Joel Flory, co-founder and CEO of VSCO, started his career as a commercial and wedding photographer, at a time when digital began replacing analog film photography. After visiting the website of his favorite band, Jimmy Eat World, he was inspired to contact its designer Greg Lutze. Lutze designed a website for Flory, and the two toyed with various business ideas before deciding to collaborate and build websites for other photographers. They had a lot of interest from the market, and in 2011 the Visual Supply Company, or VSCO, was born.
On Monday, September 16, 2019, Bloomberg Television’s Scarlet Fu discussed creativity, subscription models, and the VSCO community with Flory as part of the Cornell Tech @ Bloomberg Speaker Series at Bloomberg’s Global Headquarters in New York City.
Today, VSCO is more than a sophisticated photo app. It’s a platform for creators and a lifestyle for Gen Z. However, that wasn’t the original vision.
“It was always this intersection of art and technology, as well as tools and community, and we always talked about ‘what if we built something by creators for creators? What if we built something in which the business model was never to take advantage of those we were serving but delivered them value in the way that they were willing to pay us and keep paying us?’” said Flory.
Earning Capital from Revenue, Rather Than Investors
Neither Flory nor Lutze had a technical background or experience working at a tech company, but they knew other photographers and designers. To raise money, they held workshops for creatives, and when they needed more funding, they developed VSCO Film, or presets that create an analog film look for digital images. With one website and five tweets, they generated $250,000 in 48 hours. VSCO Film had a 97% gross margin, and sales funded the company for the first 2.5 years as it grew to 43 employees.
“It was one of those things where had we raised [capital], had we been technical, I don’t know if we would have been forced to put a product out like that in the first place,” said Flory. “We probably would have kept heads down on this website builder, and we probably would have gone so far into it that we never would have been forced by the constraint of not having money to go and sell something.”
Changing Business Models
VSCO started as a desktop product. To drive sales, the team created VSCO Film, a 99-cent mobile app with limited photo editing functionality. In 2013, VSCO introduced in-app purchases and became a top-five grossing photo-video app in every country.
With fewer than 100 employees, maintaining and upgrading the app limited the company’s ability to innovate and move forward with new products and business models. That’s when VSCO made the strategic decision to stop offering presets and instead to build a new business model focused on a community.
The community was launched in 2013 as invite-only because they could not afford to let everyone onto the platform. People joined in groups, and VSCO observed their behavior while monitoring costs. When the company saw the high engagement and success of this new model, they raised a $40 million Series A funding round from Accel Partners to pay for the servers that housed the community. In 2017, VSCO launched a paid subscription model, and by the end of 2018, the company had more than 2 million paid subscribers. Subscriptions are on pace to double in 2019.
VSCO’s subscription offers tools and has created a community that inspires others to create their own content. With such a large community, VSCO no longer needs to rely on intuition to make product decisions.
“We run our business by listening to consumers and their needs and being relentless at following our mission to help people fall in love with their own creativity,” said Flory. “I think more importantly, it helps accomplish our vision to create a world in which differences are celebrated.”
Drafting Off Smartphone Advances
Launching a year after Instagram helped VSCO’s success, but mobile phones played a larger role. Apple demonstrated with the iPhone 4s model that people would upgrade their phones based solely on a better-performing camera. Unfortunately, the phone often crashed because it couldn’t handle the larger image files.
“It was that insight that Apple was going to build a device that the buying decision was to be based upon the camera,” said Flory. “We knew that if they were willing to do that, they obviously planned ahead so this was a part of their product roadmap for the future. Every billboard for any phone, it’s about creating photos and video.”
As a result, VSCO went all-in on mobile. Today’s phones have video and photography capabilities that provide new ways for people – especially those in Gen Z – to express themselves and create. VSCO’s business is impacted by Apple, Google, Samsung, and other smartphone manufacturers since smartphones have tools that make creativity more accessible.
Building a Community
VSCO and its community is not a place to share someone’s portfolio or show their perfect self. Instead, it’s a place where people can share how they see the world. There are no public “likes,” comments, or follower counts. VSCO strives to give people from all over the world a chance to share their images – more than 80% of VSCO users are outside the U.S., and more than 75% are under the age of 25, or Gen Zers.
Gen Z is very aware of mental health and how social media can stifle their creative expression, their process, and their choices about what they want to share with the world. On VSCO though, they don’t feel pressure or anxiety.
“They feel the freedom to express how they want to share themselves,” said Flory. “We find it really powerful and exciting and it’s something that we’re continuing to focus on from our mission and vision perspective, because we believe that is absolutely critical for the future.”
You can watch the entire discussion below: