Awesome interview in Fast Company today with Jeremy Levine of Bessemer Ventures on why they decided to invest in Pinterest–even though there’s no clear monetization strategy:
How does a “product-related, user-generated” media company like Pinterest make money?
There are no specific ideas or projects in the works. Much to the Pinterest team’s credit, they subscribe to the Facebook theory on how to build a really valuable business: You don’t worry about [monetization] for a while. You focus on one and only one thing, which is building a product or a platform that consumers love to use over and over again. If you have a rabid fan base among consumers, eventually you’ll have so many ways of monetizing it that you just don’t worry about that.
In fact, if you focus too early on how to make money off of something like this, then you start to build features designed to cater to the paying constituents, like businesses, brands, advertisers, at the expense of building more and more great stuff for consumers. The chance that you overextend your consumers’ patience by not doing the things they want, and ultimately turning them off and having them abandon your product, is quite high.
So until you feel super-confident that you’ve got a really durable relationship with your consumers, it just makes no sense to focus on the monetization.
Of course, you’ve got to have enough money to have the luxury to not think about money, but he makes a great point. And I love the statement that happy users inevitably = lots of ways to make moola. Nail it for the customers first (or pin it, in this case), and you’ll get a bunch of happy eyeballs. Happy eyeballs = lots of ways to make money, because so many people want time in front of happy eyeballs. Oh and by the way, if you own the happy eyeballs, it’s then your job to protect their happiness. Meaning, you tell advertisers how they are allowed to advertise:
- No, you can’t do a big annoying banner, because we won’t let you.
- No, I don’t approve that design.
- No, you can’t offer that to our users if there’s nothing in it for them.
Again, remember: be inspired by Amazon’s ads. They’ve managed to create ads that look, feel, and act like features: customers who bought this also bought is an ad that Amazon users love. Why can’t everyone have that kind of standard?
The interview is a great counterpoint to last year’s prevailing VC winds, in which you had to show traction in order to get money. So, in other words, prove that you can do something worthwhile with no money at all, and then we’ll give you money to do more. Fair enough, I suppose. But also kinda paradoxical. If you can get traction without money, why not just keep going? (Oversimplify much, Tamara? Why yes, yes I do. So sue me.)