Rakuten CEO on why Pinterest is worth $1.5B
Rakuten has led a $100m funding round into Pinterest, which values the online "curation" community at around $1.5bn.
The Japanese ecommerce giant won out over major US venture capital firms who were vying for a piece of Silicon Valley's new sweetheart, which lets users clip images to a virtual pinboard.
The FT spoke to Hiroshi Mikitani, chief executive of Rakuten, about how social discovery can boost ecommerce and the growing importance of images over text on the web.
How did Rakuten get involved with Pinterest?
I met Pinterest's management a few months ago and we got along very, very well. I explained about our business model and our philosophy of creating this "win win" with our merchants. Ben [Silbermann, Pinterest chief executive] really had an extremely strong sympathy with our business model and philosophy, [plus] the fact that we did not raise any money from VC.
They said they were planning to raise capital. I offered to take all of it. They had a prior arrangement with their angels so I told them I would like to get as much as possible. We talked about how we can help each other and we can help their presence in Japan which is one of the major markets in the internet industry. And they liked the fact they we would be able to help their business in Japan. We can help them with almost all our ecommerce properties.
Now they are growing very fast but I think I can possibly add a little ecommerce flavour onto their business model as well. I became their advisor too.
Are Rakuten sites already using the "Pin it" badge?
Not at this moment but we are going to. Our users will be able to pin in a very easy manner. We are thinking about a more seamless interface to pin our products. Pinterest is the future, we know we are going to have a more tight integration for all the ecommerce sites we have.
Kobo [Rakuten's ebook reader and store] has a strategic partnership with Facebook, they have created this reading community called Please Read On â€“ it's very tightly integrated. Books are not about a digital image, so I don't think the Kobo ebook has so much synergy with Pinterest at this moment but they use Facebook very well. The reason Kobo is so strong is they use social very well. We are going to do similar things between our ecommerce site and Pinterest.
What does a social curation/discovery site provide for Rakuten stores?
Search is still the main driver or us. We are always looking to make our site more interesting. Pinterest is a little bit different from Facebook. Pinterest is more targeted. They use beautiful graphics very effectively to create interest circles. They are extremely good at it. Because of that, the traffic coming from Pinterest probably will have a very high conversion rate. That is why I think they are very good at this discovery shopping.
We already invested in AHAlife [in April]. They are also another format of curation. I am a very strong advocate of discovery shopping. There are so many ways we can build a new concept together. Also, we are the largest mobile commerce player in the entire universe [laughs]. We can connect mobile commerce with Pinterest.
What kinds of products can Pinterest work well with?
Home deco, interiors, sporting goodsâ€¦ Having a good grasp of images is becoming more important for ecommerce. It's more straightforward and appealing to the instinct of human beings than text. That is the strength of Pinterest, I think. They did it so well, even though there are so many copycats.
Could social discovery eventually be a bigger driver for online shopping than search?
We don't know. It's too early to tell. The way they do it adds very meaningful traffic and a clear stickiness to your ecommerce site. It's not just about price or convenience, it's about curation and lifestyle. This is something we have talked about before: internet shopping is not just buying something from a vending machine. It should be a very rich, personalised experience.
What is the significance of Pinterest choosing to take money from a strategic partner rather than traditional VCs?
They do not disrespect VCs, their existing backers are the new emerging ones. Definitely they have a different philosophy. They are in this business for the long. long term. They love the service, they have so much personal attachment to this business. And we really respect that. Ben is different from other entrepreneurs.
Were you concerned about Pinterest's possible copyright-infringement issues, with taking images from other sites?
I think on the whole, they will overcome those issues. Their intention is not to damage any brand. It's a positive thinking and a positive way of promoting brands and images.
Could Facebook make a greater push into commerce?
Facebook in Japan is increasing driver of traffic but its share is still a little bt small compared with the US. Ecommerce will be a very important business for Facebook, just as it's a very important business for Google â€“ a substantial portion of Google's revenues come from ecommerce. They are our competitor but they are also our partner. I'm sure Facebook will think about something [in ecommerce] but they cannot dominate everything.