
Everpix was great. This is how it died - coloneltcb
http://www.theverge.com/2013/11/5/5039216/everpix-life-and-death-inside-the-worlds-best-photo-startup
======
aaronbrethorst

        [Everpix] lost the $50,000 first prize
        [at TechCrunch Disrupt] to Shaker, a
        bizarre kind of Second Life-meets-Facebook
        social network that raised $15 million and
        hasn't been heard from in a year.
    

A promising, arguably 'disruptive' company lost at a TechCrunch event to a
startup backed by Michael Arrington? Color me shocked! Shocked, I say!

~~~
devindotcom
Yeah, I was doing photos at that one. I nearly lost my shit when I heard it
won. Mike said there were 'very good reasons' but I never found out what they
were.

~~~
batemanesque
it's a real shame Disrupt carries any weight. the awful hype is one thing, but
the fact that it screws over genuinely promising companies due to its
grotesquely corrupt nature is a real problem

~~~
imsofuture
It's a shame that TC carries any weight. Let's stop beating around that
bush...

~~~
pavs
It's a shame that Arrington carries any weight, really thats where it all
started.

------
martingordon
> __They spent too much time on the product and not enough time on growth and
> distribution. The first pitch deck they put together for investors was
> mediocre. They began marketing too late. They failed to effectively position
> themselves against giants like Apple and Google, who offer fairly robust —
> and mostly free — Everpix alternatives. __

People on HN crap all over MBAs, but these are the types of problems many of
them have been trained to solve.

~~~
enjo
The anti-education bias of HN simply fascinates me.

~~~
rfnslyr
It's strictly from a code monkey perspective. If you want to be a coder, you
_really_ don't need to go to school. If you want to take it to the next level
and learn the theory behind what you are doing, get a degree.

I dropped out, or semi-dropped out because I wanted to be a frontend/UI guy
and learning shit like C++ and basic C/PERL/PHP <3 (seriously) for two years,
while paying 10k/year, was super pointless.

I'm saving now for a proper degree, and the rent to go along with it. Probably
going to do electrical or computer engineering, because that, you can't really
learn online like you can HTML/CSS/JS.

~~~
cookiecaper
A "proper degree" is ridiculously inefficient. If you've already established a
feasible career path, there is little reason to learn these things by
following the standard curricular programs available at most educational
institutions. Find good online communities and resources, buy textbooks and
other primary informational sources, and hire a good private tutor to help
fill in the blanks or answer questions and you can get the same stuff down
much better in _a fraction_ of the time it'd take with generalized mass
schooling, i.e., universities.

University is an outdated model that's never really been applicable to the
"real work" that needs to occur in an economy. Not sure why everyone decided
it needed to become a general thing after WWII.

~~~
enjo
Only if you view a degree as skills training.

The idea that it is inefficient is what I find so interesting, because from my
point of view it's entirely the opposite. For most people a degree will
greatly improve their _ability_ to learn new things. It will expose them to a
whole host of thoughts, ideas, and areas of exploration that they would
otherwise never touch.

The thing is, I don't have a degree. I have a LOT of one (well two actually).
I feel that it's ok, because the last 30 hours or so that I'm missing are
basically all computer science. That's the stuff I've been able to learn.

Still I can't imagine not having the college education that I do have. I use
what I learned in psychology almost every day (absolutely essential for anyone
trying to run a company). I use the lessons learned in history and literature
to guide my decision making. Philosophy has greatly influenced HOW I interact
with others and informs the type of team that I want to have.

College made me a much better entrepreneur and it did it _only_ four years!
Give me that experience every day over someone who skipped college.

Now, can you get all of that elsewhere? Of course. You can learn to program.
That's easy. You can read every day. Of course. But unless you are a
remarkable human being (and they do exist), you'll never achieve the breadth
of knowledge that comes with a degree.

