How Pinterest grew from a failed shopping app to a $16B IPO

Executive overview

Pinterest started as Tote, a mobile shopping catalog app nobody wanted, before pivoting into a visual bookmarking tool that resonated deeply with a specific audience: women who collect and plan.

The company built its product-market fit not through Silicon Valley growth hacks but through women bloggers, grassroots meetups, and a distinctive UI — the fluid image grid — that became a defining internet paradigm.

By the time of its April 2019 IPO, Pinterest had $755M in 2018 revenue, 250M global users, and a disciplined management culture rare among unicorns.

Building infrastructure ahead of growth, not after, is what separates Pinterest from nearly every other unicorn of its generation.

Founding and the Tote pivot

• Ben Silbermann grew up in Des Moines, quit Google in fall 2008, and set out to build a startup — just as Lehman Brothers collapsed.
• Co-founder Paul Sciarra, with VC connections, became CEO; Silbermann was not initially CEO.
• Their first product, Tote, digitized paper mail catalogs on iPhone — hand-typed product data, zero traction.
• First investor: First Mark Capital, who met them after they placed second in a college business plan competition; shares bought at $0.01.
• Evan Sharp, an architecture grad student in New York, joined part-time and designed the fluid grid layout — vertical image orientation that later proved perfect for mobile.
• The product was renamed Pinterest over Thanksgiving 2009 when Silbermann's girlfriend Divya coined the name, inspired by a Dos Equis ad.

Finding product-market fit

• After launch in January 2010, Palo Alto tech friends ignored it; Des Moines friends and Silbermann's mother's ophthalmology patients didn't.
• Silbermann attended the Alt Summit in Salt Lake City, a women-focused design and blogging conference, and signed up early users there.
• The Pin It Forward campaign — a chain of bloggers each creating a board about "home" and passing it on — ignited growth through existing blogger audiences.
• Growth hit 40–50% month-over-month and sustained that rate for years.
• First serious angel investors: Shana Fisher (IAC), Kevin Hartz (Eventbrite), Scott Belsky — all reached through the blogging community.
• Pinterest's target market is effectively the lifestyle magazine audience, which skews heavily female; years of attempts to attract men have not moved the needle.

Building the company

• Series A ($10M) led by Bessemer in May 2011 — associate Sarah Tavel found Pinterest and lobbied the firm; partner Jeremy Levine canceled his flight home after a 10-minute meeting.
• Series B ($27M at $200M valuation) led by Andreessen Horowitz just months later as growth compounded.
• Ben Silbermann became official CEO in April 2012; Paul Sciarra departed amicably.
• Pinterest moved from Palo Alto to an abandoned chicken factory in SoMa, SF — an early sign of San Francisco's gravitational pull on startups.
• Recruited heavily from Facebook: Tim Kendall (monetization, later president), Barry Schmidt (marketing), Don Fall (operations).
• Invested early in women engineers — ~25–26% of the engineering team, well above industry norms.
• Raised $100M from Rakuten at a $1.5B valuation in May 2012; still had no revenue.

Monetization

• 2012: Brief experiment redirecting affiliate links through Skimlinks to Pinterest — caused user backlash, pulled immediately.
• 2015: All affiliate links banned from the platform entirely.
• May 2014: Launched Promoted Pins, starting with Vineyard Vines; opened to all advertisers in December 2014.
• Revenue: $300M (2016) → $472M (2017) → $755M (2018), growing 50%+ year-over-year.
• Pinterest sits across the entire commerce funnel — awareness, inspiration, re-targeting, and purchase — giving it outsized monetization power relative to its user base.
• US users grew slowly (65M in Q1 2016 → 82M by IPO); international growth pushed total to 250M globally but international monetization remained minimal.

The IPO

• March 2019: Filed S1; initial price range $15–$17 per share ($8.5–$11B valuation), below the last private round of $12.3B.
• April 17, 2019: Priced at $19/share, above range — $12.6B market cap, roughly flat to the last private valuation.
• Day one: Opened near $24, closed at $24.40 — a 28% pop, implying a $16B market cap.
• Company held $600M cash and was trending toward profitability (operating loss fell from $126M in 2017 to $63M in 2018).
• The IPO raised questions: with ample cash and no urgent capital need, a direct listing appeared viable.
• Contrast with Lyft: Lyft raised its range repeatedly, priced above range, popped, then declined; Pinterest took the opposite approach.

Bull and bear cases

• Bull: User growth of 23% versus declining numbers at Twitter and Snap; approaching profitability on current trajectory.
• Bull: Unique discovery position in the ad funnel — users open Pinterest to find things, unlike passive social feed browsing.
• Bull: Strong content flywheel — more pins attract more users who add more pins — even without traditional social network effects.
• Bear: Instagram's collections and commerce features could replicate the Pinterest experience inside a higher-engagement platform.
• Bear: US core market appears saturated at ~82M MAUs with persistent gender skew; the addressable market is bounded.
• Bear: Pinterest sits between pure search and pure social on the ad spectrum, a position that historically captures less total ad value than either pole.

Playbook lessons

• Invest in company infrastructure (finance, HR, culture, operations) well ahead of growth — Pinterest did this at employee 10; most unicorns do it under duress.
• Target market size matters as much as execution quality; Pinterest is exceptionally well-run but operates in a smaller market than Facebook.
• A content-powered flywheel can substitute for network effects if each new user meaningfully enriches the experience for all others.
• Persist without rigidity: pivot what isn't working, but don't shut down while a team and resources remain.
• Major economic disruptions reshuffle the soil — good time to spot which new business models become possible.