Home > business, smugmug, web 2.0 > Shutterfly buying SmugMug? Say it ain't so!

Shutterfly buying SmugMug? Say it ain't so!

October 5, 2006

It ain’t so.

Some of our customers are worried that we might be selling, based on Bambi Francisco’s latest newsletter at MarketWatch.

Bambi is a great journalist, and I’m flattered that we’re on her radar, but I’m afraid we’re not for sale.

We love our business, we love our customers, and we love the people we work with. Not only that, but it pays the bills – we’re profitable, with no debt and no investors! Why mess with a good thing?

Besides, I’m still trying to wrap my head around why anyone would want to invest in Shutterfly in the first place. Alan Meckler, CEO of JupiterMedia, has a write-up that resonated with me. Let’s take a quick look at their business (I’ll be the first to admit I haven’t really paid that much attention to the whole thing, being buried in our own business, so fact-check my stuff before quoting me):

  • Devoured a massive (I believe >$100MM over multiple rounds) investment.
  • Has trouble turning a profit ($24M of their $28M last year was apparently a one-time tax benefit)
  • Incredibly competitive marketplace, complete with a nasty price war ($0.12 4×6 prints) and deep-pocketed competitors (Kodak and HP)
  • First quarter loss increased by nearly 2.5X this year compared to last year
  • HP’s Snapfish seems to have the best product, marketing, and awareness in the online photo printing space. (In other words, they seem to be winning)

We’re small, fun, happy, and profitable. Best of all, our customers love us. Does it get any better than this?

Categories: business, smugmug, web 2.0
  1. Unknown
    January 9, 2008 at 12:02 am

    And your thoughts now on shutterfly? =) They are the market leaders and doing thinsg that HP & Kodak are not even close to doing. The streets say they will do 185+ million..and what about Smug Mug?

  2. January 9, 2008 at 9:31 am

    Are you kidding me? Have you looked at their financials (let alone the 16% stock drop in a single day)?

    If you think they’re doing well, awesome. That’s great. But it doesn’t look like a wonderful, healthy business to be in to me – Snapfish just cut their prints to $0.09 for 4x6s. Talk about a cutthroat market with rough margins.

    I’d much rather be small, well profitable, and growing than big and having to scrape for every penny. But maybe that’s just me?

  3. Unknown
    January 12, 2008 at 2:47 am

    If prints were their bread in butter then yes that would be a problem but prints are less than half of their revenue. All HP is doing is canalizing there higher margin print at home business. can you say INK?

    SFLY is know as the Porsche of the business where Kodak, Snapfish and these other small players are Honda’s. SFLY has always had higher print prices and their loyal customers have no problem paying for that when they know they will receive the highest quality print, fastest service, and a CS group that just received yet another award. And we’ll keep the photobook awards for a later discussion =)

    looks like SFLY announcing Q4 results in feb..I’m sure the stock will go back up. no worries

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