Hell I'm all for restructuring how we think about education. The answer isn't
to eliminate it. Instead lets decouple the skills training aspect. Liberal
arts degrees for everyone!

~~~
kansface
"Liberal arts degrees for everyone!" strikes me about the same as "Engineering
degrees for everyone!".

------
SoftwareMaven
I can't help but wonder if that safety net feeling is part of what doomed
Everpix. If they had believed they were incredibly lucky to land $1.8M and
that they _had_ to build the whole business with that (rather than having a
belief that more funding awaited whenever they needed it), would it have
forced a different set of decisions to be made that would have driven revenue
and growth, and ultimately success, instead?

~~~
rhizome
From the sounds of it, what doomed them was pricing too low in a way that made
it impossible to create higher tiers of service, and, perhaps most
importantly, using AWS for everything. AWS bills monthly, so if in fact they
were running a $35k/mo bill there, a _HUGE_ refactor was passed by. But then
again, startups don't hire sysadmins anymore.

~~~
aespinoza
Do you think they were better off by having their own servers ? (Honest
question we use AWS and Rackspace, and we feel the pain of Monthly bills as
well).

~~~
autarch
This should be fairly easy to price out, right?

I suggest you start by simply comparing the cost of dedicated hosting-provided
hardware. This is the middle ground between owning your own stuff and
something like AWS.

Pricing out the cost of owning your own servers can be tricky since you need
to account for a number of factors:

* Initial cost of hardware - don't forget to include things like network switches, remote console devices, etc. - you may also want to buy something like a remotely accessible power switch so you can forcibly reboot machines

* Rack space costs

* Bandwidth costs

* Sysadmin time to manage the _hardware_ (you already need a sysadmin to manage things like backups, logging, etc.)

* On-site remote hands if your rack host is not physically near your sysadmin

But regardless, I'm pretty sure that _anything_ ends up being cheaper than AWS
once you get beyond a fairly small number of servers. The big advantages of
AWS are integration with other services (storage, load balancing, etc.) and
the ability to spin many machines up and down very quickly.

However, if you can tolerate waiting a day or so to provision new servers,
dedicated hosting-provided hardware is almost certainly going to be quite a
bit cheaper.

You could also compare this to something like Linode. Again, you lose the
ability to provision new machines almost instantly, but they are pretty quick
to bring up new machines (minutes, not hours or days). They also have a number
of nice integrated services like backups.

Finally, you can also do some sort of hybrid setup where you have core stable
services on dedicated machines but still spin up AWS instances to deal with
bursty computation needs.

~~~
dmourati
I did this math at Eye-Fi, a competitor of sorts to Everpix. What I learned,
is the answer to whether to build or buy is the classic: "it depends". The
driving factor? Data retention policy. The one move Amazon made during my
analysis that had a huge shift in the calculus was to introduce Glacier.

My takeaway, the economics of a lifetime storage offering are very difficult
to achieve. Glacier changes the rules by altering the SLA for data access to
make the money work out.

~~~
girvo
Eye-Fi is awesome. <3

------
radley
Perspective:

"Blogger was a success and quickly gained traction. But unlike their
enterprise product, Blogger had no way of making money. Pyra Labs eventually
had to lay off all of their staff as the money ran out. For a year, Ev worked
on Blogger by himself in order to keep the site online. After a year of
struggling to keep the site afloat, Blogger eventually started to make some
money. Google would eventually make Blogger it’s first acquisition."

[http://culttt.com/2013/09/11/founders-work-
review/](http://culttt.com/2013/09/11/founders-work-review/)

------
radicalbyte
Sad. It looks like their technology did a great job at solving a very real
problem.

If any of the founders are here, can I ask a question: why did you chose to
implement this as a cloud based service, when a little basic Math would
suggest that it was a better match as a client-based tool with upgrades?

Take me for example. My internet is 20mb down, 1.5mb up. That's pretty good
for Western countries. I currently have around 300gb of photos taken in the
last 10 years. That'll take months to upload. But if you made it client based
you could do conversion & classification locally. Then uploaded the best into
a pinterest style gallery for your website (with social features).

Then offer backups, custom galleries etc as professional features ($5/month
for low-res jpeg backups, $20/month for 500gb RAWs). Maybe you could have
found a niche with semi-pro photographers who're fed up with flickr? Or
families who want to share photos with relatives without the risk of
Facebook/Google using them in adverts?

~~~
swisspol
We built a unique image pipeline with excellent full-res image optimizations
allowing to save close to 5X in bandwidth and storage costs. Incidentally, it
also makes syncing entire life photo collections much faster, that's why the
average Everpix user had more than 9,000 photos.

~~~
hvidgaard
I know I'm probably in the minority, but if I was to pay anyone to store and
manage my photos, I'd expect to be able to save the RAW files along. For all I
care you can use high quality jpeg for daily use, but the raw needs to be
accounted for as well, and storing them separately is tedious work.

------
thatthatis
35k/month in aws bills. 6k paying users. 10% upgrade rate.

That means their storage + servers per customer cost ~$.5/month. Storage per
paying customer of about $5/month.

Ergo their $5/mo service has costs of $5/mo per paying user.

This isn't a failure to raise funds, it's a failure to achieve basic unit
economics. And that's just cost of goods sold before you even think about
acquiring new customers or paying staff.

------
apinstein
Everpix team: sorry to hear that the runway ended before you could take off.
It is a great idea, but with such tough competition for user acquisition (esp
free competition in the B2C space), it's easy to see how customer growth
couldn't deliver the returns needed for a VC-backed startup. We considered
this space heavily but decided we'd be no match against the giants throwing
money at this space.

At Tourbuzz, we've approached the photography market from a commercial angle.
We've bootstrapped a profitable niche in professional real estate photography
and are now planning our expansion into other niches. I do believe that the
feature set you were formulating is one that is in consumers' interest, it's
just a matter of finding a way to monetize it successfully. The photography
space is still huge and growing, and there is plenty of time to build large,
successful companies in the space.

We'd love to talk to you about the future if you're interested.

------
homersapien
Their focus wasn't on the product, it was on living/working in SF. They could
have saved a year's worth of AWS payments alone by trimming the fat that comes
with wanting to be in a "hip" location.

~~~
sameer_sundresh
I know what you mean, SF is too expensive. But it's basically impossible to
relocate a team of 7 who already have various different ties to a given area.

~~~
bjansn
For product development, remote working is one solution. I work remote with my
team all the time. Sometimes you need to see each other face to face, then
meet up somewhere where it's affordable. Could make for a good team field trip
even!

------
mvkel
I think Gruber (ironically) said it best:

"Everpix sponsored the DF RSS feed twice this year, which is how they first
came to my attention. ... Really a shame to see them close."

There's the problem. They spent $16K on Daring Fireball sponsorship instead of
doing basic research to discover where they should actually be targeting their
marketing efforts.

Your best idea for acquiring more users is to sponsor one of the most
expensive RSS feeds in the world? Sponsoring DF is typically what companies do
when their accountant says "you need to get rid of some cash, stat."

If Everpix hadn't yet found a path to sustainability, doing something like
sponsoring Daring Fireball as a tactic to acquire more users is a good
indicator of some very poor business decisions.

~~~
ents
I bet a lot of people here, myself included, learned about Everpix through DF.

~~~
mvkel
Unfortunately, there aren't a lot of people here. Not enough to generate real
revenue.

------
zaidf
My hunch is that Everpix's $35,000/mo AWS bill could have been significantly
less if they went with their own dedicated servers.

When I ran my music start-up, really smart people would look at me funny when
I'd tell them it is cheaper than AWS for us to get a couple of high-power
dedicated servers with unmetered 100mbps bandwidth. We were pushing over 100tb
per month and paying under $3,000/mo, _including_ the cost for our web and db
servers.

~~~
paromi
i was pushing 100 T / month with one server 1Gbit unmetered at 250$ / mo ,
also music site.

~~~
zaidf
What backbones? We had an option to get much cheaper pricing on Cogent. We
decided to pay a bit extra for premium.

