A Tale of Two Startups: Picnik and Wetpaint, Like Peanut Butter and Chocolate

Earlier this week, we heard that two of Seattle’s most promising Internet startups have teamed up to deliver sophisticated photo editing services to a growing pool of social-network users. Picnik, which makes Web-based tools for creating collages and cool photo effects, is now available (with just a click) to users of Wetpaint, a “social publishing” site that lets people and companies create online communities around topics of interest like TV shows, consumer electronics, and other products.

It struck me as a really interesting partnership, because the companies are polar opposites in terms of their financing history. They were both founded in 2005, but Picnik has been entirely self-funded, while Wetpaint has raised some $40 million in venture funding from the likes of DAG Ventures, Accel Partners, Trinity Ventures, and Frazier Technology Ventures. Both startups have a substantial and loyal following, with Picnik getting more than 30 million visits per month—9 million uniques—and Wetpaint boasting more than 8 million users worldwide.

I spoke with Jonathan Sposato, the chief executive of Picnik, to get his thoughts on the deal, among other things. “I love the Wetpaint partnership,” he says. “That’s exactly the kind of joining forces that can really deliver even greater utility and value to the user. It’s like peanut butter and chocolate.” He was half-joking with the latter statement, but the partnership is a prime example of how Web 2.0 startups in complementary spaces should think about working together to grow their customer bases.

Here’s how it came about. About six or seven weeks ago, Sposato says, he met Wetpaint co-founder Kevin Flaherty at a symposium organized by Kevin Merritt of Seattle-based Blist. Sposato and Flaherty exchanged business cards and a couple of e-mails. “And we were off to integration,” Sposato says. “They have been so easy to work with. The deal was easy, and that’s how you should do business.” (The deal doesn’t involve any revenue sharing or other financial terms.) Picnik also has partnerships with Flickr, Facebook, MySpace, and other popular social sites.

Meanwhile, I also caught up with Rob Grady, Wetpaint’s senior vice president of marketing, to hear his side of the deal. Meeting at a local coffee bar, the former Starbucks executive recommended I try his favorite caramel-flavored espresso drink (it didn’t disappoint). When the talk turned to Picnik, Grady sounded pretty excited. “There is a cultural similarity in that they’re passionate about a great user experience, and so are we,” he says. “Both of us have built open platforms, so integration was totally doable.”

It may be a small step for a couple of local startups, but it’ll be interesting to see what other Web 2.0 partnerships emerge from Seattle’s tight-knit community. “We weren’t arguing over who gets A or B,” Grady says. “Both of our user bases want this, so let’s raise the tide so both boats go up.”

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