Profile: Smilebox mixes Web and desktop

(for anyone who’s interested, here’s a piece I wrote on Smilebox.com for globetechnology.com)

Andrew Wright, a Canadian who made his way from Alias Research to Microsoft and then to Real Networks during the 1990s, says he had an epiphany of sorts while building the RealArcade gaming unit, which would eventually become a $100-million-a-year revenue generator for Real Networks.

The epiphany had to do with the target market for RealArcade’s casual computer games. Over time, it had become obvious that the main market for such games wasn’t kids — although they were an important market. The biggest market segment by far, however, was women, specifically stay-at-home and working moms.

Why? Because games such as Bejewelled were intellectually stimulating, but were also simple enough that they could be completed in minutes — perfect for a mom with dozens of other things on the go, and only a few minutes here or there to relax and do something fun.

Mr. Wright took those insights with him when he left Real Networks and started building his own company: a combination greeting card and photo-sharing/scrapbooking service called Smilebox, which launched last year. Much like RealArcade, the service is a combination of Web and desktop: users install a small application, but it is tied closely to the Web.

In the same way that RealArcade’s games gave moms (and more than a few dads) a quick and easy moment of fun during their busy day, Mr. Wright says that Smilebox was carefully designed to allow parents to share photos and slideshows with their friends and family as quickly and easily as possible.

If a stay-at-home or working mom wants to share photos “she doesn’t want PowerPoint,” he says. “She doesn’t want to be confronted by all these options and have to spend a lot of time figuring things out or worrying about screwing it up. So we made it as easy as possible.”

Much like a greeting-card program, Smilebox comes with a number of free downloadable themes or layouts — sports-related, seasonal, etc. — and users can pay individually ($1.99 or $2.99 each, depending on the features) or monthly ($5) for other themes and features, such as the ability to add their own music.

Unlike most greeting-card programs, Smilebox also allows users to add photos, music and video. And while uploading pictures and video clips to Web services such as Flickr and YouTube can take a while, the fact that Smilebox is partly desktop-based means that it can quickly encode and compress the content so that it can be easily viewed by a recipient.

“Having an app that you download and install is a huge advantage” over strictly Web-based services, Mr. Wright said in an interview. Although it does take some effort for a user to install the software, the download is relatively small and gives Smilebox some added flexibility, he says.

“It’s really a hybrid of desktop and Web,” says Mr. Wright. “You download a piece of software that is 300K and then it’s 100 per cent a Web service. So we get the benefits of the Web but also the benefits of a local application” for things like encoding content. “It provides a much better user experience.”

One minute of video is about 75 megabytes in size, and takes as long as an hour to upload, he says. “We compress it to the same quality as YouTube and it’s only 3.6 megabytes, so it uploads a lot faster.” When users send a Smilebox card/slideshow by email, the recipient sees the front of the card and can then click and watch the slideshow/movie in their browser.

Although it is just a little over a year old, Smilebox has about a million and a half downloads, the founder and CEO says — a number that is growing by 50 per cent quarter over quarter — and expects to hit 1.3 million unique users this month. Revenue is “in the millions and growing quickly,” he says. “I would estimate that we are within a year of breaking even.”

Smilebox competitors include sites such as Photoshow.com — which also sells downloadable software — and OneTrueMedia.com, as well as a number of scrapbooking sites. Mr. Wright says the scrapbooking market in the United States is worth about $2.6-billion, but is “highly fragmented.”

In addition to its own software and service, Smilebox also has deals with several large players who provide a “white label” version of the software, including greeting-card giant Hallmark and the Lifetime TV network. And as of next week, Mr. Wright says that Facebook users will be able to embed their card/slideshows into the hot social-networking service.

Smilebox, which uses Macromedia’s Flash software, was financed by Mr. Wright and his wife Susan — a former Microsoft executive who is a director of the company — and by angel financing from a group of Silicon Valley players, including Flash inventor John Gay, former Disney Online head Richard Wolpert, Real Networks founder Rob Glaser and former Macromedia chairman (and former Alias Research CEO) Rob Burgess.

The company also raised a $5-million round of financing last year from a group that included venture capital firm Frazier Technology Ventures in Seattle. Smilebox is based in Redmond, Washington.