Shutterstock is a great example of what can be achieved at scale by a founder launching a startup executing a bootstrapping mindset. Founded in 2003 by Jon Oringer, he bootstrapped for four years then raised, to become a billion-dollar venture and one of the most influential companies in the marketing landscape. Shutterstock maintains a library of 200m royalty-free stock photos, 10m video clips and music tracks available for licensing, together with editing tools. Everyone can have their own unique collection.
Oringer was always looking for images, and they were $500, or he had to call people to get the rights to use them. He needed a product that didn't exist. So, with just himself using a Canon camera, he took 100k pictures of anything he could find. He cut the number to 30k and put them on a website.
Shutterstock licenses media for online download on behalf of photographers, designers, illustrators, videographers and musicians. It pioneered the subscription approach to stock photo sales, allowing customers to download images in bulk. Oringer built an online community in the manner of Facebook and Pinterest, with its marketplace platform created almost entirely by the enthusiasm of its contributors, both providers and customers..
It's a self-service platform too. Once approved, contributors can upload their work through the website. They supply keywords, categorise the images, and submit them for inspection. Images are examined for quality, usefulness, copyright and trademark laws. Each time an image is downloaded, the photographer receives a payment. Photographers retain copyright over their images, but Shutterstock is given full permission to market, display, and license the image to customers on the site without final approval from the photographer.
Shutterstock started with a subscription model at $49 and the existing media model of collating and making available as much content as Oringer could from other photographers. He expanded beyond subscriptions into à la carte pricing, with its on-demand service removing daily download limits.
Today, Shutterstock is both a social media platform and a tech firm. From its bootstrapping origins, what are the lessons we can take for today’s early-stage founders to apply to their own self-funded ventures?
1. Hold a bootstrapping mentality From the outset, Oringer’s emphasis was keeping all aspects of his business simple and focused, allocating resources only to essential activities that directly contributed to customer value or business growth. He ploughed all early revenues back into the business. He set aside twelve months of savings as an emergency-fund. He had a clear bootstrapping founder mindset.
2. DIY Oringer was a one-person solo-founder startup machine, that was his way to learn. Working with limited resources is an excellent way to hone skills that will serve you well for the rest of your journey. You will prioritise profitability from the start. I needed photographers, so I became a photographer. The first customer service e-mails that came in, I answered those myself. I programmed the site in Perl. In the early days, start-ups make the mistake of hiring people to do the work they could do themselves.
3. Timing is everything: be patient Despite what many businesses claim, there's no such thing as overnight success. Things take time, and you probably won't see results for a while. That doesn't mean you need to constantly work frantically or give up, but just so you know: things aren't going to turn out the way you originally planned. They just aren't. You can't completely control how things grow, and you have to be okay with that.
4. Seed money is overrated Oringer didn't want outside money, so did everything himself. As a result, he could easily navigate low sales as a lean startup. By not taking outside investors too early, he was forced to use every dollar as efficiently as possible, learn and take a risk. Besides keeping a large part of the company for myself, in survival mode I was forced to make solid and accurate decisions.
5. Frugality, financial discipline & monitoring He was frugal in both personal and business spending. Maintaining strict financial discipline is crucial when resources are limited. Regularly monitor your financial metrics. Stay on top of cash flow, track expenses meticulously, and adjust your strategies based on real-time financial insights.
6. Customer focus Oringer’s business model was built with customer centric focus and features: community, facilitating the network effect, speed and simplicity. Their tools are easy to use, and their accessible approach fuels their success.
Selling both B2B and B2C can be a profitable method of diversification. We realised we had a high-volume marketplace as a platform. Anyone can come in and buy with a subscription. Though its primary focus is B2B, Shutterstock’s diverse customer platform is vital to its success.
7. Harness the network effects of building a two-sided community When demand for images grew, Oringer hired other contributors. The shift happened organically, and he got other photographers interested in contributing their own content. I turned my one contributor account into an entire upload system for anyone. The marketplace created a contributor community of novice and experienced photographers, and demand drove the supply side, a supply chain a platform for photographers eager to share their work.
Camera phones further simplify the process, encouraging people to shoot more stuff. Contributors can access Shutterstock’s consumer insights and contributor tools as a unique value proposition. Oringer’s trick was to put himself in the shoes of both the content creator and the buyer, rather than just thinking how to make a profit. Consider your business model, can you crate such synergies and dynamics?
8. Strategic partnerships Strategic alliances with other similar and dissimilar firms allowed Shutterstock to strengthen and scale its network, providing customers with a broader range of tools. They partnered with Penske Media Corporation to exclusively offer fashion images, which took a key provider of fashion and entertainment photos and video away from arch-rival Getty Images.
They partnered and integrated Facebook's Ad Creator, allowing advertisers to select from Shutterstock's images when creating ads, then Google’s advertising products AdSense, AdWords, and AdMob. The integration allowed marketers creating Google ads to directly access Shutterstock images and track ad performance via their API.
Their most recent partnership is with OpenAI (2023) in which it provides access to its audio, video and image libraries as training data for DALL-E. In turn, OpenAI would provide generative AI capabilities and tools for photo editing
The strategy gives Shutterstock rapid and low cost of acquisition to attracting new users. It’s a highly effective go-to-market strategy all startups should consider.
9. Know when to take outside investment – and what to spend it on Many entrepreneurs think that investor funding is the ultimate solution to all of their problems, but a bootstrapping zero-debt philosophy allowed Oringer to leverage a lean business model, pursuing organic growth. Shutterstock expanded only when the demand was so big that it couldn't fulfil it.
The firm took a small private equity round from Insight Venture Partners, and then an IPO in 2012 to fuel growth. The firm used its cash infusion to invest in new technologies and expand its offerings, including reverse image, editing, and filtering tools, integrating bolt-on acquisitions by purchasing a number of rivals and complimentary products and services - Bigstock, Webdam, Rex Features, PremiumBeat, Pond5, Splash News and in May 2023. Giphy from Meta for $53m cash.
10. Maintain your innovation culture as you scale Shutterstock Labs, Offset and the Palette tool were early innovations developed through internal hackathons. Latterly adopting a computer vision strategy, Shutterstock has developed a number of tools utilising a convolutional neural network that it created to help with reverse image search technology. The network is essentially a computer system that is trained to recognize images - there are millions of specific items such as cats, bicycles, the night sky - and pull up the most relevant photos. It breaks down the key components of a photo numerically, drawing from its pixel data instead of metadata that is pulled from those tags and keywords.
Summary
Shutterstock shows how the art of bootstrapping is more than a financial strategy for startups, it’s a founder mindset that puts resourcefulness, creativity, and resilience alongside a shoestring budget, testing the ability to build and grow. By embracing lean practices, prioritising revenue generation, and navigating financial challenges, founders can build sustainable businesses that stand the test of time, you don’t always need other people’s money. As you embark on your bootstrapping journey remember that limited resources can spark creativity and lay the foundation for a robust and successful enterprise.
Bootstrappers take an idea without the backing of anyone else but themselves, and having little or no starting capital, do it for themselves. It takes great dedication, work ethic, and single-mindedness to achieve success this way, but many of the successful companies we see today had humble beginnings as bootstrapped enterprises besides Shutterstock – Dell. Apple, HP, eBay.
Everyone’s entrepreneurial journey is unique, but the art of bootstrapping is all about Survive until you thrive through a combination of common sense, determination, and ingenuity. Build your Minimum Viable Business.
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