The Pinterest IPO

Pinterest went public today!  

An IPO is a giant milestone for any company. I had the privilege of being CEO when OpenTable went public, in May 2009 — in the depths of the worst financial crisis since the Great Depression. Now, in some ways, things have come full circle: Pinterest was one of my first investments when I moved into venture capital, and its IPO is officially my first in my 8-year tenure as an investor.

Pinterest back then looked radically differently than your “typical” consumer-facing technology company, bucking stereotypes at every turn. Here are some of those key differences, from my perspective:

• The company was co-founded by an entrepreneur from Yale, Ben Silbermann, who had majored in Political Science — the only Political Science major turned founder I can remember seeing (us Political Science majors need to stick together!). Ben was then, and still is, the opposite of the archetypical startup founder/CEO who is often portrayed as confident (even brash), hard-driven, promotional. This CEO was not interested in the spotlight and was deeply thoughtful and very humble; completely counter to type, but just as quietly ambitious.
• Pinterest flew under the radar while it grew and developed, likely because of the demographics of its early users, who were primarily women and (early on) over-indexed on women who didn’t live on the coasts of the U.S. Many in the Valley were unaware of the company or its very impressive early growth trajectory.
• The product itself defied typecasting. Investors usually seek to categorize companies (think home sharing, or on-demand food delivery, or ride sharing) and then try to pick the company that will be the ultimate winner in their category. Pinterest presented itself as a “virtual pinboard”, and we weren’t aware of any other companies targeting this specific prize at the time. In other words, there was no category to dominate — there was the creation of a category wholesale.
• Pinterest’s design and user experience, under co-founder and chief creative officer Evan Sharp’s direction, was unlike anything else that we had seen on the Web at the time. The product was (and is still) at heart a set of pictures on the screen. But instead of having the pictures live in a fixed grid, they were set free to float on the page and utilize whatever space they needed based on their unique shapes. This simple design tweak was — and is — mesmerizing, setting a new bar for software design. The design encouraged collecting as a core user behavior, with Pinterest users putting great effort into carefully curating their visual collections.

So what attracted us to Pinterest back in 2011? My then-deal partner Connie Chan (who last year became a General Partner at a16z) and I believed that the co-founder/CEO — who had worked tirelessly for multiple years searching for product-market fit — had finally found it. Ben therefore had an extremely hard-earned secret. Achieving product-market fit is massively challenging, especially on the scant resources the company had available at the time.  In doing so, he had demonstrated some pretty extreme persistence — one of the key traits we look for in founders. He also had a very clear vision for how he wanted the product to evolve over time.

The then-very recent trajectory in the metrics were also eye opening. User growth was strongly up-and-to-the-right, albeit off of a relatively modest base. This was even more impressive given that the site was not yet openly available to the public (registration was by invite only). Yet even more impressively, the engagement of these users was off the charts and the majority of users were hyper-active. We saw double digit growth in both PV/UU (page views/unique users) and PV/Visit month over month. The only company I had seen up to that point with superior engagement was Facebook.

The company’s growth was also entirely organic. It wasn’t buying users; users were recruiting other users to join the service. We had a theory on the strength of the company’s long-term defensibility if they continued on the same growth trajectory. We often see consumer-oriented companies with strong early growth that struggle over time with defensibility (think e-commerce or meal kits). On Pinterest, careful analysis of their metrics lead us to believe that a network effect was emerging: that more pins would improve the user experience via enhanced selection, and more users would attract more pinners and pins, etc.

Lastly, while it was pre-revenue, the intent inherent in activity on the platform was obviously commercial: things I want to wear, places I want to go, plans for my wedding. This commercial intent was as deep as any non-commerce business that we’d seen.

We at a16z would like to congratulate founders Ben Silbermann and Evan Sharp for reaching this impressive milestone for the company. We are all proud to be supporting your efforts to build one of the truly unique technology companies in the world.

I love athletics, and the metaphor I used about the IPO at OpenTable was one from the sports world: The IPO wasn’t the finish line, it was getting called up to the major leagues — time to show them what we’ve got. We can’t wait to see where Ben, Evan, and the entire talented team take the business!