The idea for Everpix began with Pierre-Olivier Latour, a 34-year-old French Entrepreneur who sold his first company to Apple in 2003. Latour first thought of the idea for Everpix in 2009 after struggling to organize hundreds of photos he took while on a vacation. In just two years, Everpix went from a dream to one of the world’s best solutions for managing a large library of photos. It attracted 55,000 users, was earning enough each month to cover the cost of the service, and at it’s peak had raised $2.3 million in Startup funding. It appeared to be on an epic rise to becoming another $100M startup success story. So, what went wrong? The founders and investors ignored several Red Flags that often lead to the demise of Startup companies.
The following chart, from Wasabi Ventures, illustrates the 5 Red Flags that all Founders and Investors should avoid if they want to have a successful venture. I will identify which Red Flags Everpix founders and their investors ignored and led to their relatively quick death.
Everpix ultimately failed because they ignored three of the 5 Red Flags. The first Red Flag they ignored was Red Flag #1: If the Founders always need to be the Smartest Person in the Room, run like the wind, because this company is heading for problems. This Red Flag can be identified in Everpix in two ways. First, while the product was relatively easy to use, there was a learning curve and the service required a commitment to entrust an unknown startup with your personal photos, something Everpix never properly figured out how to sell or ease the concerns of customers. Second, Everpix had acquisition discussions with Facebook, Dropbox, and others, but turned them all down because the founders wanted to create this service on their own terms. Then they spent the next six months doing Beta tests before releasing what they considered the true Everpix 1.0 Prototype. The founding team obsessed about perfecting the service, and paid far less attention to needed growth.
Red Flag #1 Explained 
The second Red Flag they ignored was Red Flag #3: If you don’t get excited and talk about the Startup, and hear other people talking about the Startup, it isn’t worth caring about. This Red Flag can be identified in Everpix in two ways. First, the first pitch deck they put together for investors was reported as mediocre. Second, Everpix built in a few features for sharing photos, but there were no other avenues in the product to help it spread to other people to help create a “buzz.” The founders and their product were not capable of getting enough people talking about and sharing their product.
Red Flag #3 Explained 
The final Red Flag they ignored and ultimately led to their inevitable collapse, was Red Flag #4: If your early stage Startup operating expenses include things like Lawyer fees, Rent, or anything that has No Return On Investment (ROI), the founders are focused on the wrong things. This Red Flag can be identified in Everpix in multiple ways. They began marketing too late and failed to effectively position themselves against the likes of Apple and Google, who offer free Everpix alternatives. Furthermore, they spent too much time on the product and not enough time on growth and distribution. The founding team obsessed over the look and features of its product, and user growth failed to keep pace. The company had spent almost all of its Startup funding building the product and service and almost nothing on Marketing and Advertising.
Red Flag #4 Explained 
There are no absolutes in life or business and there are usually exceptions to any rule. Nothing is “always” and nothing happens the same “every time.” With that in mind, a company could possibly be successful even if they ignore or break one or two of the Red Flags. However, the smart money avoids these Red Flags all together. In my opinion, if a Startup ignores or breaks 3 or more of these “5 Deadly Sins,” like Everpix did, it is almost a certainty that the Startup will eventually fail “everytime.”
Reference content is found here: http://www.theverge.com/2013/11/5/5039216/everpix-life-and-death-inside-the-worlds-best-photo-startup
Chris Niles, LtCol(Ret), USAF Believe it!
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