Startups January 10, 2008, 5:00PM EST

An Idea That Really Clicked

Chris and Don MacAskill parlayed a love of taking pictures into a hit Web site

By Larry Armstrong

It was 2002, not an auspicious year for starting a Web business. But for lifelong shutterbug Chris MacAskill, 54, it was time to leave his job, which had become more administrative hassle than adventure, and have some fun. Along with one of his three sons, 30-year-old Don, MacAskill decided to start a subscription-based business that would give photo enthusiasts a place to store and exhibit shots online. They'd call it SmugMug, reflecting MacAskill's belief that great brands should have catchy names—easy to say, easy to type, easy to spell. At first blush the idea seemed preposterous: Competitors such as Ofoto, Snapfish, and Shutterfly (SFLY) were well-established, and free. The business that wasn't already taken by them was split among the likes of Canon (CAN), Nikon, and Sony (SNE), which offered photo sharing as a service to camera buyers. But today, SmugMug is the destination of choice for professionals and serious amateurs, with more than 450,000 customers, including nearly 120,000 subscribers who pay $40 to $150 a year for the service. Revenues doubled in 2007, as they have for the past three years, to $12 million. With only 29 employees (including seven MacAskills), it's profitable.

MacAskill's fascination with photography goes way back. When his kids were young, he spent hours obsessively turning the living room into a photo studio, complete with huge seamless-paper backdrops and professional lights. His home movies from the '80s aren't clips of random events but, well, movies—meticulously edited, with characters and story lines.

Until 2002, photography had been purely a sideline while MacAskill raced to make his fortune on the Internet. The plan was to build a company, take it public, and cash out. So in the '90s, he started an online bookstore, FatBrain, in his garage in Mountain View, Calif. Within four years, FatBrain had grown into a $100 million enterprise, the third-largest online bookseller after Amazon.com (AMZN) and Barnes & Noble (BKS). In 2000, Barnes & Noble bought FatBrain, by then a public company, for $62 million in stock and cash. MacAskill's take—he owned 6% of FatBrain before the sale—came largely in Barnes & Noble stock, most of which he eventually sold.

MORE INSPIRING

That left MacAskill with a hefty nest egg and an electronic vanity press, MightyWords, that had been spun out of FatBrain. But consumers never bought into the concept of e-books, where authors publish and sell works in electronic form, and MightyWords ran out of money. MacAskill was forced to lay off the whole staff, and he shut down the company in early 2002.

In the wake of the MightyWords failure, and mindful of how inventory snafus and other hassles turned low-margin FatBrain into "just another job," MacAskill wanted something more inspiring. "I was facing the question of what to do with the rest of my life," he says. This time, he wouldn't be focused on cashing out. And he'd fund the venture himself (he and Don each own 40% of SmugMug; 20% is set aside for employees).

After selling off FatBrain, MacAskill had launched a Web site about motorcycling. Adventure Rider (advrider.com) was a message forum where bikers exchanged tips and trip reports. "I realized we all just wanted to show off our photos—of ourselves, our bikes, places we visited." Meanwhile, Don was trying to start a site for video gaming, his passion. It would include forums and photo galleries. "Don found that what people loved was showing off screen shots," says MacAskill.

The duo decided to get rid of the gaming component and focus Don's venture solely on photo-sharing. Even with competitors offering such service free of charge, the MacAskills saw an opening for a subscription-based offering.

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