Pin­ter­est a uni­corn, doesn’t act like it

But its slow, steady tac­tics frus­trate some in­vestors, em­ploy­ees.

Austin American-Statesman Sunday - - FRONT PAGE - Erin Grif­fith

SAN FRAN­CISCO — Ben Sil­ber­mann does not en­joy be­ing in­ter­viewed. He is not a fan of speak­ing at tech in­dus­try con­fer­ences. Nor does he like sit­ting for glossy mag­a­zine por­traits. He does not think he should have to ex­plain Pin­ter­est, the web ser­vice that al­lows peo­ple to save images to vir­tual pin­boards, to any­one other than those who want to use it.

That is the case even in the past cou­ple of years, when Pin­ter­est and Sil­ber­mann, its co-founder and chief ex­ec­u­tive, could have been shout­ing the com­pany’s virtues from the rooftops.

Its peers — In­sta­gram, Face­book, YouTube and Twit­ter — have been drown­ing in toxic ha­rass­ment, fake news and Rus­sian dis­in­for­ma­tion cam­paigns.

Pin­ter­est, by Sil­ber­mann’s de­sign, is the op­po­site: the web’s last bas­tion of quaint in­no­cence. Hav­ing de-em­pha­sized its so­cial me­dia el­e­ments years ago, Pin­ter­est aims to be a safe and happy place for in­spi­ra­tion, self-im­prove­ment and salted caramel cookie recipes. It also re­jects Sil­i­con Val­ley’s typ­i­cal uni­corn for­mula of mov­ing fast, break­ing things, chas­ing growth at all costs and brag­ging about ev­ery vic­tory.

But the re­served, slow and steady ap­proach has frus­trated some in­vestors and em­ploy­ees, who say that it has neutered growth, ac­cord­ing to in­ter­views with more than a dozen peo­ple who have worked with or for the com­pany. Many of those peo­ple spoke on the con­di­tion of anonymity be­cause they were not au­tho­rized to speak about the com­pany’s pri­vate af­fairs.

Matt No­vak, a part­ner at All Blue Cap­i­tal, said his firm was try­ing to sell its stake in Pin­ter­est, which the firm ac­quired on the sec­ondary mar­ket, be­cause it had not lived up to its po­ten­tial.

“If they don’t keep up, they very quickly be­come pre­his­toric,” said No­vak, who would not dis­close the size of his firm’s stake

in Pin­ter­est.

And yet de­spite Sil­ber­mann’s ap­proach — or maybe be­cause of it — the com­pany is worth $12.3 bil­lion, and growth is ac­cel­er­at­ing. This month, the com­pany has crossed a new mile­stone: 250 mil­lion monthly ac­tive users. Those users have pinned 175 bil­lion items on 3 bil­lion vir­tual pin­boards. The com­pany is on track to top $700 mil­lion in rev­enue this year, a 50 per­cent in­crease over last year, ac­cord­ing to a per­son fa­mil­iar with the com­pany. There is wide spec­u­la­tion that it will go pub­lic next year.

If Pin­ter­est con­tin­ues its tra­jec­tory, it could change the nar­ra­tive of what it takes to build a suc­cess­ful com­pany in Sil­i­con Val­ley, a mean­ing­ful feat at a time that the startup world is seek­ing new tem­plates for lead­ers. If it does not, it will serve as an­other ex­am­ple of wasted po­ten­tial, or worse, a cau­tion­ary tale.

“I tell them, ‘You have to tell your story, es­pe­cially now,’” said Scott Bel­sky, an en­tre­pre­neur who was an early in­vestor in Pin­ter­est.

‘Mea­sures twice, cuts once’

Tech com­pa­nies usu­ally re­flect the per­son­al­i­ties of their founders. Mark Zucker­berg in­fused Face­book with a “move fast and break things” hacker men­tal­ity. Uber’s founder, Travis Kalan­ick, pushed a “toe-step­pin’” and “hus­tling” cul­ture at Uber.

Sil­ber­mann, 36, grew up in Des Moines, Iowa, in a fam­ily of doc­tors and as­sumed he would also go to med­i­cal school. But his first en­counter with high-speed in­ter­net, at Yale Univer­sity in 1999, changed his mind. “You could find your peo­ple there and re­ally ex­plore in­side your­self,” he said.

