Pinterest Business Model Canvas

My research found that Pinterest primarily supports itself through fundraising by seeking out investors. Some key investors are Valiant Capital, Rakuten, Andeerson Horowitz, Bessemer Venture Partners, and FirstMark Capital. The majority of Pinterest's (about 83%) 40M users are women, I estimate of the remaining 17%, 10% are men and 7% are teens.

Pinterest has significant costs in web development and storage of $2M per month, or $24M per year. Pinterest has about 300 employees, and assuming the average employee, plus any health insurance and other benefits makes about $100,000 per year, the total staffing costs would be $30M per year. I also assumed that Pinterest may pay about $1M per year in security costs.

Pinterest has begun selling advertisements on its website to major corporations such as General Mills, Kraft, Lululemon, and Gap. These advertisements can generate about $2M per six months, so Pinterest could make $16M in Advertising Revenue from those four partners in a 12 month period.

Since Pinterest has the ability to bring in $16M per year in advertising revenue from the above mentioned firms, it could add to that revenue stream by securing additional advertising partners. As things stand, it will not be possible for Pinterest to make money; however, there is potential to make money with additional advertising partners.

In its current state, I estimate that Pinterest is losing about $39M per year, which is less than the approximately $56M per year it was losing before it began brining in advertising revenues.

Strategies for generating additional revenues:
Similar to Facebook and Twitter, Pinterest could develop a "sponsored" pin for which a user could pay a fee to have its pin featured.

Pinterest could add in required viewing videos such as YouTube in order to view certain pages which could also generate advertising revenue.

History of the Internet

I thought it was very interesting to watch the YouTube clip on the history of the internet. It was a detailed, technical look at arguably the most fascinating invention in the history of the world. The points discussed in that video are not things that I ever think about each day when I open my laptop, iPad, or iPhone to surf to the web, send a tweet, check FootballScoop.com, send emails...or write blog posts.

Consumers Run the Show

Page 11 of this week's main reading had a line that really jumped off the page at me: "Consumers run the show". I think that it is becoming more and more important for marketers to realize this in today's economic climate. When I was working at UConn I took the approach of trying to provide social media content, handwritten correspondence, and general correspondence to our prospective student-athletes that they wanted to see. The target audience was my consumer base and I couldn't simply take the approach of creating material that I liked to view or that the coaches thought we should create (although at times those ideas did fit what we needed to do).

I also was struck by the mention of cookies. In the past several months I have made numerous trips to Indianapolis (for the AFCA convention, KD Connect Week, a job interview at Purdue, etc), so I often get United Airlines banners on web pages advertising flights from BDL (Hartford, CT) to IND (Indianapolis, IN).

Infographics

Over the last 12 months or so I have really come to enjoy infographics. As I have stated in previous blog posts, Infographics are becoming more popular, and widely effective in the world of football recruiting.

I really liked the infographic prepared on "The Retailers Guide to Big Data" from the Shopping and Social Media. It really details the importance of the shift from digital consumption on computers to digital consumption on smart phones and wireless devices. This is a key point that executives and strategy makers will have to keep in the forefront in the coming months and years.

For a while there was a trend in football recruiting to create expensive "micro" websites that were a football-only focus. These sites could be upwards of $80,000 to create. An example is http://lesmiles.net/#/main. This is a site that LSU contracted Overtime Software to create. It relies heavily on flash media, which led to LSU having to create a mobile app, thus costing more money. From my experience I have also found these sites are tremendously difficult to maintain if a staff does not have one full time staffer solely dedicated to the site.

What I have found (without hard data, more word of mouth-type conversations) is that the traffic to these sites consists of more fans, the media, and others that are not part of the target audience (football recruits). So schools were dishing out thousands upon thousands of dollars without asking what the return on their investment was (maybe one of these schools should hire me to manage their recruiting efforts).

Recently a firm called JumpForward released a new concept for a recruiting based microsite called a "Social Media Hub", which had a desktop platform, but is geared toward the mobile consumer. Their first client to implement such as site was Northwestern: http://www.thewildcatway.com. JumpForward was able to develop a site that gave a one stop shop for all of Northwestern's social media accounts. Aside from the practicality of being very mobile friendly, it is also about 12% of the cost of those other "flashy" flash based sites.

Now, back to the Infographic in the article - This piece contains so much information and it is presented very succinctly for the reader. I think this is something that I could take and re-work (with different data) to be geared towards a football program.

Two interesting articles on the power (or lack there of) Facebook

I found two articles this week about Facebook's power (or lack there of). The first was about internet marketing. It contained some data collected from businesses on their use of social media.

Marketers use of Facebook

Nearly 97% of marketers use Facebook for B2C marketing when 57% don't believe it even works. That seems like a waste of resources! The article also says that only 1% of marketers are using Snap Chat. One thing that I found very fascinating is that just last week Walt Disney World unveiled their plan to begin using Snap Chat in their social media marketing.

Snap Chat for Disney World

From my experience, I find that the younger generation (high school and college age) are turning much more towards Twitter and Snap Chat. CNBC had an article that contained little to no scientific data about UCLA students' views on social media.

UCLA Students & Snap Chat

They certainly seem to be turning to the route of Snap Chat.

Business Model Canvas Assignment 1

I chose to use my former employer, the University of Connecticut Football Program for my first Business Model Canvas Assignment. I was able to gain a clear understanding of the operational end of the football program over the course of the six years I worked at UConn.