Also, most of our cost was for the hardware(not the bandwidth). We went with
top-notch storage with RAID and a bunch of ram. In hindsight, we should have
bought the hardware for one-time fee but didn't for cash flow reasons.

~~~
samcrawford
Wise move!

FWIW, 100TB (approx 300Mbps continuous) costs us approximately $450/mo with a
good quality host (Quadranet) with a good blend of upstreams. A cheaper host
(Ubiquity) charge us about half of that. It's worth paying the extra for sure.

------
bjansn
The transparency in this article is something we can learn from. It's sad to
see a service like Everpix go as they were making money. But if you look at
the other numbers, they just staffed up too quickly. Salaries, personnel and
payrolling costs of together $3.7 million in two years is just way to much
compared to the money they were making.

What I'm curious about is that the cost per user (storing photos) is what
killed them, or a burn-rate simply to high for what they're doing.

But then again it's easy to look at this as an outsider and try to point out
their flaws. I'm hoping to learn more about how they monitored specific
business metrics to test their business model.

~~~
rhizome
If they were paying $35K/mo to AWS for hosting and storage, they could have
paid about that much for a _year_ of hosting on their own machines. There's a
lot we don't know about this angle, but suffice it to say they were throwing
money away on infrastructure.

~~~
bjansn
Yes. We moved back to our own infrastructure as well. But AWS has a broad
range of services. I can imagine storing photos on S3 makes sense for a
startup like Everpix. Because, you don't need to worry scaling on storage
level. Sometimes it makes sense to pay a premium, but it should really be tied
to your growth metrics. If you see a month to month growth to which you can't
keep up with updating and migrating your own infrastructure, then make the
move to AWS or another big cloud vendor.

------
3JPLW
Dammit. That sucks. I am (well, was) a paying member of Everpix and I loved
it. It was very great. It surprises me that this is how I found out about the
closing. They haven't sent out the notifications to members yet, it seems.

Guess I now have to look for another similarly seamless remote backup of my
photo library. Any suggestions?

~~~
sameer_sundresh
We're sending out emails in batches. We will also be in touch about refunds
and downloads.

~~~
3JPLW
Just got it. Thanks for your part in creating a product I loved. Best luck in
your future endeavors.

------
Codhisattva
Wow. What an interesting example of what's wrong with the venture capital
model. A great product dies because the founders "spent too much time on the
product".

I hope a 9th inning miracle saves the day. If not, thanks for the great
product.

~~~
angersock
From the article:

 _" The reaction was positive for you as a team but weak in terms of whether a
$B business could be built."_

Wow, fuck these guys. It seems like a lot of good ideas are getting left on
the cutting-room floor because people are holding out for the next giant
thing.

I hope the crowdfunding thing is enough to help unlock capital for things like
this.

(j/k crowdfunded equity is going to be a shitshow)

EDIT:

The folks probably blew some money they didn't need to, but the quote I
brought is specifically "Yeah, so, you guys are good but we don't see this
being a billion dollar business".

A glorified photobucket doesn't _need_ to be a gigantic billion-dollar
business. Most startups which solve simple problems and solve them well are
very useful to consumers but aren't going to be massive juggernauts; that
doesn't mean that they're bad investments.

Had the investor said, "Yeah, we don't see this becoming a $100M any time
soon", maybe that'd make sense. But the additional order of magnitude (one
billllllllllion dollars) strikes me as unreasonable.

This is a great example of why everyone thinks we're in a bubble folks.

~~~
crapshoot101
Wait, explain? Why should VC's fund something they don't think will make
enough money? That seems to be a sense of entitlement - clearly, paid users
were not enough to support this product on its own (which by all accounts, is
a shame).

~~~
Glyptodon
I think his implication was that paid users would have been enough to support
it in the long run if the goal of investment were a stable business with some
amount of yearly profits rather than a VC jackpot valuation exit.

~~~
jfb
But isn't that more the role of traditional sources of capital (banks, &c.)
than a SV VC?

~~~
Glyptodon
To be honest, I've never heard of traditional sources of capital funding
websites but I suppose that doesn't mean it doesn't happen.

