The Pinterest IPO

0:00 Oh the users used to drop by the office. I That's so crazy to me. I know. And the woman dressed up as Pinterest for Halloween. Yeah. And oh here's here's ornaments for all of you. How many people work at your company? Great, I'll hand make you twenty five ornaments. I know. So great. Welcome to season four, episode five of Acquired.

0:34 the podcast about technology acquisitions and IPOs. I'm Ben Gilbert. I'm David Rosenthal. And we are your hosts. Today we are talking about a company that is not A social media company.

0:47 Or is it? Interest. For context, this is a company that has more users than Snap, though a little bit less than Twitter. is used by eighty percent of moms in America. and is actually a pivot of an early failed mobile shopping app.

1:02 But we will get into that. Indeed we will, As always here in Acquire. This is episode two of the A plus IPO saga. We are are proud to be coming at ya.

1:13 Um what, two days here after trading? We start it started trading on Thursday and then yesterday the the stock market had the day off. Yeah. So we've got one day of uh of data here and uh and we'll be course talking about the entire story of Pinterest, but I had a nice little pop in the market as well that that we'll touch on. Yeah, we've got so far we have the P L. Of the A plus. Indeed.

1:37 Indeed. All right. So listeners, today we are talking about a company's exit, and really that's what we do on every episode of this show. But there are lots of company creation topic that David and I can't help but discuss. And as many of you know, we have a second show for that, the limited partner show. So last week on the L P show, we spent an hour diving into a required topic for every entrepreneur. The term sheet. We went through line by line analyzing each term of a standard series seed term sheet, and of course offering our uh our editorial on each one.

2:09 If you are interested in hearing us, two non-lawyers try to put it in as plain of English as we possibly can, you should definitely consider becoming an LP. And we have a big announcement today. It's big news on that front. We have heard from a lot of you that you wanted to listen to the L P show, but you weren't sure how it worked. So we decided to change the sign up and offer every new person who joins a seven day free trial. Just so there's no need to take the plunge blind.

2:34 You can listen right here in the podcast player of your choice and sign up in two taps. Yes. Only two taps. By tapping the link in the show notes or going to Glow.fm slash acquired. Yes, note the new and official name of the company, Glow. And as the person who works on the product behind the L P show

2:51 I am selfishly very excited to see how well the new trials feature works, so uh please do not be shy to check it out. Yeah. Big congrats to Ben and team for getting all that out. Thank you, sir. All right listeners. Now is a great time to talk about a new partner of ours here on Acquired, Lagora.

3:09 The agentic operating system that is redefining how the world's best legal teams work. Yep. It's sort of obvious that AI is gonna completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. Ligora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry? So the founders did exactly what great founders do. operate with obsessive customer focus. They embedded inside a massive law firm.

3:41 For months. They sat with the lawyers just watching how the work really gets done. And that's how you get features that customers love, like tabular review, where you drop in a folder of hundreds of contracts and it pulls every key term into a grid a lawyer can actually work with. Lagora's Bet here is interesting. Since it lets each lawyer handle more complexity, any given person can increase the quality of their work. and do higher value work. And this means that the pie can grow even as each individual task takes less time. And they recently launched Lagora Agent, offering greater intelligence and performance. The agent lets lawyers set an objective. Then it can handle the planning and the execution and deliver of the final product. Legal teams get to maintain full control and transparency since they're still involved where judgment is required.

4:29 And Lagora works where you already work. You can use it within Microsoft Word while redlining or drafting. The early Lagora numbers essentially speak for themselves. When they have a head to head pilot with their top competitor, they win 70% of the time. Lagora now has over a hundred thousand lawyers on the platform from twelve hundred legal teams in fifty countries. And crazily, they went from one million to a hundred million in ARR. In about

4:58 Eighteen months. Mm. Truly insane numbers. And that is the real test. Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time, or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm or you're in-house at a company, you can learn more at Lagora.com/slash acquired.

5:21 And just tell'em that Ben and David sent you. Right, David. That is all I have before the illustrious history and facts. We are. Let's do it. So today

5:35 We start our story. in the nineteen eighties, mid nineteen eighties, early nineteen nineties. special time for me probably Probably was a little bit later for you, but m for you, Ben too. We're all all of us millennials growing up. And there was another Ben. Ben Silberman.

5:53 who was growing up in the middle of the country in Des Moines, Iowa. uh around this time. And uh I remember growing up my parents always used to joke whenever they talk about like shipping me off to somewhere random when I was like being bad growing up, they'd say, you know, I'm gonna send you to Des Moines. Apparently Des Moines is a really great place. Man Anyway, uh Ben Silverman talks about how it is a really great place and it's going to play a big part. in the story here.

6:22 I have not. No. It's awesome. It looks beautiful. Yeah. Um is it part of the quad cities? Or is it That that is deeper than my knowledge on the area. On Midwest geography. Okay. Anyway.

6:34 Regardless whether it is or isn't. Ben Silberman. Is growing up there. around this time and he is a he's a middle child. He has two sisters, an older sister and a younger sister. He comes from a family of of doctors of MDs. Uh both of his parents are doctors. They are ophthalmologists in Des Moines. Uh his grandparents were doctors. And both of his sisters would go on to become doctors later in life. So Ben thinks, you know, this is basically his destiny. He can't escape this. But he's a he's he's a quiet kid and uh he actually says at a talk later that he wants to be known in life for the things that he makes

7:12 Not the things that he says. Uh quite quite in contrast to your typical uh Silicon Valley unicorn founding. Uh this is gonna be a theme here. Yeah, I was gonna say, listeners, like Dave and I were chatting before the show. It actually takes quite a bit of research to find a lot of the best stories about Pinterest because they're a very sort of do the work and let the work speak for itself company rather than beat in a drum that m many of their other companies do to attract talent and um, you know, share the spotlight and and be in the news a lot. Pinterest just just never really had that in their personality. No, totally. I mean we this is probably the the most work we had to do researching the history of the company and founders, you know, in a long time. Not because there aren't great stories here. There are. We're gonna tell them. But you know, unlike Airbnb or or Lyft or Uber, you know, the the founders, uh Ben uh and Evan and Paul just don't talk about them. But we found them nonetheless. Uh so Ben's growing up and um

8:09 He's he's quiet kid, uh, likes to, you know, let let his work uh do the speaking and and he's Very good work. Very good student, as you would imagine, coming from the family that he comes from. Supposedly collected stuff. Hard to verify if this is true or this was this was added as part of the lore later. Feeling like I know Ben after watching basically every talk over the last ten years in the last couple of weeks. Um I actually believe him. Famously, he supposedly had a bug collection, you know, like where you uh where you'd have awesome and then you would pin bugs onto it. I remember I think there was a calculator.

8:42 So Ben uh He's a great student, Ben Silverman. Ben Gilbert was probably also a great student uh in high school. Did you uh Uh Silverman though goes to Yale and he does pre-med uh as he is destined to do. Uh he majors in political science and and does pre-med on the side. And you know, I remember I had tons of friends. I was in college right around this time too. Uh also do the same, you know, be pre-med, but major in something else. And uh one day though, Ben wakes up, it's it's his junior year, and he talks about he just kinda has this feeling that

9:19 Yeah, he's been doing pretty mad and you know, he's doing well, of course, but um He's just not sure that medicine is right for him. Not his destiny. It's not his destiny, uh that he might have thought it was. He's interested in other stuff and in particular, and I can so relate to this because I was in basically the same moment in in my life and history when I went to college. When he went to college was the first time he had his own laptop and his own, you know, dedicated broadband high speed connection to the internet. And he basically fell in love with it. He was like, This is so cool. This is

9:51 the industrial revolution of our time. And um, you know, I'm a young person, I see this and he gets access to it in school for the first time. And he just starts tinkering. He uh he builds a bunch of, you know, what he calls toys with friends while he's in Yale. He builds a website uh where you can try on eyeglasses. Remember his parents are ophthalmologists, so he's in college. He builds this website where that you can virtually try on on eyeglasses. I don't even know how he did this at the time with whatever web technologies were Yeah,'cause in like twenty fourteen or whatever, when Warby Parker rolled it out, it was like, Whoa, it's incredible. Yeah. He basically invents Warby Parker. Just a little bit ahead of his time. So he's tinking around with all this stuff and he decides, you know I think I'm not gonna go to med school. At least not right away. And so he goes and he talks to

10:37 His other friends who were who were at Yale and and uh also liberal arts majors, but weren't pre med and asked them, What are you guys doing? And they're like, um We're going to all these consulting interviews and investment banking interviews, because that's what you did. And Ben says, Oh, okay, cool. I should do that too. He does the whole consulting interview circuit. He ends up uh getting an offer and joining a consulting firm, which I think has been acquired now. Uh I remember these guys, corporate executive board. They were based in Washington, DC And uh so he joins them. He moves down to D C after school and two Big things happen there. Really important things that

11:13 are important for the future of Pinterest. One, he gets assigned Randomly, I believe. to the IT consulting practice within C E B. He's like, This is great. I love the internet anyway. I'm gonna work on IT, you know, consulting rel related projects. And he gets really into it and he starts reading TechCrunch, which had just come out around that. Of course I remember this too. And he's reading about all these startups out in California like Dig and you know, Yelp was just getting started. This was the the web two point oh, dawn of the web two point oh era. And he's like, Man, I really kinda wanna be a part of this. The other really important thing

11:46 that happens during his couple years as a as an analyst at CEB. He meets his girlfriend, who would become his wife, Divya. Uh and Divya worked also at CEB in the HR consulting group. So Ben's in the IT consulting group, Divya's in the HR consulting group. And uh as the story goes, one night they're watching a movie uh in D C and they watched The Pirates of Silicon Valley. Uh which is I still have not seen I need to watch this movie. It's so I've heard it's so great. It's kind of a it's like a crime that I haven't watched this movie. I'm not sure if it's more cringeworthy or more like legitimately awesome, but it has so much of both That uh Yeah, I I I can't believe it was only ever a T V movie.

