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Everpix was great. This is how it died (theverge.com)
320 points by coloneltcb on Nov 5, 2013 | hide | past | web | favorite | 258 comments

    [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!

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.

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

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

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

"backed by Michael Arrington" - what more reason could you want?

'very good reasons' == self interest.

This happens routinely at Disrupt. I remember a fabulous startup called Prism Sky Labs (could connect to any network camera with drag and drop software and was quite cool in ambition) lost to Qwiki.

Don't feel too bad for Prism Skylabs, they just raised $15 million.

Pitch competitions are just that - competitions for who has the best pitch - this includes the quality of the pitch itself, and the performance and stage presence of the presenter.

I think the best startup in such competitions rarely is the actual winner.

CrunchFund is actually an investor in Prism Sky Labs (as am I).

I remember those final pitches. It was bizarre that Shaker, some Habbo Hotel-like facebook soc media skin would beat this functional idea, or beat a very good but boring B2B accounting thing which looked like a great idea. Of course the shaker guys also had a totally freaktastic presentation _style_.

careful! comments like this might get you disappeared by the YC positivity-maintenance crew

> 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 β€” and mostly free β€” Everpix alternatives.

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

Does an MBA inoculate someone from making these judgment errors? If so, I personally know multiple MBA-holders who've made similar errors who should be informed that they deserve their money back or something.

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.

Does an MBA inoculate someone from making these judgment errors? If so, I personally know multiple MBA-holders who've made similar errors who should be informed that they deserve their money back or something.

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.

The anti-education bias of HN simply fascinates me.

I don't think one would need an MBA to figure out getting paying customers is the number one priority. They had a tough job ahead of them, lots of free competitors, so they felt that they had to make a vastly superior product to differentiate themselves. It's not a bad assumption, it's just a tough market to compete in.

Yeah, it's weird. And for all it's inefficiency, there are absolutely brilliant things to be learnt that you'd never come up with it all.

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.

But code-slingers are world-changers.

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.

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.

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!

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

It's not just code monkey.

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?

I want both.

You don't need an MBA to solve those problems. It's a problem with prioritization, not lack of ability.

That's exactly what an MBA does. Teaches you to prioritize effectively. It also gives you countless examples of businesses who don't, and the consequences they suffer. Sometimes learning these lessons in the real world can be very costly.

One of the biggest myth about getting an MBA is that you learn anything at all.

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.

MBA is great but I think your expectations are high. Oftentimes the issue is not knowledge but rather working at high pressure and to do it well nothing beats experience & good mentors.

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

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.

I am going to tackle this, from a coders point of view, you can very quickly see if someone is any good. Or a designer, sysad, most other things.

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.

To be fair, the slogan their late-term marketing consultant came up with was pretty lame.

Your response seems to assume that she has earned MBA, but she has not. http://www.linkedin.com/in/juliesupan

To be fair, there's a lot more to user acquisition than a slogan.

Let's be clear: learning about those lessons will take maybe, at most, a month or two of reading a couple of books, reading PG's essays, and reading a few of the blogs written by great entrepreneurs and VCs. That's it. An MBA probably does teach you this - it just doesn't need to take two years and XYZ thousand dollars. There's a lot of fluff in an MBA that's just not necessary for a startup.

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.

Is this an issue of needing an MBA, or just needing to think about marketing and finance?


I do not hold an MBA, but have a few friends that do and this seems like an inaccurate generalization. My understanding is that MBA's can have varied focus areas, with a varying curriculum. For example, MBA's can be focused on: Finance, Marketing, Management, etc, and yes, Entrepreneurship.

How can you have formal education in Entrepreneurship? It's pretty much on job type of learning. Not trying to be snarky but I'm genuinely curious.

90% of small businesses fail within the first year, or so the conventional wisdom goes.

Not all of them can possibly fail for completely unique reasons.

Sure, but lack of hustle/perseverance is probably the biggest factor past the trivially solvable problems.

Product-market fit? Team's ability to execute? Resource constraints?

Eric Ries, for example, might differ that you can't formalize learning about startups.

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.

