Photofy Ad 2014

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With $1 million in new funding and a just-launched enterprise platform for brands, Photofy is out to prove it's not like other photo editing apps.

In the year since the Raleigh startup launched its free consumer-facing app and raised $750,000 in seed funds, its team of designers and developers have built a library of 35,000 digital stickers, frames and overlays and earned the right to license images and marks from Disney, DreamWorks, most major fraternities and sororities and many NCAA colleges. In-app purchases have made Photofy a top 40-grossing photo app in the App Store (and at one point made its Top 1000 overall). It is nearing a million active monthly users.

But today marks its real opportunity to differentiate from thousands of other photo startups and apps (nearly 1,500 are listed on AngelList) and show that brands will spend marketing dollars on tools that help them better engage with customers and fans. 

"Our goal is to prove you can build a revenue model around photo sharing," says Photofy co-founder and president Jon LaNasa. Today's Photofy 3.0 launch includes improved features for consumers along with the brand platform, and the new app is available on iOS, Android and Kindle devices.

Betting on Photofy this round is its seed investor Capitol Broadcasting Corp. (ExitEvent's parent company), along with Michael Olander Jr., who owns Raleigh-based MDO Holdings and O2 Fitness, and Jim Dondero, who runs the Dallas hedge fund Highland Capital.

"I saw a really strong enterprise play here," says Olander, who expects to use the platform to market O2. "We've evidenced that with Oscar Mayer and the Durham Bulls. It has a great product that these companies can use for social media and to create community engagement."

The new Photofy for Business gives brands the opportunity to create branded frames, overlays and stickers that can be used internally or made available to customers and fans to add to their photos. The tool is made to be social, so completed images can be shared through any social network, letting customers promote the brands they love. Early beta testers have included Oscar Mayer, CanvasOnDemand, the Durham Bulls and Albright Digital, a Durham creative agency that provides digital marketing tools to more than 100 car dealerships around the nation. At least three dealerships will be launching galleries of branded images using the app in coming weeks, and Albright has since created Stamp'd for Automotive to resell Photofy's offerings to its dealers.

"Auto dealers are in a very competitive market and are always looking for creative marketing ideas to get in front of the customer," says Albright General Manager Vickie Gibbs. "Photofy gives them the ability to include their brand on customer photos that they can share with customers via email or post on Facebook."

Photofy's first year

Photofy is the brainchild of LaNasa and Jesse Flores, who worked together at CafePress. LaNasa previously founded the Cary-based custom invitation creator and operated invitation and stationary wholesaler Noteworthy Collections and sold both to CafePress in 2011. Flores, a designer by trade, served as its creative director.

Photofy Founders
Photofy was founded by Jon LaNasa, left, and Jesse Flores, right. Credit: Photofy

The men have quietly built the platform and team over the last year-and-a-half, spending little money on marketing for two previous iterations of the app. The goal, LaNasa says, was to have the functionality in place before targeting brands and consumers on a wide scale. Photofy is rated 4.5 stars on Apple and 4.2 on Android. That focus was what attracted Dondero to invest.

"It's a competitive space, but I don't think a lot of people in the space have done it well," he says. A self-proclaimed amateur photographer, he believes Photofy now has broad appeal for brands and consumers, and "it lets you do a lot on a mobile device that previously was only really done on a desktop."

Their mission is not to be a social network, so they don't count Instagram or Facebook or WhatsApp as competitors. It's to be a platform for consumers to create and share beautiful, custom images and to engage with their favorite brands. That's how money will be made. Photofy for Business costs a minimum of $30/year with higher rates based on number of assets and users (for example, for branding agencies) and designs. Photofy's team can also be employed to create the images.

Attracting a diverse and global audience

Photofy has built a big following in the United States—40 percent of the market is here—but there are growing audiences around the world. Brazil, Indonesia, the Philippines and Mexico are its next four biggest nations.

It has been most popular with women aged 13 to 39, but branded content is aimed to bring in more men and to target Millennials. A key way Photofy will attract those crowds is to make the app easier than ever to use.

The best advice on that came from advisor and Shark Tank investor Mark Cuban. It had to be possible to creatively edit, post and share a photo within 20 seconds, he said. With 3.0, LaNasa believes Photofy has achieved that goal.

A key way is through the launch of "experiences," or libraries of images based on themes. With one swipe to the right on the new app, a selection of more than 100 experiences will appear on the screen, some of which will be targeted to users in geographic regions (like Fun in the Triangle) or those attending certain events (like a local election or concert). Others, like this week's Halloween experience sponsored by the Party Bluprints blog or a Thanksgiving experience sponsored by CanvasOnDemand, will be available to anyone.

"We're showcasing what we can do," LaNasa says. Besides the Photofy for Business options, he expects brands will sponsor future experiences. 

Credit: Photofy

The team and the strategy

LaNasa and Flores have built a team of 11 designers and community managers at American Underground @Raleigh but will soon move to a larger office downtown. The mobile development team is located primarily in the Ukraine. LaNasa expects to hire another three or four people in Raleigh to fill design and sales roles over the next three months.

One key sales strategy will be a guerrilla marketing initiative on college campuses around the nation. He also expects to begin Facebook and social media marketing campaigns.

Customer engagement will also be critical as the user base grows, LaNasa says. That's because, unlike many competitors with 20 or 30 apps in their portfolio, he's focused on building a platform.

"Mobile is the fastest market I've ever been in," he says. "Customers are very vocal and you get tons of feedback quickly and they expect changes nearly immediately. You have to respond to everyone."

LaNasa's big vision is that the current round of funding will be enough to get the company to cash flow positive—his conservatism has been another draw for investors.

"One of the keys is to treat investors' capital as precious. You have to roll up your sleeves and do most of the work yourself," Dondero says. "Jon gets that drill and I'm confident he doesn't waste money."

But that doesn't mean Photofy won't raise more money, LaNasa notes. 

"It depends how fast we want to grow."