[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.
I think the best startup in such competitions rarely is the actual winner.
People on HN crap all over MBAs, but these are the types of problems many of them have been trained to solve.
It's important to be aware of the necessity to perform those business functions that coders probably would rather not bother with, but once that happens, I find that technical people tend to make much, much better judgment calls than their business school superiors.
In reality, it's rare to find people who're daring enough to apply simple rationality across most or all spectra, regardless of their background. Unfortunately, an MBA seemingly does very little to mitigate this, and it's the core problem.
Yes, people could hypothetically learn, but most don't. I don't understand why we've all fooled ourselves into believing that four years of rote memorization and arbitrary compliance will do anything. I guess it being a much more fundamental problem is scary, because as simple as it may be, it's apparently quite difficult for most people to change.
We have a big problem with our educational and hiring cultures.
An MBA inoculates somebody from making poor decisions just as much as anybody having expertise in any specific field. As you would agree, nobody is beyond making a poor decision.
Let's also be clear than an MBA is a broadly defined credential, as there are a host of specializations (including Human Resources management, Marketing, Finance, etc) that are often bundled within the "degree". However, from what was described in the Everpix case, I am confident that somebody with the right mix of educational training in early-stage venture management (MBA w/entrepreneurship concentration) and smarts could have added value.
I'm not sure it's specific to programming, but I find it dismaying to see how many solved problems we still need to fight with every day just because the people that originally wrote the code never paused to think enough about the theory behind it all.
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.
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.
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!
Who do you want to run your company?
A guy with no MBA but a 6 year history as CEO of a successful company, or a guy with 6 years of academic training and a MBA, but no history of ever running a company?
Same for coders. What do you want, the guy who has coded in a similar environment for 6 years, or the guy who spent 6 years in academia being taught to code with no experience on any project outside of academics?
The two primary motivations for getting an MBA are completely unrelated to obtaining an "education":
1. Career transformation (i.e. you're a marketer that wants to go into banking.. basically impossible to get interviews without going to bschool)
2. Obtain a professional network
"Learning" is really a tertiary priority.
So, didn't their investor have any MBAs? These are also the kinds of problems VC investors are supposed to advise on, to protect, you know, their investment.
But MBA are like economists, they all have different ideas on how to advance, and it is very hard to actually hard to test them, takes a long time to see if they were actually correct, if they fail they have a good reason, and it all sounds like something you could have worked out anyway.
The fact also remains that the vast majority of people I know who got an MBA did it for the network, not for the education.
Not all of them can possibly fail for completely unique reasons.
Almost every job has quite a bit "on the job" learning that you won't get in your academic studies. An MBA still teaches a lot of the skills, whether they be in finance, business planning, networking, IP issues, or presenting, that are useful for entrepreneurs. I imagine an MBA focused specifically on entrepreneurship would have even more useful stuff in the curriculum. Would be great if someone with such a qualification could chime in. A friend of mine with an MBA had one course where the main project was to basically to development a business from scratch and pitch it to real investors. Several students went on to launch those businesses after school.
Just replace the word "Entrepreneurship" with "Sales" (which is similar) and perhaps you can understand.
A typical MBA involves the study of topics such as marketing, finance, risk management, accounting, economics, statistics, operations, HR, organizational dynamics, business law, and strategy.
Many of these can easily be adapted to be more useful for entrepreneurs. A finance class can focus on venture capital more than the bond market. A marketing class can focus on new product development more than the promotion of existing products. A law class can deal with the issues most relevant to startups. The accounting needs of a startup exec are different than those a future partner at Deloitte. etc.
As a clear example of the type of content that an entrepreneurial class could cover, Steve Blank's book Four Steps to the Epiphany originated not as a book, but as the notes for his class at Haas.
