Brian Smiga: Hi, this is Brian Smiga at Alpha Venture Partners, and I’m interviewing Brian Cohen today about Pinterest, one of his category leading companies. Welcome Brian.
Brian Cohen: Hello dear friend.
Brian Smiga: Let’s hear about New York Angels, and Brian Cohen’s discovery of an iconic company, Pinterest, and the idiosyncratic details of that wonderful discovery. So Brian, tell us about you and about New York Angels.
Brian Cohen: The New York Angels is, of course, one of many groups of professional level investors, who get together to invest in startup companies. And in its purest form, we’re looking to make money for ourselves and for the founder, and we have a deep-rooted business process that support that. We’ve been doing it longer than pretty much any other angel group in the United States. We’re one of the founding members of the National Angel Group, and the Angel Capital Association. And we’ve invested in over 200 companies, and I guess the total dollars is about $130 million to date.
We are membership-based. Everybody is choosing what they invest in on their own. It’s not a fund, I don’t believe in that, I think that’s a slippery slope. I think the individual angel needs to make their choices, so we’re designed for every individual angel to make those choices. And when I’m asked questions about angel investing, I certainly note that each person sees something different.
We are 130 members. Pretty tough to get into our membership. We’re running now, this year, at a rate of $1.2 million invested per month. And we’re very proud of what we’ve achieved with the investments we’ve made, with the membership, and their support of the startup community in the New York City area. On my watch, which has been about eight years as chairman, it has been the most gratifying experience I think of my life. It continues to astound me how much I continue to learn, how much we learn together as a group, and how much good we can do in the New York City startup world. It’s been a great journey.
Brian Smiga: That’s great, Brian. And I think the emphasis on learning around venture creation, and venture investing is overlooked. There’s probably no better educational crucible than making an investment in a young company that doesn’t yet have revenue. However, there’s one company out of those 200 that we want to talk about today, and that company is Pinterest. What we’re interested in is your personal story of the discovery in the early days of Pinterest. Do you want to share about the discovery? I know you’ve told this story before, but we want to hear a special version of it.
Brian Cohen: Well every time I tell it it’s special. So, I started out as a maniac in this business wanting to find as many companies to invest in as I could. Why do I say that? Well, part of the thesis of being successful in this business is deal flow, right, how many companies can you see? I had been a news man for many years, and it started in a number of the early computer publications. People would say, “Well, how do you know what news is?” And the answer used to be, “Whatever Walter Cronkite said it was.”
I think as a news person you develop a nose for news, and I think as an angel investor you develop the same nose. Now that’s an important point, because every now and then you smell something, feel something, and you get a
little chill up your spine. And that’s as a result of as much as one can do it, coming in contact with a founder, an idea, a moment in time, a situation, whatever you want to describe it as … I’m not trying to make it too deep, but I felt that when I had the opportunity to come into contact with Ben Silbermann, the founder, at an NYU Business Plan Competition, almost 10 years ago, I had that happen to me. It was like a strike of lightning. I don’t want to say that it was something metaphysical, but it was clear that when I walked by a table, a casual table that they set up at universities, and Ben was standing there holding the first version of the iPhone and he said, “Would you like to see my app?”
And I turned around, and I said, “Okay,” and I freely admit this, “You’ve got 30 seconds.” And I’m sarcastic, that was a sarcastic line, I wasn’t trying to be rude. And in less than 15 seconds that happened to me. When he began to speak and I began to listen. I began to say to myself, “Whoa! There’s something remarkable about this person.” He spoke more than 30 seconds and began telling me about a product called Tote, which was the first product. Pinterest hadn’t yet been born. And it was a catalog for women, multiple catalogs for women, solving a number of problems for women to buy mobile merchandise for themselves. They would download catalogs, make choices, and in their free time end up looking to purchase those products.
So there was a green play there. He was telling me he wanted to get rid of catalogs. They were stuffing too many mailboxes. And there was a mobile play there, it was one of the first apps on the iPhone. And he shared with me his background, how he’d worked at Google, and that’s where it all started. Ben wrote about our meeting in the preface to my book. Every time I read it, I shed a tear, because he remembered, and he said extraordinarily kind things. The kinds of things that make what we do real. And I don’t want to say them because they sound too self-serving, but they’re the kinds of things … He felt from me what I felt from him. And as I’ve noted to you in our friendship, I’m an emotionalist, and so we both connected in an extraordinary way.
