Smilebox is turning into an intriguing story of a young company grappling with the challenges of expanding to new markets and geographies. The Redmond, WA-based company just raised $2 million from its existing investors, as we reported yesterday, and the money is being used to fuel its expansion to Europe, starting with the U.K., Germany, and France.
I spoke with CEO and founder Andrew Wright this morning about his company’s plans, and how it’s doing in a tough environment for consumer tech companies. He confirmed that the $2 million is a follow-on to Smilebox’s $7 million Series B round from December 2007. And that the money was raised to expand to the European market. The new effort is being headed by Yannis Dosios, a marketing executive and four-year veteran of Smilebox. Dosios is now based in Athens, Greece (his home country).
Smilebox is a photo services company that helps consumers do things like share pictures and videos across social media and blogs, manage and print photos through retail chains, and create greeting cards and DVDs using their personal digital media. The key to all of this is that Smilebox provides about 1,000 original templates for designing scrapbooks, photo albums, and so forth. The company says 10 million customers have installed Smilebox. (The software is a hybrid between an application that sits on your hard drive like iTunes or Windows Media Player, and a pure Web service like Google search, though Wright says it’s mostly the latter.)
“We have a personalized content platform,” says Wright, who previously worked at RealNetworks and Microsoft. Smilebox’s ideas and products apply globally, he says. But on a regional level, it has to market them properly and develop content that relates to local consumers stylistically and culturally. That means understanding U.K. holidays as compared to the U.S. or Germany, for example, and designing localized templates around that.
Of course, Smilebox faces big challenges in getting established in Europe, especially as a small company. It will take time to understand each country’s culture, educate the market on what Smilebox provides, and build relationships with local partners. “I’m a content network. It’s like launching a broadcast TV channel. The good news is it’s hard to do, so if you do it, you build barriers to entry,” Wright says. “It’s not easy for other people to duplicate what we’ve done.”
Nevertheless, the company faces competition from the likes of Shutterfly, Snapfish, Hallmark, and Photobucket. (And it has some similarities with startups like Animoto and Picnik, but those are focused on professional slide shows and photo editing, respectively.) But so far, so good. Wright says Smilebox was cash flow positive for the fourth quarter of last year, and that its revenues were “up well over 100 percent” for 2009 compared with the previous year.
Smilebox was founded in 2005 and has raised a total of $16 million from Frazier Technology Ventures, Bessemer Venture Partners, and angel investors including Rob Glaser, Paul Thelen, and Richard Wolpert. Last summer, the company acquired Preclick, which was based in New Jersey and the Seattle area, to tap into what Wright calls “high demand” for printing pictures at retailers like Wal-Mart and Sam’s Club. Smilebox now has just over 50 employees and is looking to hire eight to 10 new staff in Europe by the end of this year, Wright says.
