Web Masters Episode #72: Jon Oringer


Media Assets - Press and Media - Shutterstock

Jon Oringer:

The light bulb moment was I’m building all these companies. I’m doing an insane amounts of marketing for them because you can build the product, but then you got to get people to come buy it. It was really interesting because I was buying images for all these companies. I was marketing all these products and I was buying these single use images from incumbents that exist today, companies that are out there trying to compete with those incumbents. And every time I would buy one of these images, I would go to another site and buy another one. And there was no loyalty, there was no reason for me to go back. And it just all kind of clicked. I started these 10 companies, some were subscription, some weren’t. I was going out and buying images from these image providers one at a time. And I had this realization. I was like, I want to be the engine that helps businesses market by subscription.

Aaron Dinin:

You just heard two things being discussed, photography and subscription marketing services. What do they have in common? Eh, not too much, unless of course, you’re building a stock photography service that marketers can subscribe to. And that’s actually exactly what we’re going to explore on this episode of Web Masters. We’ve got Jon Oringer, founder of the pioneering subscription stock photography marketplace, Shutterstock. Not only did it change the way businesses marketed their products on the web, it also helped entrepreneurs completely reimagine what kinds of business models and business opportunities existed online. Are you ready to hear the story? Let’s get dialed in.

[INTRO]

Aaron Dinin:

Welcome to Web Masters. This is your favorite podcast about startups, business, tech and entrepreneurship delivered to you via stories about the history of the internet told by the very people who helped create it. That would be the founders of some of the world’s most innovative and successful internet businesses. I’m your host around here. My name is Aaron Dinin. I’m a serial entrepreneur and I teach entrepreneurship at Duke University. On this episode, if you’ll indulge me a bit, I’d like to explore an issue that comes up often with the entrepreneurs I work with, is an issue related to how much entrepreneurs need to, yeah, for a lack of a better word, care about the industry of the thing they’re building.

That’s not to say they should hate what they’re building, but do you need to be a passionate enthusiast of a specific type of product or service or industry in order to build a business around it? What we’ve got on this episode is a discussion with the founder of Shutterstock, which is one of the world’s biggest stock photography services. So is the founder, Jon Oringer, passionate about photography, and does it matter? We’ll discuss those things. But first, I want take a moment to discuss this podcast’s sponsor.

This episode of Web Master is being brought to you thanks to the incredible support and partnership of our sponsor, Latona’s. Latona’s is a boutique mergers and acquisitions broker that helps people buy and sell cash flow positive internet businesses and digital assets. That includes things like content websites, eCommerce stores, Amazon FBAs, online subscription services, SaaS apps, domain portfolios, and any other type of online work from anywhere internet business you can imagine. If you are currently operating a profitable internet business, and you’re thinking of selling it, you should definitely talk with the team at Latona’s. They can tell you everything you need to know about the process and when you’re ready, they can help you get your business sold faster, easier and for a better price than you’d likely be able to do on your own. Or maybe you’re not selling an internet business, but you’d like to buy one, you’re in luck, Latona’s can help you too. Start by checking out the Latona’s website where you’ll find listings for all the businesses they’re currently helping sell. That website is Latona’s.com, L-A-T-O-N-A-S.com.

Before we dive into Jon’s story and the story of Shutterstock, I guess I should take a moment to make sure everyone listening knows what Shutterstock is. I mean, yeah, it’s a big publicly traded company, but it’s also kind of niche in the sense that not everyone would have a reason to encounter it or directly use its product. So let’s start by letting Jon tell us about Shutterstock.

Jon Oringer:

Shutterstock is a two-sided marketplace with creatives on one side, creating commercially released photography, 3D assets, audio, video, for businesses on the other side of the marketplace to buy and use.

Aaron Dinin:

So it’s a place for photographers and later videographers, et cetera, to create and post professional esque content that businesses can buy and use. And would you mind explaining why businesses would want to buy other people’s photographs?