12:28 I know. And it's about uh Steve Jobs and Steve Jobs and Bill Gates and the rivalry between them and and and Microsoft and Apple. Highly dramatized in like whatever nineties or early two thousands sort of like camera angles and uh and lighting and it's just so so utterly dramatic. And there's this ridiculous line in there. Ben talks about he g he he g he gives a talk that I'll reference later, uh where he literally has a slide and he has this this line, this quote on the slide. Uh there's this super cheesy line in there that I think uh Bill Gates' character says um

13:00 There might be something going on in California. And according to them, this inspires uh him and Divya, and they're like, You know, what are we doing in D C We gotta move out to Silicon Valley and be where the action is. So they do. A little while later this is um This is two thousand six, I believe. They move out to Silicon Valley out to Palo Alto. Ben ends up getting a job at Google in ad operations. Divia uh gets a job. She wants to work at a startup. So she gets a job at a cool startup right off Calav in uh in uh Palo Alto. Uh you may have heard of it.

13:34 called Facebook. She joins them in two thousand six. She's the first HR remember she was doing HR consulting at C B. She becomes the first HR person at Facebook. Oh I didn't know which is pretty awesome. And is also gonna have a huge impact on Pinterest. Ben works at Google for uh a little under two years, I believe. He really wants to do a start up, you know, he's like obsessed with Tech Crunch. He's tinkering with all sorts of stuff on the side and Every night he's talking to Divya and he's like, Oh, what about this? Like I wanna work on this. And and again, supposedly they're they're having dinner one night and and Divya's just sick of this. She's working at a startup and she's like, Ben, you know, you might want to just either do this or or just stop talking to me. And I could so imagine this. I I've uh Jenny and I have had many versions of this conversation. And Ben's like, you know what, you're right. So it's fall of two thousand eight at this point. And he decides he's gonna leave Google. He's gonna launch His own startup, he's gonna live the dream.

14:32 He has an idea and he's got a couple of friends that he's gonna work on work on this company idea with. And they want he wants to build a website that holds your that that stores your medical history, your family's medical history. So not like an EMR, but a place where you can store, you know, what what is your grandparents' family medical history, your parents' medical history, you know, your siblings, um and uh actually seems, you know, really Relevant. So it's fall two thousand eight. He goes off to do this, he quits Google, he walks out And then like a week later. Lehman Brothers collapses. Uh it's amazing. We'll we'll we'll we'll get back later in the show to uh

15:06 how impactful that event was on so many things in the world. I think there's probably four or five episodes now where that's been a a a turning point in the history of each of these companies. Yeah, totally. And the most direct impact that that has on on young Ben Silverman and uh and the company that would become Pinterest is Is nobody else who he was talking about doing with this ends up leaving and joining full time. Uh I think some some people may have been at Google, some people might have been friends. Uh he's he's talked about that were uh in PhD programs. Everybody's like, Nope, the world falled apart. Yeah, everybody g go to cash, keep your job, don't do anything risky. Yep. And uh and so Ben's out there, he's all alone. He's he's quit. He's gone.

15:47 So he goes and he goes out and he tries to raise money. He has this idea, this website he wants to build, but A nobody no no uh angel investors or or early stage VCs at that point are investing in like anything, let alone some random, you know, Adops guy from Google who's a solo non technical founder. Uh come on, the bottom is the best time to to buy. This is when you should be investing. I can't wait to do the Airbnb episode uh hopefully later this year where uh We tell their version of this story, which is also very similar. So he he can't raise any money, he has no co founders, no ability to build a product. He he does a bunch of things just to kinda pay the bills and get by. Uh fortunately Divya is, you know, working at Facebook and and Doing pretty well. So uh she keeps the keeps the the the fledgling family afloat. And and they're still well well pre IPO at this point. I mean they hadn't found mobile yet. They hadn't this is this is still eight. Facebook's doing well, but it's doing well on venture dollars, not on its uh its real business model. Yeah, totally. So Bend ends up Moonlighting he he helps design a product and a company called Mighty Quiz, which was a Y combinator uh company. I forget were they in the first batch? Uh it wasn't the first, but it was very early.

17:02 Very early batch. Um they might have been in the same one as Dropbox. Uh I think drop. Dropbox was in the f was Dropbox in the Reddit batch?'Cause Reddit, I think, was the first. Dropbox may have been yeah. It w it was it was first two or three years. It was definitely early on. They powered trivia games for other websites out there. Uh

17:22 Doesn't work, of course, but that's how he gets exposed to Y Comedy. I was always wondering. Ben goes back and and he does talks at YC startup school and I was like, Pinterest did they do Y C didn't do why but that's how Ben became involved with Y C. He's doing this and he's looking for something to do. He he comes upon he realizes, you know He loves this iPhone. And the iPhone SDK had come out earlier that year in two thousand eight, and it just started to open up to third party applications. Cause remember the first year, year and a half of the iPhone, it was only apps from Apple. There were no third party apps on this. Uh iPhone OS two that had the uh the app store and the SDK. Yeah, and and famously Steve Jobs was against the idea initially of having third party apps on the iPad. But he Bezos style disagreed and committed and and they shipped it anyway. Yeah, how different history would have been if that had not been the case. So

18:16 Ben sees this and he's like, Okay, this might be the wave that I can I miss the sort of web two point oh wave, but this might be the wave that I can ride to uh build a big company here. And so he hooks up with another friend from from undergrad from Yale named Paul Schiara, uh who very random that Paul would end up becoming his co founder because Paul lives in New York is also not technical, but Paul had a very important aspect to his background and skill set. He knew investors. He had been An associate at a venture capital firm on Radius Ventures in New York.

18:51 And uh he knew investors. And what was one thing that they needed? Money. Money. Money. And Paul, of course, was also saw the opportunity that The opening of the app store would unlock. Says, okay, great, we're gonna build a company, we're gonna build iPhone apps. They decide to call the company Cold Brew Labs. Because it sounded cool. Like listeners, we try and pour over like what's the real origin story, what's you know, what is the company espousing. This is like this is all we could find. Like it's that it sounded cool and they just rolled with it. Yeah, I th I mean I think that was the actual story. Yeah. Paul though, because you know, they need to raise money and Paul has all these investor relationships, they decide it's natural he should be the CEO of the company. So he's in New York and Ben is is out in Palo Alto, and uh he's the CEO and they hit

19:40 The fundraiser they decide well first they decide. What are they gonna do to build iPhone apps? And they Ben has this idea, um I actually don't know who whether it was Ben or Paul. They come up with this idea for a product that they call Tote. T O T E and we should pause here before diving into what TO is. This was like

19:57 aha moment number one for me doing the research that Ben Silbermann was not the initial CEO of Pinterest. Yeah. I think that David, you even texted me like Whoa did you realize this? This is just one of those things that ends up buried in the lore that's the sort of super fun when we're diving in and trying to figure out what's going on then while the sort of visionary and you know, the person that we chose to start the story with in in his upbringing was not the CEO of the company. And despite having left his job at Google earlier and been Searching around for a company to start.

20:28 They decide that they're gonna build this this app called Tote and release it on the app store. How they got the idea for this? I don't know. Um the idea is that You get all these paper catalogs, you know, direct mail catalogs uh sent to you in the mail for all sorts of things, you know, uh fashion, uh home uh decor, you know, pottery barn, what have you. Wouldn't it be interesting if instead of getting those in the mail, you could get them on your new Smartphone device. David, that is just what I want. Oh man, I can't wait to read more catalogs. And so they decide they're gonna do this. But there's no like API for you know getting Products and catalogs from companies. So they start getting catalogs and just

21:11 Like by hand, ingesting the product data into into the app. Like typing in like oh here's this, you know, uh dress at Forever Twenty One. It's priced at this. Like take a picture of it. Here's the picture. Um talk about doing things that don't scale. And and this is two thousand eight. Like there was zero evidence that anyone wanted to do Anything that resembles shopping on mobile yet. Yep. Uh end of two thousand eight, beginning of two thousand nine. They uh so they think, Okay, we've got this great idea, we're working on this product now, we're gonna we're gonna go out and we're gonna raise money with, you know, our our new great V C connections. Everybody turns them down. They meet with like everybody in Silicon Valley. People more or less laugh them out of the room. Rightly so, at that point in time. So they get so desperate.

21:55 This is this is later on in the spring and actually David, I'll I'll push you on rightly so because if they had invested, they would have been the first investor in Pinterest. So it is interesting. It's like rightly so on the idea. Yes. Well, and that's the that's the art of uh of early stage investing. Uh Which we'll we'll get into uh uh more as we go here. So they're so desperate. For Money to pay the bills that they start applying to

22:25 business plan competitions at colleges. That they didn't even go to They're just doing anything to try and get some money. Uh and presumably also some money to, you know, pay some developers to actually build this, because they can't build this. According to Ben, they go to several. They go to one, I believe this was NYU. I couldn't I couldn't verify, but I believe this was NYU's business plan competition. They end up getting second place. in the competition. So they don't get any prize money. But what they get for coming in second is a meeting With a VC. And that V C happens to be a V C in New York, a brand new firm that has just gotten started at this point in time, which

23:00 Side note, must have been incredibly difficult to start and raise a first time fund in the middle of two thousand eight, two thousand nine. Man, it was hard enough doing it at Wave in twenty seventeen, twenty eighteen. And David, to double down on that, imagine ha how hard that is You're an early firm, you're making one of your first few investments and it's Pinterest. Yeah. Exactly. Well, so these guys firstmark capital, which is now great. much larger VC firm based in New York. Uh they'd just gotten started. They were the second place uh door prize in this competition. And so they meet with Paul and Ben in this app called Tote.

23:39 And for whatever reason they take a shine to them and they say, Okay, great. We'll throw you guys a couple hundred K. Like let's see what you do with this. So firstmark becomes the first institutional investor in Cold Brew Labs. You can read the uh the form D that gets filed. Uh Paul uh signs it as the CEO of the company. They invest a couple hundred K. And we do this part later, but just to sprinkle some numbers on this. Pinterest. their IPO price was at at nineteen dollars a share and when they opened trading it was at uh twenty almost twenty four bucks a share. These shares.

24:12 Or Bought for one cent per share. Yeah. So they do pretty well. And I believe Firstmark still owns about nine nine ish percent of uh of Pinterest. Man, the art of of early stage venture capital and betting on teams. Great investment there. With these resources, they uh they hire some developers. Uh the ship. The app.

