With this deal, Shutterfly gets to burnish its brand and bask in the reflected glow of a hit TV show. Also, after the well-publicized failure to take SFLY private last month, this move shows Shutterfly has some game and is willing to grow its app business. And,Groove Book gets a home in Redwood City.
Further, there’s little down-side risk for Shutterfly, which is nearly a billion-dollar company. There’s no question Shutterfly itself could have on its own developed a subscription photo book product similar to Groove Book; they have the programming prowess and the manufacturing capability. What they don’t have, as some big companies have found, is a way to grow niche brands quickly. With the millions of dollars in free advertising and PR from this acquisition, this kick-starts this for Shutterfly. Housenbold himself told CNBC:
Every time you’re on ‘Shark Tank’ it’s the equivalent of getting 10 to 15 million dollars of advertising. As you think about plugging in that mobile, social component into our platform, it made sense to do an acquisition at this early stage versus trying to compete.
Check out the list of “success stories” on the “Shark Tank” page. None of these are household names; some are fine products, and could be mainstays in Brookstone or catalogs, but nothing earth-shaking. In fact, consider this: After five years, it’s taken the Sharks this long to pick a big winner? Sure, with the snarky dynamic and the vicarious delight in watching entrepreneurs get their hopes deferred or endorsed, “Shark Tank” makes for good TV. But is it good business? With this long of a drought, it was coming into question. Like “American Idol,” a show like “Shark Tank” thrives on a constant stream of dreamers and doers, looking for that big break. What they have missed is their Kelly Clarkson, the household-name winner. Groove Book is it.
The big winner here, then, is not Groove Book or even Shutterfly. It’s “Shark Tank” itself.
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