Jon Oringer:

Yeah. Images sell things, right? All marketing kind of needs both still and more and more moving imagery. And so shooting that yourself would take finding a studio, hiring models, getting releases, and there are a lot of people willing to do that for you. And often you can be the first one to use an image. I mean, Shutterstock will tell you whether anyone’s downloaded that or not. You can find something really unique today without having to hire your own team, find a studio and do everything associated with that.

Aaron Dinin:

And just for context, obviously the stock imagery market existed before the internet. Could you talk about what that market looked like?

Jon Oringer:

Yeah, it was catalogs. We would get these big catalogs in the mail, and then it became CD-ROMs. So there’d be a CD and every six months or a year, you get a new one.

Aaron Dinin:

So yeah, Shutterstock is a marketplace where people like photographers can upload their images and other people, usually businesses, can buy them to use kind of however they want, advertisements, informational materials, whatever. Even if you’re not a buyer of stock images, you’ve certainly seen tons of them. In fact, I’m guessing the majority of marketing images we encounter in a given day are stock images. Though, to be fair, I don’t have any hard data to prove that, but let’s assume it’s a lot. Now, to be clear, Shutterstock wasn’t the first place online where consumers could buy stock photography, that wasn’t Jon’s big innovation. Jon’s innovation was the subscription marketplace he built around photography.

Aaron Dinin:

So here we are discussing one of the largest and most successful companies in the world built around photography. You’d assume the person who started that would be passionate about photography, right? That actually turns out not to be the case. Jon Oringer wasn’t a photographer who created an enormous business around his passion. He was an entrepreneur who identified an enormous market opportunity that happened to be related to photography. Not that Jon wasn’t interested in photography, but as we dive into Jon’s history and background, we’re going to quickly hear that he was first and foremost, an entrepreneurial software developer. It was an interest that actually began at a very early age.

Jon Oringer:

It was third grade, there was an Apple IIe in the classroom. And the teacher, I remember had showed us a few things on it and I couldn’t wait to get my hands on it. So I figured out that during recess, nobody was staying inside to play with the computer. And so I decided I was going to occupy that time on the single computer that was in the school. It was the eighties. And so this Apple IIe fascinated me, it was something that can give you instant superpowers. It was this crazy machine that you give it instructions and just keeps going. And so that was where the switch kind of clicked for me. And I spent whatever time I possibly could on this computer, essentially starting to dissect the thing and learn how to code.

Aaron Dinin:

Wow. It kind of sounds like you committed to being the nerdy computer tech kid all the way back in third grade. You’re like, I’m not going to go play kickball with the cool kids. I’m going to sit in this dark room and code stuff. And I mean that with all the love in the world, you are definitely a man after my own heart.

Jon Oringer:

Yeah. I mean, I didn’t even know if it was defined that way. I don’t think people knew what this thing was. It took a few more or years I think. But it was there and it was amazing, and a lot of people weren’t that fascinated by it, which I found interesting too. How could you not be interested in this magical device?

Aaron Dinin:

Okay. So that’s how you got your first taste of computers. What about the internet and networked machines? When did those come into your life?

Jon Oringer:

I remember it was a couple years later, I eventually got an Apple computer, it was an Apple IIc. I got a modem, I was using BBSs, which was the first kind of pre-internet network. And it was amazing there, [inaudible 00:09:18] only there were tons of other people that had the same feeling I had about these things out there that you can reach out to and find. And so people were talking about software they can build and how to make the modes more efficient or how to speed up the computers to run more instructions or what the latest game that people were interested in was. Then they were even networked game, these kind of early, early multiplayer text based games that got interesting as well. And the code was public. You can kind of dig in and see how they were created. So that’s essentially where I started playing with building these plugins.

Aaron Dinin:

How did that sort of hobbyist programming on the early internet lead you to building web tech companies? What’s, I guess, the link between being interested in tech and actually becoming more of an entrepreneur and business builder?

Jon Oringer:

Right. So I was in college in ’92 or so, and it was around ’95, ’94 that people started talking about Yahoo, and AOL was obviously a solid business by then. And these were big interconnected networks that people dial into at that point. So that’s where I started to get interested in building software to sell. And so watching the stories of Bill Gates and Steve Jobs, software to me seemed like the ultimate business model. And essentially I’ve been focused since that started on that Apple IIe.