I'm not saying that hiring an MBA would have been a magic fix for Everpix, but when looking at the business as a whole, the product looked great (despite its lack of support for non-JPEG formats, but that's more of a personal nitpick) and there was engineering talent to continue building the product. However, the part of the article I quoted above indicates that the team lacked the business talent to successfully find a market for the product (or to identify that there wasn't a market and pivot while they still had cash left).
Also, every startup has tons of different problems at micro level even though macro themes are consistent (e.g. getting new customers etc.). It will be hard to generalize problem solving across startups.
I agree that Everpix couldn't find scalable business model for their product. But what I'm saying is you may not necessarily need MBA to find market/business model.
I don't see why. Startups aren't some magical beast unmatched anywhere else in the world. They're small businesses.
Total Salaries (between 6 people) $1,168,710.45
Total Payroll $1,298,819.67
Total Personnel Costs $1,411,513.53
That's about 10x their hosting expenses. Even if they had free hosting it seems like it would only have kept them going for another 2-3 months.
If you are a photo backup company, storage is (or at least should be) part of your core.
It seems like they tried to take the heroku route, repackage aws services with premium software and sell it for a premium. But forgot to charge the premium end user price.
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.
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.
Of course, raw hosting costs are only part of the calculation. You have to include sysadmin time and salary.
Of course, if you don't need permanent storage (and your needs are bursty) than using EC2 is probably a huge win.
I work in a very different area, but my experience with ec2 are you should drop what you're doing and immediately price out leaving. Roughly: for big hadoop tasks, ec2 is a horrid environment. The boxes are slow, flaky, and shitty; the network is slow and super shitty; and everything about the experience is ass. Oh, and the emr admins are assholes who push broken code; code that couldn't even have run once. These assholes, after issuing us a hotfix to a boot action, proceeded to change the path to the hotfix (without mentioning it to us), breaking our production clusters twice in in 30 hours. I guess I hold a grudge but I like sleeping. The point is emr and perhaps ec2 are complete amateur hour.
Quoting myself earlier:
from a former employer who wants to stay anonymous, ec2 bill per month: $97k
peak, softlayer: $26k. 1/3 the cost, 2x the performance.
And let's not mention emr; a $15k/mo cluster in softlayer did something like
5x the performance of an emr cluster that was costing (and running!) $2k/day.
This was over 5 years ago. I am sure things would be even cheaper now.
The 244gb cr1.8xlarge (16 cpus, 240gb ssd) amortized over 3 years costs $659 / month. Softlayer would charge quite a bit more for similar specs ( order of magnitude more).
When you factor redundacy I need to buy 200tb, factor in other server infrastructure with the cost of a 4TB drive running around 180 and I can spend 15K to buy 200TB of storage.
Put another way, we can own twice the storage capacity (or 1x mirrored) for roughly 2 months of S3 storage.
You're also completely ignoring the costs of hosting this stuff, the computers they're in, redundant network switches, failed disks over time, and administration costs to rack and stack failed drives plus all the risk associated with your redundancy going wrong. You're also assuming your hard drives will be able to handle the performance needs. Not to mention this is one site - no DR.
So, Amazon S3 at $7.5k a month for 100 TB is $90k annually with RIDICULOUSLY high redundancy and known performance. Reduce it to 99.99% availability (about what your setup with dual drives might be if you run it well) and you're at $60k annually.
You really are going to host fast, reliable 100 TB for under $60k? Betting your business on it?
It's far from simple though: you need to find the people who can build such systems and also be able to afford the capex. And then there's the risks of running your own system and opportunity cost.
It's really unclear we would have been able to go this far in the first place without AWS.
You could have drastically cut your burn on that last $550K by hiring a sysadmin and bringing it all out of AWS (maybe keeping S3). This would have likely also involved retooling on the app side, but in the long run it would have given you more time for positioning/promotion/etc. All in all, 4th Gen is way late for this.
P.S. Number of photos is basically irrelevant, were you actually using market-fit metrics for infrastructural decision support?
pricing out servers and researching / working with smaller infrastructure providers who actually care about you and your account (imagine that) is real work, which is why so many people avoid it these days.
it's much easier to click a few buttons and "choose" machine type x in the offerings that amazon has designed to maximize their own profit.
computers are hard, let's go shopping.
