More on the Hedgehog Concept

Good thing I had written an extra post a couple weeks ago because last week I forgot. This will be my fourth post. I have thought the hedgehog concept was awesome since I learned about it, and I found an article that applies directly to it.

The article Pinterest's Right of Web Passage - Huge Traffic, No Revenue in the WSJ talked about a company which my wife loves, Pinterest. Essentially, it is an online website where you can "pin" different media that you have found on the internet. Essentially it is an online scrapbook. Pinterest's popularity is surging, especially among women, because it is a place where they can keep images of clothes, decorations, food, or whatever else they want. They can repost them to facebook, twitter, blogs, etc. without having to search the internet to find it again.

From what the article says, would say that Pinterest has two of the three hedgehog categories down. First, they have a passion for what they do. Everyone at Pinterest seems excited about the company and what they can give to the community. Second, they are the best at what they do. In fact, at the moment, they are the only online scrap booking website. Companies have stopped focusing on facebook and other online advertising. Instead they are trying to get their products on people's pinterests so they can cheaply advertise to all their friends.

On the third section, profitability, they are having problems. At the moment, although they are a huge success, they are not profitable. Additionally, they aren't sure how they will make any significant revenue. The way most online companies that are even remotely similar to Pinterest gain revenue is through advertising. Pinterest feels having ad drops for items you might be interested in, like Amazon or Google, is not what they stand for and may alienate users. Currently, they have decided that they will keep improving their business and that a revenue opportunity will present itself eventually. Investors may be okay with that for now, but soon they will lose interest and take their funding with them. Hopefully Pinterest finds a revenue model soon because I know my wife will be upset if they aren't around anymore.