To begin, I provided the following as the value proposition for what UConn Football is providing to their customer base: "Provide exciting football games against high quality opponents in a state of the art stadium built in 2003." Rentschler Field is a tremendous venue to watch a college football game. It is one of the newer college football stadiums in the country and includes great amenities such as a high definition video board, beer vendors, and concessions areas.

Football is considered to be a "Revenue Generating Sport", which means that it should be at a minimum revenue neutral, or turn a "profit". If a profit is turned it is then redistributed to other sports that may not generate enough revenue to cover their expenses. Customer relationships includes tickets to games being sold over the internet on UConnHuskies.com, over the phone, and in person at the on-campus ticket office and the stadium box office on the day of the game. Key activities are the games, as they are the primary source of ticket revenue, but making post season bowl games, the annual signing day event, and the spring game are great ways to generate revenue by enticing fans and alumni to make private donations.

Next, here is an analysis of the major revenue streams for the UConn Football program. These would most likely be fairly similar to most major college football programs across the country. The first is the American Athletic Conference Television Contract. The revenue share for teams in the AAC is about $3.5 million per year per school. The University of Connecticut Division of Athletics also has a contract with IMG College Sports that is worth about $10 million per year. For purposes of this assignment I assumed that Football accounted for 25%, Men's Basketball accounted for 25%, Women's Basketball Accounted for 25%, and all olympic sports bundled together to capture the remaining 25% of the $10 million per year. Therefore, I input $2.5 million in revenue from the IMG corporate partnership. The University of Connecticut Division of Athletics also has a corporate partnership with NIKE that is worth approximately $4.5 million per year. Once again, I used the same 25%/25%/25%/25% split amongst the four segments, which leaves the Football Program with approximately $1.125 million in revenue from the NIKE contract.

I also evaluated the revenue gained through private donations. In 2012, the University of Connecticut raised $21.8 million in private donations for athletics (Per UConn Fact Sheet). I once again used the 25%/25%/25%/25% split amongst the four segments that I used for the corporate partnership analysis, which led to me inputting $5.45 million in private donations being allocated to football.

For the purpose of this assignment I listed the television contract, the IMG Corporate partnership, and the NIKE corporate partnership as "Other" in the customer segment section. Since these are guaranteed revenue sources I input the customer segment size as "1" and the percent of market share as 100%.

I also evaluated ticket sales as part of the revenue stream. I looked at three potential segments of customers Alumni, CT Residents, and Students. Student season tickets sold out each of the years that I worked at UConn. The student body is 30,256 (Per UConn Fact Sheet) and the student section seating is approximately 5,000, which means about 16.8% of students buy the season ticket packages. The package includes 7 home games at $8 per ticket. Of the 217,000 (per 2012 UConn Fact Sheet) living alumni, I estimated that about 5% or 10,850 would purchase tickets. The average ticket price is $30 and their are 7 home games in a season. I also estimated that about one half of one percent of CT residents, or 17,950 would also purchase tickets. In total, that is approximately 33,800 tickets per game. The stadium seats about 38,500. For the purposes of this assignment I estimated that complimentary tickets for players, staff, the visiting team, give-a-ways, and the band accounted for the 5,000 other tickets.

Next, I evaluated the expenses for the football program. Our annual operating budget was approximately $4 million. This includes team travel, staff salaries, scholarships, equipment, and other operational costs. The annual recruiting budget was approximately $480,000. This includes coaches travel, official and unofficial visit costs, recruiting subscriptions, and recruiting software. I also estimated that the per game cost of the stadium lease agreement was approximately $2 million per game. This cost was part of a state contract that I did not have access to, but the general estimate of $2 million had been discussed in meetings that I had attended. Over the course of 7 home games that would equal $14 million.

The total revenues equalled $18,907,648 and the expenses equalled $18,480,000 for a "profit" of $427,648. Because of the methods of tracking football only expenses that are only part of the football budget and division wide expenses, I did have to include some estimates in this analysis. According to the tool based on the figures I input, UConn Football is an effective Revenue Generating Sport that could assist the Division of Athletics in funding other varsity sports on campus.

UConn Fact Sheet

Capital, Competition, Creativity

As I watched this week's lecture the 3 Cs of Capital, Competition and Creativity really stuck out to me. I do agree that this is the future of the internet and it is the future of many different businesses. I have, without a doubt, witnessed this concept in college football recruiting in the past 12-18 months.

The video also mentions Vine, which is an interesting concept for social media. I prefer the 15 second Instagram videos as opposed to the 6 second Vine videos. I did agree with the mention that Instagram is becoming the younger generation's Facebook; however, I feel that SnapChat may even be taking over the popularity of Instagram. As I stated in an earlier week's blog post, SnapChat becomes a permissible form of communication for college coaches and prospective student-athletes on August 1, 2014.

It will be interesting to see what sort of traction Mark Cuban can gain with his new social media application called CyberDust, which like SnapChat contains texts and photos that disappear and are untraceable once gone. Mark Cuban Cyber Dust.

Earlier this week I read a job posting put out by the University of Michigan Football program. Michigan Recruiting Assistant Job Posting. I actually think that Michigan will have a larger reach to prospects if the videos are being created for Instagram. I believe that it is a larger platform amongst the target audience compared to Vine.