Why Pixable is Worth $26.5 Million vs. Pinterest's $1.5 Billion

It is not often that you get an inside look at the critical moment of a company’s development - and then a chance to see the outcome. Now that Pixable has been sold for 26 million while an arguably similar company, Pinterest, is now valued at around $1.5bn - we have a rare moment to make a comparison.

Back in 2010 we developed a unique program called “Job Generation.” It was a kind of “Shark Tank” in reverse, where we invited senior executives to pitch Start-Ups for the job of running their companies.

Pixable was one of our first participants. Andres Blank, one of the founders, sat in the catbird seat as a former Kodak executive, Harry Falber, pitched him on running the company.

At that point, Pixable was far less evolved and presented itself as a company that helped you gather pictures from Facebook to create albums. Falber did not profess to have great knowledge of the technology but he did make this one point: as a Kodak exec, he knew from research that the customer in this business is overwhelmingly female and so the product should follow their interests.

In theory, Harry was a winner who got a “job” with Pixable. In practice, nothing like that happened. There was some follow up but no relationship actually formed. Pixable went about its own way, as a company run by some really smart guys who kept thinking up newer and cooler features. They raised $6.6 million and then sold out for $26 million. This will enable the founders to pay off their student loans, buy Teslas and enjoy lives as minor millionaires. The investors made some money but not the kind they were looking for – think of scratching off a $2 win on your lottery ticket. It keeps you in the game but that’s not why you bought the ticket.

So what really happened?

These were guys whose board of advisors were other guys and they had no inherent sense of their true marketplace: females. They did find a marketplace, guys who want to stay in touch with the coolest pictures but not the females who live by the images that illuminate their live's interests. That is what Pinterest does.

Whether Pinterest got lucky and stumbled upon that or had it planned, who knows. To quote Bo Peabody of Tripod, lucky is often better than smart. What does matter, is that companies usually take on the groupthink of a few key people and they will tend to follow what they care about rather than what the market wants. Granted, being authentic as a company is good - it is just worth 1/60th less than finding and serving an authentic market. At least, it appears so, in this case. 

As for Job Generation, we learned that one of the reasons young people start companies is because they really don’t want to listen to older guys. Maybe they should. Or maybe the older folks should be their own start-ups. They won’t get any Angel money (another controversy we'll discuss) but at east we know that in theory – and in the right context – their input can be worth as much as 60x.