Shutterfly Should NOT Go Public

Shutterfly has recently filed for an IPO. My honest feeling is that they should not go public. They will get creamed.

First, there is plenty of competition in the online digital photography business, with KodakEasyShare Gallery, HP’s Snapfish offering, as well as Yahoo and Google vying for market share. Each of them have additional channels to leverage, which Shutterfly doesn’t, and will hurt from not having access to.

Second, and more importantly, they have not yet shown the savvy in collaborating creatively with channel partners. Their leadership team is experienced in Internet Marketing, but not in deal-making, which is what is likely to save the day.

Against that back-drop, either they should get themselves sold to Microsoft or News Corp, or hire a leadership team that can go out and do deals with, for example, the New York Times, and Boston Globe. They should carve out a niche in the market, perhaps around the vector of Local Content, and build a channel around that.

Failing to put forward a compelling, unique and defensible strategy will make them an also ran, and market share will consistently erode in favor of the big multi-channel properties.