I have an MBA and MS in CS from Arizona (who at the time was ranked top 10 in entrepreneurship). I did not have a focus in the MBA so I could do Computer Science but the entrepreneurship track sounded like a less serious/competitive YC with a few classes thrown in the mix. You grouped up with others and worked on an idea for a year. The program recruited successful retires to both teach the classes and advise you on your idea. It actually sounded fairly practical, and the caliber of advisors they recruited was pretty good (most of them had run several businesses and made a few million dollars over their lifetime). It was definitely less tech-oriented though.

Like any field, there are people who do research on it. Being familiar with the research that can be useful.

Just replace the word "Entrepreneurship" with "Sales" (which is similar) and perhaps you can understand.

The same way you can have formal education in Computer Science...but never mind, you're right, no on-the-job learning in CS...

An MBA in entrepreneurship has business classes adapted for an entrepreneurial audience.

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.

Part of the problem is that an MBA can be a lot of different things even within a schools. I, for one, am working on learning how to solve problems that startups face, problems that can't be solved by code.

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).

Is working at a startup mandatory as part of curriculum then?

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.

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 don't see why. Startups aren't some magical beast unmatched anywhere else in the world. They're small businesses.

Either way, they need to hire an annoying "business guy" to worry about money 24/7 at some stage during the 18 months.

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?

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.

Even at 35k/mo, that's 420k/year. That seems reasonably low to me (in the sense of a fundamental operating expense, not in terms of the going rate for hosting, which I have no clue about). By contrast, look at their people costs:

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.

I don't know why the article list salaries, payroll and personnel costs as separate numbers like that. Payroll includes salaries, and personnel costs includes payroll.

Is this payroll over one year? If so, that's absurd. No one should be making $200k+ in salary at a startup that still has yet to turn a dime of profit. Just shaving 10% off that number would have covered their AWS costs for another 3 months.

The totals are all over 2+ years, not per year.

Still higher for a company with paltry traction and no hockey stick growth. Weren't the employees (including you) compensated with equity?

They were paying themselves nice salaries weren't they.

We support 4x their number of paying customers with an ANNUAL server bill that is ~half their MONTHLY bill.

But it wasn't necessarily scalable from a business perspective, and that might not have been attractive to the investors they needed. Especially if it's true their pricing was low.

I think the relevant standard should be: focus on the core of your business, outsource everything else.

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.

Amazon regularly features SmugMug at their conferences and in case studies. I haven't looked at the specifics recently but they basically went all-AWS. (SmugMug is also a bit different from your typical consumer photo site but they are a photo storage and sharing company.)

Since they are a featured customer, they may also get price breaks.

I don't believe smugmug is a freemium service, are they?

Nope, their lowest tier is $5/mo.


Correct me if I'm wrong, but doesn't Dropbox use AWS? (Or at least did until recently.) The two services' pricing (on a per GB basis) is within the same ballpark.

Dropbox has received a quarter of a billion dollars in funding.

According to Drew Houston at Websummit last week, they haven't spent any of that money.

So all of their acquisitions and burn has come from (crunchbase caveat) ~7MM? There's some missing pieces to be sure, but suffice it to say that having that much cash in your back pocket allows a different set of considerations.

Drew said the same thing at TC Disrupt in SF this year. Reading between the lines: All the acquisitions and ability to pay 300+ staff without needing to touch a massive $250 million pot of money is basically telling the market (eg: Box): "We can play the enterprise game very well and have the revenue to prove it"

I'm sure Dropbox gets better volume pricing than Everpix did.

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).

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.

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.

Eye-Fi is awesome. <3

If you just use EC2, no EBS, and reserved pricing then AWS is just as cheap as other providers if not cheaper. It is all the nice features that make it expensive. S3 is pretty damn cheap too.

Of course, raw hosting costs are only part of the calculation. You have to include sysadmin time and salary.

You can't really compare EC2 sans EBS to something like a dedicated server. Most apps need permanently available storage.

Of course, if you don't need permanent storage (and your needs are bursty) than using EC2 is probably a huge win.

Your second paragraph exactly describes Everpix's computational needs: bursty with no use for local persistent storage.

Dedicated servers don't really give you permanent storage either. Granted, it is more permanent than EC2 instance storage, but hard drives do get corrupted. You still need backup and replication for a robust solution.

