Just a month after its launch in 2008, San Francisco-based Minted faced a crisis like none other — it had failed to find a single buyer for branded wedding stationery. Mariam Naficy, who in her previous life had co-founded Eve.com and then helped start The Body Shop’s online operations, had never seen anything like it in her life. And if that was not enough, she was running out of money.
Today, three years later, the company says it has received $5.5 million in new funding led by Benchmark Capital with well-known VC Peter Fenton joining the company’s board. Previous investors such as IDG Ventures also participated in the Series B round of funding. Marissa Mayer of Google and Jeremy Stoppelman of Yelp participated in the round as angel investors. So far, the company has raised nearly $11.5 million in venture funding.
Minted sells stationery items such as personalized wedding invitations, holiday cards and party invites, among other such things. For the company, the fresh cash infusion comes thanks to an idea that was a last ditch move — and not even company’s main thing.
Not Even The Main Thing
With its main idea — selling branded stationery products hitherto unsold online — a huge flop, Minted had a silver lining. The company had been testing an idea that allowed anyone to submit their designs into a contest and if the design won the contest, it would then be turned into stationery and be put on sale. This was an idea that borrowed a page from the playbook of 11-year-old Skinny Corp., a Chicago-based company behind T-shirt maker, Threadless.
Skinny Corp. is a crowdsourcing pioneer and perhaps one of the most under-appreciated Internet companies. I first wrote about Skinny Corp. in 2005 and have been following them since. My view at that time was that companies that took their community and made it part of their economic ecosystem were going to thrive in our connected future.
My given name-tag for the phenomenon – iCompanies, didn’t quite stick, but crowdsourcing has become a major economic movement. These distributed, people-to-people economy are now common place with some like Kickstarter and AirBnB are becoming part of the vernacular.
There were sixty-six contestants who submitted during the first Minted contest. They were getting folks to vote for them and in the process building a community. Buyers were simply waiting in the wings. A year after she had started the company and had blown through most of her $2.2 million in angel funding, Naficy had a business model. She subsequently added another $500,000 to her angel round.
“In 2008, it was hard to get any funding for an e-commerce company,” says Naficy who keep the company running on fumes as she bet the farm on “crowdsourcing.” Her bet paid off. Those 66 contestants have become thousands of participants in the fledgling community with thousands of challenges. Last year when I wrote about Minted, their sales were pegged to cross $5 million. The sales for 2011 are said to be much more than twice as much and well north of $10 million.
Naficy, not surprisingly, is coy about the sales, though she did say that depending on the season, Minted does have profitable operations. Thanks to this growth and proven business model, Minted has just received a new slug money to accelerate the revenues and hire more people to grow its overall business and move into new avenues.
Right Value Proposition
“It was pretty clear we weren’t offering unique enough value proposition for the branded stationery as people could easily get it offline,” she recalls. However, crowdsourcing designs allowed the company to offer very unique offerings that weren’t available anywhere. “The designs were a lot more fresh and dynamic and more importantly there was a lot of interaction between the community.”
And if there is one lesson here in this story – sometimes it pays to listen to wisdom of the crowds.