Paperless Post Moves Into Paper CardsThe Wall Street Journal Oct 18, 2012 Back to press
Alexa and James Hirschfeld, the founders of Paperless Post—and rising stars of New York City's booming tech start-up scene—are branching into a new realm with their three-year-old online invitation business: paper.
The 20-something siblings, who founded their company in 2009, this week began selling paper versions of some of the 50 million e-cards they expect to send this year alone. For $1.10 to $2.50 per card, customers can purchase printed versions of their personalized digital invites.
The move is a step toward positioning the company to reach customers over multiple distribution channels, whether online, offline or mobile, they say. But it also shifts the founders' focus away from their core business, at a time when their fledgling company is seeing growth. For start-ups, that can be a recipe for disaster.
Beyond the Web, the greeting-card market is shaky. The volume of invitations in the mail fell 24% between 2008 and 2010, according to the latest U.S. Postal Service survey. Hallmark Card Inc., the nation's largest card maker, earlier this month announced the closure of a 70-year-old Topeka, Kansas, plant that produced nearly one-third of its cards, laying off 300 workers.
Over the past three years, Paperless Post has carved out a niche for online invitations, charging for the kinds of tools that websites like Evite and Socializr give away for free.
To do that, it offers handcrafted designs, fancy stationery and pop-up envelopes. The cards, which are sent ad-free by email or via social networks such as Facebook or Google+, cost about 20 cents each.
Today, the company, based in Manhattan's Chelsea neighborhood, has $10 million in revenue and 50 employees.
"People said consumers will never pay for a Web-based service," says James Hirschfeld, 26 years old, who developed the site's design tools in his Harvard University dorm. After dozens of early-stage investors turned them away, he and his sister launched the site from their parents' Manhattan home.
By May 2012, the company had raised $12.3 million in capital, including $6 million from RRE Ventures, SV Angel and Tim Draper. Other investors include Ram Shriram, a Google Inc. board member.
Alexa Hirschfeld, 28, a Harvard alum who was an assistant to ABC News host Katie Couric while launching Paperless Post, says more than half of the online customers request printouts. But the move comes with a "steep learning curve," she adds.
The siblings are working with a printing company in Memphis, Tenn. They spoke to The Wall Street Journal last week. Edited excerpts:
WSJ: Where did you get the initial idea for Paperless Post?
Mr. Hirschfeld: Right after my 21st birthday, I was in college and had to organize a party. But there was no way for me to send an online invitation in a way that reflected all of that thought and care. What was missing was design. We thought, let's create the kind of email that you really want to open. I knew if we offered that for pennies, people would pay for it.
Ms. Hirschfeld: James called and told me his idea. I realized that even for the most formal [printed] invitations, there was always a follow-up with a digital version. While the digital version was important, in terms of functionality, it was just a formality.
WSJ: What's it like to start a company together as young siblings?
Ms. Hirschfeld: We knew that we had complementary skills and would be good working together. James is very focused on the creative aspect of the business, the design and content.
Mr. Hirschfeld: And I knew Alexa would be good at building a company that would make the product I was envisioning.
WSJ: What was your first big milestone?
Mr. Hirschfeld: Raising our first seed round and bringing on our first outside board member, Charles Heilbronn [a Chanel Inc. executive whose firm Mousse Partners Ltd. took a $300,000 stake], who has been a great mentor. It was a friends-and-family round of $750,000. Six months after we raised it, we were making $100,000 a month.
WSJ: What was the competitive landscape for e-cards?
Ms. Hirschfeld: We were up against very simple Web-page invitation services, like Evite, Punchbowl and Facebook Events. On the other hand, there were really fancy paper invitations. We've zeroed in on the intersection of really great design with extremely easy-to-use functionality.
WSJ: Why branch out into paper cards?
Ms. Hirschfeld: When 50% of your users ask for something that's 10 times your price point, it would be a risk not to try it. Whether it's an online notification, an email or by paper, each sender should have the ability to control how their cards are sent in any media, including paper.