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The Hottest Startups Have One Thing In Common: Our Faces

Welcome to the photo economy, which is turning into a picture-perfect fight.

You may think of Facebook as a community, a news feed, or even a force for change, but it’s really something far simpler: a photography company. Facebook processes more than 350 million photos every day, far more than Kodak or Polaroid ever developed in 24 hours. Photos drive most of its engagement and advertising. And despite the dreary fate of those onetime photo giants, calling something “a photo company” now is hardly an insult. Of the approximately 50 tech startups of the past decade to be valued at more than $1 billion, at least nine–Facebook, Twitter, Whats­App, Dropbox, Pinterest, Airbnb, Snapchat, Instagram, and Tumblr–have photos at the core of their businesses. We are in a photo economy.

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  1. Clock – Staples, $15
  2. Pillows – PillowMob, $30
  3. Shirt – SeeMe, $26
  4. Umbrella – ArtsCow, $43
  5. Mug – Shutterfly, $15
  6. Lollipops – Designer Lollipop, $21.50 for six

It was a natural progression. Digi­tal cameras made photography an in­stant experience, the iPhone put a great camera in everyone’s pocket, and social networks turned images into mass communication. It turns out that we really, really like sharing our snapshots. It also turns out that advertisers get this. In the last couple of years, they have transformed their online businesses by moving ads from the wasteland of online banners into the photos in our social feeds–to great annoyance, perhaps, but also to great effect.

Last November, for example, Instagram launched a program allowing brands to insert sponsored photos into users’ feeds. Engagement on non- sponsored photos from the same brands has increased, with some brands seeing a 50%-70% increase in likes in the days following an ad. That means that users saw an ad and then actually went hunting for more. Taco Bell increased its follower count on In­stagram by 45% during the period when it promoted its new breakfast menu with images of people enjoying waffle tacos. Last March, Instagram made a reported $40 million advertising deal with the marketing giant Omnicom.

Facebook saw this coming. Its conviction led it to acquire Instagram for $1 billion and the messaging service WhatsApp (which couriers about 700 million photos every day) for $19 billion. It even offered $3 billion for ephemeral- photo app Snapchat, although Snapchat rebuffed its offer. Almost every piece of data suggests that Facebook is on the right track. Marketing company Hubspot ran an analysis and found that Facebook photos generated 104% more comments than text-based updates. Another analysis, this one by social media analytic firm Socialbakers, found that 90% of the most engaged-with posts on Facebook were photos.


Photography is now a crowded market, with entrepreneurs trying everything from niche social networks to printing your face on a pillow. But if current trends are any indication, the big money will shift to three categories of S’s (and “Selfie” isn’t one)–storytelling, shopping, and storage.

Photography’s storytelling potential, with the quick pics of Instagram and Snapchat, is in its early stages. The app Storehouse is a step toward something more, enabling long and beautiful visual essays. Digg creator and VC Kevin Rose, meanwhile, recently unveiled a new app called Tiiny. It displays photos only as thumbnails in a grid, and they disappear after a day, which he’s betting will encourage people to post photos more often than they do in other apps.

But of course, we’ll always take more photos than we post. That’s where storage comes in. Photos are one reason why, this summer, Dropbox increased storage capacity to 1 TB for $10 a month–competing against Google Drive, Box, and others to be the continued home of your excess vacation photos. And in May, former Apple executive Tim Bucher debuted a $299 device called Lyve Home that collects and stores all the photos and videos across your devices and makes them easily accessible. But storage is a double-edged sword, as startups like Everpix discovered: hosting costs can outrun revenue, a battle all photo-based firms must contend with.

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And then there are shoppable photos. This may be the holy grail of business opportunities, an e-commerce engine for the likes of Pinterest, Tumblr, Facebook–and anyone else who gets it right. Many startups have tried. But so far none have succeeded.

Alex Koblenz, for instance, wanted to buy a black sweater that he saw Jay Z wearing, but he couldn’t identify it. So he launched a startup, Pradux, to turn photos into clickable catalogs. The next time he saw a celebrity wearing something great, he wanted to just click a photo and buy it.

Others have shared Koblenz’s dream. A company called Pixazza set out to make objects in celebrity images shoppable; it later changed its name to Luminate and outfitted images with more general ads (and was acquired by Yahoo in September). Stipple, which at launch helped brands tag their merchandise in celebrity photos, pivoted to make web tools and then shut down in April.

What happened? Many things. Tagging millions of photos requires an automated image tool, which can’t account for context. “You might have a photo of a man dressed in a nice suit, down on one knee in the street,” explains Luminate founder Jim Everingham, “but he might be depressed and looking at an accident.” No brand wants to hawk a wedding ring on an image of a car crash.


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Even if tagging software is perfected, there are still barriers to turning celebrities into stores. Katherine Heigl sued Duane Reade for $6 million after the pharmacy tweeted a photo of her carrying its shopping bags. (They settled.) “If people clicked on her jeans to buy them, should she be paid an affiliate marketing fee? Probably,” says Peter Minnium, head of brand initiatives at the Interactive Advertising Bureau.

New startups keep seeking solutions to all this. Spring is like an Instagram in which brands post shoppable photos. TheTake turns select movie stills into virtual catalogs. And Pradux–well, Koblenz had to refine his initial vision. His startup now asks people to post “products you see on TV and in the world,” which others can buy. He hopes celebrities will sign up, too, to do the same thing. He’s still waiting on Jay Z.


Are These Apps Winners Or…?

Two investors in photo darlings weigh in on new apps.

Frontback (Free)

Instagram-like network with a twist: Every photo is a split screen, showing something photographed and a selfie of the photographer.

Jeremy Liew: “To be successful, it needs to be supersuccessful. It can’t be just a little successful, because it’s trying to build a social network. It’s not interesting if only 3 of your 100 friends are on it.”

Josh Elman: “It changes the nature of the photo. But does a network of new photographs become a deep community? It might feel deeper if you could engage with the photographers.”

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SnapDash (Free)

Charades with a camera: The app suggests funny poses (“You’re a saber-tooth tiger that’s frozen in ice!”).

Jeremy Liew: “They were smart to integrate it into platforms and not try to be the platform themselves. You can probably monetize it without having to displace winners like Snapchat.”

Josh Elman: “If this model works, and hundreds of millions of people constantly share experiences, then everyone could do something with, say, a can of Coke–brands would pay for that.”

Facetune ($3)

A photo editor for selfies: Clean up those blemishes and yellow teeth!

Jeremy Liew: “Everybody has taken a selfie and thought, ‘Man, I look ugly.’ The widespreadness of the problem it’s trying to solve contributes to why it has been popular.”

Josh Elman: “They’re making money today, which is great. But turning a photo editor into something larger is a real challenge. If it’s a network, is it just of people who edited their photos?”

About the author

Sarah Kessler is a senior writer at Fast Company, where she writes about the on-demand/gig/sharing "economies" and the future of work.

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