Startups January 10, 2008, 5:00PM EST

An Idea That Really Clicked

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Existing sites' business models depend on getting customers to buy prints—and mugs, albums, even cookies with photos on them. For them, sharing—providing a way for family and friends to see your photos—is a means to an end. So sites insist friends sign up in order to see your photos; they surround albums with advertising; they delete images if you don't buy something at least once a year. "We don't care whether you buy prints or not; we just want your subscription fee," MacAskill says.

Why would shutterbugs pay a fee when they could get the same basic service free? It's mostly because pictures look a lot better on SmugMug, says Don. If a consumer has a large monitor, images display at 1,280 x 1,024 pixels, compared with about 400 x 300 for a typical free site. Pictures fill up the entire browser window rather than being flanked by ads. Photographers get to show off high-resolution images in Web albums free of clutter. Says Don: "I'd be hard-pressed to name an industry that doesn't have a premium offering that costs more, whether it's first class over coach, Apple (AAPL) over Dell (DELL), BMW over Toyota. (TM) We're the premium offering in photo-sharing."

SmugMug's biggest challenge came in 2006, when the site began to run out of space to store copies of subscribers' pictures. It was burning through capital, buying disk drives. Help came from Amazon.com, MacAskill's former archrival in the book business. "We got a call out of the blue from Amazon saying they were coming up with an online-storage service," says MacAskill. SmugMug first used Amazon to store backup copies but eventually moved most of the originals to the service.

The smartest move the company made, says Don, was recruiting employees from customer ranks. The 22 workers who aren't family all started out taking part in a message forum, Digital Grin (dgrin.com), that SmugMug set up in 2003. Hiring anyone "who hadn't already gotten the vision" was tough for a tiny company with big rivals, says Don.

What the entrepreneurs recognized, of course, was that there were people like themselves itching to turn a hobby into a career. Now, says MacAskill, his job doesn't feel like a job: "It's not like getting up and going to work every day."

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