Online photo sharing and printing service Shutterfly raised $87 million in an IPO today, closing up 3.7% at $15.55 per share. VentureBeat points out that the price climbed as high as $16.73 at one point in the day.
Born in 1999, Shutterfly is a survivor of the last bubble and crash. Now it’s an interesting case for considering other possible valuations. It also gives us a chance to look at what a company with a successful IPO took to market. For comparison, Flickr is rumored to have been acquired by Yahoo! for $30 to $35 million.
After J.P. Morgan, Piper Jaffray and Jefferies sold 5.8 million of Shutterfly’s 23.6 million shares, the company ended the day with a market value of more than $350 million. With about 200 employees it had just under a 34% net profit margin on about $84 million in revenue last year. The company has taken $67 million in VC backing to date. NetScape co-founder Jim Clark, and Shutterfly board chair, bought about 30% of the stock sold today.
In a time when IPOs are among the least common liquidity events enjoyed by Web 2.0 startups, for a photosharing site to remain independent and go public is interesting relative to all the startups we profile here.
Shutterfly is a company that has lots of overhead, faces price cuts from competitors and has no shortage of small startups seeking to edge into its market. It makes much of its revenue from shipping and faces questions around scalability. There’s some interesting analysis over at MrWaveTheory.
While Shutterfly offers more than 150 print and DVD products, photo to print startups like OneTrueMedia, Tabblo and Scrapblog offer more sophisticated design capabilities, more viral online distribution and in some cases prominent media partners. Most photo sharing sites online now allow users to print or burn to DVD their archives, though few of them base their entire business model on printing as Shutterfly does.
What does Shutterfly offer in user experience? A product that clearly appeals to mainstream users.
- Unlimited free storage.
- Good bulk uploaders for both Windows and Mac (though not Intel Mac).
- Public and private albums.
- Group collaboration on shared collections.
- Clean URLs, comments on photos, basic crop, border, red eye removal and color change effects.
- They’ve also got business solutions for resellers.
Its primary competitor, HP’s SnapFish, offers much of the same feature set plus mobile upload by email.
I find everything but site navigation pleasing in Shutterfly. My one complaint as a user is that it doesn’t offer tagging. Album navigation means that one photo can’t be found in more than one group. There’s a reason tagging has caught on recently – it’s really useful and makes an group of pages much easier to move around in.
Will the company succeed now that it’s gone public? It’s hard to say, given even its own concerns about overhead, price competition and an increasingly diversified market. You can’t say that Shutterfly is standing still, though. This new infusion of cash, the contemporary features that it does offer and its already large user base certainly look good.
Not many people print their photos these days .. and the ones that do simply go to their local walgreens .. I think picasa web album will soon allow photo printing .. picasa is much better than shutterfly .. shutterfly has ads and stuff .. and is not for the tech savy !!
Nabeel
http://nabeelze...an.blogspot.com
This is really interesting. I launched ClubPhoto back in 99 and also worked with the guys over at Smugmug (I love that site by the way). I think this is one of the true first signs that the internet economy is going to heat up again and let’s just cross our fingers that everything stays in perspective. Experts are using numbers to prove that we’re not in Bubble 2.0, but the hype is reminiscent of the first one. I wonder how they’ll use this money to remain relevant in the face of new technology and new consumer mindsets.
Brian, I don’t think that Shutterfly doing an IPO is a sign of a second bubble. The fact that they closed 3.7% up is a sign of moderation among investors. In all fairness, Shutterfly is a solid company with loyal customers, sizable revenues and infrastructure. I would be concerned if young startups like us or Tabblo attempted an IPO.
“I find everything but site navigation pleasing in Shutterfly. My one complaint as a user is that it doesn’t offer tagging. ”
Though I agree with your thoughts on tagging, I’d expect Shutterfly’s general audience to _not_ know what tagging is. My assumptions on the site are that mostly new parents and non-technical people are using it. Of course what do I know.
“Not many people print their photos these days”—that’s taking a narrow view. If so how come these photo-finishing companies like Shutterfly are taking any revenue? And indeed *have* developed to the point where an IPO is a reasonable move. Folks in the online age tend to forget about the prior generations who have no grip on all these new-fangled technologies and want to hold something concrete in their hands, and share that. Obviously this is a diminishing attitude but one that is still a significant market.
As to tagging the general consumer does not need really need it. A basic structured hierarchy of albums is generally adequate, anything else is more work than many people are willing to invest. Certainly it *could* be useful, but the user needs to be educated and given the option, not to have it foisted upon them using dodgy terminology like ‘tagging’ (the understanding of existing concepts like keywords is much better). Too many companies are developing great techniques and technologies but reducing their chance of wider adoption by using incomprehensible monikers.
teasest stste
Being a loyal user of Snapfish and Flickr, I can appreciate the value that the “original” photo-sharing sites (Shutterfly, Snapfish, oFoto, Photoworks et. al) bring to their users. A snapshot of a real-world family using these services? While I have used Flickr mostly for quickly sharing some pics with family & friends around group events (for free, of course), my wife is busy uploading, organizing and printing her digital pics with Shutterfly to the tune of a couple hundred $$$s a month… not to mention what our extended family buys from shared albums.
Even for those of us heavily involved in the online age, there is a certainty and comfort derived from having your memories in two places for safekeeping — online AND in hard-copy.
By the looks of it, the IPO sold off right after the stock open at 10:30 am and underwriters were understandably trying keep it afloat. You can see that around 2:45 pm, there was a large spike in volume. It looks like somebody was trying to bail – understandable and highly likely that it was a fast money hedge fund that had bought it hoping for a quick flip that never materialized. After all, what venture capitalists hope to be able to accomplish in 7 years (that is the amount of time that it took for ShutterFly investors to get an exit), hedge fund managers hope to do in minutes , hours, and at most months! Read More
I’ve been using Shutterfly since about 1999, and have thousands and thousands of pix there. I now upload only what I want to print. Cue up a couple of hundred, let em upload overnite, order them the next morning. I have never gotten a bad photo from them. The prices are good, and shipping is incredibly fast, sometimes in 2-3 days.
I noticed the link to One True Media is giving a 404 error. I believe their site is http://www.onetruemedia.com. It’s a nice sevice for photos and video and way more than photo sharing!
Take a look at these not so fortunate other companies:
http://donwiss....BrooklynStores/