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Why every photo storage startup dies or gets acquired

Why every photo storage startup dies or gets acquired


Picturelife didn't want to sell, but it had to

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In November 2013, when the photo storage service Everpix went down, the CEO of rival Picturelife offered assurances to his company’s customers. "We have lots of cash and ramping revenue," Picturelife CEO Nate Westheimer said in a tweet. "All signs say we will last :D Would love you have your business!" But just a few months later, Westheimer acknowledged the difficult economics of storage-based businesses. Like Everpix, Picturelife’s millions of photos were stored on Amazon Web Services servers — and its costs were growing quickly. "Picturelife, a relatively nascent company, will pay Amazon over $1 million just this year," Westheimer wrote. "The way I see it, it’s a million dollars standing in the way of thriving and sending them even more money in the future."

Westheimer’s post was prescient. On Thursday, he sold Picturelife to digital media hub Streamnation for an undisclosed sum. All but two of the company’s eight employees, Westheimer included, will leave the company. And while Picturelife will continue to operate, its failure to remain independent is telling: it may be simply impossible to build a standalone billion-dollar business based around storing people’s photos. "This isn’t a product like Snapchat; it doesn’t take off overnight," Westheimer told me. "So you need that financial durability in the early years, while you’re still building your customer base."

"This isn't a product like Snapchat. It doesn't take off overnight."

The idea behind companies like Picturelife is simple: every year, we take more photos and store them in more places. There’s your phone’s camera roll, Facebook, and Instagram. But there are also photos you posted on Twitter, stored on Dropbox, or shared on Flickr. There’s the photo library on your laptop that you keep forgetting to back up. And so starting a few years ago, a handful of companies emerged to take all those photos and put them in a central place.

Picturelife had raised $4.6 million from investors including Betaworks and SV Angel. In its first 15 months, the company attracted 200,000 subscribers. (The company wouldn’t say how many were paid users.) But this fall, when Westheimer went out to raise a new round of funding from investors, he was met with unrelenting skepticism. "There was a lot of scared thinking in the investment community," Westheimer says. "On one hand they would say, this space is so crowded, these giants are going to kill you. But every entrepreneur hears that. What’s weird is, two sentences later they’d then use those same companies that were supposedly going to crush us as examples of how hard it was to succeed in the space — because even they weren’t successful."

picturelife web

At this point, every major tech company offers some sort of photo service for storage or sharing. But none are as fully featured, or easy to use, as Picturelife is. Apple’s Photo Stream is all but incomprehensible to me. Google’s photo product, while very good, is buried inside Google+. Amazon’s photo storage service, tied to Prime, is just getting started. Facebook’s service is designed more for sharing photos than for organizing them. Dropbox’s Carousel seems to exist for the sole purpose of helping people consume their Dropbox storage.

We upload 1.8 billion photos a day

No wonder people keep building superior services: it’s impossible to store your photos with Apple, or Google, or Amazon, and not imagine you could do it better. And the need grows larger every day. Last year, trend forecaster Mary Meeker of Kleiner Perkins estimated that we upload 1.8 billion photos to the internet a day, up from 500 million the year before. But while services like Picturelife have attracted thousands of paying customers — I’m one of them — they haven’t found enough to build a sustainable business.

In December, investor and writer Om Malik wrote about the desperate need for a photo solution that goes beyond storing your photos and actually helps you enjoy them. "What the world needs is not filters to apply cool effects to the photos but filters to surface photos," he wrote. "Right now it is virtually impossible to find that photo from six months ago, even though you have a vague recollection that you took that photo." Big tech companies are focused on other things, Malik wrote. "And that leaves the opportunity wide for startups."

But the startups keep dying. First Everpix went under. Then Loom, a kind of infinite camera roll, sold to Dropbox and formed the basis for Carousel. Now Picturelife belongs to StreamNation, which aspires to become the hub for all your digital files: movies, music, and photos. The good news for Picturelife subscribers is that it will continue being actively developed — albeit with a mostly new team.

Jonathan Benassaya, the exuberant French founder of StreamNation, bristled at any suggestion that the 250 million photos stored on Picturelife are at risk. "I’m leading this company with my heart," he says. "And I take it personally when people don’t trust us to be able to keep Picturelife alive. It’s my mission. I have two kids; my wife and I are using Picturelife every day with our families in Europe and Asia. It’s a product we don’t want to see go away."

"I'm leading this company with my heart."

Benassaya previously co-founded Deezer, the European music streaming service that has recently made tentative moves into the United States. For now, Benassaya is bootstrapping StreamNation, a worrisome proposition for anyone who has already watched a few favored photo services wither away. But he says he has advantages over services like Everpix and Loom.

For starters, he says, a true digital media hub is easier to sell than a dedicated photo service. Americans spend about $3 billion a year to build personal media servers in their homes, Benassaya says, and that market is ripe to be transformed by the cloud. "If you take the consumer market, and you see what sits on their hard drive, it’s mainly media," he says. "Why would you want to offer them a service where they have to use one service for movies, one service for photos, and one service for music? We want to be able to access all our content on whatever device we want, whenever we want."

Perhaps more importantly, StreamNation is storing content on its own servers: a more difficult proposition than AWS, but apparently a much cheaper one. "Today Picturelife on Amazon is a huge monthly loss," Benassaya says. "Today PIcturelife, on our platform, is generating margin. And this is how you transform, just by making the right technological choice from the beginning." Picturelife will be six times cheaper to host on StreamNation’s own servers than it was on AWS, Benassaya says.

The end of dedicated photo storage apps

Westheimer, for his part, is optimistic about Picturelife’s future — even though he won’t be a part of it. Customers, he says, "can rely purely on the perseverance of a very determined entrepreneur. I think that’s an incredible amount of security for the business." Looking back, he says, he now believes people will be drawn more to all-in-one services like StreamNation than to a dedicated photo app.

And perhaps that’s true, rationally. But emotionally, it feels false. When your house is burning down, you don’t run back in to get your music and movies. You run back in to get your photos. So far, no one has been able to build a beautiful digital home for our photos and turn it into a sustainable, independent business. The opportunity is still there, but it seems to get further away from us every year.