Anonymized VC Feedback.md

Overview

This document contains the unedited feedback received from VCs who passed on investing during Everpix's Series A tours. Most of the feedback was provided in writing by email, in which case it has been copy pasted here, and sometimes over the phone, in which case conversation notes have been reproduced instead. Notes and comments are in italic.

This list only includes VCs we met with in the scope of a Series A participation and to whom with officially pitched (some introductions to VCs resulted in a phone call with no in-person follow up meeting but that was rare). We ended up meeting with most tier 1 and many tier 2 VCs from the Silicon Valley. We almost always got partner level intros and in the vast majority of cases were able to get an in-person meeting within 2 weeks. It's worth noting that very often the in-person meeting with the partner went well over the 45mn to 1h of allocated time as there was a lot of interest about the Everpix team & product.

First Tour (February / March 2013)

The main feedback during this tour was that we couldn't build a $100M / year revenue or $1B worth business from Everpix. One reason for it was likely the fact we weren't explaning properly what the potential of Everpix was and why it solved a emerging problem that will affect most consumers. Instead we were spending most time on the technology and user experience.

1. [2 meetings with multiple partners] Thanks for taking the time to meet with more of the team this week. We had a pretty thorough review and discussion over the course of the last several days and came to the conclusion that we are going to pass on the investment opp. You guys seem to be a spectacularly talented team and some informal reference checking confirmed that, but everyone here is hung up on the concern over being able to build a >$100M revenue subscription business in photos in this age of free photo tools. Its totally unclear, for sure, but I haven't been able to get enough momentum behind it with the team.
2. [1 meeting with 1 partner] It was great to meet you and get an overview of everpix. I love what you're working on. I'm going to discuss today with my partners and follow up… [Never heard back]
3. [1 meeting with 1 partner] I've had a chance to chat internally, and I think we're unfortunately going to pass on this round. While I think the technology and product looks very promising, we aren't ready to place a bet in the space. Would definitely love to stay in touch as you build out the company and chat again when you're next raising funding. Best of luck closing out this round and scaling up the company! [2nd email after asking for more details] A large piece was really just the historic difficulty in monetizing online photos. Obviously you have built-in monetization to start with, which is hugely helpful, but there was skepticism about that allowing a truly large revenue stream. We would have preferred generally to see larger user traction for a Series A for a consumer service, but that's not really a deal breaker, just something that makes it tougher to decide to do.
4. [1 meeting with 1 partner] I enjoyed meeting yourself, Kevin, and Wayne. You three form a very impressive team for sure. I did talk with my partnership about you guys and Everpix. The reaction was positive for you as a team but weak in terms of whether a $B business could be built. My partnerships reaction thought the product idea was a good one but didn't see how to build a standalone company that could be a $B company with $100M of revenue. Because of that lack of clarity on our side, I have to bow out.
5. [1 meeting with 1 partner] Got a few friends to try as well and just collected everyone's feedback.

• It is pretty cool: fast; stylish and minimal photo display; Photo stored uncompressed; easy import; good price.
• "Moments" was a miss for most people. It was perhaps more frustrating. For me, I just want to organize myself for a bit and then let you take over. I couldnt do that as the only dimension now is time. I assume more will come: like tags and labels or folders. For others, it is frustrating if you already know which photos you like best. One friend uploaded all of his 2012 and 2013 photos, and unfortunately the sys did a poor job of picking his favorites. Similar experience for others.
• Some other comments: captions/titles embedded in EXIF data do not get displayed; some of the automated feature analysis is wonky: for example, snow-covered cliffs at Sugarbowl are labeled as "54% likely to be a city". no developer API? All agree a lot of these seem to be immaturity. Great job getting it going!!
• As for [our fund] and me, I like how the trend is heavily in your favor. Massive number of pics and storage are issues for users. I am surprised by how slow the incumbents have innovated. I wonder if it is appropriate to scale back the product promise a bit and offer something that is more mundane as faster tagging and filing vs super smart AI. The "moment" value prop will take time to perfect and using that as your lead might set the expectation too high. I wonder whether that actually impede vs accelerate conversion. I also want to explore more about how everpix re-think on conventional wisdom and challenge commonly held assumptions on pic space. So, that's my .02. Hope it helps. Will check back with you in six months. Thanks so much for taking the time to connect.