"Disk is cheap"

Thank you for your answer. I agree with you. And after I read this article I went on to do some research decided to move the servers in-house. But I am also researching a Hybrid cloud using AWS.

s3 seems great for scaling out storage, but I'm sure there are gotchas.

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.
I'm not kidding about 1/3 the cost and twice the performance. And this wasn't even with rack/switch local boxes, which would improve performance even more.

I can vouch for your numbers. My music start-up was one of Softlayer's early customers. We stayed with them for a while before moving to an even cheaper host. In all, we were pushing over 100TB and paying under $3,000/mo for everything(web, storage, db servers).

This was over 5 years ago. I am sure things would be even cheaper now.

Soft Layer seems to be as expensive as EC2, if not more expensive, especially when compared to reserved instances.

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).

My startup is in the same space as them and I can promise you that running our own storage is much cheaper. Azure and AWS run around 7K per month for 100tb.

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.

S3 is already redundant - it virtually guarantees no data loss and mirrors your storage across multiple data centres.

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 something that was absolutely on the table for our planned 4th generation infrastructure. It was unlikely to us we could stay on AWS. We already had 400 millions full-res photos and running 80+ EC2 / RDS instances for 50,000 users. At our growth rate, we would have been close to a billion photos by end of year.

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.

Not to pile on, but a storage startup should have had a systems person among the 7 employees. I would do it in the first 10, but the only reason it wouldn't be in the first 5 is that I have the skills myself.

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?

Any idea what the average storage take per user was?

yes. they would have 100% been better off, provided they actually knew what they were doing, which i guess is questionable since the business failed.

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.

Your alternatives are

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.

Yes, when you have a large amount of storage, it is well worth doing it yourself. The cost of redundant storage devices with replication ends up being paid for in like 3 months of S3 bills.

I could not agree more. Running on Amazon instead of let's say OVH incurred maybe 10x costs. At the same time they probably didn't have an adequate pricing and freemium ratio and/or didn't do enough to market their good product. I could have been a customer but was not aware of everpix.

When you go down the VC path, they expect hypergrowth; certain doors are opened and others are closed. Personally, next time around I minimize dependence on funding.

VC kids treat themselves like kings and never truly get to hacking. What ever happened to internal hardware? Build, setting up, and tuning servers is one of the most fun parts of running a service.

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.

It's a lot of fun, but it's also a bit of a trap in my experience. My previous startup was all custom, my current one is all as hands off as we can be infrastructure wise.

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.

Build, setting up, and tuning servers is one of the most fun parts of running a service.

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.

It's kind of sad really. I'd love to have a big office with a dedicated center to some really awesome equipment. It's like a work of art that you crafted yourself, right up to the cable management!

It's loads of fun, especially when you have dedicated chillers and sufficient power for everything. However, as you come to the realization that your C-level execs negotiated forever contracts for keeping data and servers spinning with no common outage windows, consolidation/virtualization becomes difficult and eventually the reality distortion field collapses and you're out on the streets with everyone blaming you for the failure, despite your ability to run modern services with stone knives and bearskins.

Plus, you don't have that all-important "Cloud" buzzword for them to throw around!

Oh get off your high horse. "VC kids", really?

Yes, VC kids. Let's be honest. Kid creates a decent website/service in a few days/weeks -> VC funding -> ludicrous spending on top tier development environments, offices, staff, and services -> "oh fuck".

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.

I would urge you to consider whether you have an accurate picture of the world. It would be a staggering claim, to me, that even most of the people who get VC money could be characterized as "kids". Getting VC money is a lot of networking, calling, follow-ups, and frank discussion of terms. I don't think that selects well for "kids".

Sorry, I must have been living in an alternate universe where every person in SV is not a total genius at the age of 20.

I agree with you. From what I read it seems they cared more about raising money than making money.

Our per-user income was above our per-user costs. But we hadn't yet reached the economies of scale where fixed costs were covered.

I always ask on question to every business, and nonprofit. How much were, are the founders of the company making per year? It's usually a lie. I've also noticed when young entrepreneurs are given a large amount of money; they don't quite realize that it's probally all the big money they will ever see. I know I didn't. I made a lot of money in my twenties, thinking it would always be this easy. Sometimes, the availability of money is just because you were at the right place at the right time; people underplay luck--especially people in their twenties, or rich kids. Rich kids have their parents to fall back on. Poor kids will never have that safety net. I don't know anything about this company, but their situation is not unique--it's the norm, that's why I cringed reading the article and looking at the pictures. I've seen it too many times before.

