E725: 500 Startups Dave McClure strategies, startup mistakes; Sarah Tavel Greylock scaling Pinterest
Pinterest CEO made a mistake pitching investors in the early days
Photo-sharing site Pinterest was founded at "the worst time to raise money" for a company, according to cofounder and CEO Ben Silbermann — right after the financial crisis.
To fund the startup, Silbermann approached several investors who turned him away because of the economic climate. Pinterest now reaches 250 million people and the New York Times reported that it will reach about 0 million in annual ad revenue this year and is valued at .3 billion.
"So I would say, 'Hey, you know, we don't have any money. We don't have any experience doing this. But we think this is a good idea. We're going to build this piece of software.' And I couldn't understand why they weren't funding us, but it was probably the worst sales pitch they'd ever heard," Silbermann said on an episode of Business Insider's podcast "This Is Success."
After a while, Silbermann said he became "pretty desperate" for funding and found a New York University business-plan competition. Silbermann entered Pinterest even though he was not an NYU student and won second place — he was awarded a meeting with a venture capitalist who agreed to put up half of Pinterest's first round of funding.
"I don't know; maybe because he took pity on us," Silbermann said.
He continued: "And so when he said that, we then called up all the other people that we'd ever spoken to. This was random people out of college, alumni directories, people that we'd read about in the newspaper that were wealthy. And that's how we put together our first little bundle of money."
Read more:The CEO of multibillion-dollar Pinterest knew he was onto something when he started getting personal emails from panicked users
Even though it's cheesy, Silbermann said, his experience trying to fund Pinterest taught him that it pays to be persistent. The then-startup didn't have anything to lose, so Silbermann didn't feel bad asking people to invest in the brand.
"But the other thing I learned was that investors — they kind of want to hear that you're selling the future. You're selling a dream of what could be. And when I used to go in and pitch investors, I was very careful not to over-promise what we could do," he said.
Silbermann said people don't expect you to have all the answers in a pitch meeting. Investors want to see confidence that you can figure things out in the future.
"It's the same with the employees you hire," he said.
Video: Ben Silbermann at Startup School 2012
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