24:33 But nobody really uses it because, you know. Again, who wants to really be shopping catalogs on your at that point in time three point five inch uh iPhone screen. There's a few things there. It's like no one was conditioned to that behavior yet. Phones weren't rich enough in their functionality to sort of give you the confidence that doing things like shopping or booking travel or anything on them was was like actually gonna work and you you had sort of the the richness of the software required to do those things. At this point in time you had three G. I think you were past the edge days of the iPhone, but You know, loading high quality images still took a while. Totally. You know, this was the era where trying to update your app took like two weeks. So, you know, any time that anything was wrong it it it it's not like

25:14 the that we have the sort of the number one, the update speed that we have today, but Number two, the the ability to change a lot of stuff on the server. I think the apps weren't that sophisticated yet and had uh just a lot of really heavy stuff on the client side. And so I think that Not only were uh was there only a small segment of people willing to do this crazy thing called shop on their phone, but then even more so, it was really hard to actually iterate on this thing. Yep. Hard on all fronts. Uh so one day, later on, a couple months later in in two thousand nine, Ben is visiting New York. I assume he was visiting because Paul is still there. And uh a mutual friend says to Ben, Hey, there's this guy here I know that I'm also friends with. You guys seem really similar. Like you should just Like grab a drink. I think you would really like each other, uh and meet while you're in town.

25:59 The friend he that the mutual friend was talking about is a Architecture grad student. Named Evan Sharp. And Pinterest really keeps finding the exact right people for these roles with just the right backgrounds. Exact right people at the right time. As with all of these stories, it's so funny when you dig into them, you know, the number of Just random events that lead to

26:21 These incredible stories and companies being created. You know, the same thing with the lift co founders meeting on Facebook. So Evan was he had an architecture background, but he actually had some super applicable skills from from tech companies, right? Facebook? Not yet. Not yet. Oh. Uh so he's just an architecture grad student in New York. Ben and Evan grab a drink. They're chatting and Evan's, you know, saying like he has talking about how He he loves you know, he's so into architecture and design and he's curated. He has thousands of architectural photos and drawings and designs that he saved online. But it's so hard to keep them organized, and he's got this whole system. And uh and they're fing in bed is like, Oh yeah, like I love collecting things too. Yeah, I had a bug collection. And I and and uh and I've had this idea of of um you know, I love tinkering with stuff and like one of the things I'd always wanted to build is is uh a product that would let you collect stuff.

27:16 things online and save them and organize them. And they start riffing, you know, and eventually Ben's like, Man, like we're really we're really in sync. You should come join me and Paul at Cul at Coldbrew and and like work on what we're working on on Totem, like maybe we can maybe we can move the product in this direction. Evan though, you know, he's still in grad school and and he's super passionate about architecture and design. And he does want to work in tech. He wants to be a product designer, but he's not super interested in uh really early stage startup that uh doesn't have a lot of great prospects. Um so uh in fact what he's interested in and I don't know if he already had this lined up, but when he graduates from architecture school, he goes and he works at Facebook as a product designer. But he's like you know.

27:57 Uh I like you guys. Uh I I don't think I want to do this full time and drop out of school, but um but I'll work with you on the side. And and I w if he didn't have the job at Facebook yet, I imagine this helps him in his interview process that he's working on the side with uh with a startup that would become Pinterest. So they they all start working together. And there was, you know, along the same vein, Tote did have this feature that they already had in there. that let people save items for later. Yeah.

28:26 And the very few people who were using Tote. They all seem to be using that. And as when they talk to users, they seem to kinda like it. You know when it makes sense, uh I was talking with um uh with my wife Jenny about, you know, what she uses Pinterest for these days and likes it and the analogy that she said to me. Is you know, Pinterest is like the online version of when you're reading a magazine and you see something interesting and you tear the page out or you fold the page down to save it for later. And uh that's literally what was happening in Tote. And um so they decide to focus on that and and build out this feature a little more, and they combine it with, you know, sort of this broader idea, like, okay, let's get beyond just

29:02 shopping in catalogs, but kind of organizing everything that you come across on the internet. So Evan designs it in his free time and he comes up with probably the most important unlock that really makes this happen from a product standpoint. He comes up with the grid layout. Now it's it doesn't seem all that remarkable. You go to Pinterest and and everything is laid out in a grid of of images. But at the time this was this was really novel. Um the idea of laying out all these images in a grid in front of you. But there were there were a couple It was it was liquid and and adaptable. So depending on the sizes of the images, the grid would readapt uh and make the images all look good instead of resize to fit in like this very specific size squares. The other thing that they did and I I don't know if this was intentional or not, but

29:53 The grid was oriented around vertical photos, not Horizontal phone. Oh, interesting. To allow us for more more of them to to be across the screen at once. Yeah, I imagine that's why they did it. And and at the time. The first version of this of Pinterest was only on the web, not on mobile, and and it even despite Tot being, you know, uh coming out of Cult Brews to build uh labs to build mobile apps, they said this product needs to live on the web, wouldn't even come to mobile until twenty eleven. But then when it did, this vertical

30:25 image prioritization was perfect for mobile. I remember back at this time When Pinterest shocked the world with what is canonically the Pinterest layout, there were so many little clones. Like like everybody tried to add a Pinterest style view to their product, or you'd see on Hacker News, Oh, Pinterest for X, and Pinterest meant that fluid layout. That was a sort of the board that was laid out in the the you know, adaptable, fluid way to lay out images. There's sort of an interesting Mm metatopic here that

30:58 Products get shaped using the technology available and what is easy using that technology. And so it makes sense that on the web for the longest time, um, what we saw were tables and what we saw were, you know, sort of articles that had inline images and It's not an obvious and easy thing to do in early HTML and CSS to lay something out in this way and particularly to do infinite scroll and a lot of the things that we come to expect knowing that these layouts exist now. And it's it's fascinating to think whenever you're designing a protocol or a platform or a a core technology that you're really shaping the you know, first five years or whatever, the first um several set of use cases of what people actually do with it.

31:39 Evan, he's a architecture grad student in New York who designs this, uh, and would go on to be one of the most influential, you know internet and mobile UI paradigms, you know, the last ten years. Super cool. Uh So they have this, they're they're pretty excited about this new version of the product. It's now November two thousand nine.

32:01 Thanksgiving. And and over Thanksgiving, uh Ben and Divya are at Thanksgiving. There watching TV Ben had been you know trying to think about what are we gonna call this new product'cause Tote doesn't make sense anymore. And of course talking with Divya about it. They're watching TV, I assume at least most US listeners are gonna remember

32:20 The commercials that were all the rage at the time. The Dosecis commercials with the most interesting man in the world. Yeah, that those are commercials were so great. How is this related, David? Where are we going? It's really it's related because they're watching TV. A most interest a Dosaki's commercial with the most interesting man in the world comes on. And Divya's like, That's it? That's the name for the company. Pinterest.'Cause they were talking about pinboards and the interesting man in the world. And that's when inspiration strikes. And that's where Pinterest is born.

32:52 Wow. Yeah. So I don't know what the moral of the story is there. Like spend more time Watching T V with your loved ones.

33:02 Spend more time with your loved ones feels like a great lesson to take away from any of this. Yeah. All right, listeners, now is a great time to tell you about a longtime friend of the show, Vanta. AI has scrambled the whole security picture. It used to be that you proved that you were secure once a year on audit or a static PDF, then everyone would nod and you're done. But in an AI first world, that doesn't hold up anymore.

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34:54 So Great, they've got a name for the product. They got this super innovative grid UI, they're ready to ship. January two thousand ten. They launched They email all their friends in Palo Alto, everybody that they know from Google, and Divis Friends at Facebook, and uh and and Evan, of course, is you know going to Facebook at this time.

35:13 And nobody uses it. Everybody's like, What is this for? What are we supposed to do with this? What's what's interesting to me too about this point in the story is It's not like They had done an exercise and said, okay, who's our core target user? What is our ideal customer profile? You know, we all know today Pinterest is I I believe it's like two thirds used by women and They didn't come up with it and say

35:38 Okay, w what product can we build for moms? You know, it was very much Here's a thing that is very agnostic to who's using it and what they're using it for, and let's just see. Uh, I'm sure you'll get into this, but like how how did they find that the right use case and who the real target user was? Yeah, well so uh Before that happens though, they're they're trying to do everything they can to get their friends to use it, to you know, do growth hacking, you know, which is all the raids of the day. So what they do the what they think is gonna be really cool, they uh they go to the Apple store. Ben goes to the Apple store in Palo Alto. I don't know if he does this every day or just for a couple days and just pull it up on all the computers. Yeah, he goes to the he goes to all the computers and he changes the home screen to Pinterest on all the computers in Palo Alto. Uh has precisely zero impact. They um they apply it a tech honey to disrupt

36:30 And they get rejected. Um didn't they like pull some strings to like get in somehow? I guess uh first mark was a sponsor, uh and uh they pull some strings and they get them like a booth at TechCrunch disrupt, but they're not part of you know the battlefield. Like it's the things are things are bad. Everybody's pretty down. But There is a ray of hope. And then some of the people that they've been trying to get to use it, they were literally anyone they know were Ben's friends back in Des Moines, uh that he'd grown up with. And these people were like so far from Palo Alto.

37:00 techies. But they seem to like it. And the other thing they had going for them back in Des Moines was Ben's Parents and Ben's mom, you know, they're still ophthalmologists in in Des Moines. They have all these patients, and Ben's mom just starts telling All of her patients to use Pinterest. No, uh his Cousin, I think. Yeah, because um I message another apps were banned, messaging apps were banned. Yeah. So great. But they all had their iPads. This is like The Pinterest equivalent. So they start seeing this and like ah

37:41 Okay, interesting. I I'm not sure if this was related or not, but on a whim. Um Ben goes to a conference in Salt Lake City uh that that January called the Alt Summit, which is a big women focused design and blogging conference. I think a friend had suggested that he should go there. Uh, but I don't think he had really that much intention of, oh, this could be this could be the promised land of our user base. He goes there, he's talking to everybody about Pinterest, gets a bunch of people signed up, and they start using it. And then on the flight back from Salt Lake City to San Francisco, uh well at the conference, he meet he meets a woman named Victoria Smith.