In any case, I agree that it doesn't match the VC models, but I'm not sure
there is another model available to a web business that can probably get
enough traction to survive, but not enough to offer massive returns.

In fact, I'd go so far as to say there are probably significant market
segments not being served because they offer a modicum of stable profit but
have large up front costs without a lot of growth opportunity.

~~~
jfb
I wonder if this is an opportunity -- the world is not solely composed of
moon-shot local social enterprise websites, and worthy businesses are being
shut out of the world of cheap money by the prevailing culture. Hmm.

------
danso
Here's my perspective as an avid, sometimes published photographer...I never
used Everpix but my perception is that it solved a very real problem but
unfortunately, it is a problem that most people don't realize they have.

For starters, most people already use something like Facebook, in which
they've selected the best or most interesting of their photos to share to the
adoration of their social network. When these users wonder if they've done
enough with their photo collection, they just have to look through FB and
remember that yes, they did put up a few photos and people liked and commented
them, end of further discussion.

Of course, these users may have thousands of other photos that they just never
got to...but that might not matter for most people...they've already gotten
some satisfaction from sharing.

Of course there are shutterbugs who do feel a yearning to go through their
photos and see them all again...but are there enough to support a paid
service? Hard to say, especially with the many other photo services out there.

From my perspective, I have a pro Flickr account where I have nearly 10,000
photos...which represents less than 5 percent of the photos I've taken in the
last few years. However, a service like Everpix is not appealing enough to
me...because the barrier to me is not that I can't easily access old photos,
but that I've realized that editing and sorting photos is the long part of the
work...and unless Everpix mitigates that part better than Lightroom and a
bunch of external HDs, I don't think id be compelled to try it out.

And so for now, Flickr is good enough...I mostly use Flickr because it's an
easy way for people to find me. I imagine 500px likewise finds its success
less as a storage service and more of a place to shareable nod be seen. A lot
of the testimonials I've seen of Everpix was its value to people and their own
photos...which, while is a very valuable thing to serve, it is ultimately the
sharing of these photos that makes people want to join a service in the first
place

------
abalone
I wish the author had dug into the budget more. Yes you need to grow your
company.. but $1.2M in salaries? Half a million in "consulting fees"? To
develop an early stage product?

This seems like a missed opportunity to explore startup finances. Not just
growth strategy. I personally would love to know more.

------
guynamedloren
Can somebody explain the difference between salary, payroll, and personnel? As
far as I can tell, this money goes to employees. However, with a sum of
roughly $3.8M, this seems a bit high for 6 employees over 2 years
($270k+/employee/yr), so that can't be right..

~~~
qq66
Payroll = salary + benefits

Personnel costs = full-time employees + contractors (iOS development shops,
etc.)

~~~
guynamedloren
Wait, so are these 3 costs not summed? I didn't do all the math from funding
to net income, so I might have missed something.

~~~
gph
That infographic is very confusing and misleading. They lined the numbers up
as if they should equal out to the net income at the bottom. They don't.

The 2.3 million funding doesn't count towards net income. I'm guessing that
number is the subscription revenue - expenses, which it says in the footnote
that not all expenses are shown. What everyone else said about
Salary/Payroll/Personnel is correct, so I have no idea why it listed all three
on the infographic.

I'm guessing the author of the article took those numbers from their financial
report and didn't have the financial sense to understand what he was doing so
he just threw them together in a way that made sense to him, but doesn't
actually make sense in reality.

------
beambot
> They _hoped_ that at the very least, they would be able to refund their
> customers' money and allow them to download their data.

I wish more web services gave the option of hooking into my own personal AWS
S3 buckets or DropBox account (with append-only permissions). This would
totally eliminate any concerns over data retention and possession. Double-
bonus points for open formats. I want to (unambiguously) control the
underlying data!

 __I don 't know if EverPix had this option or not... it's just a frustration
for me that keeps me from using (most) web applications.

------
elag
Other People's Money. There's a reason they're all smiling in the final photo.

~~~
infinitone
Frankly, thats what struck me the most- them smiling as if nothing happened.

