Pearltrees: 3 years and €8.5 million later, there's finally talk of a business model

Finance

In Europe, as many of you may already know, people tend to talk about business models much earlier in the game than they do in the US. In fact, it’s a widely-held belief that European investors don’t tend to invest in companies that aren’t generating cash (which many believe explains the French VCs’ love for e-commerce).
While US companies like Instagram, Pinterest, Quora and the likes are busy amassing millions upon millions of non-paying users prior to even talking about their business models (oh wait, Pinterest actually does make money?), European companies are more often than not approaching things from the opposite end. In fact, it is so engrained into European startups’ brains to talk about business from the get-go that Ohai’s Susan Wu shocked the Paris tech scene at Le Camping’s Fest event last year when she told a startup that their business model wasn’t important at their current stage and they could worry about it later.

Ah, yes, Pearltrees.

While many European entrepreneurs swear by Susan’s “the business model can wait” approach, the ones who actually practice it often get a little flack. Take Pearltress, for example. The Paris-based companyis a social curation and bookmarking  tool, allowing users to organize, store and share digital content in a visual “tree” format.

The startup just announced it’s 4th round of funding since it’s launch in 2009, having raised over €8.5 million to date. And now – just now – there is finally talk of a business model.

Talking numbers.

So, if the business model has been on hold for the last few years, the company must have naturally spent its time focusing on the product and user acquisition. Well, the first number that the company consistently puts forward is that 15 million “pearls” (more or less the company’s term for “bookmark,” almost in a Pinterest type of way) have been created to date. But what does 15 million “pearls” mean? In terms of users: 350,000 – with Americans taking the lead, comprising over 30%. And in terms of page views? 30 million per month.

Talking money.

But this time, if Pearltrees is raising money, it’s clearly for monetization. So far, there has been talk of a Freemium model – but little details have been provided on the specifics. I’ll be curious to see what the company has lined up – especially since I feel that the product  (at least conceptually) isn’t that different from Pinterest. The company is also said to be going after a more multi platform approach (releasing an iPhone app), will be opening up its API and will finally move away from Flash to HTML 5.
I’ve reached out to the company for more information on their upcoming business model and will keep you posted once they reply. In an interview with Journal Du Net, founder Patrice Lamothe said that he would be looking to grow the team by 50-60% and that the product – which right now only allows users to create interest graphs using links – could also include other types of media.
In the meantime, I’m glad to see that Pearltrees is continuing its development and finally talking business. 🙂

3 Responses

  1. Avatar
    françois rocaboy

    Hi Roxanne,
    Thanks for your interest in Pearltrees.
    I agree with you, it is very interesting to understand the differences beween Pearltrees and Pinterest. Here Patrice Lamothe (Pearltrees CEO) answer in a recent interview : ” Pinterest and Pearltrees share a common aspect: curation is treated in both products as a pleasure per se, and not an additional feature. The commonality ends there, however. The things you curate, the way you curate them and the benefits you get from them are different! While Pinterest focuses on images, Pearltrees was built to organize Web pages. While Pinterest’s first benefit is probably to share a board (or know you can share it), Pearltrees first benefit is to build you own large, deep, constantly changing library of the Web. As a consequence, the type of use, the type of people using the products and the way they interact in both social systems have very little in common.”
    As to Pearltrees freemium business model, it is set on the intensity of Pearltrees use (30M page/view month, 1M uniques for 350k contributors) and a very specific demand for “private pearltrees”. The idea is simple, to get the ability to manage private pearltrees in your account there will be a fee. The amount is not determined yet. This model will be implemented in 2012.

    • Avatar
      Roxanne

      Great, thanks François for these answers concerning the Freemium model. I’d love to know when it is planned to go live and prices when they become available. So the model would be just paying for private trees? I’m guessing you’ll see an increase in inappropriate content being “pearled.”
      Also not to worry, I’m aware that Pinterest has a visual component and that Pearltrees is more around organization. But I still think it’s nice to be able to draw parallels between the 2 companies, definitely not a bad thing!

  2. Avatar
    Ronan Amicel

    Let’s have fun and make a few wild guesses about that freemium business model. 🙂
    How much will it cost, and how many of the 350K users will pay? Let’s go with a $30 yearly subscription, and a 1% conversion rate. That translates to 3,500 customers, and a revenue run rate of $105K/year.
    Pearltree’s CEO says their monthly growth rate for most of their metrics is 15 to 20%, which means they’re doubling every 4 to 5 months. If you think they can sustain a monthly growth rate of 15% for the next 24 months, it means they could have 10M registered users in 2 years. Keeping a 1% conversion rate, that’s 100K paying users, and a revenue run rate of $3M.
    Some data points for comparison:
    – Delicious, a free bookmarking service started in 2003, claimed 5.3M users in 2008
    – Diigo, a freemium bookmarking service started in 2006, has 2M registered users, and offers both a $20/year “basic” plan and a $40/year premium plan (no data on the number of paying users).
    – Pinboard, a premium-only bookmarking service, has around 20,000 customers, who paid a small one-time fee (<$10).
    – 1% of Evernote users have signed up for the premium plan six months after registering. 2% after one year. 5% after two years.

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