Chirply Brings Crowdsourcing—and Good Art—to Greeting Cards
In this era of Kindles and iPads and cloud-based data storage, the idea of an Internet startup that’s actually focused on paper is more than an anachronism—it’s almost a contradiction in terms. But that’s Chirply, a Y Combinator-backed company in San Francisco that sells high-end greeting cards—and soon notebooks and wrapping paper—printed with designs from independent artists. The six-employee startup runs a website where artists submit designs and random fans and customers vote for their favorites (that’s the Internet part). And the designs themselves are fun, hip, and edgy. But in most other ways, Chirply would be as at home in Peoria in 1935 as it is in San Francisco in 2011.
To find out more about the startup, and what inspired a pair of brothers with background in cloud, security, database, mobile, and video technology to launch something so retro, I biked into SoMa in April to visit Chirply’s office at 153 Townsend. (They’ve since moved.) The building contains a warren of rental offices occupied by early-stage Web startups, including other Y Combinator alumni like Convore and Rapportive. So it’s probably safe to say that Chirply was the only company in the building whose office was stacked high with boxes full of actual stock—greeting cards, on the day I visited.
“My brother and I both come from artistic backgrounds,” Gagan Palrecha explains. “I ran a record label for 10 years. My brother [Neel Palrecha] was a professional musician in a touring band. We both grew up screen-printing T-shirts and concert posters in our parents’ basement. So we’ve been in that world, and a big part of what we set out to accomplish was to work closely with designers and give them a serious outlet for their art.”
Laudable enough—and as for why the Palrecha brothers chose greeting cards and wrapping paper as the medium for their mission, I’ll get to that in a minute. But it’s an interesting fact that Chirply didn’t start out as a crowdsourced paper goods company. “Pivots” aren’t unusual for young startups, but Chirply’s, which came just a month before Y Combinator’s summer 2010 demo day, was more dramatic than most. The original idea for the company was all about the Internet, befitting Gagan’s background at early cloud services company Loudcloud, security startup Vantu, and Oracle, and Neel’s history at mobile video companies MobiTV and Quickplay. The Palrechas wanted to turn Twitter into a platform for e-commerce by writing software that would translate a retweet into a purchase. “Let’s say you were Capital Records selling a new Coldplay album,” says Gagan. “You could put out a message saying ‘retweet this message and get the new Coldplay record for $5.99′ and then all of your followers, to get that price, would click the retweet button.”
A neat idea—and “we still have the code,” Gagan says. But the brothers realized that profit margins on such an operation might be small, and that mitigating fraud would be costly. “We made a decision that this wasn’t going to be big as big as we wanted.” But they already had a domain name that was “cute, short, memorable, happy, and cheerful,” in Gagan’s words. So for their second act, the brothers picked something closer to their artistic passions.
Gagan says he and Neel are both big fans of Etsy, the online marketplace for small independent craftspeople, and Threadless, which sells T-shirts with crowd-sourced designs. They’re also the kind of people who will gladly spend $20 on a leatherbound Moleskine journal when a $2 spiral notebook would do. “The reason we use really nice notebooks in the office and at home is because we just feel more productive and more driven and happier when we’re using stuff that we have an emotional connection to,” Gagan says. “That is what we want to do, help people create meaningful artistic connections with the things they use every day.”
But Threadless already had a corner on artsy clothing, as Etsy did on jewelry and other crafts. The Palrechas wanted to find a market where they could spotlight cool independent designers, but in a way that that would guarantee recurring revenues. “The question was, what can we do that would satisfy the artistic stuff we want to do, but would also be an interesting business from a market size perspective?” Gagan says. “What is a consumer product that we use personally but that lacks great design? And for us it was obvious—it was print.”
Gagan says consumers in North America spend $10 billion a year on greeting cards. If you throw in wrapping paper and notebooks, the number rises to at least $30 billion. And those figures seem to be growing: e-cards put a dent in sales of paper cards in the mid-2000s, Gagan says, but they’re coming back now as consumers realize that the very ease of sending an e-card subtracts from the act’s sincerity.
From a salesperson’s point of view, all three product categories have the advantage of being short-lived; you can’t use any of them more than once, which makes repeat purchases inevitable. The only problem—and the opportunity, for Chirply—is that few people think of printed greeting cards as good art. “We are sort of programmed to accept the fact that cards are bad,” Gagan says. “But I think people want illustrative, artistic cards. And I think design is more important in our daily lives today than it ever has been. We’re trying to take the effort out of finding beautiful design.”
Artists who come to Chirply can download a submission kit with the specs for the designs that work as greeting cards, notebook covers, and wrapping paper. Designs get posted to the voting section of the site, where Chirply members get 30 to 60 days to vote for their favorites. At the end of each month, the designs with the most votes graduate to the shopping section of the site. But if you’re an artist, don’t count on winning just by having your 10,000 Twitter followers vote for you. “Our voting is weighted based on who is active in the community,” says Gagan. “It’s not about who has the most friends but whose design is best.”
All winning designers get a $300 up-front fee in return for an exclusive license to use the artworks in print, plus a $100 royalty on each $1000 in sales. Gagan says Chirply orders print runs in advance to reduce costs (hence the piles of boxes in its office) and that it needs to sell about 100 cards to break even. Most customers buy several cards at a time, in part because the site offers a discount on packs.
I commented to Palrecha that he and his brother must have felt somewhat out of place at Y Combinator, given Chirply’s focus on physical stuff, rather than software or services. But he says he and Neel understood supply chains, given their history running a record label, and that it has found ways to economize. “If you look at the unit economics of our business, it’s pretty amazing, even though in many cases we’re prepaying,” Gagan says. “Printing paper goods is almost like printing money, because the costs are pretty low.”
And as with Etsy or Threadless, buying a card from Chirply is supposed to be more than just a transaction—it’s an experience, with a built-in social component. (The average Chirply member has voted on 60 designs, Gagan says.) “I know it sounds like marketing jargon, but we don’t consider ourselves a marketplace; we consider ourselves a community,” Gagan says. “I could care less at this point whether we sell 100 cards this month or 10,000. What I care about is that the people who are coming to the site and admiring the designs and voting for their favorites feel an emotional connection to the designs and the designers.”