Aaron Dinin:

I’m always curious to get into the minds of people like you, someone who went from being a coder, to someone who successfully scaled out a huge software company, what helped you connect the dots between, oh, I can make computer do these interest things to like, I should build a business around what these computers can do.

Jon Oringer:

I mean, what I knew is that these were machines that can make you scale in unbelievable ways. And so, not only was being an entrepreneur important to me, but using this machine to scale started to become important also. Because if you want to be an entrepreneur, there’s plenty of ways to it, you can open a store and sell stuff, but you have to be there all day. But the way that you can do it with a computer obviously, it’s obvious today, but not then maybe not as much so, you can build these things that sell these things for you. And so it always seemed to me that commerce was going to be part of these operatings. So when it’s started to happen, I had a bit of a head start because I had been thinking about this for a very long time.

It’s hard to imagine the scale we are at today, but I knew it was going to be much bigger than what it was. I challenged myself way early on. I remember even in high school, how can I know how to do this stuff without getting a job, that was essentially the goal. I mean, I have a job today. I have many of them, I work hard, but the differences I get to create, which is a pretty amazing thing to be able to do all day.

Aaron Dinin:

Yes. You definitely still have a job as an entrepreneur. I often have young students telling me they want to be entrepreneurs so they can, quote unquote, work for themselves and be their own bosses. And they make it seem like they’ll be free to do whatever they want. And I always feel terrible when I have to break the news to them that, no, running your own company is actually a harder job and you’ve got lots more bosses than you would’ve had if you just worked for someone else.

Jon Oringer:

Yeah. Suddenly you have a lot of bosses, they’re called customers. They’re a lot more demanding than any boss out there.

Aaron Dinin:

And you kind of learned those lessons the hard way because Shutterstock wasn’t your first company. From my research, you sort of built up to it over time. Is that right?

Jon Oringer:

Yeah. Pre-Shutterstock, there was a ton of failures. I mean, every single one of them taught me something about how to be successful inside of Shutterstock, just trying something, failing and then looking back and being like, oh, okay, well, in hindsight, that’s so obvious. Of course, I wouldn’t do that again.

Aaron Dinin:

If you’re able to, I guess, could you summarize the big aggregate lesson or lessons from all those early experiments that ultimately led you down the road toward Shutterstock?

Jon Oringer:

So I’m in college and I would put up a product. I would spend months creating this thing and then I put it up and it would be something that would take a credit card or something you install. Netscape was the browser and they were software programs you would buy. There was a pretty noticeable twist in some of them that were really successful, I noticed that it had to do around subscription. A lot of people would sell software, they’d try to figure out how to entice you to come back, even Windows and Microsoft Office did this for a while.

And over and over again, the prevailing theme was if you could figure out how to get the subscription from the beginning, you won. And so everything I started had some sort of subscription, some were stickier than others, but there was something about Shutterstock that stood out from all of them. So all of these businesses would kind of start and they’d be really expensive to get customers, plus trying to figure out how these businesses do it. And when I was sorting through the landscape, you saw businesses that were super successful and ones that seemed like they had to climb a steeper treadmill to get to where they were going. It was subscription that was a big difference.

Aaron Dinin:

You’re hearing Jon praise the value of a subscription business model. And quite frankly, I couldn’t agree more, subscription products are kind of the holy grail of business. It’s why every media company is launching a streaming service. It’s why Apple switched iTunes from paper song downloaded to a subscription service. And it’s why software as a service businesses, as SaaS businesses, are so popular in the venture capital, private equity and public markets. Simply put, rather than getting customers to buy something once and then having to convince them to buy something again, it’s much more lucrative and easier to get customers continuously paying smaller amounts of money.

Over time, they’ll likely end up spending a lot more money and the cost of getting that money will be significantly less. More money at less cost equals of course, bigger profits and yeah, business 101. That’s a good thing. And again, Jon certainly didn’t invent the idea of a subscription. What Jon did was identified an opportunity to create a subscription service. He found a market where businesses were continuously making unique transactions for the same basic product. And he realized he could better fill the market demand by building a subscription model. So that’s what he did. That’s actually what you heard Jon talking about at the very beginning of this episode.