I then, from that point, ended up being his mentor at the New York Business Plan Competition. I can bore you to tears more about that competition, how it went, and how he ended up winning …but at the time the iPhone was so new that the other judges didn’t understand the iPhone, nor did they understand tech on the platform. But I convinced my fellow judges to give Ben, at the time Tote, a portion of the $100,000 that was going to the winner. So they got their first $25,000 as a result. It was definitely a magical moment.
Brian Smiga: You were a catalyst and a mentor. And then, you became an investor yourself. Tell me about the first year together.
Brian Cohen: It was a year of discovery, certainly, where he had some partners, and how they worked together on the development of this first platform in a very immature technology platform. The iPhone didn’t have anything in the support of APIs for transactions, for purchasing things. And so they went through the normal struggles that a startup would go through, but they were struggling on a platform that just didn’t have all of the technology yet that it needed to create a robust application that would be supported and usable. And of course, the user wasn’t used to buying anything on a mobile device, right?
“I buy something, I hit purchase? That’s scary. I have to input data, my credit card information, oh my God.” So being early, as they always say, you get sacrificed on it. So they reached out to raise money. I brought Ben to meet the New York Angels, and we were very small at the time. He presented to a lot of people that regret not investing. And I supported him through the entire effort of the presentation, and he then made some contact with a venture capital firm in New York City, and he did his initial raise of $500,000. And I participated in that very first raise of $500,000.
And we walk away from it, he moved to California, wanted to be much more into the Silicon Valley mystique, and from there on it’s the next stage of the story. Some people use the word ‘pivot,’ I like to use the word ‘evolve’ to what is currently, recognized as Pinterest. And the story of how that happened and why it happened, and what creates a company to go from one to ten million users faster than any other product in history … Maybe that’s still the case, any other platform product like that in history is the story of legends.
It was a great relationship. I’m a PR guy, I’m a communications strategist. I’m not a product guy. So from my vantage point, my value was in, what does something mean, what words do you use to describe it, how does the customer best understand it … I’m all about communications strategy. And it was an interesting time in the early days of the iPhone mobile environment, and it was a sheer joy to be a part of it with Ben.
Brian Smiga: So two things emerged around that time. One was, a New York company moved to Silicon Valley. Did that play a role? And then the second is, this one to ten million, was there some secret in that that can be repeated in other companies if they can execute against it?
Brian Cohen: I don’t necessarily think so, but there isn’t a secret to the virality of something. I guess there could be the, “What was the spark,” right? “What got it going?” I relied heavily on my daughter for a lot of input when I was looking at a lot of technology, particularly if things appear to be geared towards women. And I remember reaching out to her maybe a month or two after Pinterest had been launched, and I said, “So what do you know, I’m looking at a company called Pinterest.” And my daughter goes, “Oh my God, my friend and I have seen it and we love it!” I went, “Really? Well that’s pretty amazing.” Right? By the way, I continue to use my kids as my best filter for ideas.
Brian Smiga: If you talk to Steve Jobs in the beginning of Apple, and Yossi Vardi and the beginning of instant messaging … It was kids who tested the software and came back with their critically unfiltered views of their experience that shaped the product. So here we see it again with Pinterest.
Brian Cohen: At the time, the New York City startup community was very young. It lacked a lot of the support structure that a young company that was destined to grow required. There just wasn’t the kind of social structure or financial structure to recognize somebody like Ben. And he had worked at Google, so he had an interest in that West Coast mentality, to become part of his world.
He graduated from Yale, so there was an East Coast element there. But as a lot of people know, Ben is a very quiet, insular, extraordinary young man. And he was born and raised in Iowa, right? How many startup founders are born in Iowa? And he wasn’t an engineer, right? So he did a short stint in New York, and there’s all sorts of elements associated with that, I think that related to his stint in New York being on the East Coast. But moving to the West Coast was a strategy, and it was an important one.
Brian Smiga: It probably was necessary in 2007. How about fast-forward to 2017. Do you think if you met another Ben today, and he didn’t have the proclivity to move back to the valley, where would you have liked to see him grow and scale his company?
Brian Cohen: I’m a New Yorker tried and true. I think there were systems, support engineering teams that he needed back then that were out there, and didn’t have it here. Strangely, the customer was primarily here. The user, the evolution of the product into the image world of fashion and furniture and those types of customers are basically on the East Coast. But he knew that he needed to build a support team of engineers, and that was really to be found in California.