38:19 who's a blogger who lives in in San Francisco. She has a a blog called SF Girl by the Bay. She's actually moved to LA now, which is of course breaks the hearts of you know all San Francisco people. But uh at the time she lived in San Francisco. And so they kinda hit it off and they're on the flight back and uh they decide like hey Let's do a collaboration together. So Pinterest is gonna gonna work with SF Girl by the Bay, and we're gonna do this thing called Pin It Forward, where Uh Victoria will create a pinboard with All the things that mean quote unquote mean home to her, things that inspire her of home and And then

38:53 They're gonna tag another blogger. And Ask the next blogger to do create a board doing the same thing for them and then just kind of pass it around through all the bloggers that are in this network and have been at the Alt Summit. And uh They do. Sounds like a growth hack.

39:09 It sounds like a growth hack. The bloggers get really into it and they of course all have their like you know, small but rabid fan bases of their blogs. Their audiences love it. They start using Pinterest. Lo and behold, things start to turn around and and and the company starts to work. And so this is a total aside. This is like this is twenty ten. A couple of years later, twenty twelve. Pinterest is now a hot startup in the valley. I'm starting business school at GSP at Stanford.

39:37 And uh in my electronic business class, we had this great professor Heim Mendelssohn. He's like a name for our class. I know. Electronic business. He's a like an old school guy. This is a holdover. But he's super smart. And he made us in like the first week in class Uh do the same thing on Pinterest. And I never understood why he had us do this random assignment on Pinterest. And now I know. This is what exercises. Yeah, the pin it forward exercise. But he didn't tell the pin it forward exercise. It was just like Oh, all you guys like Go create a pin go create a Pinterest board of your hometowns and what like home means to you. And only now, years later, do I see where I get the idea for it. It's it's interesting thinking too about why it made so much sense for bloggers, because for them

40:22 whether it was part of their own process as a tool So y you can imagine it it's kind of difficult to go and collect good links and good images and put them somewhere if you're trying to go look at a hundred different websites and then write a blog post about sort of a synthesis of all this stuff. So it's both an interesting tool there, but then also it's probably the best way to showcase At that time. a set of things that you want your your fans or followers to go and look at much better than, you know, making a separate WordPress blog post for each thing that you want to show off. Totally. There's there's a great talk. Ben goes back to the Alt Summit in twenty twelve. Uh

40:58 And that's where he has the uh the s the slide that has the There might be something going on in California uh in that talk. Uh but one of the questions from the audience is this woman who says interest is uh something like the best thing that has happened to My business and my following and the worst thing that has happened to my actual blog because I now do everything on Pinterest. Like it's just so much it's so much a uh better vehicle for if you're, you know, a design blog and you're sharing ideas and uh products that you find with people to use a service like Pinterest than it is to use a blog. The site starts growing About between forty to fifty percent month over month.

41:36 At that point. Uh it's still really small. But it really starts taking off and and it sustains that growth rate for Years. And I mean that's that's a magic number for startups. If you're growing ten percent week over week or sort of that forty, fifty percent range month over month, I mean, that is you are a high growth startup, and that is uh uh that is how you know you're onto something. Yeah. All these angel investors that two years ago would would barely even take a meeting with Ben, uh, they start to notice that something's going on there. So in in May of that year, uh Shauna Fisher, who was the head of MA at IAC, she had started using Pinterest, probably heard about it from a blog and she loved it.

42:14 She email them and she's like, Hey guys, I want to invest and they their minds are blown. Catch me up, what what year is this? Is this after they were out of private beta? They're still in private beta. And they would be in private beta for the next two years. So you had to you had invites and you could invite your friends. Um so the site is still growing like crazy, but and a lot of the invites were distributed via these blogs. Ah, interesting. So Shana invests and then she introduces Kevin Hart, who's the CEO of Eventbrite, co-foundered CEO of Eventbrite with his wife Julia at that point, uh, and also a prolific angel investor in Airbnb and others. Uh he invests, friend of the show, Scott Belski invests. Uh, and there's like serious momentum behind this company. This is a fun aside, but also part of the story. July, a couple months later, they do the first

43:00 real life Pinterest meetup uh with Victoria with the SF Girl by Bay uh by Bay uh vlog at a store in Noe Valley called Rare Device, uh which is now moving to Hayes Valley, but is like right down the street from from where Jenny and I live now in Noe Valley. Too funny. Uh that's the first physical Pinterest meetup And then goes to the And all these people come out. It's not it's not like a huge amount of people, but they're all like so engaged and they love the product so much. And they're talking about how all the things that each other is pinning on about their homes and about everything else on on Pinterest is inspiring them to go do these projects and they're supporting each other and working with each other on these projects. And Ben is like, this is it. We have figured out What Pinterest is, who it's for.

43:44 And we're gonna double down on this. And at this point, Ben Ben is doing things like giving out his personal phone number, giving out his address, saying like, hey, please reach out to me any time you have any any feedback, or he really started doubling down on building this sort of um a wildly intimate relationship with the Pinterest users around this time. Yeah, and meetups start happening all over the country. And so at this time, this is this is great. Remember Divya was the first HR person, uh Ben's wife now, uh I don't think they're married yet, but a girlfriend seemed to be wife Divya was the first HR person at Facebook. Ben uh is so inspired about how fast they have to move here. He copies he gets a poster of um Facebook's Move Fast and Break Things motto. And he makes that the Pinterest motto. And then redesigns it. They redesign it in Pinterest font and and you know red lettering. And they post it all over the office. So the opposite of Pinterest's like actual mantra as a company just years and years after that.

44:42 Yep, but in the in these these very early days, this is when he realizes Okay, we got here. We gotta move fast. So they've just raised this angel round, they keep growing, and then the next Spring. They end up raising a ten million dollar, which was series A from led by Bessemer, which was a very large series A for the time. Which which closed in May. I wanna I want listeners to pay attention to the timeline here. This round closed in in May. Just to continue tracking the share price here, that's at seventeen cents a share.

45:11 Yeah, seventeen such a share. Wow. And what was interesting about so Sarah Tavell, who's now who's a great investor and now a GP at Benchmark, she was an associate at Bestemer at the time. And she had heard about uh about Pinterest. And she had found them and she had lobbied the firm to do it. And Jeremy Levine, the partner who ended up leading the deal, he was coming out to

45:33 San Francisco one day for to meet with a total uh he writes a blog post to me with Minted, another company. And she'd convinced him, like, hey, we gotta go down to Palo Alto, we gotta meet with these Pinterest guys. And Jeremy had like ten minutes before his flight. He was like, Okay, fine, I'll go go down. And then ends up canceling his flight stay and they and they Do the deal, but it was totally sort of. It was supposed to be a longer meeting and then there was traffic'cause it was raining or something, and by the time he got down there there was only ten minutes for the meeting. Um, and then of course it's interesting enough that you just skip your flight. Yeah. But yeah, like I I I think we should put a stake in the ground right here and say, just let's notice a trend of amazing women doing things like naming the company. Like Pounding the table to make the investment.

46:18 Um, I I think S Sarah should get a huge amount of credit for this f spotting it super early. Exactly. You know, it's it's Divi U comes up with the name. It's Victoria Smith and the Alt Summit that uh which is all women focused bloggers and designers that come, you know lands the the product market fit for the company. It was it was Shauna at IAC who was the first, you know, elite angel investor to recognize the potential of the company and want to invest. Uh and then it was Sarah who found them and and led to and pounded the table to do the series A. At the same time, uh this is super fun. So S V Angel Yeah.

46:52 They had passed on the company during the angel round. Ben and I a great friend of ours, uh Leslie Kincaid, was working at SP Angel at the time, uh here in Silicon Valley. And uh Kevin Carter, who was also there at SP Angel, he was like Man, I think we might have missed this during the angel round that had happened uh with uh with Scott and and and Kevin and Shauna uh the past summer. And and maybe we should like see you know, we don't really do series A, but like We might want to really try and take another look here. And so uh Leslie and Kevin.

47:25 lobbied within the firm that S V Angel that hey we've made a mistake. We should try and push our way into this round too. Kevin specifically was like, Leslie, what do you like, what do you think? This is a a female focus site, or at least that seems to be the user base. So Leslie pulls together a focus group of of three women, I think at the firm And basically went back to him and said, Yeah, I know we pass, but there's there's no way we can miss this. So S V Angel ends up coming in to this series A as well. And then This is so great. Both Sarah And Leslie. Sarah leaves Bessemer, Leslie leaves SP Angel, go and join the company as early employees. And uh and we have to give

48:03 Shout out to Leslie too. She's helped us with a bunch of these stories and research here. And um she's now she now runs um the office and his and his chief of staff to the CTO at Convoy up in Seattle, which is another great company that will be an acquired episode sometime. Yeah. Thank you, Leslie. Thank you for the stories that are to come in this episode. And listeners, you can find links to uh uh some some cool posts from Leslie's Instagram over the years, uh from ten employees onward at uh at Pinterest. Yeah, it's super fun. Go look at these these pictures that Leslie has, uh documenting all this'cause uh this I think this is the first time we've had like actual visual accompaniments to the stories that we tell here. Across three different offices and yeah. Yeah. Super fun. So

48:45 We're now in July of twenty eleven. They hit a million users. Remember, it's still not open to the public. You still have to have an invite to join. in August of twenty eleven, they're n listed as one of Time Magazine's fifty best websites. Which actually meant something back then. Now probably less relevant. Uh remember, the it was May when the series A got done. We're still in August. And

49:09 Andrews and Horowitz. uh spearheaded by Connie Chan, who was on the deal team at the time there. had gotten wind of all this great stuff that was going on. At Pinterest. And they come in.

49:20 Jeff Jordan and Connie come in uh and lead the series B just a few months later in the company, there is twenty seven million dollars at a two hundred million dollar valuation. Yeah, for those keeping track at home, share price is now up to seventy two cents. And in that time from May to August, the valuation goes from forty million to two hundred million. This is what happens when you hit that exponential growth curve. So they now have tons of resources. A couple months later though, in April twenty twelve, A transition happens and this is uh it really was at this point. A long time coming and probably had

49:54 de facto already happened, if not officially then Silverman, finally. becomes the actual CEO of Pinterest in April twenty twelve. Paul leaves the company very amicably, ends up doing a few things, and he is now actually the chairman of a electric, uh yeah, an E V Tel company, a vertical takeoff and landing flying cars company, yeah, called Joby Aviation. Oh, that's awesome. Yeah.

