Startup Spotlight: SmugMug, Where Your Photos Do the Talking

Mountain View-headquartered SmugMug is a father-and-son story in reverse. CEO Don MacAskill started the company and then hired his father, Chris, as president, eventually adding five more family members.

"They left their promising careers, and two SmugMug MacAskills became seven, solving the Silicon Valley problem of not enough time for family," Chris MacAskill writes on the SmugMug website.

SmugMug? It's a subscription-based, online photo-sharing website that provides unlimited photo uploads, safe back up, easy sharing, customization, image protection and privacy features.

It's for people who want to store, showcase or even sell their own photography under their own domain names.

The company was incorporated in fall 2002, starting with an initial investment of $200,000 by Chris MacAskill, who had also founded FatBrain, which raked in $100 million in sales and was later acquired by Barnes & Noble.

“I think we’re the largest tech company that completely bootstraps,” said MacAskill, who pumped in an additional $300,000 to SmugMug in 2004 and boasts about the company's lack of debt in 2011.

What was initially meant to be an online gaming company with photo-sharing evolved into a full-fledged photo-sharing company. “We followed our hearts and our passion and what we loved," MacAskill said. "We loved photos and videos, and we found an excuse to do it.”

He describes the site as something similar to the WordPress blog. “WordPress lets you tell your story through text with adding a few photos," he said. "We let you tell your story through photos, and you can add text and customize it.”

Chris Chute, research manager at Worldwide Digital Imaging Practice at IDC, said that the online space for photo sharing and printing is estimated to be worth close to $2 billion in the U.S. for 2010.

And he describes SmugMug as one of the big success stories of digital photography.

“Ten years ago, one of the first ways of starting a business on the Internet was to share media—media being photographs,” Chute said. The SmugMug concept, he added, was born out on an understanding that for a well-designed space, a space without any advertising clutter, you’d pay upfront.

Users can choose from three types of accounts, all of which come for an price—$40 annually for basic, $60 for power and $150 for pro accounts. 

Just as Costco charges its members to use its stores while other retail stores are free, SmugMug gets them to pay to upload their photos. Both businesses "seed" their fanatical customers, to an extent. As MacAskill said, “Two-thirds of our customers come from referrals,” and then he cites “an interesting dinner” he had with Costco’s vice president of marketing. 

As Chute said, SmugMug's business model continues to be successful. “Considering the fact that they have strong renewal rates—a certain type of consumer continues to use their site—means that there is value in the site.”

Competitors Flickr and Picasa also charge after a certain limit is reached, which happens really fast, according to MacAskill.

“You need to pay for the experience," Chute said. "If you want a similar experience in Flickr, you have to pay for their premium membership.” 

SmugMug has apps for iPad, iPhone and Android, and—unlike other photo-sharing sites, MacAskill said—its photos seamlessly adapt to the size of the browser, whether on a mobile device or a 30-inch monitor. “We make your photos look big and beautiful,” MacAskill said, adding that the power and pro accounts come with enhanced customization, watermarks and an option of selling digital downloads.

SmugMug also uses Amazon’s Simple Storage Service. MacAskill credits the "cloud-based approach" of handling storage requirements for having revolutionized its business. “It saved us a fortune and made us financially successful,”  he said.

SmugMug now has 81 employees, millions of customers and billions of photos. It's gone from 60 terabytes of data in 2006 to 4 petabytes of storage today.

It has a fourth of photos that Yahoo!-owned Flickr has, MacAskill said.

As for audience, SmugMug had about 1.8 million unique U.S. audiences in November 2010, according to The Nielsen Company, which was a 14 percent increase from the previous year. In comparison, Flickr had 13 million unique users, Picasa had 10.7 million and Snapfish had 5.4 million. 

Who uses SmugMug? President Obama reportedly used it when he ran for for the Illinois Senate. Howard Dean used it for his presidential campaign and also suggested the now-popular feature of opting for one’s own domain name. Photographer Trey Ratcliff, the governor of Georgia and Jesse Jackson Jr. are some of the other SmugMug users.