

Ask HN:social print studio makes $40 million profit per year? - LedZeppelin

I have a friend who personally knows the founder of http:&#x2F;&#x2F;socialprintstudio.com&#x2F;, a website where you can get all your fb, instagram, pinterest pics printed on nice paper.<p>He claims that they make $40 million profit&#x2F;year.  I took a look at the company and feel like this claim is totally preposterous. Last year facebook had about $53 million in profit (I know it&#x27;s a different industry but that is A LOT of profit.)<p>This company is bootstrapped and has 10 employees.  They make all their sales online yet their shop ranks in the top hundreds of thousands of websites on the internet which is not very high for their purported profits.<p>I don&#x27;t believe they ship internationally, yet the country from which the 2nd greatest amount of visits come from is India (they SF based), which is 1&#x2F;3 of the traffic from america where the most visits come from.<p>He says they outsource all the printing to China.<p>Doing the math, and let&#x27;s say they have a 20% profit margin, that means they make $200 million&#x2F;yr in revenue.  Assuming the average purchase is $20, that means they sell 10 million goods a year, or roughly 30,000 goods&#x2F;day.<p>Is there any possibility that this claim is true?  I put together a top 50,000 website a few months ago and I get about 23k uniques&#x2F;day.  There&#x27;s no way this company sells 30,000 goods&#x2F;day based on their much lower web traffic.
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systemtrigger
Even if your friend's numbers are off by an order of magnitude it is an
interesting thought experiment to try to reverse engineer the business.

According to SPS' FAQ customers receive product within "4 to 10 business
days." Let us assume the partner in China ships directly to the end customer.
SPS has one shipping price for all orders - $6 - which seems cheap for
international so for simplicity let's assume SPS makes no profit on shipping.

Their cheapest products -- Mini Squares and Prints -- are both $15 for a set
of 48. Each is roughly the equivalent of 4 sheets of 8.5" x 11". If the cost
per sheet of glossy thick 8.5" x 11" cardstock is about $0.05 and the cost to
print, cut, package and prep for shipping is $0.05 then the cost to print an
order is ~ $0.50.

Let's use $10M for their annual revenue. If their average order is $25
(including $6 for shipping) that's 400,000 orders.

$25 (gross revenue) - $6 (shipping) - $0.50 (printing & prep) = $18.50.

x 400k orders = $7.4 million

Let's say each employee costs $100k/year. They have 10 employees, so now SPS
is left with $6.4 million.

Their next highest costs might be: marketing, office space, servers, employee
computers and professional services e.g. attorney. Add to that other costs of
doing business like chargebacks and returns, and call it another $1 million in
annual expenses.

Even if I am now overestimating actual profit by an order of magnitude, the
founders or investors of SPS are still doing well. This in a market I would
have bet was oversaturated. But most startups competing in this space probably
do not think to run their supply chain and distribution from China. Not to
mention the other areas of the business that SPS appears to be executing
nicely on.

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Casc
Take it from the founder himself:

[https://news.ycombinator.com/item?id=6039053](https://news.ycombinator.com/item?id=6039053)

(I believe he's the founder)

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outericky
Well... that wouldn't make them $40m annually.

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cheald
Nope. By his numbers ("growing six-figure monthly revenues"), they would max
at $12m in _revenue_ annually. Profits will be substantially lower.

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timmm
No there is no way they make $40 M/yr profit with 10 employees.

That would make them more successful than Craig's List which remarkably
manages to earn $3.3 M (Revenue) per employee per year.

