Shutterfly’s Strategy: A Conversation with CEO Jeff Housenbold (Part 10)

SM: Zazzle and CafePress are not going after personal memories or families.

JH: Not in the same sense. It is personal publishing. They use different backend technology, being heat transfer method versus digital print technology. From a ecommerce standpoint, there area lot of similarities. We advertise online, run a ecommerce company, own our manufacturing and supply chain, and provide customer service. There are a lot of similarities and it is an adjacent market. The question is over time, do we start moving more towards the middle and is there an opportunity to partner or acquire some of those assets in the marketplace? It is an area we watch, but not one we think of as overly competitive.

SM: No, it is certainly not a competitive area.

JH: From what I understand, Zazzle went out and have been trying to raise a round for more than a year now. They got a small commitment from a hedge fund at a very high valuation of around $300M. They’ve also lost a number of key employees including their CTO, CMO, and business development lead. Family run businesses are usually harder to scale.

SM: To finish let’s talk about your quarter, guidance, and how you see metrics.

JH: Let me look back before we look forward. 2007 was a phenomenal year, top line growth of 51%, we improved net income by 74%, and we had 2.4 M transacting customers who did 7.1M transactions. We shipped 7.1 million orders out of our two manufacturing facilities. It was great from a business standpoint and it was great from a scalability standpoint. We made a number of senior hires. We hired across all of the different departments. We opened Charlotte on time and under budget, and it is producing well, giving us lower operating costs on the east coast and more efficient shipping to east coast customers which represent 61% of total customers. I could not be more excited about 2007 as a year.

Regarding 2008, I can’t give updated guidance and we don’t reiterate guidance intra-quarter, but at a high-level we believe that it is early days in these enormous markets for social expression and personal publishing which encompass digital photos, greeting cards, calendars, social stationery, photobooks, scrapbooking, and photo merchandise. We are committed to listening to our customers, building a premium lifestyle brand, and expanding our revenue and profits. We believe the investments we are making in new products and services, quality and scalability will benefit our customers and shareholders over the long-term.

This segment is part 10 in the series : Shutterfly's Strategy: A Conversation with CEO Jeff Housenbold
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