~~~
weavie
I remember when my business went bust, the amount of stress I went through in
those final weeks was so intense that the sense of relief I felt when it was
finally over meant I was smiling during the post announcement beers. And that
was my own money as well. Trying to avert bankruptcy is a horrendous
experience..

------
chmars
It's somehow ironic that a service provider whose name contains 'ever' and
promised to store your photos for ever has to shutdown after only two years.
As a user, I tend more and more to go with well established providers to avoid
such situations. 40 days isn't much to migrate away from a service either. On
the other hand, users have probably to be glad that the service wasn't shut
down with immediate effect.

~~~
lh7777
The thing is, more established companies aren't a guarantee either. I tend to
hit the back button as soon as I see an internet company promise to do
anything "forever."

------
robterrell
Wow, I just signed up for Everpix two weeks ago. According to this article,
they had already written the message announcing their end when they took my
money.

~~~
girvo
On the upside, they've said they'll give it back.

------
dm8
That was fascinating read. Kudos to the team for opening up their finances and
talking about them openly. It brought some scary memories when I was in a
similar situation a while ago and had trouble paying AWS bills even though
they were much smaller than what you guys have to pay. Startups are indeed
hard.

One thing that I've learnt is that market size matters the most in venture
backed startups. And if your addressable market is not large enough then
product or team are irrelevant.

Regardless, good luck to the team. I'm sure things will work out eventually
for everyone.

------
yashg
I have a photo watermark product and I see photo backup as a natural
progression of our product line up. Stories like these are a wake up call. Few
things that I would take away are -

\- They were charging too low IMO. The free tier gave away too much for free.
If your product is of value then charge for it. People will pay. It does not
matter that Apple and Google are giving it away for free.

\- They should have spent at least some part of the millions they raised on
acquiring users.

\- It seems they blew almost all money on salaries and consulting. Even if the
AWS bill was $35K a month, the money they had raised was enough to last them
for two years and they also had paying customers.

At the end of the day it looks like a classic case of concentrating entirely
on product and neglecting the revenue and user growth. You can afford to
ignore revenue if you have the growth rate of Instagram or Twitter. But if you
have neither revenue nor growth then it's difficult to keep going on VC money.

------
afterburner
Never heard of them before today, and I'd been looking for a good picture
storage solution in the last year. Maybe that's part of the problem.

------
innonate
I just posted some more detailed thoughts here:

[http://innonate.tumblr.com/post/66113756052/everpix-blog-
we-...](http://innonate.tumblr.com/post/66113756052/everpix-blog-we-gave-it-
our-all)

In some way we felt like classmates with Everpix. We started in the same half
of the same year. Most every thing they wrote about we believed in too. We
didn't know the team, but from afar they seemed like stellar people with their
hearts in the right place -- right where our hearts were too.

Awesome job team Everpix. Thanks for the inspiration and sharing the journey
with us!

Nate CEO - Picturelife [https://picturelife.com/](https://picturelife.com/)

------
Geee
Couldn't they have shut down just the 'freemium' part of the service and keep
going? Then figure out growth later on.

------
Artemis2
I'm not surprised, AWS is expensive as hell.

~~~
eterm
While the article concentrated on the incomnig AWS cost, if you look at the
infographic the expense of AWS is tiny compared to their overall expenses.

~~~
Artemis2
That didn't help them through

~~~
Grue3
Tumblr has an AWS bill that dwarfs theirs, and did survive for 6 years without
any income. It's mostly Everpix's failure to attract investments to blame
here.

------
robryan
I am confused about the $500k loan, surely this would need to be repaid before
they can look at customer refunds?

~~~
CoachRufus87
I was wondering the same thing.

------
johnrob
_but everyone here is hung up on the concern over being able to build a >$100M
revenue subscription business in photos in this age of free photo tools_

Dropbox is a billion dollar company doing exactly that. I'm willing to bet
that photos/videos are what exceed quotas and create paid accounts.

------
pkmehta
This article is well-written and The Verge's production quality is tremendous.
Can we get more like this?