Jon Oringer:

The light bulb moment was I’m building all these companies. I’m doing an insane amounts of marketing for them because you can build the product, but then you got to get the people to come buy it. It was really interesting because I was buying images for all these companies. I was marketing all these products and I was buying these single use images from incumbents that exist today, companies that are out there trying to compete with those incumbents. And every time I would buy one of these images, I would go to another site and buy another one. And there was no loyalty, there was no reason for me to go back. And it just all kind of clicked, I started these 10 companies, some were subscription, some weren’t. I was going out and buying images from these image providers one at a time and I had this realization. I was like, I want to be the engine that helps businesses market by subscription.

What you’re describing seems kind of like an obvious idea now, but as you’re talking about it, it kind of strikes me that the reason it seems obvious is basically because of Shutterstock’s success, right?

Jon Oringer:

I remember when I launched it, people thought I was crazy. It’s like, it’s a business to business product. You don’t always need images. It’s kind of this thing that’s project based, but I was positive this was a thing. And so I went all in on it around 2002.

Aaron Dinin:

So why were you so sure it was going to work?

Jon Oringer:

Something else also happened right around 2003, digital photography existed. It was just really bad, made by these little kind of point shoots and people were still shooting film because it didn’t feel like things were real. They didn’t have that same kind of feeling. When people took a picture, they wanted this warm image and that wasn’t happening yet. But the digital SLR, which was priced really high, I remember the early 2000s. The entry price for digital SLR was around $10,000. It started dropping like a rock.

Canon came out with this sub $1,000 digital SLR. And that was where I realized that the amount of photography that can get created and the number of people that started to become photographers that weren’t before. I mean, these things were going to continue to drop and there was going to be a pretty liquid marketplace. Combine that with the fact that I knew what it was like to be an entrepreneur on the internet, you had to start a lot of things, you had to create something and market it in very aggressive ways. And you had to do it often and a lot of testing, and so the subscription made sense. I mean, ultimately it was something I want, which is also a good signal for an entrepreneur.

Aaron Dinin:

Then just to be clear, because the stories I found about Shutterstock’s history were a bit conflicting about this. You weren’t a passionate photographer and that’s not why you started the companies. Is that a true statement?

Jon Oringer:

I was a software engineer. I mean, I liked photography, but I was not a photographer, I was an engineer.

Aaron Dinin:

You’ve maybe noticed how this conversation keeps coming back to the theme of Jon not being a photography person. It’s because Jon’s story is such a great example of how entrepreneurs should go about identifying valuable business opportunities. Specifically, notice how Jon never says I was really passionate about taking photos and I just needed to find a way to get paid for doing it. That version of Jon wouldn’t have created Shutterstock. He would’ve found someone to pay him for being a photographer. Maybe he would’ve become a wedding photographer or a school portrait photographer. Not that there’s anything wrong with those things, they’re just not multi-billion dollar publicly traded tech companies, which is probably what you’re here to learn about. To build kind of business, the billion dollar tech company kind, you don’t start by asking yourself what you are passionate about. You do what Jon did, you identify a valuable business model, in Jon’s case, subscription billing, and you find a market where you can apply it. Most likely because it doesn’t already exist, which is what Jon did.

By the way, the other option, it would be to provide value through the business model in a way others can’t or won’t, who are already in the industry. An example of that would be Disney launching a new subscription streaming service to compete with Netflix. By that, I mean, monthly billing for streaming content already existed when Disney launched Disney Plus. But Disney’s library of content offered consumers a different value than what Netflix could offer. But back to Jon’s case, he figured out a way to create a subscription business model in the stock photography market. And he did it by creating a marketplace where photographers could get paid to post their photos. There was just one problem in the early days, and it’s the same problem that plagues the launch of pretty much any two-sided marketplace. Jon didn’t have any photos, which he needed in order to get subscribers. And he also didn’t have any subscribers, which he needed in order to attract photographers. Luckily for Jon, even though he wasn’t a passionate photographer, he knew enough about photography to at least get the marketplace started.