50:18 Super fun. Uh it's a it's an L P show prediction for the uh what was our from our twenty nineteen predictions. Yeah, UV Tall. becomes a thing. That's bringing the the the growth just continues on a tear. So the twenty twelve presidential campaign is in high gear at this point in time. Uh and Obama's running for his second term and uh Mitt Romney's running against him. And both actually first Ann Romney met Romney's wife and then Michelle Obama joined Pinterest and on the campaign trail start, you know, building pinboards of their life and inspiration, and it is huge for huge for the company. In

50:56 May. So we're now one year from when the series A Had happened. uh the Bessemer and S B Angel Series A we're now in May of twenty twelve. Rakuten, the Japanese e commerce company comes in, leads a hundred million dollar investment in Pinterest at a one point five billion dollar valuation. Man, think about when you're raising money for a company and you're like you're selling twenty to thirty percent of it.

51:20 the leverage that they had to have at that point to say sure we'll accept a hundred million dollars, but It's gonna be on the company. Yeah. Wild. You know, when Leslie had joined, she had joined in November of twenty eleven, so just a few months before, she was the tenth employee. So there were only like ten people at the company. Is this a good time to talk about the really forward looking investment in general administrative uh creating infrastructure. Okay. So listeners, one thing that

51:50 If you remember one thing from this episode to take away it's Pinterest thought so far ahead on a lot of things that most companies say, ah, we'll think about that later. Think finance, think HR, think people ops, think workplace, uh, think culture. it it was amazing starting really at the you know uh very early on um from the company that Ben wanted to build and and also, you know, in bringing Leslie in an employee tenant really starting to invest ahead of their growth. Rather than You know, a shi a shift's burning down and you're trying to patch it while it's on fire.

52:28 The story. of Pinterest and the history of Pinterest diverges from a lot of your typical kind of Silicon Valley hypergrowth company. They they just they'd done the A, then they'd had this crazy growth. They done the B a couple months later. And like Your average Silicon Valley company at this point would have been like, Great, let's pour all this money into growth and like go, go, go. And to Pinterest and and Ben's credit, I think in the long term, uh, but this really impacted the trajectory of the company. They said, now is the time To pause.

52:56 and build the foundation to support this hyper growth that we know we're gonna go through. So yeah, they brought in Leslie as site operations manager. They got really serious about hiring executives, and they start bringing over again, remember Divya is head of A was the first HR person at Facebook. They start bringing over some great, great, great people from Facebook, uh to come in and build out all the infrastructure around the company. So a guy named Tim Kendall comes over and Tim had been an early Amazon guy and then had joined Facebook also very early, was head of all monetization within Facebook. He joins Pinterest in March twenty twelve, first running product. He then eventually runs product engineering and all of builds the whole ads business for the company. He becomes president of the company. They bring over Barry Schnitt, who was running marketing and communications at Facebook. He comes and joins Pinterest. Uh Don Fall, who is running operations at Facebook, comes and does the same at Pinterest. And

53:54 Really a whole suite of and I remember I've lots of friends who also were at Facebook and moved over to Pinterest at this point in time. And they start really building out. a lot of the senior management and functions to scale up the company. And all these people end up staying a really long time. Uh so Tim is now CEO of a company called Moment. Uh, but he stayed about six years uh and built out all of these things at uh at Pinterest. The other thing that they start really investing in and playing to their strengths is women engineers and women on the engineering team. And this becomes a huge ass. I mean, this is Well ahead of uh, you know, all of the all of the things we'll cover in the Uber episode. The philosophy was our our team across all functions should requ reflect our user base or, you know, trend much closer to that than most of the industry.

54:40 So they have a an early Pinterest engineer named Tracy Chow, uh, really becomes uh an absolute leader in recruiting for the company and diversity and uh in engineering and in Silicon Valley more broadly. Pinterest. Has way higher percentage of female engineers than your average Silicon Valley company. Um and it's a huge asset to that. It's interesting I was looking at it right before this. It was it hovers around twenty five, twenty six percent of their their engineering team right now. A fun story too around all this time. And right as Leslie was was

55:09 joining the company. So they had been in Palo Alto and their first office there, which you can go look at all our photos and their great early photos. They end up moving to San Francisco, and this was a huge moment at the time. I remember this, like'cause Palo Alto was still headquarters of Silicon Valley and where startups were. There were very few companies that were in the city and Pinterest moving up. from Palo Alto to S F was the start of Really the center of gravity.

55:35 shifting up to San Francisco. And it happened because Tim had just joined Tim Kendall and he had a friend who knew about they were looking for a big office space to support all this all this hiring they were gonna do. This is the chicken factory. Chicken factory. In Soma, in San Francisco, right next to the Caltrain station. Like perfect location. And uh and so they jumped on it and the Pinterest now the core of what's now the Pinterest campus right around the Caltrain station there. Started in an abandoned chicken factory.

56:10 They have it. So Through all this time though. And all these fun stories. There's no revenue. There's no business model. Like the product is seeing tons of usage and engagement and growth. Um but they're not making Any money, not a dollar of revenue.

56:24 And uh And they're even making noise about the fact that they're not. They're getting pressed for this, they're getting, you know, Ben Silverman's getting asked at conferences and his party line is we want to be really thought about this. We wanna have something like measured growth or thoughtful growth, and we wanna do monetization when we feel it is right for our our users. Which Mm. they towed for years after you would think they would start experimenting with monetization.

56:48 Which is true, and also fits their personality, but also they have a very traumatic experience with this, right? After the series B, but before Tim Kendall joins to come in and and ultimately build out. the ad and monetization platform, they we're seeing that One one of the things that started happening on Pinterest from the early days and especially coming from the blogging community.

57:10 Is people posted pins and And the pins were based on they put affiliate links in them. So when you click through the pins to the link, it would be an affiliate link to whatever the retailer was that was selling the product. And then the bloggers or whoever posted the pin, they'd make a they'd make a cut on that transaction. And so Pinterest definitely saw that this was going on. They thought, well, this is pretty interesting. It was probably design as an experiment from the get-go, but they worked with a company callinks uh in early 2012.

57:39 And they Without warning, the pulled all of the affiliate links, rewrapped them with Skim Link powered Pinterest affiliate links and Pinterest took over all those affiliate links that were running through the site. It caused a huge uproar and to Pinterest Ben and Pinterest's credit, they they pull the plug on it immediately and they apologize. And actually later on in twenty fifteen, they would kick all affiliate links period off the platform and just ban them totally. Um but it was so powerful and demonstrated the monetization potential and and Pinterest

58:12 place in the commerce flow that for years afterwards they were still getting checks from like that week or two that they had affiliate links on. They were still getting affiliate checks. And it was like A very powerful uh way to prove um the potential here. Um but then they bring they bring Tim on and they don't do anything, Ben, as you alluded to, for for the next two years uh around monetization after this. Twenty fourteen is when they started. Yep. It was mate. May twenty fourteen.

58:41 They launch promoted pins, and by this point in time they had built All the product and engineering and ad sales functions and organizations to do this right. Um They launch promoted pins. The first promoted pin is from Vineyard Vines, the uh the East Coast uh fashioner. It goes well. That's they they work just like we talked about with Emily White on the on the Instagram episode. They work with a few select uh partners uh to start. And then in December twenty fourteen, they open it up

59:10 To everyone. And it starts working. Really well. So much so that in March of twenty fifteen. There's so much hype around the company.

59:20 They were about to hit a hundred million users. They've just launched this advertising platform promoted pince that's going well. There is at an eleven billion dollar valuation. uh going from they had raised a few times its successively higher valuations from the one point five uh earlier Uh, but this is a massive jump up. This is a pretty firm commitment to we're gonna be a public company. It's really hard when you raise money at higher than a ten, ten billion dollar valuation to say, you know, we're

59:48 Well, an acquisition track of some sort. Not just a public company, but like this is the next Facebook. Uh you know, there are all these people that have come over, great people from Facebook. There's all this potential. The ad platform is working super well. User growth is going great. You know, think about this. eleven billion dollar valuation March of twenty fifteen. And uh we'll get into the IPO just now. So that's been four years. Yeah. Four years since an eleven billion dollar valuation. So things do continue to go well. However.

1:00:17 User growth at this point. Right after this, basically, flat lines. And they had just hit a hundred million users. But as we've been alluding to They have start having a huge problem. They've saturated uh most of their core target market in the US, they do eventually start going internationally back in in starting in twenty sixteen, twenty seventeen, and that reignites growth. But

1:00:38 They just can't get men to use the product. Um and is still a big issue to this day. Yeah. So today in the US. So they they're up to what, two hundred and fifty million users. Um but globally, but in the US here it's eighty two million. Um, if you go and you look three years ago in Q one of twenty sixteen, that was sixty five million users in the US. So when you look at their

1:01:07 very nice user growth, albeit not monetization growth internationally, and compared to the United States, international looks like, oh great, a high growth company. US looks like, uh Okay, it's been pretty flat for a while. When they did that big fundraise. The vision, like we were saying, was this is gonna be the next Facebook. Um, and I think what happens over the next couple of years is uh

1:01:29 They realize the market realizes This is gonna be a great company, but has a very specific target market that is not every person in the world. A very specific target market and a very specific time and place for use rather than all day every day like Facebook. So that said though The monetization

1:01:46 engine starts really working. By twenty sixteen, two years after they launched it, they did three hundred million in revenue in 2016. 2017, that grows over fifty percent, they do 472 million in revenue. 2018, that grows hugely again, they do 755 million in revenue. Which is a serious amount, especially given the uh and speaks to the power of like they saw with the affiliate link test, the power of where they sit in the commerce flow, that even though they have a relatively smaller user base compared to other big social networks, There's incredible monetization potential here.

1:02:24 Yep. If you think on in like a Porter's five forces sense, um they they have a tremendous amount of power in this value chain from when the user sees something they're interested in into where Pinterest can sort of steer their attention and how they can derive monetization from doing that. they go into great detail in the S one, but this isn't just point of purchase. It's awareness, it's reminding people about the product, it's steering them to a purchase, and then it's actually executing the purchase. So it is sort of n all across the life cycle of you buying something. On the back of all this Just

1:02:57 last month in March of twenty nineteen. Two. Very big things. happen from the company. Two very big announcements. First.