On Everpix - pretty shocked at the candor/level of disclosure in this article
including from the founders and Index Ventures. VCs tend to keep mum about
their misses so a bit refreshing to see.

~~~
girvo
For the past year and a bit, The Verge have been lightly dipping their toes
into startup journalism. See Alexis Ohanian's "Small Empires" on there for an
example.

I personally hope they give it a bigger shot, as it fits their cross-section
of tech and culture that they're aiming for, and I've loved the writers since
some of them were back on Engadget!

------
jervisfm
So I am wondering: as a startup founder / cofounder are you obligated to
return investors' money/funds if it comes to the point that you have to
shutdown your startup? Or was the raising of the money done with the
understanding that investors may never get it back ?

Obviously, the answer here depends on the exact agreement(s) between the
investor(s) and the founders but I am curious about the typical case.

If indeed, as I suspect, you are not "in-debt" by the amount of money that you
had raised, this makes the shut down a bit less painful and also gives you
room to try and do another startup in the future (due to not been burdened
with paying back huge sums of borrowed money).

~~~
gojomo
Most often professional tech startup investments are either (a) purchases of
stock in a company; or (b) a 'convertible' loan to the company (that's
expected to turn into shares when a full stock-sale round happens).

In both cases, the money enters the company's accounts, not the founders'
accounts, and is used over time for business purposes.

If the company fails there's little or no money left to pay anyone back. In an
orderly liquidation, there might be a little left over, or picked up from an
asset/tech fire-sale. Those amounts go first to pay back creditors, first
among them anyone owed salaries, as much as possible. If any is left over,
it's split proportionately among shareholders, usually first to 'preferred'
shareholders (professional investors). But by this point the liquidated value
is likely to be nothing, or pennies on the dollar.

Professional diversified investors understand this: sometimes the shares go to
zero, and sometimes debts are uncollectable.

It's not common for the founders to offer personal guarantees of repayment.
(In other kinds of going-concern small-business financing, like bank loans or
equipment financing, where the founders/officers have the means, they may
offer such guarantees to lenders... but not in highly risky tech startups.)

Now, there's a fair chance that the founders themselves depleted savings or
ran up personal debts to feed the company – investing/loaning their own funds,
working for little or no salary in the expectation of gains later. So it's
often still a draining financial hit... but the professional investors aren't
expecting a formal debt repayment.

Instead, if the investors think the failure came after a good honest try, and
was a learning experience for founders who will succeed at other times and
opportunities, they'll favorably consider investing in a future venture, or
help place the team elsewhere. So it's never a total loss: everyone learns
things to do, things to avoid, and how/when to work together.

------
wehadfun
I find it hard to believe that no one wanted to buy this service. $35K per
month in revenue.

~~~
robterrell
Well, I think the article said it was $35k per month in AWS costs alone. If
they had 6800 paying customers at the cheapest rate ($50 per year) they were
making $333,200 per year -- $27,767 per month.

My #1 priority would have been getting the storage costs to be break-even,
with plan to get well under in a year. I have to assume they tried and
discovered they couldn't get their numbers low enough.

~~~
swisspol
FWIW we designed Everpix's infrastructure and our unique image pipeline so it
would break even and it did: revenue from subscriptions (around $40K / month)
did cover both free and paid accounts (around $30K / month).

~~~
camus2
what stack did you use on the server ?

~~~
swisspol
Mostly RDS / EC2 / Python with C/C++ extensions

------
PanMan
This is one of the first public numbers I have come across on salaries in SF
startups: $ 1,168,710. This is for a team of (in the end) 7 people, in about 2
years (started with 3 people). Let's say an average of 5 people. That comes
down to $ 117K/person/year. Is that average, or above or below? I know some
startups in Europe, and in Europe half of that would be common.

------
NirDremer
Call me optimist but I have a hunch that the level of engagement around the
shutdown will attract investors to try and save the company.

------
j_s
I was a potential customer that decided against Everpix.

1\. I couldn't install their desktop app without 'Run as Admin' (which is
understandable but not documented as part of the process). When I did a
minimal effort at reporting this (responding to my signup email), the email
bounced.

