Mar 24, 2021 · 43m · 20vc
20VC: The Pinterest Memo: Bessemer's Jeremy Levine on The Secret To Success within User Generated Content Plays, Where Most Investors Make Mistakes When Analysing Consumer Social and How The Pinterest Deal Wouldn't Have Happened without a Diverse Partners
0:00 / 0:00
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of 20VC, host Harry Stebbings interviews Bessemer Venture Partners' Jeremy Levine to dissect the original 2011 Series A investment memo for Pinterest. Levine shares key insights on contrarian venture strategy, evaluating non-traditional founding teams, navigating early monetization challenges, and accurately assessing consumer engagement metrics.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 26.2% of the talking time here. How this is scored →
Harry as informed peer 3.1 Guest teaching 5.7 Guest disagreement 1.1 Harry pushing back 1.9
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 12:49 Deflecting proprietary insight inquiry
Jeremy firmly and humorously rejects Harry's attempt to elicit his unannounced current investment thesis on air without compensation.
Hardest push from Harry ▶ 25:00 Challenging standard VC benchmark expectationsHarry pushes back against general VC demands for ultra-high monthly growth metrics, asking Jeremy to defend realistic compounding growth to skeptical investors.
Biggest teaching moment ▶ 27:00 Deconstructing DAU/MAU metric fallaciesJeremy educates the host and audience on why forcing daily active user benchmarks onto non-daily human use cases leads to building second-rate social features.
Harry holds his own ▶ 33:05 Enforcing Sarah Tavel's scenario-planning pre-mortem frameworkHarry demonstrates insider domain preparation by bringing up Sarah Tavel's specific historical scenario planning exercise to anchor the upside/downside discussion.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| The Origin Story of Bessemer's Pinterest Investment | 2 | 6 | 0 | 1 | Jeremy shares the detailed origin story of meeting Pinterest after a rainy drive to Palo Alto and explains his thematic thesis around user-generated content businesses. He jokingly notes Harry might be too young to remember ePinions, showing a high level of guest-led exposition while Harry facilitates smoothly. | |
| Market Timing, Contrarian Investing, and Capital Competition | 4 | 5 | 3 | 4 | Harry pushes on market timing and asks Jeremy to reveal his current non-consensus ideas. Jeremy playfully deflects the question, stating that such proprietary insights require top dollar, demonstrating quick-witted boundaries during a friendly exchange. | |
| Pinterest Series A Deal Structure and Initial Assumptions | 2 | 5 | 0 | 1 | Jeremy breaks down the $10M Series A structure at a $40M pre-money valuation and explains the secondary transaction to buy out early Tote seed investors. Harry listens attentively as Jeremy explains how their original assumption regarding transaction-based monetization shifted to advertising. | |
| Competitive Landscape, Unorthodox Team, and Diversity Insights | 3 | 6 | 1 | 1 | Jeremy discusses how competitor analysis missed subtle execution details and highlights the importance of diversity, crediting Sarah Tavel for recognizing Pinterest's potential when male Sand Hill VCs missed it. Harry candidly admits his own potential bias regarding non-technical founders. | |
| Product Growth, Retention Benchmarks, and North Star Metrics | 4 | 7 | 2 | 3 | Jeremy dismantles the standard VC reliance on Facebook-style DAU/MAU metrics, clarifying that inspiration platforms operate under different usage ceilings. He advises founders that VCs demanding 25% monthly growth on non-daily use cases are 'the wrong VCs.' | |
| Founder Evolution, Upside Potential, and Risk Analysis | 4 | 6 | 0 | 2 | Jeremy shares the pre-mortem analysis, explaining that media businesses carry a 25-30% chance of complete failure because advertisers require 5-10 million users before spending a single dollar. Harry guides the exercise using scenario questions suggested by Sarah Tavel. | |
| Quickfire Round: Key Takeaways and Unsung Heroes | 3 | 5 | 2 | 1 | In the quickfire round, Jeremy highlights the strategic advantage of stealth funding to delay competitor reaction from giant tech rivals. He also dispels control structure anxieties, noting that control arguments become irrelevant when a company succeeds. |
Statements from this episode (18)
Levine: Bessemer Passed on Minted Series A Due to Revenue Seasonality
“We decided we were not going to pursue an investment in Minted.”
