A weekly(-ish) newsletter on commerce, media, science, tech, investing, & internet culture by Alex Taussig of Lightspeed.

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A weekly(-ish) newsletter on commerce, media, science, tech, investing, & internet culture by Alex Taussig. I am a partner at Lightspeed in Silicon Valley.

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Drinking from the Firehose #114


Pinterest publicly filed its S-1 on Friday. The document gives us a rare look at how the company assesses its own strengths and weaknesses in the consumer media landscape. Reading the document myself, what stood out to me was how Pinterest defines itself, as well as the implications of that definition for its future viability.

As The Verge notes, Pinterest (soon: PINS) is reticent to call itself a "social network." Unlike Facebook, Instagram, Twitter, and Snapchat, Pinterest lacks a strong communications use case. You don't go to Pinterest to find your friends, or to follow influential people. You go there to find inspiration.

Inspiration is high ground on the internet; it's the very top of the intent funnel. By structuring content downstream from inspiration, Pinterest can guide that intent towards an eventual purchase. Both Google and Amazon have built pervasive services as internet gatekeepers, and Pinterest seems to be angling for that type of position. 

Pinterest's "right to win" comes from a powerful insight: 

"People often don’t have the words to describe what they want, but they know it when they see it."

If you can't describe what you're looking for, Google and Amazon aren't that useful for you. Pinterest is unique in solving this use case for search. 

On the flipside, the biggest question Pinterest must answer is, "How common is that use case?" The more common, the more likely a user will start her search on Pinterest. The less common, the more likely she will start her search on Google and click through to a Pinterest board.

The former position in the market is far more valuable than the latter. Take Amazon, for example. The site grew symbiotically with Google in the early 2000's, but over time Amazon reduced its search engine dependence. As purchase frequency increased with the size of Amazon's catalogue, users preferentially started searches on Amazon. Today, 54% of product searches begin on Amazon, and only 28% of Amazon's traffic comes from search engines.

Pinterest, however, still depends heavily on search engines, which drive 45% of its traffic. Its S-1 reads:

"We depend in part on internet search engines, such as Bing, Google, Yahoo! and Yandex, to direct a significant amount of traffic to our service. For example, in the first quarter of 2018, Google de-indexed our keyword landing pages, which negatively impacted traffic and user growth in the quarters that followed."

The company's reported engagement metrics also hint that the Pinterest use case is not daily, but weekly. Note that, while social networks like Facebook and Snapchat report daily active users (DAUs) in addition to monthly active users (MAUs), Pinterest only reports weekly active users (WAUs). It claims WAU/MAU was 57% at the end of 2018. That's the first time I recall seeing WAU/MAU mentioned in a public filing. It's just not a metric that social networks report because communications tends to be a daily use case. I can only conclude from this omission that viewing pins isn't nearly as frequent an activity as checking messages and status updates. 

Pinterest should have a successful IPO. It has established a strategic position by capturing visual intent on the internet. Beyond that, its long-term viability depends on reducing its dependence on search engines like Google and building its own recurring use case that drives more frequent, directly sourced usage of the platform.



Check it out.

Instagram announced an integrated shopping cart for a select few brands in closed beta. For many users, Instagram is a modern day QVC. Between the ads, organic accounts, and influencers all hawking products in your feed, Instagram has long played host to shopping behavior, but neglected to support it natively. The move should also help increase ARPU for Facebook/Instagram in North America, which is a crucial driver of revenue growth now that the social network has reached saturation.


Stadia Arcadia (video).

Google announced a game streaming service called Stadia at the Game Developers Conference in SF. As described, the service is highly compelling, especially for fans of online multiplayer games. Because game sessions are jointly managed server side, all players get the same high frame rate, regardless of each user's internet connection speed and congestion. How Google is able to guarantee 60 fps over a Wifi network it doesn't control is beyond me, but if it can the prizes are numerous.

First, Google can leverage YouTube as a point of distribution for games. It already has a massive audience that comes to watch streamers. Google will therefore compete with Sony and Xbox, who have their own console-based stores. Moreover, if you're watching a streamer play a game, Stadia will allow you to immediately start a session of your own in your browser -- no software download required. It may even let you deeplink into the same game state, or if live, join the session alongside your favorite streamer! If your game isn't already free-to-play, it will be soon or you'll be at a disadvantage inside of Stadia.

Second, Google can enable new types of massively multiplayer online games that could not have previously existed. Because the entire game session operates in the cloud and can be sharded and scaled arbitrarily, developers can build games with physics that is interactive across thousands of users. If this truly works, the line between "game" and "world" will continue to blur.

Third, as a point of distribution for games, I suspect Google will take another crack at building a social identity service. If you're instantly jumping into a game in your browser, it makes sense to use your Google identity to quickly set up your character. That means that Google could build an underlying messaging service that connects those identities in game. After all, Google is providing the run-time already. Discord might be in for a rude awakening if this takes off.  


A free launch.

The U.S. recently struck a deal with Brazil that could be a boon for the emerging NewSpace industry. The country's launch complex at Alcântara has a few core advantages due to its geography. It's close to the equator, which means that rockets get a "free" speed boost due to the Earth's rotation. It also looks out over the ocean, which is helpful for launch safety. 


Ever present.

An MIT professor has a radical idea about time. His so-called "block universe theory" supposes that time does not flow from one moment to the next, but instead is spread out like the way space spans the universe. This would imply that time does not actually pass to an external observer, and that we're simultaneously living in both the present and future. Woah.


The dark knight turns 80.

Batman's looking good for his age. The caped crusader turned 80 this week. George Gustines wrote a neat feature in the New York Times that traces the evolution of one of DC Comic's most iconic heroes. 

Disclaimer: * indicates a Lightspeed portfolio company, or other company in which I have economic interest. I also own stock directly in AAPL, ADBE, AMZN, CRM, FB, FTCH, GOOG/GOOGL, NFLX, SPOT, SQ, TSLA, and TWLO.

Lightspeed Venture Partners, 2200 Sand Hill Rd, Ste 100, Menlo Park, CA 94025 USA Sent to — Unsubscribe