6. [2 meetings with 2 different partners] They said they're passing because they want to see first proof we can build a product that's attracting to more than the DSLR crowd, and we have a way to convince mobile users to use our system to store & browse photos (and therefore reach the billion dollar company target).
7. [1 meeting with partner] He said that we have very impressive tech but he couldn't invest right now as we don't have our marketing story defined.

Second Tour (June / July 2013)

For this 2nd pass, we went back to the drawing board and did extensive work on product positioning (the "Photo Mess") validated by market research and consumer surveys. When presented with it at the beginning of the pitch, almost all VCs immediately said "I get it, I have this problem myself, no need to spend time on this". Then problem then become the fact we were in a highly competitive and noisy space.

1. [1 meeting with investor] We all agreed that the Everpix product is great and the early traction looks quite impressive. That said though as we continue to think about the current state of the space I think we are a bit too concerned about the competitive nature and thus uncomfortable pushing forward at this early stage.
2. [2 meetings with partner] I've been thinking a bunch about Everpix over the last 10 days or so, and using it a bunch. And I really, really like what you've done with the product and especially the upcoming release that you're heading towards. But I have concerns about consumer adoption that are bugging me. I think you've got the right product at a good time in the market, but I am not sure how you'll get it on hundreds of thousands to millions of desktops & devices -- that's the big prize. So I think it makes the most sense for us to stay in touch; and I'd love to help you in any way that I can, but am not quite in a place where I'd feel great about leading an investment round right now. [Indirect email forwarded to us] I like Pierre & his team; recognize the problem that they're solving (I have it myself), and think they've got the best solution that exists right now. But I worry about the whole category in terms of distribution being really, really tough, and that's what's got me scared away honestly. (In addition to stiff competition from Apple & Google, although I think they'll always put up flawed, platform-centric products here.)
3. [1 meeting with partner] He said we were early and they are really focused on Series B and later, but we should keep in touch and circle back when we have more revenues and users.
4. [1 meeting with senior investment manager] I have spoken with people internally. We think that you and your team have built a very impressive product that addresses the need of millions of photo lovers. The proprietary sync and image analysis technology is exciting. It is also encouraging to see that Everpix is already monetising from its user base, and that the scalability of business model is inherently high. As previously flagged, we feel that Everpix is probably a bit early for [our fund] (i.e. timing is not right, not the product). We are eager to see more proven points as the business scales (i.e. v2.0 product, further optimisation in processing process, sustained user and volume growth etc.). Please do keep us in the loop, and reach out again when Everpix has hit more milestones!
5. [1 meeting with principal] We did talk about your company. Unfortunately there wasn't enough critical mass among the partners to consider an investment. So regretfully we're unable to move further at this moment.
6. [1 meeting with partner] He said they discussed Everpix for a long time at their partner meeting today. He agrees this is a real problem and the world requires a solution to it today. He believes we are the most interesting company in the space, loved the tech, likes the UX quite a bit (although wished it would be even simpler and easier to learn). The reason for passing however is 90% [competing cloud storage company]: this fund is on their board and this company is going aggressively after photos. This means if their fund were to help a deal with a big CE company or find a great designer, would it go to this other company or us?
7. [3 meetings with partner - over the course of 18 months] They have been looking at investing in photo space for 12+ months. He says it's a "bad category" with lots of noise and that being the best is not enough (he believes we are at the top if not the best): we need either have a paid UA model that works ($5 per signup wouldn't work for him) or have "frequency" i.e. have a method for our users to use the app daily so it's in their mind and talk about it etc…
8. [1 meeting with partner] He said their fund is running out and they have 2 or 3 investments left they can do and for photo space bar is quite high so he likes the product and sees potential as a platform but will pass.
9. [2 meetings with 2 different partners] We've had a chance to consider a potential investment in everpix, and as much as we like you guys, we aren't ready to move forward right now. We think you are attacking the right problem. The issue is that several others are also approaching it too, perhaps not in as elegant a way. We'd like to see things evolve a bit more before potentially re-engaging.
10. [1 meeting with partner] I'm very sorry for the delay getting back to you. I had some time to catch up with [other partner] a couple weeks back and we did some digging into our various photo initiates and generally came to the conclusion that while we agree you're addressing a big problem (managing exploding and fragmented photo libraries) we really wanted to see the business evolve and see some revenue momentum. At this time, we think you're a bit early for us. Happy to provide more color and help where we can.

