Everpix, a well-loved photo storage service, recently announced its imminent shutdown:
We were unable to secure sufficient funding in order to properly scale the business, and our endeavors to find a new home for Everpix did not come to pass. At this point, we have no other options but to discontinue the service.
By all accounts, the site and service provided an elegant solution to a common problem: how to store, organize, and access years' worth of digital photos from myriad sources. Everpix stored them all on the cloud and gave users a simple interface to manage them. But as good a product as it was, it simply failed to gain traction. Casey Newton's post-morten at The Verge reports that "the company had attracted fewer than 19,000 signups". Some 6,800 of those were paying customers, plunking down $4.99 a month or $49 a year for the paid version.
In the company's final months, company founder Pierre-Oliver Latour made the rounds among the venture capitalists. He sought another $5 million to follow up on the initial $2.3 million he'd raised during Everpix' nonage—which sum the company had burned right through. In a telling paragraph, Newton reports:
In meetings on Sand Hill Road, Latour says, nearly everyone expressed enthusiasm for Everpix's product. But one by one, they turned him down. After two meetings with one well-known firm, a partner sent Latour an email. "You guys seem to be a spectacularly talented team and some informal reference checking confirmed that, 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." Said a partner at another firm: "The reaction was positive for you as a team but weak in terms of whether a $B business could be built."
Everpix, not holding the possibility of doing billion-dollar—or even a paltry hundred-million—business, was thus refused five million semolians by the VC's. Which well they should have. Only suckers go for an investment that gets you less than a 2,000-percent return.
In time, Latour hopes, the lessons of Everpix will become more clear to him. Where had it all gone wrong, exactly? Maybe there was something obvious that everyone had missed.
Maybe the Everpix guys could have taken a look at their expenses. Their Profit & Loss statement:
Income
Funds raised: $2.3 million
Subscription revenue: $254,060.57
Expenses
Total consulting and legal fees: $565,975.65
Total Office Expenses: $128,750.87
Total Operating Costs: $360,924.30
Total Salaries: $1,168,710.45
Total Payroll: $1,298,819.67
Total Personnel Costs: $1,411,513.53
Net Income: -$2,294,818.17
Source: Everpix profit and loss statement summary (via The Verge).
Everpix was spending money like there was no tomorrow. Which, as it turned out, there wasn't.
To be clear, we're sympathetic to the Everpix guys. No one wants to see their work up and vanish like that. What we're looking askance at is the culture that killed it. The company raced through its cash with such abandon that it must've been planning on either more funding or an acquisition. And when it came to that time, turns out the VC's wouldn't lift a finger for anything less than a nine-digit payday. Not a thought given to long-term sustainability or the preservation and improvement of what they had built.
The ones who put up the money are the ones who own your work. If you want it to last past tomorrow, make sure they're as invested in it as you are.