Everpix

What did it do?

Everpix was a San Francisco-based photo service that gathered all the photos on users' phones and computers in the cloud, automatically picked out the best ones and resurfaced old memories. Alongside a free version, it offered an unlimited-storage subscription for $4.99 a month. Praised by critics, the product was considered one of the best photo solutions of its time.

Why did it shut down?

Despite strong subscription conversion, the product did not grow fast enough; by March 2013 it had gathered fewer than 19,000 sign-ups. The company spent almost all of its $1.8 million seed investment on the product and could set aside no budget for marketing. Its search for a $5 million Series A coincided with the Series A crunch, when investors were being highly selective, and failed. When acquisition talks also came to nothing, the company announced its closure in November 2013.

The story

In October 2013 the seven-person Everpix team, gathered in a co-working space in San Francisco, was facing an Amazon Web Services bill of about $35,000. The company stored its users' 400 million photos on those servers and had no money to pay the bill. Founder Pierre-Olivier Latour had been paying his staff the minimum wage for a month.

The Everpix story began with two French computer scientists who met at Apple. Latour had sold his first company to Apple in 2003; Kevin Quennesson was the lead on Apple's Quartz Composer project. Latour developed the idea in 2009 after struggling to organise hundreds of photos on his return from a holiday, and he founded the company in August 2011; designer Wayne Fan joined the team as co-founder. That same year Everpix was a finalist at TechCrunch Disrupt SF. The product gathered all the photos on a phone and computer in the cloud, automatically picked the best ones and sent a daily email recalling shots taken on the same day in previous years.

Users loved the product. Some 12.4 per cent of free users upgraded to the $4.99 monthly or $49 annual subscription, roughly twice Evernote's rate. The company reached 55,000 users and 6,800 paying subscribers. But next to free photo apps that were gathering millions of users, growth remained slow, and almost all of the $1.8 million raised from Index Ventures and 500 Startups had been spent on the product. Latour's search for a $5 million Series A coincided with the period known as the “Series A crunch”. Investors praised the team but did not believe a $100 million subscription business could be built in photos in an age of free tools. Index provided a $500,000 bridge loan but declined to lead a new round.

In the final months an acquisition deal collapsed at the signing stage, and an offer for only part of the team also came to nothing. On 5 November 2013 Everpix announced that it would close: new sign-ups stopped, the apps switched to read-only mode, and the service ended completely on 15 December. The company tried to sell its technology so that it could refund subscribers.

Everpix is a classic case of the difference between a loved product and a fundable business. Its conversion rate was high, but the capital ran out before the user base reached the scale investors expected.

Lessons for founders

• Even if your paid conversion rate is good, investors gauge the size of the market by user numbers and growth rate; report both together.
• Do not spend your entire seed investment on the product; set aside a small marketing budget from the start to test user acquisition.
• Keep a cash reserve that covers unavoidable costs such as the cloud bill even in a shutdown scenario; returning users' data safely is a company's final responsibility.

Sources

1. Everpix, The Cloud-Based Photo Startup, Is Shutting Down (TechCrunch, 2013-11-05)
2. Out of the picture: why the world’s best photo startup is going out of business (The Verge, 2013-11-05)

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