In 2010, Google bought a Web-based photo-editing startup called Picnik for $50 million. Picnik's three cofounders made $16 million each.

Privco, "the private company financial data authority," (subscribe here) has obtained a copy of the email thread that launched Picnik in 2005.

Everyone in the startup space likes to say that ideas are cheap, but clearly, these guys had a pretty fleshed out set that put them on their way toward huge riches.

Read:

From: Massena, Darrin

Sent: Sat 12/10/2005 8:47 AM

To: Harrington, Mike S

Subject: Picnik

What do you think of Picnik as a code name? I really like it. Maybe even as a product name? Picnik.com is for sale. After sleeping on it I think it is really important to get and use the product's domain name. Flickr.com is just so much a better handle than somecompany.com/flickr. Especially for a first product, why confuse things by emphasizing your company over your product?

From: Harrington, Mike

Sent: Saturday, December 10, 2005 9:42 AM

To: Massena, Darrin Subject:

RE: Picnik

awesome. get it!

From: Darrin Massena

Sent: Saturday, December 10, 2005 10:56 PM

To: Harrington, Mike; Massena, Darrin

Subject: Internet Photo Editing

OK, OK, this is it man. Our long term business goal: OWN THE INTERNET PHOTO

EDITING MARKET. I think we can do this.

THE MARKET What is the internet photo editing market? Any site/service that people upload images to. Any site that hosts photos. Photo storage/sharing/management sites (Flickr et al), social networks, blogs, personal web sites, personal gallery sites, forums and groups for starters. More and more people are uploading unedited photos from their camera phones directly to the internet. Wifi-enabled cameras also allow direct-to-service uploads. New sites and services that make use of photos are popping up all over the place. Photos are becoming an internet data type as common as text.

THE PROBLEM There is no ability to manipulate photos once they are online. People have to download them, bring them into a photo editor (which they must buy/maintain/upgrade), and somehow upload them again. That sucks. Especially for little tweaks like to sharpen an image, or crop it, or to zoom in on part of it. The overhead is so high that most people just don‟t bother even though they know the photos they‟re printing/sharing could look better and wish they did. To some degree this must be hindering photo sharing sites, amongst others, because their user satisfaction levels aren‟t as high as they could be.

OUR SOLUTION A wholly-online photo editor, provided in (at least) two forms. Standalone, as an online application we provide direct to end-users. And integrated, as a seamless part of any site whose users benefit from being able to manipulate images. Our standalone photo editing service is so complete and powerful that people will pay to use it. They‟ll prefer it over the offline tools they have today. The integrated service will work so seamlessly and be integrated so easily that any photo-using site/service will be happy to pay for the value it adds to their site/service; they‟ll attract additional users who will spend more time on the site and be happier with their results.

THE COMPETITION Established companies with photo editing products. Established companies have to overcome two major hurdles to address this market (in addition to realizing it is a market!). First they must write an online photo editing application. There will be no quick ports of existing applications; most code will have to be from scratch. Second, they must implement their code to work as a seamlessly integrated service in a 3rd party site. Not only is this more work, but it is a new mindset for the established players. Their present mindset is more about how they can create a vertically integrated application and service of their own, not how can they add value to a 3rd party.

Upstarts like ourselves, possibly as outgrowths of photo sharing sites. Competition against an independent startup comes down to our ability to execute on our standalone and integrated services as well as our marketing of them. As far as I can see nobody has any kind of lead on us so it is a good bet we will be first and even if we are not first we will be best!

Each photo sharing site that develops an adequate photo editing solution in-house might mean one less customer for our integrated service but a) our standalone service might still make customers out of some of their customers due to its superior interface and capabilities, and b) if even one major photo sharing site adds significant editing capability (presumably proprietary) they‟ll fuel their competitor‟s desire for our integrated service.

GETTING THERE There are many avenues we can take. Here‟s one possibility that appeals to me.

1. create v1 of the standalone service w/ a minimal devil-horn level of features (i.e. not a serious photo editing tool) 2. launch it using the viral marketing strategy (“Make funny pictures of your friends!”). Build an audience, build credibility.

3. start implementing more serious photo editing features and the ability for the photo editor to be seamlessly integrated into 3rd party sites 4. send our biz-dev folks out to make deals with sites that can be satisfied with basic set of photo editing features

5. launch our v2 standalone service when we have a credible set of photo editing features 6. add features and customers forever and rake in the dough

THOUGHTS This could be really BIG ($-wise). Our timing is right. We‟re at the intersection of demand (mass use of online photos) and capability (Flash 8 supports the first level of functionality we need). Flash 8.5/9 will take us to the next level. If Canvas becomes widespread and is hardware accelerated we can move to that. If WPF becomes widespread we can move to that and boost our functionality/performance even further.

One thing I like about this is the RAD Games Tools-like approach of providing a service for other sites. This is an angle not every Flash bitmap-editing tool author will consider or be able to execute on. In addition to the revenue stream we will be building relationships that will make us harder to displace.

Another service we can provide to 3rd parties: photo processing (both user-directed and automated). Shaula mentioned a service she‟s used that provides photos of race participants after a race like the Seattle Marathon. They take pictures of everyone during the race. You pick your photo from their site then they send you prints in the sizes you‟ve chosen. They also allow you to choose whether the race‟s logo will be printed on the photo. Problem is, they don‟t preview what the result will look like with the logo overlaid nor do they let you choose its positioning or which race logo to use. Such a site could insert our service after the photos have been selected and pass us the various logo options. We‟d take over and let the user choose/place/size the logo, maybe add a caption, crop the photo, zoom in on a particular group of runners, draw an arrow pointing themselves out in a crowd, etc. We‟d pass the composited result back to the host site and they‟d take it from there. This is one small usage but I suspect if we look we can find a lot of opportunities like this.

I specifically didn‟t mention above the potential inherent in allowing people to „upgrade‟ their images to include animation, sound, and interactive elements (e.g. hover your mouse over each person in a photo to see their name) because I don‟t think it is necessary to add these abilities to make serious headway toward owning this market. They would be really cool though and might break us through into something completely new.

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