1:03:07 Leslie Kilgore. Joins the board. Do you remember Leslie Kilgore, Ben? I do, and I was trying to remember from where, uh, so I went and and looked her up on LinkedIn. I thought it was something where I like uh may have known her personally or something like that, and then I looked up on LinkedIn and I was like, Oh, previous acquired episode. Yes. It's almost like we know her personally. The acquired superhero. Uh with the writing shotgun alongside Barry McCarthy from our Netflix two party, Leslie Kilgore. Who was the CMO on Netflix and

1:03:37 Now on the board at Netflix. Yeah, yeah, I think that's right. Um So she just joined the board of Pinterest, which is awesome. Love it when love it when the heroes and and not Carl I can come back into these stories. Um and then of course second on March twenty second. Pinterest files, publicly files, it's S one to go public. And then over the next week and a half, as we covered on the Lift IPO episode. The Lift IPO happens. We'll talk about that in a minute during narratives. Um but when Pinterest sets the range for its IPO on April eighth, this is after the dip in trading from Lift, they set it at fifteen to seventeen dollars

1:04:17 For share. which equates to about a a range of eight and a half to eleven billion dollar valuation below the last private round, which they had done another private round in twenty seventeen that valued the company at twelve point three billion. So this is Pricing below. It is. And and listeners like

1:04:35 They've done a series D, series E, F, G A G one or something like that. And then they stop counting the letters, but there's six rounds that are in this sort of two hundred million, three hundred million dollar range of amount of money that they're they're raising. They had that rapid acceleration in uh valuation and then continue to raise sort of hundreds of millions of dollars over and over again somewhere around that price point for a while.

1:05:03 As the user growth, especially domestically, was was flatlining. So them on This past Wednesday, April seventeenth. They price the IBO at$19 a share above the range, uh, and then equates to a twelve point six billion dollar market cap, very slightly above the last private valuation.

1:05:22 And then on Thursday. The start trading and uh they pop up twenty eight percent. close at twenty four dollars and forty cents a share or a sixteen billion dollar market cap. So A nice you know, nicely above the last private round, but still not uh

1:05:37 Not a ten X here. The share price is now above where every shareholder bought. So You know, we've only had one day of trading and uh I think We can discuss this, but we saw sort of what happened with uh with Lift in the couple of weeks after they they started trading. But from what we know so far it looks like the strategy of pricing modestly and and being below the the last round and then uh uh letting the the pop sort of happen in the market, uh has worked. Yeah, as opposed to lift, which we saw.

1:06:04 increased its range during the road show several times. Then priced above the road show. Then popped big time on the first day, and then of course has been Down since then. So if there's one thing we should probably learn for ourselves on acquired is it's very likely we'll see a pop on the first day no matter what, and then it's, you know, in the weeks and months that follow that we should really be paying attention. Yeah, yeah. So Uh, you know, I think we and everybody were very excited, uh, and still are very excited about Lyft and their IPO, but uh there was a lot of euphoria that has been tampered.

1:06:35 Over the last several weeks. All right listeners. Now is a great time to thank our longtime friend of the show, ServiceNow. If you are running a large enterprise, AI agents are likely spread across every team, and deploying them is uh no longer the hard part. Yeah. The hard part is knowing what permissions they have, what employees are using them for, or what decisions AI is making.

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1:08:13 Who's managing them all? So if you're trying to turn AI ambition into real business outcomes and make it work safely, securely, at scale. Go check out service now dot com slash acquired and tell them that Ben and David sent you. So let's go into to narratives here. So listeners, what we decided to do in these IPO episodes is um walk through what the bulls are saying and what the bears are saying. And that way as we get into kind of our discussion, we can kind of have a baseline representation of of both sides.

1:08:41 On the bull case I think their growth rate relative to their comps of Twitter and Snap is really encouraging. they're growing much faster than than Snap or Twitter to put some some numbers behind that. Pinterest grew its user base twenty three percent last year. Twitter and Snap saw user numbers decline.

1:09:01 And so when you think about sort of this this tier of uh of ad based You know, Internet. Social. I think we can leave social out for for Pinterest, but social ish business models. Platforms. Platforms. Yes. Add based platforms. Yes. uh very interesting to compare there and and and very promising. The other thing is, and this is from a great financial summary on Seeking Alpha that we'll put in the in the show notes, if the growth rate for both revenue and expenses stays the same in twenty nineteen as it did in twenty eighteen, Pinterest will be profitable. They'll they'll earn pre tax sixty five million dollars because of the way that the

1:09:38 business is monetizing well and user base continues to grow, especially internationally, uh, more monetization domestically and then growth internationally, there's really going to be a business here. And and I think You gotta really whip out your discounted cash flow models to try and understand is it is it worth thirteen billion over some time frame. But contrasting this against other IPOs that we're seeing recently where there may not be profitability in sight, um, wouldn't shock me if it happened in the next year, eighteen months. Yeah. Well Pinterest is a Class case of the historic technology company business model of very high fixed costs.

1:10:13 that and basically zero variable costs that get leveraged uh over a large user base. And once that user base passes a point where the revenue from per user is is covering the fixed costs, everything above that is Basically pure margin. Uh now that is definitely not the case with uh marketplaces and especially real world marketplaces, as we uh saw with Lyft and we'll talk about soon with Uber. But doesn't mean they're bad businesses, but it's just a very different business structure. Right. Do you eat anything else in in bowls before we go into bears?

1:10:46 Um, you know, I think the the the bull case we we alluded to this earlier, but um You know, I think Pinterest actually does a really nice job. in the S one laying this out and and and Ben has the Silverman is always said this about it, that it is

1:11:03 Yeah w you were joking about Not a or is it a social network? Is it not a social network? You know, in the S one they say Pinterest is the productivity tool for planning your dreams. Dreaming and productivity may seem like polar opposites, but on Pinterest, inspiration enables action and dreams become reality. Visualizing the future helps bring it to the life. In this way, Pinterest is unique. Most consumer internet companies are either tools or media. Pinterest is not a pure media channel, nor is it a utility. It's a media rich utility that satisfies both an emotional and functional need, et cetera, we call it discovery. And I think that is perhaps one of the strongest bull cases here is that for product discovery, there is nothing quite like Pinterest in the funnel. You know, for Google, uh Google serves demand fulfillment.

1:11:48 Better than anything known to man. You know, Facebook also serves discovery, uh, to a certain extent, but I I think it's not quite in the same way or as effective at it as Pinterest is. Uh Pinterest is where you go to specifically look for something at Facebook, you're being shown products as you're looking at other things. The Facebook newsfeed is like the best ad format of all time, but it it can be a little disruptive, uh Yeah, it's like ads in a newspaper, whereas to bring it full circle. Pinterest is like browsing a catalog where you are intending to to get inspiration and then act on that inspiration.

1:12:24 Yep. So the biggest bear case, at least to me Is that they will not be the only ones to own this market for long. Uh we've seen Instagram before try to get into uh both commerce and a Pinterest style functionality of Discovery. Both of them have not gone well. Um their recent effort into commerce is much more serious and they've they've launched collections, which is gonna look a lot like Pinterest boards.

1:12:51 If Instagram can do to Pinterest what it did to Snapchat with stories, they'll be in big trouble. Uh but I think to flip back to Bull real quick, it's it's a reasonable argument to make that Interest actually fulfills a much different emotional need when you open that app uh than Instagram does.

1:13:10 And Instagram may not be able to offer the same solution to that job to be done of getting inspired and collecting things. in its format, uh th that that Pinterest has been able to do by really solidifying its brand and this is what you go to Pinterest for. Yeah, I mean totally to uh having gone and watched, you know, uh all these talks by by Ben Silverman over the last few years, to his total credit, you know, he's been if you were to listen to the narratives leading up to the IPO, He and Pinterest are talking about how Pinch's goal is not to get you to spend more time online, it's to inspire you to do

1:13:46 projects offline and take action in the real world. That sounds like a soundbite he came up with to market Pinterest in reaction to everything that's happened with Facebook and Instagram and the rest of the internet over the last, you know, twenty four months. Uh that's not true. He's been saying that since twenty twelve. Um and uh Pinterest has always been about that. And so Yes, the the potential mitigation to that to Instagram is like Instagram's cultural DNA and Facebook's business model is about The attention suck. And that is not the culture n neither the cultural DNA nor the business model of Pinterest. The biggest reason to be a bear here isn't that it's not going to be a good business or they're not going to be able to maintain the size of the business, unless, of course, you think that Instagram's going to come and eat all their lunch. Um, it's that it frankly, it's just the smallest of these these online ad platform companies. And when disruptive markets are created, the

1:14:37 biggest opportunities tend to get filled first, and then the smallest one the smaller ones tend to get filled over time. So, you know, when we saw Um, let's take marketplace businesses, for example, uh in the sharing economy. If you look at what people spend in GDP, it they spend on their house, they spend on transportation, then they spend on food. And you look at sort of Airbnb, and then you look at Uber and Lyft, and then you look at DoorDash and DoorDash and Instacart and you know when you see a new paradigm like online advertising. You know, you see the biggest ones that are are taken are intent based search, and then there's uh, you know, w what we didn't realize was gonna be such a big market, but social media advertising. And then there's this new thing that is uh, you know, I guess discovery based or inspiration based or curation based advertising, which is just smaller. Like it's just not a bigger thing. I was gonna wait to make this point in in grading, but since we're already here, I I wanna make the point that

1:15:34 When I first started researching I was thinking there's basically Two distinct online advertising markets. They're social based and they're search based. But Pinterest is really somewhere between there with the curation and discovery based, and I think

1:15:52 now I'm thinking about it more of a more as a spectrum and I think if you think about it as sort of a smiling curve where there's way more value creation if you go pure search or pure social. There's there's less in the middle because frankly, you're not spending as much time there and you're not doing mission critical things there as much as you are do during during search. Um But You know, s it's it's still a a super sticky product, a super useful product, and a a product that monetizes well. It's just not one of the other two. Yeah. Well I think uh this is

1:16:23 Building off kinda the the end of history and facts here where we alluded to this. I'm not sure that it's not that the value is I think there's a ton of value in Pinterest and what they Offer to advertisers in this Discovery. And it works incredibly well and is very unique. The the the problem though is is just the product itself, the consumer product, uh is a niche product, a very large niche. Um, but uh you know, we alluded to it in history and facts.

