Smilebox Takes on Shutterfly, Snapfish in Growing Global Market for Photo Sharing

Smilebox is on a mission to help people around the world capture life’s moments, and share them. The Redmond, WA-based startup’s photo service—something of a cross between a desktop application like iTunes, and a pure Web-based service like Google search—helps consumers share pictures and videos online, create original projects like greeting cards, invitations, scrapbooks, slideshows, collages, and DVDs with their photos, and manage and print them through local retail chains.

The four-year-old company has some pretty lofty goals, from what I gathered in a recent conversation with CEO Andrew Wright. He envisions Smilebox becoming a household name—a part of the basic life experiences of the global population. Every wedding, anniversary, birthday, holiday (international and local), child’s first day of school, community festival, reunion, and family vacation, Smilebox wants to be there.

“Our goal is to be the brand that is synonymous with life moments and how people share them, connect around them, experience them,” he says. “We want to be at the center of that, and we want to do that globally, and to do that we need to be in all these countries, we need to leverage a global approach to be culturally relevant.”

The global approach Wright’s referring to involves building a local culture around Smilebox in every country they expand to, and it has been the company’s main focus over the last year. When we last checked in with Smilebox in February, the startup had just raised a $2 million round to expand its market to the U.K., Germany, and France. Now, six months later, the company has passed the 12 million download mark, trucking along like the startup that could. But this isn’t good enough for Wright.

According to Wright, Smilebox has an awareness level hovering around 18 percent in its current markets. His goal is to drive that number up, and fast. “We want to get our awareness level up to 60, 70, 80 percent over the next several months so we can be one of the dominant brands in photos,” he says.

This means taking on better known brands in the industry, such as Shutterfly, Snapfish, Photobucket, and fellow Seattle company Picnik (which focuses more on photo editing, but shares some features with Smilebox). And it’s a task that proves difficult as the company moves forward with its international expansion plans.

“We need to build awareness globally and build reach,” Wright says. This means Smilebox needs to build out its technology to support the individual cultural environment of each and every country it enters so it can target its services toward local holidays, festivals, traditions, customs, and whatever else is specific to that market.

“It is a tough job, but it just means that we’re culturally a lot more relevant,” he says. And that added value is what’s helping the company find success, even as the underdog. Smilebox more than doubled its revenue in the fourth quarter of 2009, compared to the same period a year earlier. And this year is looking good so far too. The performance has been strong enough to make Smilebox think about international growth. “We want to make this a big company, and we’ve been investing aggressively,” he says.

Luckily, the international expansion through cultural awareness is also what differentiates Smilebox from its competitors, according to Wright. “The fundamental difference in the way we do business,” he says. Unlike companies like Photobucket, the Smilebox business model is based on providing valuable content—like the 1,000 scrapbook and album designs users have access to for free—rather than monetizing it.

“They’re whole goal is to promote [consumers] to print out physical content,” Wright says. “Our strategy enables us at the core to have the experiences that users create—nobody today has replicated that.”

Instead, Smilebox focuses on providing consumers with whatever services they need to build their own experiences. Up until this point, the company’s main demographic has been primarily women, from their early 20s to late 70s. Wright says the older women tend to use the photo sharing service to stay in contact with their families. And as the company expands abroad, he says one more goal will be widening its appeal to larger markets at home—“making sure we have the right mix of content styles to appeal to the more urban, suburban, coastal, Midwest—something for everybody.”

This, Wright says, creates a “much richer experience” for everyone, and helps Smilebox “build a great global differentiated brand.”

It has also helped Smilebox foster its own unique company culture. All but 5 of the company’s 60 employees work in the Redmond office, where a large international group works to develop Smilebox services that cater to the atmosphere of the countries it’s expanding to, coordinating with the European office.

“We’ve spend a lot of time and energy on our culture,” Wright says.”There are no walls.” He means that literally—the floor is undivided, the conference rooms have glass tables, and rather than having the management in officers around the outside of the space, the management team sits in a cluster right at the center of the room—what they call “the kitchen table.”

“It’s kind of like a trading room on wall street, or a newsroom,” he says. “Anyone can come up and talk to us and share ideas.”

The open and collaborative strategy has worked so far. Wright says there are many more exciting developments on the horizon, including expansion into even more additional European countries in the months ahead, more retail partnerships—the company has already teamed up with Sam’s Club—in the next few weeks, and a rolling out of new contents and services. And if all goes according to plan, more hiring.

“We’ll be creating a lot more content for the modern urban mum,” he says. Broadening the Smilebox catalog is also a big piece, as well as pushing forward with more social media campaigns. The company integrated with Facebook a year ago, and Wright says the benefits have been undeniable.

“It’s been on a very steep upward trajectory—it’s by far our fastest means of sharing,” he says.

The company has raised $16 million to date, and isn’t currently looking to raise cash. But Wright didn’t rule out the possibility of raising more in the future. “Never say never,” he says.

“Right now we’re in very good shape, and we’ll see what the future holds. If we have to we will, but obviously I’d like to do without it,” he says. If everything goes according to plan over the next six to 12 months, Smilebox will be cash flow positive again. Then, Wright says, “We should be good.”

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