A Discussion with Jeffrey Housenbold

Boyden’s Leadership Series presents discussions with business and thought leaders from organizations across the globe. The series focuses on topical issues that offer executives, political leaders and the media insight into current trends in business and talent management in the global marketplace.

This issue features Jeffrey Housenbold, President & Chief Executive Officer of Shutterfly, a leading internet-based social expression and personal publishing service. He discusses Shutterfly’s growth strategy, industry consolidation and competition from large conglomerates, why social media will become more private and the connection to Howard Schultz as his mentor.


Mr. Housenbold is a new-media visionary who leads Shutterfly’s strategic direction and growth. His leadership and vision are the driving force behind the company’s industry leading transformation of how people interact with their memories.

Previously, Mr. Housenbold was Vice President of Business Development & Internet Marketing at eBay, where he managed customer acquisition and retention. At eBay he also held positions as Vice President & General Manager of its Business-to-Consumer Group and Vice President of Mergers and Acquisitions. Formerly, he held senior management positions with AltaVista, including Vice President & General Manager, and was the Chief Operating Officer of Raging Bull, the award-winning community finance portal. He also served as Vice President of Corporate Development at WinStar Communications and as Manager and Co-founder of Accenture’s Media & Entertainment Strategy Group.

Mr. Housenbold earned his MBA from Harvard Business School where he was a Dean’s Fellow; and his undergraduate degrees, with High Honors in Economics and Business Administration, from Carnegie Mellon University where he was a Presidential Scholar.

Boyden: Would you consider your role as CEO of Shutterfly a dream job, given your photography passion?

Housenbold: In many ways it’s a dream job. Photography has always been a passion of mine growing up – I was even my high school and college yearbook photographer.  At Shutterfly, the content of our product is certainly something that excites me. It touches our customers’ hearts in so many ways, not just their wallets. We’re constantly dealing with people’s life joys and happy moments – everything from the birth of their child to their wedding nuptials and 80th birthday parties, which is incredibly satisfying. But even more exciting than our product is the opportunity for me to help lead and grow a dynamic organization that’s building a lasting brand.  When I joined the company, we had 103 employees, about 50 million dollars in revenue and about a $100 million valuation.  Today we’re a thousand people, approaching half a billion dollars in revenue and our market cap is nearly a billion dollars.  So it’s exciting to be part of that growth and innovation that’s helping transform the way people interact with their memories and stay connected to those that matter most. 

Boyden: It seems like a classic case of “follow your passion and success will follow?”

Housenbold: Yes, and if you focus on doing right by the customer, attracting and retaining great people, working hard, and are fortunate to have a little luck, you’ll enjoy success along the way. At Shutterfly, we’ve set out to build a company that will last. While in the Silicon Valley many people start a company on the basis of trying to create wealth, we really began this journey to see how we could create a large sustainable brand that will outlive us all.

Boyden: In seven years, you’ve successfully transformed Shutterfly’s business model from an online photo finisher into an Internet-based social-expression vehicle. What’s been key to the company’s success?

Housenbold: I think there have been a number of factors. One is being customer-centric – really understanding our target demographic, their current needs and what we think they’ll need in the future. Understanding the customers we’re trying to serve and winning their hearts and loyalty in return rewards us with very high net promoter scores and repeat rates. Our customers are very evangelical on our behalf and help bring their friends to the business. We are also relentlessly focused on quality, which is key to being customer-centric. Second is a culture of innovation driven by a laser-like focus on identifying our core competencies vis-à-vis key competitors, some of who are large, multi-purpose companies like Wal-Mart, Walgreens, Apple, HP, Kodak, Sony, Hallmark etc. Besides this, being vertically integrated and owning our manufacturing, which is very rare in our industry, has allowed us to innovate more quickly and have better margins, which in turn allows us to invest  more into marketing and customer acquisition.  

Boyden: You mentioned facing competition from other large conglomerates – how does Shutterfly stand apart?

Housenbold: We have very large competitors who do many things so the key for us is focused innovation, which has become the cornerstone of our culture. A lot of the companies I mentioned are over 100 years old and have a kind of particular perceptual map on the world. In that respect, we’ve benefited from being a relatively new company because we were able to come into this industry with a fresh mindset and think about how we could use technology innovatively to enable deeper, more personal relationships with our customers.