Levine: User-Generated Content Creates Highly Profitable Media Businesses
“If you build a media business with all the content generated by users or consumers, you can end up with a really powerful company because media businesses in general are pretty profitable because they make content once and then they sell it over and over again…”
Levine: ePinions Was a Genius Concept Launched 15 Years Too Early
“And I actually think ePinions was a genius idea, but it might have been 15 years too early for the internet to be ready for it.”
Levine: Competition Is the Most Destructive Force in Capitalism
“Competition is tough. It motivates all of us, but it's the most destructive force in capitalism, no doubt about it.”
Levine: Bessemer Invested $9M in Pinterest's Series A at $40M Pre-Money
“The first step was a simple ten million dollar investment. It was a forty million dollar pre-money valuation, fifty million dollar post-money valuation. I think Bessemer was eight and a half or nine million of the 10 existing investors put up the balance.”
Levine: Pinterest's $1M Seed Stock Buyback Was Its Best Capital Use
“The company actually bought back some of the stock from those very early investors. It wasn't a large amount, but it might've been another million dollars. And so it was probably the best use of capital the company ever could have come up with, given what that…”
Levine: E-Commerce Transactions Are Not Required for Pinterest to Monetize
“I thought that would be necessary to monetize. It turns out that it's not. I think it's necessary, important for consumers to have a great experience, but has been less critical to monetization.”
Levine: Pinterest Had No Technical Founder When Bessemer Invested
“Young internet founding teams included a highly technical founder, and Pinterest had no technical founder.”
Levine: Pinterest's User Base Was 90% Female at 2011 Series A
“The product was used at that time, probably by women in 90% of all cases. The male user base was tiny.”
Levine: Bessemer Would Have Missed Pinterest Without Partner Sarah Tavel
“Had we not had, at least on a gender basis, A diverse duo of people looking at the investment. I think we would have missed it, too.”
Levine: Pinterest Grew 50% to 70% Monthly After Bessemer's Investment
“I think in that first year or so after we invested, the business was growing like 50 or 70% in a month.”
Levine: Compounding 5-6% Monthly Growth Over 10 Years Creates Massive Startups
“It's not about growing really fast, really quickly. It's about building an engine that will compound over time and sustain. And so if you can grow at five or six percent a month, but for 10 years, you're going to be massive.”
Levine: 40% of Early Pinterest Sign-Ups Stayed Active Month Over Month
“And I think in the early years of Pinterest, seeing that something like 40% of the users who had ever signed up were using it month on month on month, relative to most consumer services, was unbelievably impressive.”
Levine: Media Startups Need 5M-10M Users Before Earning Ad Revenue
“And critical mass in the U.S. Is probably around between five and ten million users. You need to get there before you can get the first dollar of advertising revenue.”
Levine: Bessemer's Pinterest Memo Assigned 25-30% Chance of Total Failure
“And the chance of it being a big zero for a company at that stage is at least 25 or 30%, which means that the chance of it working is also not going to be huge.”
Levine: Pinterest Generated $40M Revenue in Its First Year of Monetization
“I think in the first year they tried to monetize, I think they made forty million dollars of revenue. That was extraordinary. I'd never seen anything like that before, to go from zero to forty million of revenue. Now, there are many other companies that have d…”
Levine: Publicizing Early VC Funding Rounds Hurts Long-Term Startup Prospects
“A lot of people, particularly around their early financings, like to go tell the world about it. It's validation. If nothing else, it's nice to have your mom read about you in TechCrunch. But the truth is, that does almost no value. It adds no value to your co…”
Levine: Bessemer Kept Its 2011 Pinterest Investment Secret for Nine Months
“Our initial investment in Pinterest was maybe in March or April of 2011. You can't find anything on the internet about our involvement with the company for at least six or nine months. In fact, it was the subsequent financing That somehow got leaked to the pre…”