Jon Oringer:

In the beginning, I didn’t have any photographer. I knew you couldn’t get customers without the photographer. So I bought that Canon Rebel. And my goal was okay, so how can I create this world where someone buys this thousand dollar camera, they go out, they use their photography skills, they shoot these images, they get uploaded to Shutterstock and then they get paid off of the platform and it pays back their equipment, gives them some sort of salary as well. So that was the model I was trying to build to create this ecosystem. I mean, today, there’s tons of these marketplace out there that do this, obviously, but at the time, the only thing that we could compare it to was these affiliate networks with the pretty big world where you could, as an independent person, kind of build these pools of traffic and resell them to advertisers, who wanted to advertise.

It wasn’t so centralized. Everybody had their own site, their own traffic pool and had to build their own technology to sell that stuff. So people were starting to think about this stuff. And these affiliate networks were putting these checks to people with traffic. So I was thinking, okay, well, I can cut checks with people with lots of photography. And so my goal there was to get all of that stuff onto a platform, but to shortcut that, I just went out and took 10,000 photos in a year and put them on a website. It took me about 50,000 shots to get to 10,000 and they’re really bad. They still exist on Shutterstock, if you search by oldest first sometimes, you can find them.

So I bootstrap the marketplace essentially by going out with the camera and learning exactly what it would take. So go out, shoot the photos, come back after the three hour photo shoot, how do I get these things on the Shutterstock? Working through the UX, like each step and optimizing each detail of that created this world where suddenly I had a couple years later, a few thousand photographers constantly uploading, and then that kept the subscriber base.

Aaron Dinin:

So in order to get your first photos, you self populated the marketplace, and how did you get your earliest subscribers?

Jon Oringer:

So 2003, it was the beginning of Google AdWords. These platforms had just started. And so SEO was always part of my previous businesses where you generate content, people search for content, you become content that shows up highest in search results. So got pretty good at that in the late ’90s with all the search engines that existed at the time, eventually Google became the leader there and had their own search platform where you can pay to buy the slots in the top. So that was initially how I got the customers. And we were way ahead of the game back then by kind of slicing nicely into different ads for different ceilings and different items in the images. And so the combination of SEO and SEM was the marketing engine for early Shutterstock.

Aaron Dinin:

It was interesting to hear you discussing Shutterstock in relation to the affiliate marketing model and basically saying it was the only other example of a company brokering the exchange of a digital asset and the case of affiliate marketing, that asset being web traffic. Of course the model is very common. Now, everything from music via Spotify to NFTs, but going back to when you’re first thinking about Shutterstock, that model of independent creators selling their content online, were there any other examples of it?

Jon Oringer:

It didn’t really exist. I mean, there were people selling it today. So there were people that were making money off the internet. There was the constant question, can there be real businesses on the internet? Crazy to even think about now. I thought I could build a solid business. It was a crazy thought, but at the same time, you could see the right end of the wall. People were starting to accept this, devices were getting smaller and faster. It was those years from 2003 to 2007/8, the number of people that were getting digital cameras, learning how to use them and becoming better photographers because they were able to shoot something and see it right away. It was really amazing. From there, we started to think about video, 3D, which we eventually got into audio and everything followed. But you’re right, in the beginning, there weren’t really these kind of models that existed. I mean the word crowdsource that wasn’t a word.

Aaron Dinin:

Let’s take a moment here to highlight and appreciate Shutterstock’s legacy. Even if you’re not the kind of person who’s regularly buying stock photos or video content. And I’m guessing that’s most of you listening, think about all the other products and services you might actually use that follow a similar model. Off the top of my head, I’m thinking something like Spotify, if you are streaming music. Personally, I write and post lots of articles over on medium.com, which uses basically the same model. I’m a creator in that scenario and then of course, people subscribe to Medium and then get to read my content and all of the other content in there.

