"I still feel pretty bad about it," Cohen admits, reflecting on his cliched investor behavior. No matter - within 15 seconds he had stopped Silbermann mid-pitch. He didn't care about the product anymore; he was backing the founder no matter what.
A fan of Spiderman comic books growing up, Cohen says that his "spidey senses" were off the charts as Silbermann spoke about his company, then a mobile e-commerce application called Tote. The founder was humble, self-aware and had an obvious empathy for his customers. "He was so insightful in the way he explained the product, so customer-oriented," Cohen recalls. "He had a very special understanding of the user."
Now that Pinterest has 20 million users and a weighty $1.5 billion valuation, Cohen's "spidey senses" are looking pretty spot-on. The company announced a new $100 million round of funding Thursday morning, led by the Japanese e-commerce behemoth Rakuten Inc. with Andreesen Horowitz, FirstMark Capital and Bessemer Venture Partners in tow. Rakuten, Japan's largest online retailer, generated $1.24 billion in revenue in the last quarter of 2011. According to reporting from TechCrunch and the Wall Street Journal, Pinterest hopes to use the partnership to strengthen its e-commerce strategy and accelerate international growth by integrating the buyer IDs and payment information of Rakuten’s 80 million customers into the website. For Rakuten, Pinterest will serve as an important sales channel and a trendy new feature to attract dormant buyers back to the site.
Though Cohen had the foresight to make an initial investment, he never imagined Pinterest would rocket to the kind of prominence it’s enjoyed in the last year. The company has grown tenfold since September, shooting from 2 million to 20 million users in seven months.
Some have balked at the Pinterest's hazy business model and hefty valuation, though in many ways the company seems to have a more obvious path to revenue than, say, Twitter once did. The site naturally lends itself to e-commerce. Online retailers, like Katia Beauchamp from Birchbox, have noted that the increasing number of referrals generated by Pinterest makes it extremely valuable as an acquisition channel. According to MSNBC, 40 percent of all social media driven purchases are expected to come from Pinterest during this quarter. Shopify, a company that offers software for creating online stores, notes that Pinterest users are 10% more likely to make a purchase (within the Shopify network) than those who arrive from other sites.
Pinterest has also distinguished itself by attracting users that many tech companies, headquartered in Silicon Valley and New York, regard as an afterthought - Midwestern women. Cohen, like others in tech circles, uses the term "normals" to identify the vast majority of U.S. Internet users: those who don't sit on Tweetdeck all day or, frankly, anyone who uses Internet Explorer. He believes that Silbermann tapped into a huge neglected market of 'normals' (think Ann Romney), people who found other social media platforms burdensome rather than pleasurable. "Communicating with images is a much more natural, logical thing to do," he explains. "As a Midwesterner (Silbermann is from Des Moines), he had a greater affinity for the needs of regular people."
Reflecting on Pinterest's usability, Cohen goes a step further: “I believe Ben discovered what Facebook was supposed to be.”
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