Grappling with the slow-to-develop Web photo-processing market, Shutterfly Inc. announced a restructuring plan Wednesday that includes a layoff of 30 employees, a CEO search and at least US$10 million in additional venture funding.
The layoffs, which represent 25 percent of the company's staff, come just more than a month after the company announced a $23 million round of venture funding. CEO and co-founder Jayne Spiegelman will step down and be replaced temporarily by David Bagshaw, former general manager of @Home Network's content division, until a permanent CEO is found. That's expected in the next three to six weeks, said Shutterfly Chairman Jim Clark.
Clark, the founder of Netscape, said he and Mohr Davidow Ventures are contributing equally to the additional funding. Both are initial investors in Shutterfly. Clark said he is committed to providing whatever the company needs to become profitable, which is expected to happen in the next year or so.
Shutterfly, founded in June 1999 and ranked the No. 2 most popular recreational photography site in February with 1.2 million unique users, trails behind San Francisco-based PhotoPoint, according to PC Data Online.
Credit Suisse First Boston had estimated that the market for online photo processing would ring in less than $100 million in 2000 but forecasts it will shoot to $1 billion by 2005. The field has been slow to take off because of slow Internet connections and confusion about home printing, among other things, Shutterfly executives say.