Jeremy Levine on why so many Silicon Valley investors passed on Pinterest
$762.5 million in funding. A $5 billion valuation. 70 million hyper-engaged users who actually buy shit, and that's just as of last year -- this number is almost surely higher today.
And yet Pinterest doesn't always get a lot of respect among many New York and Silicon Valley elites. Maybe it's because 92 percent of its activity is generated by women, who are disproportionately unrepresented among venture capitalists and venture-funded founders. Maybe it's because the network is favored by people between the coasts. Maybe it's because the community is focused largely on fashion and food and other things real actual Americans aren't afraid to admit they care about. Whatever the reason, as "New York Magazine"'s Kevin Roose puts it, "You don't see lengthy dissections of [Pinterest's] news feed algorithms, worried hand-wringing about its future, or personal essays about the emotional solace it provides during times of trouble."
But as little respect as Pinterest gets now, it got even less respect in 2011. Basically everybody in Silicon Valley had passed on it. When Bessemer Venture Partners' Jeremy Levine, our guest at tonight's PandoMonthly in New York, first heard about Pinterest it was described to him as "a teeny little company in this crappy little house." Levine himself wasn't all that excited himself to meet the company -- the most enthusiasm he could muster ahead of the meeting was, "I've got two hours. Why not."
By the time he arrived at the "crappy little house," he had been slowed down by traffic and only had ten minutes.
"'Tell me your story,'" he said. "They started describing what was going on, and I had one of those 'aha' moments. I stayed for two hours."
Pinterest reminded him of a concept he witnessed years earlier in product review site Epinions: "User-generated content for products." Epinions was perhaps too early to make a big splash -- it was eventually acquired by Shopping.com which in turn was acquired by eBay. But with Facebook and Twitter having come into their own as potential distribution models, Levine felt that Pinterest was poised to fulfill the promise of user-generated commerce.
So why did so many investors miss the early boat on Pinterest?
"They had two founders, neither of them had any technical background whatsoever, and they had pivoted from one idea after another," Levine says. But perhaps the biggest factor was that Pinterest was targeted at females, and the vast majority of VCs are male.
It was a female VC who alerted Levine to Pinterest and ensured that a meeting took place. It's a valuable lesson to any asshole who thinks that "funding female entrepreneurs" or "hiring female VCs" is little more than lip service or tokenism designed to produce good publicity.
[illustration by Brad Jonas]