He has tried to in­still that same think­ing at the com­pany. Pin­ter­est val­ues “knitting,” a term its em­ploy­ees use to de­scribe col­lab­o­ra­tion among groups. “We be­lieve in­no­va­tion hap­pens when dis­ci­plines knit,” the com­pany’s web­site says.

In the be­gin­ning, when Pin­ter­est was des­per­ate to hire en­gi­neers as quickly as pos­si­ble, Sil­ber­mann screened po­ten­tial hires for their val­ues be­fore even con­sid­er­ing their tech­ni­cal skills.

Sil­ber­mann is some­one who “mea­sures twice, cuts once,” said Rick Heitz­mann, a man­ag­ing di­rec­tor at FirstMark Cap­i­tal and early in­vestor in Pin­ter­est.

“Per­fec­tion­ist doesn’t over­state it,” said Jeff Jor­dan, a gen­eral part­ner at An­dreessen Horowitz and a Pin­ter­est board mem­ber.

The com­pany’s growth ex­ploded by 2011, a year af­ter its ser­vice went live, spawn­ing count­less copycats and clones in ev­ery ma­jor coun­try. It seemed pos­si­ble that Pin­ter­est could be as suc­cess­ful as Face­book, In­sta­gram, Twit­ter or YouTube — maybe even Google.

The busi­ness case was sim­ple and pow­er­ful: It was a shop­ping mall dis­guised as a mood board that held its users’ as­pi­ra­tions, un­earthing pure and un­fil­tered com­mer­cial de­sire. “You can draw a di­rect line from those in­ter­ests to a com­mer­cial op­por­tu­nity or re­tail cat­e­gory,” said Andrew Lips­man, an an­a­lyst at eMar­keter.

But just as the com­pany be­gan sell­ing ads in 2014, user growth stalled, and it was not clear why, ac­cord­ing to mul­ti­ple peo­ple fa­mil­iar with the com­pany. The com­pany dis­agreed that growth had stalled, ar­gu­ing that it had “slightly slowed.”

Ex­ec­u­tives on Pin­ter­est’s “growth” team pro­posed spend­ing $50 mil­lion a year to ac­quire users through mar­ket­ing, a com­mon tac­tic for web com­pa­nies. Other ex­ec­u­tives ar­gued that the com­pany should court celebri­ties and pay in­flu­encers to share con­tent on Pin­ter­est, sim­i­lar to YouTube’s pre­mium con­tent pro­gram.

Sil­ber­mann op­posed both, ac­cord­ing to peo­ple fa­mil­iar with the de­ci­sion. He pre­ferred what he called “qual­ity growth.”

“There’s a nat­u­ral rate at which you can scale a com­pany that’s healthy,” Sil­ber­mann said. So Pin­ter­est stuck to its knitting.

Pick­ing up the pace

In­vestors and for­mer ex­ec­u­tives say Pin­ter­est has ral­lied in the past year un­der a new chief op­er­at­ing of­fi­cer, Fran­coise Brougher, and a new head of sales, Jon Ka­plan, both for­merly of Google.

Pin­ter­est’s founders “have this look in their eye like this is work­ing now,” said Bel­sky, the early in­vestor.

The com­pany is even try­ing to raise its pro­file a lit­tle bit, hir­ing a new chief mar­ket­ing of­fi­cer and com­ing up with a new mar­ket­ing plan to em­pha­size the ser­vice’s ben­e­fits. Brougher said she, like Sil­ber­mann, prefers to un­der­promise and overde­liver. “But that doesn’t al­ways work well in the tech world,” she said.

Sil­ber­mann said, “In tech­nol­ogy, peo­ple are very, very fast to de­clare some­thing a win­ner or loser, like, ‘That’ll never work,’ or ‘That’ll take over the world.’ The truth is al­ways some­where in be­tween.”

PATENT AND TRADE­MARK OF­FICE U.S.

Ama­zon in 2016 was granted a patent for a sys­tem to trans­port hu­mans, en­closed in a cage and on top of a ro­botic trol­ley, for work in ar­eas full of other au­to­mated ro­bots.

ANAS­TASIIA SAPON / THE NEW YORK TIMES

Ben Sil­ber­mann is CEO of Pin­ter­est, which has re­jected Sil­i­con Val­ley’s ag­gres­sive, hype-driven way of do­ing busi­ness.

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