We came at this industry not with a scientific perspective on producing prints but from a technology and style point of view, which is why our products have a design sensibility and are user-friendly. Being aware that 85 percent of our customers are female and that a design aesthetic and personal expression are important to them has allowed us to tailor our products to resonate with their memory-keeping activities.

Lastly, our customer-centric business approach helps Shutterfly stand apart from competition. We do whatever it takes to make it right by the customer because I believe that’s a self-fulfilling virtual cycle. In summary, our history of having a strong business strategy, laser-like commitment to customers, quality, design and innovation has allowed us to outpace our competitors.

Boyden: What key industry trends do you foresee in the U.S. internet e-commerce sector over the next year or two?

Housenbold:  If you look at the various vertical industries that are using the internet as a key enabler, either as a distribution, acquisition or delivery channel, what we’ve witnessed over time is a consolidation of businesses, although singular-focused companies have ultimately stood out as clear winners.

Let me give you examples to provide context – if one thinks of online payment systems, it was initially pioneered by PayPal, not MasterCard, Visa or American Express. Similarly, for online brokerage, there was E*TRADE and Ameritrade, not Fidelity and Morgan Stanley, and for search-engines it was Google and not large portals like Microsoft and Yahoo. In the photo-publishing space too, Shutterfly has had a singular business focus unlike Kodak, Fuji, Sony, HP and Yahoo.

I strongly believe in having a singular business focus and the ability to quickly innovate. What we’ve seen in various verticals is that singular focused companies typically win and the leaders end up capturing the lion’s share of the economic rents. Number two and three can survive, but then we ultimately witness a shakeout and consolidation. Historically, there were around 14 online portals and now AOL, Yahoo and MSN are last of the survivors and are all struggling in their own ways. Groupon bought over 30 of their competitors in their space and Zynga’s done the same in the online gaming space. Google alone this year has bought 46 companies. So I think there will be further consolidation in the various vertical industries in the internet e-commerce sector and in a Darwinian way, the strong will get stronger and the weak will fall by the wayside.

Another significant trend in the industry is the continued inclusion of social, mobile and local features into various product/service offerings. Right from entrenched traditional retailers who have e-commerce divisions to new startups, we will continue to utilize the power and force of these online communities of interest. The power of technology and immediacy of smart phones and social media will continue to allow us to tap into local commerce. But at the same time, I also tend to think in a counter intuitive way – that there’s going to be a burnout of “social” and the open graph after which people will start to look back and re-associate with closer communities of interest.  

Boyden: Tell us more about this anticipated reverse trend vis-à-vis social media.

Housenbold:  I think social media channels like Facebook and Twitter will continue to play a meaningful role in people’s lives, but like I said, I do anticipate a little bit of a burnout at some point. I have 1,655 Facebook friends but I’m a busy dad of three kids with a 70 hour work week job and involvement in my community, so any free time I have is going to be spent with the people that matter most.  

So yes, I think you’ll start seeing a little bit of a social media burnout where people, instead of meeting everyone online, would instead like to focus on deepening their relationships with near and dear ones through face-to-face interaction. People are already starting to look for respite from the bombardment of information via social media and are lookng for ways to better manage their digital lives. I believe tools will be developed to allow us to manage all the online information in a more efficient way.  

I also believe that with technological advancements come new social norms, so with the increasing pervasiveness of social media in our everyday lives, we’re going to have to face a society with a different paradigm around privacy. Not only will we need to adapt and cope with these trends but also better understand the nuances of public/private partnerships and working of privacy laws.

Boyden: Shutterfly has survived shifts in the photo industry whereas competitors had not fared as well – what’s been your growth strategy?

Housenbold: I came to Shutterfly with a philosophy that we’re going to grow to greatness. Since then, we’ve out-executed and out-innovated, enhanced customer relationships, provided better design and intuitive product creation processes, and created a sustainable business model. We have revenue, profit and free cash flow whereas many other players in this space have either been venture-backed companies without a profitable business model or large companies who did not innovate, and thus failed. We’ve clearly had an edge in this regard, which has allowed us to build a great business.

Over the years, we’ve also witnessed a lot of consolidation in the photo publishing industry. We first saw Kodak buy Ofoto and HP buy Snapfish in 2001 and 2005 respectively. After that, we saw dozens of companies go out of business and exit the industry. Large multi-conglomerates like Sony, Yahoo Photos, AOL Pictures and MSN exited because they found it difficult to drive profit from this particular vertical segment.