Well, Shutterstock is certainly one of the companies, if not the company, that really helped to first prove out that model of creators creating content and providing it to a central subscription based marketplace. That’s an impressive legacy. I admit, before I started researching Shutterstock, I hadn’t really made the connection in terms of where that business model came from, but it was really Shutterstock that proved it was possible and lucrative, which of course, can be seen by Shutterstock’s amazing growth since Jon first launched it back in 2003.

Jon Oringer:

The beginning months we were doubling month over month, there was a lot of growth. I had a customer acquisition cost, I had a lifetime value. And I would make sure my CAC is less than my LT. Those rules don’t seem to exist today in our fundraising environment, but they will come back one day. But that was essentially in the beginning what I did. And so I would look at my customers and be like, okay, well, they hang out for on average X number of months. And so I can only spend up to here to buy them profitably. I was really careful. Shutterstock’s been profitable since 2003. I think that’s pretty unique in the technology world, especially today. And so that permeates through the company in interesting ways as well.

Aaron Dinin:

In what ways, what would you describe as kind of both the legacy of Shutterstock and of course, because it still exists and is doing great, it’s current position in the broader tech ecosystem?

Jon Oringer:

I think we created an entirely new type of marketplace. I think we’ve built that industry. There’s been a lot of people that have replicated it, that’s something I’m really proud of. Shutterstock, for many years, people kind of looked at it as, it makes money. Is it really a tech company? You’re not focused on growth at all costs. Are you really a tech company? And finally, I’m proud that it’s starting to look like this is how you build a real business because it is. You need economics that makes sense and there’s been a few times in the past 20 years that the markets have reminded people of that, but forgot really quick that they had to keep reminding people of that. So maybe we’re at a point now where people really have to do it, but I’m proud the fact that Shutterstock’s stood by that and was profitable for now almost 20 years, almost every single month, but definitely every quarter. And I think it’s a cool story and I like telling it.

Aaron Dinin:

It is a cool story and well, I’m glad Jon was willing to take the time to tell it to all of us. After more than a decade and a half of running the company, starting with just him through taking it public, Jon decided it was time for him to step away. So as of this recording, he’s no longer the CEO of Shutterstock, but he’s still the executive chairman and the company’s largest stakeholder. So yeah, as you can imagine, he’s still heavily involved with where the company is heading and how he can best serve his customers. In fact, he’s probably more involved than you’d expect from someone who’s had as much success as Jon.

Jon Oringer:

Even today, when I see a Twitter message about a certain type of complaint, sometimes I’ll respond and people think it’s not me, but it’s me. And I think that’s really important that there are only a certain number of hours in the day. But if you don’t get this stuff from the beginning and you’re not able to stay that close to the edge of your business in ways that really matter and in ways that you can manage your time around, I think that’s a really bad recipe for the future of your business. I tell people, go through that pain and do it. Talk to your customers, be that contact, have your email address right there, get CC’d on whatever that CRM is, that you’ve set up for your customer service team. If you insulated yourself enough, you’re lost forever. You better hope you hire the exact right person. You better hope there’s some other way to get the data to you in a way where you’re going to understand those customers better because it’s going to be way too difficult to catch up.

Aaron Dinin:

Yep. Jon is even still lurking around Twitter responding to Shutterstock customer issues, which means, Hey, maybe he’ll respond to you if you ask him questions about something you heard on this podcast. He’s at @jonoringer. We’ll respond to your questions and thoughts too, because Web Masters is also on Twitter, we are @webmasterspod. And I’m on Twitter @aarondinin, that’s A-A-R-O-N D-I-N-I-N. I also write lots of articles about startups, business and entrepreneurship. You can find that content over on my website, it’s aarondinin.com.

In addition to thanking our guest for sharing his story, I also want to thank the people who helped me pull together this podcast, especially Ryan Higgs, our audio engineer. And of course our sponsor, Latona’s. If you’re interested in buying or selling an internet business, be sure to check out Latona’s.com. And a final thanks to all of you for listening. If you enjoyed the episode, please take a moment to rate us on your podcasting app of choice. Share the episode with some friends and as always, be sure you’re subscribed so you get the next episode as soon as it’s released. That episode is of course, coming your way very soon. For now though, well, it’s time for me to sign off.