2\. I asked for slideshow support and basically got a 'we don't do that here'

------
ismail
500k for consulting???????

~~~
middus
Let me break this down a bit: USD 500k at USD 2k/man day = 250 man days

A US man year has ~235 man days, so that's just roughly 1 external FTE for a
year. Not so much, actually.

~~~
jrochkind1
What kind of FTE makes $2000 a day, what?

~~~
twic
Consultants. Not freelancers, consultants. They have to charge that much so
people know they're consultants rather than freelancers!

------
Touche
If you're a user who signed up because of the new tagline:

> Your photo mess, solved.

I'd be pissed right now. Not solved, the company's out of business. This is
why I won't sign up for another web service that isn't open source again. I'll
gladly pay for hosting, but core technology must be libre.

~~~
atourgates
As a user, I get pissed off with acquihires, or pivots. Those can feel like a
breech of trust.

This is different. It's pretty clear that the Everpix team worked hard to
deliver the service they were selling, and in the end, failed.

I love(d) Everpix. It really did solve my photo mess, and their daily
"flashbacks" were a welcome dose of nostalgia, delivered to my inbox every
morning. There are other photo services that do similar things to Everpix, but
none that can match their unique combination of pricing, ease of use and the
brilliant flashbacks.

I'm sad that I lost a service I really really liked, but far from pissed off,
at least at the company itself. They created an awesome service, and hopefully
one that will soon be copied by a more financially stable successor.

~~~
Touche
But your photos are much more important than the life span of one company. So
if you're truly trying to solve photos, it has to be as an open source
project.

------
gte910h
Part of this is a lesson on using AWS early then looking for cheaper stuff
later if your income doesn't rise above your AWS costs. There are considerably
cheaper options for many of the categories it serves that would have
drastically cut down their bills.

------
ebarock
You don't need just a great idea, you need to set a finance strategy that can
follow this idea. A VC or others investors, does not mean that you will
survive. Keep an eye open and do a balance forecast. It seems basic, but it is
always forgotten.

------
b0z0
It's incredible to me that an amazing service like this, solving real problems
would fail while stupid (let's be honest and call them what they really are)
social media startups are prospering all over the place. It's quite sad.

------
msutherl
For my part, I didn't use Everpix because I actually want to edit my photos
and just save the best ones. I keep less than 5% of the photos I take. Everpix
tried to do the editing for me, but software will never win that game.

~~~
msutherl
I should say though, it was a beautiful product and did its job extremely
well.

------
keithwarren
I cannot help but wonder if this is why my startup Pivotal
([http://pivotal.ws](http://pivotal.ws)) got a rejection letter from YC last
night.

~~~
baddox
Are you aware of Pivotal Labs and Pivotal Tracker?
[http://pivotallabs.com/](http://pivotallabs.com/)

~~~
keithwarren
I am, we know long term we will have to change the name and already have
something lined up but we figured it best right now to keep the current name.
Make a bunch of mistakes and then rebrand.

~~~
qq66
Publicly admitting a plan to "make a bunch of mistakes" under another giant
company's trademarked brand may not be wise.

------
GuerraEarth
Everpix. They just needed someone on the team who was passionate about
marketing. Whose gifts ran in that direction. I bet what they do next will be
even better/hotter.

------
NKCSS
This really saddens me. I hadn't heard of the service yet, but it looks and
sounds awesome... it's a shame they couldn't make it work :(

------
bluishgreen
Everpix photos are private by default, it is waay more difficult to build
private by default companies in general.

------
ronjac
andrewchen wrote a blogpost about this [http://andrewchen.co/2013/11/05/when-
a-great-product-hits-th...](http://andrewchen.co/2013/11/05/when-a-great-
product-hits-the-funding-crunch/)

------
batemanesque
sad to hear this, great product. in a perverse way it was also nice to see an
article & responses from the team that dodged the usual Valley bullshit.

------
veritas20
sadly, this is my first time hearing of this service...

------
schenecstasy
At least they didn't call themselves Foreverpix.