If he did it now, would I say that he could do it in New York over Silicon Valley? If that’s the question you’re asking, I’d like to think so. I think the Silicon Valley mentality recognizes somebody like Ben more than New York would. They would understand the product and the development effort that would be required a bit more. Not much more. I don’t want to say it’s a slam dunk. But I think they would recognize it more. And I see that, just through my own experience of seeing a lot of companies in New York, where it’s just too fractionated, that a company like his needed to be destined to grow out there.
Brian Smiga: No doubt, it was a good move in 2007. The jury’s out, I guess, about 2017. But there is a culture of openness, openness to failure, and being an iconoclast, that’s prevalent in San Francisco, because that’s how it’s grown up over 30 years, a whole bunch of iconoclasts breaking the mold. And I think even if we don’t have as much a decade later in New York, I think we can keep our eye on the prize, and continue to build a more iconoclastic
and “open to failure” environment here on the East Coast. This was a great journey for you both as a person and as a mentor, bringing your career of skills to this company and to Ben. But, what learnings did you take away that you can repeat, or that you could share with one of the founders or angel investors in our audience today?
Brian Cohen: That’s a good question, because it’s focused on Ben. I could generalize it in many ways, but I think from the viewpoint of Ben, he was so incredibly focused on product. I mean, he was the epitome of heads-down. So focused on product and talking to the customer, and making it better. And he’s generally thought of to some degree as shy, but I would say that he was just so focused. And I don’t want to confuse that word with passion, I think passion gets in the way, maybe blinds you. He just had his eyes wide open all the time on product, and a sense of customer responsibility in use that was uncanny. And his decision-making, number two, his decision-making was based on controlling thought. It wasn’t casual. He had this sense of being in control. And I don’t mean under control in a limiting way. He knew what he had, he knew what he was doing, he knew who he was working with. He understood things. It was crystal clear to him when he did something. He did it not casually, he did it with purpose and meaning.
So this complete sense of focus on product, and this complete desire to do things in a customer-focused kind of way, you just knew he knew what he was doing. There was little in the way of having to question it. You’d say, “Well, yep, can’t debate that. He’s looked at it every which way possible, and he’s figured out the right way to do it.” You find that people who can raise $1.12 billion dollars have an uncanny ability to make people follow them.
Brian Smiga: I think that’s the draw for so many entrepreneurs that are solving a problem, or even creating a new category, is they can do the work to make themselves the best in the world at that particular product. And especially when you create a product that didn’t exist before, there’s that opportunity to be, essentially, the gold medalist in that product. And some people, some entrepreneurs just get the right combination of capital and relationships and customers around them, that it propels them if it was a good idea, if it was a good race to begin with.
And I think we need a new word that’s adjacent to passion, but has this coolness about it. I don’t know what that word is. Do you want to take a stab at it?
Brian Cohen: You know, Steve Blank at Columbia said “Passion is blinding.” It doesn’t help you balance your books, it doesn’t help you sell. It maybe pushes you in some cases to make another try at something, but the word ‘grit’ is the old word. ‘Determination’ are those words … And I see some of the newest research into successful entrepreneurs. Unless they were just basically incredibly lucky, which is also an important part, meeting luck halfway, but I think it’s the words like ‘grit’ and ‘determination,’ and not finding themselves believing too much in what they think they’re doing, or at least trying to figure out what they know they should be doing.
But it’s grit and determination. I love coming up with new words, you kind of put me on the spot there to try to come up with another word. I remember in sixth grade, my sixth grade teacher said, “Where do you think the words come from in the English language? We make them up.” So we made up, we took fabulous and fantastic and we came up with ‘fantabulous.’ I’ll never forget that day. We sent it in, and I believe they took it and made it a word. I don’t know what the word would be in this case, but it’s not passion.
Well whatever that word is, you’ve been fantabulous, and I think bringing your grit to angel investing and to this venture back when Ben had nothing but a table and 30 seconds with you is really a great story. And I’m sure there’s many more to come. Brian, thanks so much for being with us today, and we look forward to following your career as you find the next one.
Brian Cohen: I’ve got some interesting new chapters to write in my life, so I’m looking forward to that. It’s been a pleasure talking to you.