1) Switch to other cloud providers, I'm not aware of any very cheap ones.
2) Switch to other hostings, which can be 1/10 as cheap as AWS, but then you have to deal with the failures.
3) Colocate and build your own servers/storage. It's only cheaper if your bill is much more than a 24/7 sysadmin(s) salary.
I suspect DropBox don't give a shit about server costs, they are swimming in money. But I bet having their own data centers will save them money.
When you get millions in funding its easy to piss away on the highest tier services. When you start from the ground up, every cent is managed.
Unless going custom allows you to do something that you couldn't otherwise do (cases which are rare, but existent), it's just optimizing margin. And you can't margin your way to success. (To failure yes, to success no.)
As noted above, their hosting was a big number, but it wasn't a dominant cost. It's like Amdahl's law of money, it doesn't matter how little you spend in one area if that area isn't dominating your costs.
And all else being equal, it's usually the wrong choice; the best way to grow the bottom line is to grow the top line. If you can spend X weeks cutting costs by Y$, or X weeks increasing revenue by Y$, grow the top line. It's fuel, it gives you options.
The thing I miss the most about doing it our selves was the raw fun of it, and how efficient it felt. But in retrospect it was a lot of time spent on things that ultimately didn't change the outcome.
As someone who has worked in this space, I can tell you that the skills simply do not exist. They don't hire for them, because they all ("all") use outsourced hosting and deployment frameworks that insulate them from these things.
Plus, you don't have that all-important "Cloud" buzzword for them to throw around!
I'm 20 myself, and while I'm not the hottest shit around, I have been working at a bank for the past two years. I've been exposed to some really smart people with extremely challenging problems, way more so than creating a pretty service in a few weeks and getting crazy amounts of funding for a business that's most likely going to fail because we're just that, kids.
Before coming into my role, I truly did think I was the best because I was able to create pretty websites with whatever is the latest JS library everyone is fawning over. That illusion was destroyed immediately when you start designing and working on infrastructures that have to handle millions of payments a minute, working with multiple vendors, business units, testing units, and various other departments you need to familiarize yourself with.
That is insane to me. I make less than 80k a year, in D.C., with a mortgage and two kids while I build on the side. A cursory glance tells me most founders aren't under such strict cost regimes. If and when I get funding and go full time I would take the absolute minimum to keep us fed and watered (~60k). How a founder could do otherwise to me is unconscionable.
I didn't say pay yourself nothing - pay yourself the minimum amount you have to in order to keep your life from impeding your work. If that means you need luxuries to be comfortable, then your lunch will get eaten by someone who is more spartan.
Did you have intermediate milestones before reaching the "economies of scale" one?
Would you mind sharing the P&L statement and/or pitch deck that the verge used in its reporting? The verge's article seems confused, and I think one of the best gifts you could make to the HN community is to teach us from this outcome with actual source documents.
"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."
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, $20/month for 500gb RAWs). Maybe you could have found a niche with semi-pro photographers who're fed up with flickr? Or families who want to share photos with relatives without the risk of Facebook/Google using them in adverts?
That means their storage + servers per customer cost ~$.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.
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.
Of course there are cons to living in SF, but if you're going for a series A after landing an initial investment it makes sense to base out of SF.
"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.
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.
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.
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.
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.
Guess I now have to look for another similarly seamless remote backup of my photo library. Any suggestions?
I'm Currently looking at loom.com as a replacement, though they don't have the same cool Flashback feature that I loved.
I just had an email pop into my inbox. Sad, indeed; I really enjoyed using it and paid money to help ensure they stuck around. I guess not enough folk felt the way I did. :-(
We're moving more into the realm of calling ourselves a backup service than the aggregator/viewer service we are mainly today.