1:16:52 Uh there are what eighty six million ish uh uh MAUs in the US and a very, very, very high percentage of them are women and men, um f despite years of trying on Petrus' part, just don't use the product in nearly as h high a percentage. They've tried to fix it. I just don't know that it's fixable with what the product is. So thus it's just a smaller market. Everyone is aware that they need to search for stuff and a a third of those or a quarter of those people are aware that they need to be inspired and and curate stuff based on what inspires them.

1:17:28 Yep. Hard to know if it is specifically men or women or that's just the way the psychological profile of users of Pinterest tend to fall out. Um but There is a huge segment, uh segments of of the population, at least domestically, that

1:17:45 Despite years of knowing about Pinterest, trying to use it, just really isn't gonna become engaged and use it in the same way as the other segments. So you know, I mean I think when you really think about it. Maybe this is the way to think about it with with Pinterest. The market for the core Pinterest product is the same market as lifestyle magazines. And if you think about what is the life the market for lifestyle magazines, there it tends to skew heavily towards women, design magazines, home magazines, uh fashion magazines. There certainly are men that that read lifestyle magazines

1:18:16 But just at a much smaller degree. And that is the market. That is where there is core fit with the Pinterest product. And I think it's had and probably will continue to have a very hard time expanding outside of that. Alright, so that's our bear case. Let's talk how did the IPO go. So Despite my pure burning hatred for this term undercorn That's a terrible, terrible term. They uh they effectively had a down round IPO.

1:18:44 And let's talk about sort of flat round. Flat round IP. Well, yes. Um w uh Yeah. Okay. Okay. So This has happened before, and we covered it well on the square episode where It was so significant of a down round at the IPO that it actually took, what, d a year or more to to climb back up to their last private valuation price. And so, you know, you saw people who uh had stock options at a strike price

1:19:18 before the the IPO where then they actually had to wait years and years for that to recover from being underwater. So they actually had a a compensation issue across the board at the company, that's not at all the case with Pinterest. Basically, you know, everyone is in the clear now. Now, of course, if you Looking and see that people bought shares at an eleven billion dollar valuation four years ago and it's at thirteen now, you know, that's not a a a phenomenal return, uh l like it is for any of these early investors, but I'm not sure that they could have done anything better. And I think it was probably smart of them to not try to make this an up round for vanity purposes.

1:19:59 They obviously saw what happened with the aftermath of the lift IPO and uh the they swung the pendulum hard the other way in being conservative here. It's interesting to know that We have another data point here of the uh public markets

1:20:14 valuing companies within range of where the private markets have been. And I think like there was a lot of fear coming into this wave of IPOs that those two things were going to be dramatically, dramatically different. It it doesn't feel like they are. No. Feels like they were they've been At the very least priced appropriately in the private markets, maybe appropriately a couple of years ahead of the curve, but uh not completely mispriced. So I do think that's actually a great segue into what would have happened otherwise in talking about

1:20:42 So why did they go public? Could they have not gone public? Could they have done a direct listing? One thing uh that I found really interesting was that they actually have six hundred million dollars of cash in the bank, and they've raised about a billion and a half over over time. their net operating loss right now after tax in twenty seventeen was one hundred and twenty six million was and last year was sixty three million. So you know they're trending toward profitability. They actually probably didn't need to raise any money in this IPO.

1:21:13 Yeah, this is really puzzling to me. And we were talking about this before the show. So by those numbers Even if they maintain the same burn rate, which they won't because they're trending to profitability, assuming revenue keeps growing, they have years of runway still in the bank. Why did they just raise all this money and dilute themselves? This seems like a Clear c case for me for doing a DPO. Yeah, David, y it does feel like they

1:21:38 totally could have done a direct offering here. And they've got cash in the bank. They're gonna get profitable. I do wonder They have Leslie Kilgore on their board, you know. Access to Barry McCarthy here. Yeah, and and you know, it's uh that went well enough that we're hearing rumors Slack is going to to do a direct listing here in the near future. And so There could be two things going on. One is they feel that their ability to raise cash right now is on really favorable terms, so it's great to get that cash into the company for an unknown purpose. The other is maybe they're gearing up for some some serious spend and they're gonna branch out into something that r requires a lot of new cash the same way that

1:22:17 Stitch fix used a lot of their cash from their IPO to actually start um retail brands that that are our first party brands. So um You know, I'm I'm not sure. Th this international expansion is interesting because it's growing really fast from a user perspective,'cause they actually started caring about that in in twenty sixteen, whereas they were very domestically focused until then, but um they're really not monetizing uh uh any significance internationally, so it could be to spend aggressively on um bringing advertisers into an an the their international funnel, but it's honestly a little puzzling. I agree as well.

1:22:52 This all would have had to be in the works long before the lift IPO, but You know, the only other reason I can think of is just to be conservative as well and Make sure things go well,'cause DPOs are still relatively unproven. Um, but again, if you don't need the cash, like Which to be clear, Lyft and and Uber need the cash. And we'll talk about that on the Uber episode. But if you don't need the cash, and companies have raised so much in the private markets. DPO really seems like the way to go. There's no lock up period. There's you're not diluting yourself. You're not selling more of the company.

1:23:25 Has a lot of advantages. I I'm You can tell I'm of the Barry McCarthy school of thought here. Yeah. Yeah. Well, you know, we've seen one DPO and here we are now asking uh like we're looking at every deal going, Why not why not DPO? Why not DPO? Why I mean look, they did the standard thing and they did it pretty well. And I think uh

1:23:43 It's not like just because Spotify did it. That's a thing that everyone feels like is a a uh one of two options they can pursue now. Yeah. Yet. Yet. Yeah. We'll see on Slack. Uh we Move to our newly retitled next section. Yes. So David, t tell us about this retitling.

1:24:01 Yeah, so okay, this is ordinarily where we would do Tech themes. Uh but Ben and I were texting the other day. And we love tech themes. It's one of our favorite parts of the show. But we realize that like It's actually something more than that, and Tech the Game's kinda sells it short. So we're gonna rename this section to Playbook. And what's actually really interesting here is

1:24:23 Not just what themes in tech this particular company's story reflects, but What are like the actionable things that we can learn from this story that we can all put in our playbooks, you know, as operators, as investors. And we think this will be really cool in a good way, in the spirit of Pinterest, to catalog all the things we're learning from this show over time. Uh So we're gonna this is gonna be our first experiment with Playbook.

1:24:49 Yep. Alright, so we focused on this one, but I just want to highlight it. What makes Pinterest different is a significant focus on building out infrastructure in the company ahead of growth in wild contrast to to other unicorn cousins. Yep. I worry a little bit that people will take the wrong lesson from the surface level facts here, and this is one of the reasons we do this show. You look at the way Pinterest has carried itself over the last 10 years, and then you you look at the way, say, Uber or Lyft have carried themselves, or Airbnb two.

1:25:21 And like There was definite craziness going on within those other companies. And their markets are so much bigger, and they will probably end up being bigger companies in the long run. The market is smaller. It's extremely well managed. And will be a smaller company in the long run, but I feel like much better managed.

1:25:38 Huh. The lesson is not don't manage your company well. The lesson is uh target big markets one and two. Manage your company well such that you have the highest probability of succeeding within them. Yeah. It's a it's a it's a great elaboration there.

1:25:55 Another point that I wanted to I think this is really more a point of discussion and David, we talked on the LP show about the downsides of being a tools business rather than a platform or a network or a marketplace. Um Pinterest is kind of a tools business in that it's much more about me and maybe a handful of other people I'm sharing a board with. Um

1:26:19 And it's much less about communicating with other people, seeing what other people are up to. Uh so it has I think less significant network effects. How how do you juxtapose it sort of being a tools business? But competing uh for the very same advertisers that these like strong, strong network effect businesses are competing for. Yes. Great. Okay. This is this is one of my entries in the playbook here. You could debate on the network effects aspect and certainly.

1:26:50 social network effects in the way that Facebook, Instagram, you know, et cetera have them Um Pinterest does not. But I think they do have a very strong flywheel. We should do a whole LP episode where we've talked about this where we just nerd out on like what we think the differences are between network effects and flywheels and whatnot. But the flywheel is Users add content and pins to the site. The more pins there are in the site, the more things there are that users, new users and existing users could get inspired by.

1:27:20 And then repin. And so there's a super strong flywheel where as people come on and they add content, that content drives more engagement from more users who add more content, which drives more users within the segment of people who find this whole thing attractive. Even if it's not a super strong uh network effect, you can still have a super strong flywheel. Yeah, like I don't care. I mean, well, maybe we should have an acquired pinboard. So in that case, I would care that you Ben are on the service, but i if we don't have a reason to collaborate, I don't care that like you or like any of my other friends are specifically around the service. But I care that a lot of other people are because then they're adding content. They care about the content. Right. Right. And like I I don't mean to say there's not network effects. I mean you could imagine a way worse version of Pinterest, which is you can't discover anything that anybody else uploaded, like there's not a business there. Um

1:28:08 Yeah, so it's a tool, but the back end of that personal tool is powered by the incredible amount of of data and work that everyone else on the platform has done. What I think a lesson there is like An interesting one of to maybe modify the

1:28:23 from our L P show uh you know, the lesson wasn't quite don't build tools, but it was like tools are limited, but if you can figure out how to make a tool that gets better for users as more people are on the service, sort of like Jake was talking about on with his coaching network's thesis at emergence, that can create a powerful flywheel. Yep. Do you have more? Nope, that's it.

1:28:43 Cool. I had a couple real quick. Um one, I was just struck in the history and facts, like and we talked about it. Two thousand eight and the recession and the Lehman Brothers collapse, like these massive Events that happen in the economy, uh and socially Can have

1:29:00 Like such opportunity, you know, even in like recessions like um Uh, Airbnb, and again we'll cover we've talked about this before and we'll cover it in depth on when we do an episode on them someday, like what enabled Airbnb was the recession and specifically the housing crisis. And same in a in a much less direct way, you know, led to the history that led to Pinterest, uh and led to the history that led to Lift. Whenever these big events happen, it's always a good idea to just pick your head up and say, hmm, okay. What is this gonna what retailing of the soil is this gonna enable now? Both as an investor and

1:29:37 Then I think this this story illustrates. It's just The power sometimes of just not stopping, you know, like Ben's story and and uh Tote and Coldbrew Labs and Pinterest and like doing the business plan competition, you know, it would have been so easy to just give it up, you know? Uh and not stopping doesn't mean banging your head against a wall with something that isn't working. It means not giving up on the idea of like building something, period. Like pivot what you're doing into something that's gonna work and listen to users and find product market fit. But just calling game over

1:30:10 means literally game over. Yeah, it's funny. It reminds me of a great quote. So Bo Lu, the CEO of Future Advisor. uh spoke at one of the first startup weekends that I organized like a decade ago or something and um I remember him saying The way to succeed is to just never admit failure. Like as long as you don't shut down, you haven't lost.

