Yesterday, I reported a strong rumor that Sequoia Capital had invested in image-hosting site ImageShack. Today, I spoke with CEO and founder Jack Levin. He would not comment specifically on the funding rumor other than to say that over the past few months he’s been in discussions with a variety of VCs. So he may still be in the late stages of discussions, or he may have closed the round. He really wouldn’t say. But at the very least, he is definitely looking for funding.
He was, however, very forthcoming on other aspects of his business. And outlined a grand ambition befitting an early employee of Google (his claim to fame is the clustering architecture that Google is based on).
Levin did want to correct a few things from the original post, in which I said he has self-funded the startup until now. “I never put a single dime into the company,” he says. Unless you count the $80 for the first month of server hosting back in November, 2003 when he was still working at Google. But that month the company made $200, so it has been profitable from the start. His secret:
We were profitable for the last three years. The most different thing about our company is that it would take 7 to 8 million dollars in opex [operating expenses] per year to run a media hosting company like ours if you were using traditional non-off-the-shelf clustering technology, where we use a tiny fraction of that amount, which allows us to be profitable and take risks other companies can’t.
Because of the way he designed his back-end architecture, he can serve two terabytes of images from a single $1,000, Linux server. So he spends only about $200,000 a year on capital expenditures and now has about 500 servers. He was also able to leverage his industry connections to get really cheap bandwidth rates.
Also, subscriptions make up a tiny portion of revenues. Most of the revenues come from advertising on the site. ImageShack serves about 10 million ads a day, mostly to people who go to the site to upload their images. Although the site also attracts 500,000 brand new visitors every single day. Levin also notes that it is “unlikely we will ever modify the image” with ads because “that would be like spamming the Internet.”
Rather than put ads in or around the images it hosts, Levin is working on harnessing all the data his service generates about content consumption (perhaps to better target advertising on ImageShack or to syndicate that targetting data to ad networks). Like Google and Yahoo, he is deploying the open-source Hadoop software to create a massive distributed supercomputer, but he is using it to analyze all the data he is collecting. Levin is vague about how he plans to make money from this data, but it is clear he is convinced the data is pretty valuable. He explains the opportunity in broad strokes:
We are like a broadcasting company that broadcasts in every country, in every language, on every topic. There are a lot of misconceptions in the Valley hat the Internet is just two or three companies. But that is not true.
Don’t you think it is ridiculous to see business plans based on how many Facebook widget users you have? We have millions of Websites using our services. It doesn’t matter what Facebook does.
So I am still not sure if Sequoia funded his startup, but I can see why it would want to.
They stole Azureus logo or Azureus stole theirs.
Great article, thanks.
Whoa. Quite impressive. And nice way to scale.
I still wonder when people will start caring about putting all their personal memories, pictures, etc. online for all to see. When that happen, I hope they turn to encryption and to cGeep especially.
G.
Thanks for this article. I would like to see more written about non-hyped, but successful, internet companies like imageshack.
Very impressive. Sounds like he’s doing it the right way: profitable from the start and a good back-end.
Really Great article, thank you. I have always liked ImageShack something about how easy it works and how well it hosted pictures… I use it all the time..
If I was to do a photo hosting site this would indeed be the blueprint… it’s really done well… and this was a great read… Nice Job! Erick…
Agreed Gabe, would love to see stories about successful companies, functional companies, rather than super-hyped companies so much. Not that it’s such a simple task, but it would be sweet.
He’s a bit misleading in saying that they became profitable right away. They asked for donations from SomethingAwful at first and many of the members of the forum supported ImageShack until it became a larger company.
Guillaume, encryption is overkill for protecting personal memories. A simple unlisted URL should do it unless it’s a particularly embarrassing memory.
I don’t see how they are succeeding without rounded corners…
boggles my mind
Craigslist of Image Hosting? The guy just earned a lot of respect from me after reading this article.
Not that impressive many start ups are self funded and profitable from day one.
wow, a lot of traffic, and i’ve never heard of them before… where’ve i been??
Definitely agree with Gabe.
Great to read about “low profile” companies finding smart ways to keep costs low and build long-term financial stability.
Given the current economic climate this is the way to work.
Much better than all the useless noise about social network add-ons that allow you to “bite” or “slap” a friend and other rubbish.
ImageShack does not allow you to upload unlimited files for free, there is an $8/month subscription for that !
And each image size is limited to 3MB even if you are a registered member
For non-registered users the limit is 1.5MB
This sucks !
Be prepared for FotoKong ! It is a new start-up founded by two young 19yr old students. It will allow unlimited uploads and each photo will be limited to 5 MB, which is 2MB more than ImageShack. So that Professional Photographers can upload their Photos too. And all for free !
It will have many features of social networking website too.
Alpha version of FotoKong will launch this Week !
http://www.fotokong.com
FotoKong,
Founder and CEO
Ghaus Iftikhar
Ghaus, it’s amazingly easy to ‘babble’ about someone who achieved way more then you.
When you scaling 1000 servers with loads they have you will have to set limits.
Anyways, I still believe that http://www.imagesocket.com is simply far greater then anything else out there (besides maybe media fire?).
yeah, I like imagesocket.com too. It’s easy to use and held up really well to the digg effect recently.
Hey Ghaus
Hope you also own your own hosting company and can get servers and bandwidth for nothing.
Back in the real world those things cost money - and lots of it.
Slap down about 100k in the first year to cover it and hope you can scale if it becomes popular.
If it does well great - then you’ll need 100k a month.
Anyone ever hear more about his clustering architecture?
Harry “intrigued” Wang
Hey guys thanks for the feedback.
Well has anyone ever heard about Amazon S3, well this is what we will be using to host all our photos, so i don’t nede to buy 1000s of servers for scaling and storing so many photos. And we are using .NET from Microsoft, and i think as far scaling is concerned, we will do our best. And ofcourse when it becomes a hit we will be looking forward for some VC fund.
http://www.fotokong.com/
FotoKong,
Founder and CEO,
Ghaus Iftikhar
Yes Ghaus. we’ve heard of S3. However, the general consensus is that while you won’t have to worry about scaling your servers, you’ll have to worry about scaling your bank account. Hope you have something interesting to bring to the table, other than <input type=”file”…
Good luck, and don’t let myself or anyone else stop you.
Thanks for the reply Eric.
YouTube’s bank account scaled a lot that they were paying $1million/month. And yeah ofcourse my bank account can scale too once I secure venture funding.
The best thing is that once millions of users start using my service regularily, i have found a way to monetize my service. While imageshack, flick, photobucket and even Google images haven’t found the way to monetize their sites properly. So my main aim is users, once i have good user base, then i will be moving to monetize it.
http://www.fotokong.com/
FotoKong,
Founder and CEO,
Ghaus Iftikhar
Ghaus you are a very delusional individual.
http://digg.com/security/Image.....st_for_fun