I hope a 9th inning miracle saves the day. If not, thanks for the great product.
"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)
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.
I just sunk my last $20,000 in your app, man. Now you are shutting down and getting cushy jobs at Google? Fuck that, where's my money? I will stalk you and your new boss on LinkedIn until you explain WHERE THE FUCK my money is. My wife is leaving me and the kids want to go to Disney World.
Everpix's raw product seems to be great in the same way "free puppies for everyone" is great. Their monthly variable costs outpaced their revenues, and their market positioning left them amidst a sea of giants who offered similar services for free.
I think neither venture capital nor crowdfunding should (or can) be a panacea for a bad business model.
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.
No... it absolutely doesn't. But this particular photobucket wasn't even a $1 business. It was a NEGATIVE business.
Startups forget they are one company in a portfolio of companies that comprise a fund.
Venture capital expects a fraction of its portfolio investments to succeed. So it must invest in companies with very large target markets so the handful that succeed can offset the losses of those that fail.
I'm wondering if there could be a VC firm that would emphasize a low cost of business (for them) in return for not so many hits, but rather a series of smaller firms that just get on base. They'd build a pool of talent, and one or more of the firms might hit it big (aka got lucky), but the VC would be more about spreading their bets, and having a strong base to generate recurring income. And with a possibility of synergy between the various firms under management. So -- more dividend oriented than IPO oriented.
I think the management and vetting overhead isn't worth it for them. Maybe SV is more hit driven, but I've seen non-sexy start-ups raise small rounds of funding. You don't really hear about them though.
The only reason I know anything about any of them is I ended up in the right place at the right time. It's a shame, but that's how it goes.
See also: Their $35k/month (Over $5/paying customer!) AWS bill, when they probably could have done the non-sexy startup thing and just leased a couple of beefy VPS servers for a fraction of that.
Everpix, from a user perspective is a great product. So says this paying customer.
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
This seems like a missed opportunity to explore startup finances. Not just growth strategy. I personally would love to know more.
Personnel costs = full-time employees + contractors (iOS development shops, etc.)
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.
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.
that is the beauty of enterpreneurship here. You can try until you succeed, and a failure is just a step on the ladder to success. Burning through 4M is not even a noise in the humming of the money making Valley machine.
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.
- 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.
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!
CEO - Picturelife
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.
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.
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!
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).
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.
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.
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'
A US man year has ~235 man days, so that's just roughly 1 external FTE for a year. Not so much, actually.
Looking besonders technology: lawyers, marketing and branding consultants, and, last but not least, management consultants.
$2000 is not outrageous.
For e.g For our startup we do not have capital for tablets.. so the question becomes how can we get things done without purchasing the tablets. Repurpose the existing devices used by customers or some other way to do things? We came up with hacks that use cloudprint and existing printers, and SMS to cheap handsets (< $10)
Why would you do this? Examples:
* a team to write the Android port(s)
* a Web design team
* Legal ($$$$$)
All of these will be at different rates. You might outsource parts of the technology to hit your other growth goals.
also, a lawyer may have taken 10-15% of this all by himself, especially if venture capital is involved.
> 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.
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.
Nonetheless, we're open source, hosted and a bunch of other things to try and make this problem suck a little less.
Here's the original Kickstarter from 2 years ago, http://www.kickstarter.com/projects/jmathai/openphoto-a-phot...
Github repositories at https://github.com/photo
Hosted service now geared towards organizations at https://trovebox.com
There are really two sides to this coin. This kind of model works well for Wordpress with hosted and self hosted/open source(?) though.
Hope this isn't too harsh, but that landing page needs work. Is there anyway you could turn what's in that video into a compelling landing page? I'm not sure where you're at with testing or usability, but I can't imagine that landing page generating many signups.
We putting about $500 dollars into AdWords just to see what CAC looked like and the sign up conversion rate was around 2%, certainly meager when we are talking about just asking for a name and email but alas, it served its purpose.