Second and a Half Tour (August 2013)

We did another last minute small tour due to the fact founders we knew around us couldn't believe we weren't able to raise and kept offering intros. By this time we happened to have our best momentum ever: 50,000 signups, strong sales at $40K / month, accelerating growth, very high retention and conversion metrics and significant organic press coverage (Gizmodo, The Verge - Best average consumer solution for photos in the cloud, Houston Chronicle…). The reasons given by VCs to pass became more esoteric e.g. already investing in another competitor or not the right time.

1. [1 meeting with “junior” partner] I was able to speak with the other Partners on the deal team and we would like to respectfully pass on participating this round. We really liked the founding team's respective backgrounds across Apple, Cooliris, and Frog. It felt like a strong fit to what you were building and we were impressed by your team's accomplishments to-date. The early metrics on the engagement side were very promising as well with 40% monthly active free users and 61% open-rate on the Flashbacks feature. However, we were nervous around the size of the revenue potential behind the business as well as the path to getting a massive user base. As mentioned, to become a truly disruptive and sizable standalone business, you'd need to get a large number of users to become active members and upload photos to the service. There is no doubt a huge issue around photo mess (much more apparent with mobile now) but we weren't convinced yet that companies like DropBox, FB, Apple, Google, etc wouldn't eventually try to tackle the problem either via acquisition or building the feature internally. The licensing model of the technology felt like there was a capped upside and in order to become a big business, you'd indirectly have to compete with consumer facing photo-storage sites with massive amount of existing users. That being said we are sometimes wrong about these things and would like nothing more than for you to build a successful business. We're a young firm, but we've already invested in startups where we'd passed on earlier rounds. Please do stay in touch and if you don't end up taking the M&A offer, keep us updated with your progress. The door is open and we hope to see you again for subsequent rounds or for any future ventures.
2. [1 meeting with senior partner] Here's the lay of the land – and I want to be very straightforward so that whatever happens you feel we've been above board and clear. We'd like to continue figuring out everpix because what you have accomplished is most impressive but we also need to ensure that we aren't on an eventual collision course with [other company] where, as you know, we've been a longtime business partner. We'd hope to resolve that within the next week or so. [Following phone call] We need to pass on Everpix: other company doesn't do today what Everpix does, but photos are so strategically important to it and it would be awkward for our fund and other company founder for us to invest in Everpix.
3. [1 meeting with partner] Thanks for the note and really a pleasure meeting you guys. I truly love the service and think you guys have done a phenomenal job. In short, I am a fan, but, unfortunately, I can't invest at this time. The big reason is we have a competitive deal in the space called [redacted] that is not as far along as you but will definitely create a conflict. I don't want to put either of you in that position. The other reason is the $5M is out of our typical range (we like to be the first 250K to 2.5M in any deal). That said, please let me know if I can help in other ways and I do hope we can stay in touch.
4. [2 phone meetings with 2 partners] We spent some time in discussion internally today. While [other partner] and I are both big fans of the product and the future vision for Everpix, we're going to have to pass on the opportunity. We don't have partner bandwidth at the moment to take a deeper look, and particularly not in the time frame you'd require for us to make a decision.
5. [1 meeting with 2 partners] We internally got our wires crossed and thought we had closed the loop with you. We really liked the opportunity to learn about your vision and personally resonate with the problem as well. However the doubts linger about being able to scale a photo storage company internally. We would love to stay in touch for future rounds as you get to some scale. You guys are awesome and we wish you all the best.