1:30:32 And that's not fully true. Like that's a good way to y th you can have a, you know, small business that doesn't grow at all and just keep going. But like it I think what you're saying is If what you're looking to do is big s build something big and impactful. as long as you don't give up and build in the direction of what what could catch, it's unlikely that you will do that for your entire life and and have something that never works, so just keep trying. And of course, I think it's that there's two versions of giving up and uh or or or failing. Uh one version of it is what we are doing is not working. We have failed at that. We are going to give up doing that.

1:31:11 That's great. Like when that's clearly the case, like you should do that and do that as soon as possible. But don't do the other version of giving up, which is saying and thus we are going to call game over and shut down the company and like go get jobs somewhere, you know? Uh as long as you still have the desire and the resources to keep going. Like Keep going. Yeah. And there's tremendous value in keeping a team together. You know, this is something I think that we realize at Pioneer Square Labs, the the twenty five of us that all sort of like systematically build companies over and over and over again is after you fail on a few things together, or maybe even succeed on a few things together, you know in your small group who's good at what.

1:31:52 you have norms and communication patterns and operations around how you work together and and you get way more efficient at building together. So if something didn't work Like keeping the team together and keeping your processes intact and and keeping your knowledge of Okay. what each other's competencies are is hugely valuable. And so I think for for anyone considering a pivot, I mean it's it's almost like

1:32:18 Yeah, you bring some baggage when you pivot, but you bring far more value from being a team that knows how to work together. Yeah, it's almost like The playbook is If you think you need to pivot, you you probably should have pivoted, you know, a month ago. Uh

1:32:33 But uh if you're thinking about Shutting down your company. And you still have a team you like and and you know Money in the bank or whatever resources you need to keep going, you should definitely not shut down your company. Yeah.

1:32:47 Alright, grading. So the way that we grade these IPOs is rather than issuing a grade, we discuss what uh a few years from now an A plus would look like versus, you know, say a C D or an F. David, I'll go first. I think an A plus looks like Cracking international monetization. I think this company can continue to grow to become a twenty, thirty billion dollar market cap company over time if they can figure out how to continue growth internationally and how to monetize internationally like they they do domestically. Um I don't think it's a crazy playbook to do that. But

1:33:24 I don't think there's a bigger success path than that. Yeah. It's funny, I was gonna say like the A plus to me is they take this The yeah, I think that's an A. That's like an A minus to A. The A plus is they take all this money they just raised in the IPO and they have some vision that they are keeping secret for now and Ben isn't telling anyone yet about how they're gonna expand the market here. And they use this these resources whether through acquisition or or investment internally to do that. That would be like

1:33:57 Yes, that takes them to you know multi hundred billion dollar market cap company. I think it's really hard. Like I have no idea what the episode would be. So um so I think that's hard. But yeah, so I uh otherwise I think the scenario you described is like super solid. A minus Ta. you know, there's a possibility that they won't be able to monetize internationally like they they can with the US. um or even that people start churning off of them because Instagram manages to launch something that that sort of leverages their really close relationship with users to get them to start using a Pinterest like experience. Um and you know, Facebook is a total shark at figuring out whether they have something there or not, uh and and rolling it out broadly. So

1:34:37 My F there would be if one, they can't monetize internationally, or two, uh uh they get their legs cut out by Facebook. You know, one thing that we didn't usually we find these things when we do our research. Um But for whatever reason we didn't this time. Is Do you think Facebook ever tried to buy Pinterest?

1:34:56 Or anybody else tried to buy Pinterest. So Facebook did not I not that I not that I found try to buy Pinterest. There actually was a story very early on in New York. Uh where yeah. Ben tried to encourage a magazine publisher to to buy them. Uh but the published thing. Yeah, it was like twenty ten or something. Yeah, yeah, yeah. So that doesn't count. But um Yeah, I don't know if that's because Nobody ever did try to buy Pinterest or their valuation grew so quickly, or just like the company's so quiet and introverted.

1:35:27 The stories never got told, but this is a a rarity in that there aren't stories like this out there. kind of interesting to think about could anyone buy them? Maybe Facebook. Yeah, I mean uh their valuation is, you know, they're a sixteen billion dollar market cap company. Of course somebody could buy them, Facebook could buy them, Amazon could buy them, um Yeah, w or I guess where would it make sense, yeah.

1:35:47 And also like culturally you know, I think Pinterest would be very attractive to Facebook right now for lots of reasons, but Could it work culturally within the company? Uh I think that'd be hard. Yeah. Well, I think Facebook needs to do something to change both public perception and retain employees, so it w it wouldn't strike me to see Facebook do something dramatic soon. And so the C minus D case.

1:36:14 I think is is that They have ful saturated monetization in the US. They can't monetize internationally. And this is a break even

1:36:25 Seven hundred million to a billion dollar revenue business going forward. Yeah, and frankly, like they just raised a bunch of cash, like The way that we grade these acquisitions is when you acquire this asset, are you able to do something interesting with it? You know, with this IPO, it's like they've just raised all this money. What are they gonna do with it? And so I think, you know, I'd I'd I'd like to see them um take a shot on goal with that.

1:36:53 Uh Alright, should we move on to car mouths? Yeah, let's do it. Um, mine is I've done this podcast before, but there was just an exceptional episode. Uh Invest Like the Best. It's a great podcast. So good. Really good interview show. Recently I had an episode with Eugene Way. And uh Eugene wrote this great blog post, Invisible Asymptotes, which shouldn't even call it an it's an it's an essay, it's a half novel. And Eugene is super brilliant and there's

1:37:19 five or six very interesting takeaways from um this invest like the best episode. My uh favorite of them is applying Blockchain theory. two social networks. So if you think about what makes a blockchain work, um there is proof of work and And then there is a reward for doing that work. And the reward is sort of synonymously the proof of work and a um has something as an intrinsic value thing, and that propagates out over a network. And I had never thought before to use that paradigm to apply it to a social network. And so when you do something like

1:37:54 post on Instagram, you're doing a proof of work. And You're putting up that picture. That picture has, you know, value and you get likes and follows uh in exchange for doing that work. And the people who are the most successful on that platform are the people who are able to work within the constraints of that social media to Basically, do the most interesting thing within those constraints, and a successful social network happens when

1:38:22 you are able to Create a format that where that proof of work is extremely variable. So the the breadth of skill is you can do really crappy things with it and you can also do amazing wonderful things with it. And also that the uh perception

1:38:39 is variable. And so it's uh not everybody agrees that that is the best picture um and and everybody can sort of have a different interpretation of what high quality is and a new social network can emerge when there is a tool set to do that proof of work, to make that profile, to do that image, whatever it is. that enables uh and of course I am Uh Eugene says it much more eloquently. Um I'm only even trying to follow along because of my respect for you and Eugene. Otherwise you would have lost me a blockchain. Sorry. Well anyway suffice to say, it's interesting fodder if you're thinking about how do new social paradigms emerge and what creates uh explosive growth social network and what doesn't. And I think the comparison to blockchain is a uh

1:39:29 Um a metaphor. It's an interesting framework, yeah. Yeah. Yeah. Uh so great. So great. Patrick does an awesome job with the Invest Like the Best podcast and uh Uh I love it. If if if you're an acquired listener who doesn't listen to that yet, um you definitely are gonna love it too. So add it to your your playlist. Okay, mine is well, first I wanna underscore Ben, your carve out on the lift IPO episode, uh, Bill Girley's talk about running down a dream and Finding and succeeding in a career you love. I did run, not walk to go watch it and it is so good. I sent it to so many friends. Like so great.

1:40:05 I just have so much respect for Bill and uh every dimension, but um So cool of him to like do this talk, go do it at his alma mater at UT. It's really inspiring, no matter where you are in your career. So I would definitely want to underscore if you haven't watched that yet, go watch it. But my my carve up for the week is uh similar somebody who has found a career uh that he loves and is succeeding at it. is Alex Rodriguez. A Rod. A Rod's interviews on ESPN and on YouTube are so good. Like I just love watching them. Whatever you think about Arod the baseball player, like A Rod the post career, you know uh

1:40:43 video and television journalist and interviewer is amazing. Like he's so smart. He's so dedicated to was so dedicated to his craft of playing baseball and hitting and now to being an interviewer and just like watching him nerd out with with other people who are also dedicated to their craft is is great. So every every interview is great. Uh one of my favorites is um his interview with uh Astros center fielder George Springer. Um so we'll link to that. He also has a great moment to Carlos Stanton at the Yankees and um but uh y you can't go wrong. Watch Search A Rad on YouTube. You'll you'll you'll enjoy yourself.

1:41:20 Thanks, David. All right listeners. Now is a great time to talk about one of our Favorite companies Statseg. Yes, there is a reason why the best product teams rely on Statsig, whether they are iterating on their core product features or shipping AI powered experiences at scale.

1:41:39 Yeah. In the crazy speed of today's AI world. Shipping fast is just table stakes now. It's basically trivial to build and deploy your app constantly. The real advantage is how quickly you learn what changes actually created value for customers and how fast you can use that signal to guide what you ship next. This is where StatsIG comes in. It brings experimentation, feature flags, and product analytics into one unified system so teams can ship safely, test rigorously, and directly link what they changed.

1:42:09 to how users actually behaved. So if you want to make learning your competitive advantage, whether you're building new AI experiences or just evolving your existing core product, go to statsig.com slash acquired to get started. Well, listeners, if you aren't subscribed and you like what you hear You should subscribe. We'll be gloriously covering all of the big upcoming IPOs, and if you want to go deeper on what it's like to build a startup, get interviews with expert operators and VCs, and explore some of my personal beliefs, and I know David's as well, you should become a limited partner. You can go to glow.fm slash acquired and Seriously, I promise you'll be overjoyed with how buttery smooth it is to get more acquired right here in your favorite podcast player, and as of today.

1:42:52 Everyone starts with a free seven day trial. And with that We will see you next time. Yeah.

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