On October 15, Paperless Post will defy its name and add a print component: Paper by Paperless Post. Users will be able to mix and match digital with hard copy sending, for example, one batch of personally designed holiday cards electronically and ordering another that can then be sent via USPS. Or, they can create and then print the whole lot of wedding or party invitations.
It’s the latest turn for a service that made its first profit in the fall of 2010 and continues to flourish three years after launch. Mediabistro recently spoke with co-founder Alexa Hirschfeld about this fast-moving entrepreneurial journey and the real reason so many of her fellow Harvard alums find big business success.
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Your brother James, while still at Harvard, presented you with the idea for Paperless Post. What was your initial reaction? And did you have any major initial concerns?
My initial reaction was I specifically said, ‘I think people will use it, but I’m not sure they’ll pay for it.’ Then we got into it argumentatively, and I was listening to him argue about not just the idea but him as the creative subtext of this potential product.
It became clear that to create this product, he would be the right person to do it. Not everybody could envision what it looks like. And what it looks like is a really important part of why it would be valuable to users. When we were growing up, James was very artistic with painting and sculpture. Friends of my mom would see his work and say, ‘Oh my God, this is so amazing.’ I was thinking it would be like that but on a potentially highly-distributed platform. And I totally got into it. But at first, it was hard for me because I didn’t see it the way he did.
| “It’s very, very hard to build something from scratch — even harder when you don’t have users yet.” |
The two of you spent Memorial Day weekend in 2007 hashing out a business plan and then the next two years going through what you have described as a “really painful” gestation period. What were some of the reasons for that?
It was painful because we were just going on our own beliefs. The data we had was from the kind of people that you trust 100 percent. But it’s very, very hard to build something from scratch — even harder when you don’t have users yet. We had to implement the product before we had users. After we had users, everything changed. Now, it’s difficult in different ways, but I really love it. That Memorial Day weekend, we were in our parents’ living room in the city. Everybody else was somewhere like the beach, the country. It was really hot, and he had just finished his second year at Harvard.
The beta launch in the fall of 2008 caught on with some high-profile users, like Condoleeza Rice. How did you get her and other recognizable users to jump onto Paperless Post?
We required people to have received an invitation to be able to register. It was a process that was really actively pushing people out of the system. That’s not the reason we acquired a user like her, but she came through another gatekeeper, which is pretty much how all of our users come to us. The invites went through our closed circle of Harvard friends initially, because we were both really paranoid. We had competitors then, and we were trying to smooth out the process of the workflow. We handed out user names and passwords very carefully back then, and Rice was maybe two or three degrees separated from someone we knew at the school.
You personally made the transition in 2009 from working as an assistant for Katie Couric at CBS News to working full-time on the Paperless Post. What did you learn from working with her?
She is very smart and very effective. I worked for her for a year and a half, and I watched the way she does everything to make her job successful. It’s not just journalism, but also her ability to get interviews and ability to charm people. I respect her a lot, and that’s helped me in a lot of different operational capacities.
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After three rounds of funding, Paperless Post became profitable just over a year after launch, which is a remarkable feat really. What were some of the keys to achieving that so quickly?
We started when the market crashed in 2008, and had a really painful experience of trying to raise money without a business model fully in place. So we had one, which is different than the one we have now. And I guess because we really started from a position of not selling ads and actually needing to get users to pay, we were able to hone in really quickly on where the value was. We read a lot of books on pricing and what the value was for our users. By December 2010, we had a year and a half of data on payments, and it became really clear. We stopped charging commissions on ticket sales, then it was stamps for postage, then it was coins that you paid per person, based on how fancy the document was. Like if you added an envelope liner or a colored envelope or stuff like that. And that kind of model grows geometrically. And just to be really clear, we were cash flow positive in that quarter, but we went back and re-invested that money in the company to make it grow faster.
| “Everything changes once the race is on, once the product is launched.” |
Much has been written about Harvard and how it prepares people for the business world. What advantages did attending that school provide you and James?
I think it’s really simple: It’s the people that you’re surrounded by when you go there. A good friend of mine started a company called Vostu, which for a while was the biggest gaming company in Brazil. He started it in 2006, and to see your friends, a person who is like you, start something like that. It’s inspiring, it makes you think, ‘Oh, we could do that too, probably, if we had a good idea.’ I was also in Mark Zuckerberg’s class. I hadn’t met him until recently, but he’s obviously a very smart, impressive person. Several people who work at Paperless Post are also people I knew at Harvard. I think it’s about whatever makes people driven. Those people are everywhere, but Harvard provided a model for that type of person that I’ve now met more in spades outside of school and in New York. Everybody who works at Paperless Post has that quality, and it’s really fun to work with those sorts of driven, passionate people.
You had a great quote in Fast Company: “Even if your product isn’t as perfect as you’d like, perfection in your hands isn’t relevant. You need to know what your consumer thinks.” Can you talk a bit about your own beta phase and how the product was shaped by initial users?
It’s sort of like a gun shooting off at the beginning of a race. Everything changes once the race is on, once the product is launched. You start getting all this info and data. And the weird thing is that the info and data is never what you expect. Although it’s rarely out of left field, it’s always much more honest and almost brutal in that way than what you’d think.
For example, our first product version did not include envelope liners. We had this one maroon option, and one of our first user emails was from someone who loved the service but felt the colors of her invitation did not match the color of the envelope liner. Sure enough, other people mentioned the same thing. That led to our first product customization and it doubled our revenue after we added it.
Hirschfeld’s tips for start-up success:
1. Believe in the product. “You have to keep believing and keep reassuring each other that what you’re building is not crazy, that it is something that other people are going to want, to help get you through this inevitably long process.”
2. Don’t focus on PR. “The more you try to pitch your story, the less you seem to get covered. But, when you do something that someone wants to track you down for, that’s when you get genuine coverage.”
3. Take awards and citations with a grain of salt. “I’ve never taken that stuff seriously. Often, those things don’t matter; what matters more is getting things done. Also, what scares me is that awards and positive write-ups seem like the kind of thing that make you think you’ve made it, which I would never think.”
Richard Horgan is co-editor of FishbowlLA.
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