It is staggering to me some of the salaries that founders give themselves. I remember reading a tip for pitchdecks/term sheets that if you put your founder salary as anything above 150k that is slightly too high for most offers.

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.

70 k/year doesn't make a difference and it's not a good thing to have founders struggling with money. If your brain is too focused on the trivialities of life you can't invest yourself 100% in the company.

Apparently it would have in this case. That would have been two months of AWS for each founder, so saying it doesn't make a difference is clearly wrong.

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.

Thanks for the answer. It sounds like your per-user profit was insufficient.

Did you have intermediate milestones before reaching the "economies of scale" one?

I thought everpix was a great product and had my family using it (4 paid accounts). I'm very sorry to hear this, and I wish the whole team good fortune.

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.

Scale goes both ways. Costs can be reduced very easily these days.

Curious: how many TB where/are you storing and what was your bandwidth usage like?


"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."


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?

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.

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.

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.

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.

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.

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.

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!

My feeling too, when you have an internet business, why would you waste so much money in the location...

And shoot yourself in the foot when it comes to future funding, potential hires, and acquisition talks.

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.

Does office space for 7 employees in SF really cost ~10K/month? I know in midtown Manhattan a previous startup I was at had over 5K sq ft for that price.

True. But, it seems many VCs won't consider you if you're not in the valley.

Typically, no VC will consider funding a business which has gone bankrupt and shut down...

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.

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

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

Wow, $9500 for a week, and only in the RSS feed. That is pretty pricey.

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.

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

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.

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.

Where did you buy your dedicated servers ?

Initially Softlayer. When that became too expensive, we negotiated a deal with an excellent provider called Choopa.com.

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.

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.

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.

That 35K wasn't the breaking point (nor close to it).

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?

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

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

FYI - I just got the subscription cancellation notice. It says "Your Everpix subscription has been canceled. You can continue using your account until [my renewal date, well beyond December]." You may want to change that to reduce confusion.

Today is a very sad day :(

I am in the same boat :( so sad. Loved the product; checked the flashbacks everyday, shared through the easy photomail feature. It was way better built out than Loom and didn't have a storage cap. But yeah, what is that worth when it's not viable? :/

I'm using loom (loom.com) and its nice--very similar I think. hope it doesn't go the same way. Yes I am paying :)

I am another very, very satisfied Everpix user who is sad to see them go. They did such a perfect job of increasing visibility on old photos and I've been sharing pictures like I never did with Facebook or any other social network. Such a shame.

I'm Currently looking at loom.com as a replacement, though they don't have the same cool Flashback feature that I loved.

>> They haven't sent out the notifications to members yet, it seems.

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. :-(

Woven - http://woventheapp.com

We're moving more into the realm of calling ourselves a backup service than the aggregator/viewer service we are mainly today.

I've been enjoying PictureLife. Allows you to use your own S3 bucket too

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.

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)


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.

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


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.

I agree that venture capitalists passing on great businesses because they're "lifestyle ventures" or whatever the politically correct phrasing is is an issue, but that doesn't seem to be the case here? EverPix wasn't trying to become a $B business, yeah, but they were still rapidly outspending their income streams, which is only sustainable if you're an extreme edge case (or receiving the massive, massive influx of buzz and users like, say, SnapChat.)

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.

Right, I agree that it looks like their business model was flawed. That said, that should've been the rejection status code instead of the billion-dollar opportunity remark.

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).

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.

But why on earth should VC's fund it in that case? Isn't that an entrepreneur's decision, not the VC's? Blaming the VC's for not funding this seems ridiculous to me.

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

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.

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.

Individually, sure, it makes sense, but the fact remains that the emergent behavior of the system seems to be the ossification of capital.

"A glorified photobucket doesn't need to be a gigantic billion-dollar business."

No... it absolutely doesn't. But this particular photobucket wasn't even a $1 business. It was a NEGATIVE business.

"fuck these guys" is way over the top. there's nothing wrong with deciding you only want to invest in businesses you think have a shot at being worth 1 billion dollars some day.

