Bala Parthasarathy set up many startups in the Bay Area, San Francisco, and went on to build Snapfish—a leading online photo service. After its acquisition by Hewlett-Packard in 2005, it has spread across 22 countries and has a user base of 70 million. Parthasarathy talks about his entrepreneurial ventures, his successes and challenges, and his gradual decision to be Managing Director, Asia Pacific, Snapfish, HP
Did you know it from the beginning that you want to be an entrepreneur?
I was brought up in Chennai and when I was young, I always thought that I would get a solid job with a good pay check. I used to think I would be happy with that. If you would have asked me this question when I was in college, I would have said—No, I do not plan to be an entrepreneur [laughs].
Entrepreneurship happened to me because of a set of people I was hanging out with at the Bay area, San Francisco. I am sure that we have lots of youngsters in cities like Bangalore, Pune, etc. who are bitten by the entrepreneurial bug. Similarly, in the Bay Area, everyone around was pretty much charged up about it. It was the company that I kept that got me into it too. Then, once I tried it, I was never happier.
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BALA PARTHASARATHY |
Tell us about the genesis of Snapfish.
Snapfish is the fourth startup that I have been associated with. Back then I was based in the Bay area, San Francisco. My first company was Digital Link in 1991. The second one that I started was in 1994 called Wyatt River Software, which I sold off in 1997. After that I took a year off and traveled around the world. After I came back, I was involved in this startup called iSelect during 1998-1999. It was after iSelect that Snapfish happened.
Snapfish was started by four of us — Rajil Kapoor, Suneet Wadhwa, Shripati Acharya, and me. We were all friends looking to start up an interesting venture during the dotcom boom. We were looking at various ideas. These included starting a cell phone company, for example. We had funding, had term sheets prepared for this idea, but we decided not to go ahead with it. One important criterion for all of us to start up was to build a good, fundamental, and real business; not something that we will build to sell out. This helped us in weeding out many ‘spur of the moment’ ideas.
The idea of Snapfish came from one of the founders who was into photography. At that time, there was also a lot of noise about online photos, and there were about 120 other companies that were doing business around it. However, we took up his idea, had discussions, and shaped up a concept that was slightly different from the others. At that time, people were at large taking pictures using film cameras. The idea that we had was to give the people an opportunity to put pictures from film cameras online. So the idea was to get people to send us their film rolls, which we would process. While we would send the prints and original film roll back to them, at the same time we would also scan those pictures and put them online. This was the idea that got Snapfish started. Later, of course, the use of film cameras started declining. We adapted ourselves to this change, and as time has proved, we did well.
Was friendship the only factor behind forming the team of founders for Snapfish?
Actually, I was friends with one of the founders, Shripati Acharya, who studied at Indian Institute of Technology, Chennai. The other two founders were his friends from Harvard Business School. The reason we got together was because we had complimentary skills for this startup. I was the technology guy. Shripati was the user-interface and product management wing for our company. The other two founders, Rajil Kapoor and Suneet Wadhwa, were very strong in business development. So it was not only friendship, but more importantly the complimentary skill sets that brought us together as a team.
 | SUCCESS MANTRAS/ "Humility. Hire people smarter than oneself. I have a point of view, but I do not have to be right all the time. Take ego out of decisions. It is not who you know, it is what you know that is important." |
After the team was formed, what was your next step?
First, we met every week and weeded out ideas that would not lead to building a real business. We agreed to go ahead with Snapfish because it was one idea that was persistent and we could not shoot down. However, in order to be different from the 120 companies that were already in the space, it was difficult for us to execute. Because taking in a roll of film, processing prints, putting it in a scanner, uploading them... all these become complicated as we were thinking in scales—tens of millions of pictures. There were a lot of operational aspects to make sure that the business worked. We had to go about setting up the idea to do a feasibility check. We found a supplier who could actually do that kind of work, made sure that they were honest and capable people to work with, etc. This was basically the homework stage.
The next step was to actually build and roll out the business. Like most people, we had to go out and seek funds to raise capital. We were lucky to get funding easily because those were the days of the dotcom boom. Besides that, we had an excellent team to win over the venture capitalists. I had been in the Silicon Valley for a long time, and had a lot of contacts, so was able to bring in strong engineers and architects to work for us. Then we launched, of course, and we have been doing good business for the past 10 years now.
Sans HP, how much were you able to scale the business? What were the challenges you faced?
The biggest challenge was the dotcom bubble burst, without a doubt. In 2000, we had about 100 employees working for us. In 2001, when the dotcom market crashed, a lot of competitors went out of business. We dealt with it by scaling down the company from 100-plus people to a very small group of 20 very smart people. Doing this was the toughest thing by far. We also changed the original business model, which was based on films, to a complete shift to digital photo prints. Then we built the business around digital photo prints and products.
At the time HP acquired us, we had about 13 million members. Back then, we were fully operational only in the United States with some experimenting being done in the United Kingdom. HP is the next part of the Snapfish story. In the last four years we have been able to kick up the member count to 70 million spread across 22 countries.
When, why, and how did you arrive upon the decision to let the business be acquired?
Quite honestly, arriving upon this decision was one of the toughest calls. We were running a profitable business in digital photo printing and products. We had not built this business with ‘sell it out later’ on our minds. During 2004-05 we signed up with some big retailers (Walgreen, Wal-Mart, Cosco, etc.) in the United States. These retailers had started to see the value in the service that we offered.
It is at this point that we felt the need to go to the next level. The UK business was taking off well, but to be able to reach across to tens of countries, we needed to get to the next level of scale. It is very hard being on your own to launch the product in different countries. The business of Snapfish is not just about putting up a website or localizing it to the regional language. We have to actually set up a physical plant. In India, for example, there is a physical plant that makes the prints.
We all thought that in order to scale, if we were to find a right partner for a right price, it would be okay with us. This is when HP came along. In early 2005, one of my co-founders was speaking at a party about Snapfish. This caught the attention of an investment banker of HP who was present there. She got interested and contacted us. That is how HP-Snapfish happened.
How does it feel to yield your brainchild to someone else?
It is really hard. It is like this trade-off in which you get certain things and lose certain things. You absolutely lose the independence, there is no doubt about it. You lose a little bit of the speed that you have as a small company. However, there are a lot of benefits too. Like I said, going from 13 million users to 70 million users, from one country to 22 countries, are numbers that speak for themselves.
The feelings that I was going through? The biggest doubt was about autonomy—when you are running a show on your own, you enjoy it and get to make all the decisions. When you are acquired, will I have that level of freedom? Will I have fun? Will I be comfortable with someone breathing over my shoulder, telling me what to do next? Would I be caught up in red tape and bureaucracy? I got over with all these doubts by talking to people from HP Division of Image and Printing group—because ultimately it boils down to the people and trust. These people who sat with us at the table had been with HP for about 10 to 20 years and were really enjoying what they were doing. To me, that was something—somebody who has been in the company for those many years and you can see it in their face that they are not making up stuff.
Also, prior to the acquisition, I was not sure if this would be a big success. Because in large companies, the acquired company on many occasions collects dust sitting in a corner somewhere. Back then, life had been all about startups. For me the idea of wearing a badge and going into large office was something that was never thought of. I was nervous about the freedom that we would have. HP assured us to not worry, and that we will be given a lot of independence, etc, which has turned out to be true. But at that time, one always has the doubts, and did not know that four years later I would be sitting at HP-Snapfish talking to you about it.
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written by Prashant Poladia, July 31, 2009
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