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Summary:

Shutterfly CEO Jeff Housenbold is aware of new photo sharing and printing startups like Instagram, Sincerely, and Keepsy. But according to him, new competition from “three kids in a garage with $3 million in venture funding” doesn’t exactly keep him up at night.

jeffhousenbold shutterfly

Online photo sharing, storage and printing stalwart Shutterfly is well aware of photo startups such as Instagram, Sincerely, Keepsy, and others. But according to Shutterfly CEO Jeff Housenbold, the new competition doesn’t exactly keep him up at night.

That’s because the Redwood City, Calif.-based company has seen lots of photo-sharing startups come and go since its inception in 1999, Housenbold told me in an interview last week. Our chat was meant to focus on the launch of Shutterfly’s new Custom Path photo book creator, which is by all appearances a top-notch product. But things really got interesting when I asked how Custom Path compares to the offerings from new entrants in the photo printing market like Postagram and Keepsy.

“Who are the ‘entrants in the market’?” Housenbold asked a bit testily. “We’ve seen more than a thousand venture-backed companies come into the space, and they all fail. They don’t understand scale.” Even big players like Yahoo, AOL, Sony, and American Greetings have “tried their hand” in the photo sharing and printing space only to eventually shut down operations, he said. “If they can’t succeed at it, I don’t think three kids in a garage with $3 million in venture funding can. It’s hard.”

Indeed, Shutterfly stands out in at least one major way: It makes a lot of money. “Instagram has built a nice feature, but it’s a function, not a business. Lots of companies offer great consumer feature functionalities, but it’s not something that people [want to] pay for,” he said. Shutterfly, meanwhile, makes products that people “are willing to take out their credit cards for.”

Housenbold has every reason to feel confident from a financial perspective. Shutterfly, with a market cap of $1.65 billion and a 56-percent gross profit margin on annual revenues of more than $300 million, is absolutely a market leader. But after our conversation about Shutterfly’s competitive landscape, I was left feeling a bit like the CEO doth protest too much. Slamming the competition is a time-honored tradition in the tech world, but when he specifically scolded GigaOM for leading potential Shutterfly customers astray, it became a bit much. Housenbold told me startup coverage like ours “just adds to the consumer confusion in this space.”

Maybe he’s not up nights, but it sounds like he’s not sleeping easy either.

  1. These are the types of statements that people seriously regret down the road. Moronic.

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