> 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.

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 not a SV resident, nor a startup kind of guy, but one thing I've noticed is that VC firms are hit driven. And when there are periods in time when hits are far apart, you end up with events like the Series-A crunch.

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'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

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.

Here in Australia, there are lots of high-tech businesses working on unsexy problems who get funding, that no one ever hears about.

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.

There are private equity funds that do this kind of thing at a slightly later stage. I think the window between a startup that burns fast enough that it needs a big exit and one that burns slowly enough to not need VC at all is pretty narrow though.

That sounds pretty close to the 500 Startups strategy.

Looks to like it died because they spent too much by being in the Bay Area. Seriously... they're spending ~$1k/employee/month for office space in a "co-working venue" in SF.

Well in defense of that - it's easy to underestimate the value of a good, creative, productive workspace.

Also very easy to overestimate it, especially when you are targeting a low value niche like a consumer web subscription.

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.

It's not a great product but a great idea. A great product is one people will either pay for or investors invest in with the assumption is will be more valuable in the future. There is a difference. Sometimes the people with the idea can't figure out the leap to a great product and it fails. I've been there.

From the investor perspective, the company is the product. Not the company's product.

Everpix, from a user perspective is a great product. So says this paying customer.

I disagree. It sounds like they had a great product, but they didn't have a good enough business.

"... and not enough time on growth and distribution." Look at the numbers posted, and even if they cut back heavily on their expenses, the subscription revenue was not where it needed to be.

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

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.

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..

Salary = paid to the employees Payroll = Salary + benefits and taxes Personel = Payroll + contractors

Payroll = salary + benefits

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

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.

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.

It probably made more sense on the P&L statement until it was dumbed down.

I was confused by that too. I suspect that they are subsets of one another (e.g. don't sum them because they are largely redundant).

I didn't understand there cost at all

> 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.

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

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

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..

Poor choice of photo, perhaps. This wasn't a posed photo originally intended for the article. We were just smiling to look good for the camera.

>them smiling as if nothing happened

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.

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.

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."

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.

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

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.

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.

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.

I just posted some more detailed thoughts here:


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/

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

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

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.

That didn't help them through

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.

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

I was wondering the same thing.

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.

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.

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!

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).

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.

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

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.

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).

what stack did you use on the server ?

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

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.

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.

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'

500k for consulting???????

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.

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

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

Top of my head: Patrick, Thomas and probably a lot of other HN regulars.

Looking besonders technology: lawyers, marketing and branding consultants, and, last but not least, management consultants.

$2000 is not outrageous.

From where i am, it seems exorbitant. Granted here in Africa, $1m is quite a big investment, we have been running on <$10,000 for over 9 months now. Capital is very difficult to get access to. Forces you to be super-lean(and practically starve)

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)

That would be a very high fill rate (5 days a week) for such high prices.

I don't think the math implies that it's a single person 5 days a week for a year, in a staff augmentation fashion. It could be e.g. 2 people for a month, then nobody, then 3 people, all at different rates.

Why would you do this? Examples:

* a team to write the Android port(s)

* a Web design team

* QA

* HR

* Legal ($$$$$)

* etc.

All of these will be at different rates. You might outsource parts of the technology to hit your other growth goals.

Essentially part-time specialist employees. Hiring them full-time would have cost a lot more.

this is only a couple contractors for a couple of years. totally reasonable.

also, a lawyer may have taken 10-15% of this all by himself, especially if venture capital is involved.

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.

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.

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.

That's the goal behind Trovebox (formerly OpenPhoto). But we've since moved away from the consumer space and into the business/organization space.

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

> This is why I won't sign up for another web service that isn't open source again.

There are really two sides to this coin. This kind of model works well for Wordpress with hosted and self hosted/open source(?) though.

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.

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.

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.

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.

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

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

Are you aware of Pivotal Labs and Pivotal Tracker? http://pivotallabs.com/

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.

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

Hey Keith,

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.

That is what 20 minutes on Instapage gets you. Long term this is not our branding (Pivotal is already taken) and we did not want to invest much time in the public site before we are ready to start marketing the system. That site was put up so there was at least some place people can go when put our name on an accelerator application or tell someone we meet what we are working on.

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.

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