What followed next was another round of industry consolidation. We recently bought Tiny Prints and we think there will be additional consolidation over the next few years as well. So the key to our growth strategy has been to anticipate what our customers want and create a profitable business that allows us to continue to invest in innovation.

Boyden: How have partnerships and affiliations influenced Shutterfly’s growth strategy?

Housenbold: About two years ago, we made a pivot in our company strategy — we moved from trying to solely be a photo-printing web destination to really thinking about ourselves as a robust application. So we’re device agnostic, be it a digital camera or smart phone, and it doesn’t matter what operating system you use, whether it’s Windows or Apple based. It also doesn’t matter where our customers save their images, be it their hard drives or on Facebook, Picasa or the Shutterfly site. We enable customers to access their images and videos wherever that content is stored.

The role we want Shutterfly to play is that of a trusted partner that helps you take your content and do more with it. We want to help you curate it, enhance it with embellishments and design and tell a story in a more powerful way. We want to help you share content with the people that matter most and preserve it for generations to come.  

This new perceptual framework has opened up a world of opportunity for us and allowed us to form meaningful partnerships. We now have about 45 active business development partnerships ranging from folks like Facebook, Google, Target, American Express, David’s Bridal, Motherhood & Maternity, BabyCenter and Roku.  Partnerships will definitely continue to be an important part of our overall growth strategy.

Boyden: How would you describe your management style and how would you say it’s evolved over the last several years?

Housenbold: My goal is to try and create an environment where we can attract, retain and grow the best and brightest talent.  I really see my job as setting the long-term vision of the company, helping define the strategy, determining the right values and behaviors to make teams successful, and then getting out of the way so my talented team can innovate and execute within that overall strategic framework.

I believe in having very open, honest and direct communication within the organization. So if things are going great, I share it; if they aren’t, I share that too because collectively as a team, we can do more together in an open environment than any individual could possibly do by themselves. It’s also important for everyone in the company to be mindful and think for the long term, like owners or shareholders.

What I’m trying to create is a high performance company that’s a great place to work and for that I believe it is important to deliver on both the “what” and the “how.” The intersection of both these factors is important in order to deliver on our goals and in a way that’s consistent with our values and behaviors.  

In terms of my personal management style, I think I’m a fair boss. I take bad news well.  I jump into problem solving.  I’m able to roll up my sleeves and dig into the details when necessary. I’m able to think about the next three, five and seven years on a long term strategic basis, and I try to be inspirational in getting people to think about what’s possible versus what’s just pragmatic especially due to the  pressures of quarterly performance.  

Lastly, I really think about the role of mentorship and leadership versus just management.  What has evolved in my career over the last decade is that as I’ve progressed to increasingly higher positions, I’ve understood how to move from a managerial role, which is more about resource allocation and project management, to more of a leader role, which is about inspiration, coaching and mentorship.  

I’m trying to focus more on what the right people, processes, and technologies are needed in order to help our organization continue to scale. So the level and nature of conversations I have with my team have now evolved to higher order discussions rather than just the tactical day to day going-ons.  

Boyden: How would you describe your approach to recruiting and what do you particularly look for in people?

Housenbold
:  I look for people who have an insatiable intellectual curiosity – that’s a really important characteristic for me.  Second, I look for people that have a very high internal bar of success because I’m a true believer that internal motivation is sustainable whereas external motivation is temporary. So I look for people who just have that innate inner sense that says, “I want to do a great job; I want to go above and beyond; I want to out-innovate and out-execute the competition.” I look for that inner motivation which manifests itself in both professional and personal accomplishments. Third, I want to hire people who can be flexible and adapt, because when you’re in a hyper-growth company, your role and the expectations will continue to evolve as the business evolves.  

But if I had to pick three specific traits, they would be intellectual curiosity, a high internal bar and flexibility.

Boyden: Silicon Valley and the multimedia sector are the biggest stars in our economy right now. How do you see this growth manifest itself in the rest of America? What are the traits of innovative and sustainable companies?

Housenbold: Silicon Valley has its fair share of innovative and sustainable companies, but by no means is there a lock on the rest of America. Our national prosperity is reliant on creating entrepreneurs and innovation. And that means providing access to capital, infrastructure, human talent and a culture of capitalism that allows individuals to continue to be rewarded for the high risk and high investments they make in growing companies, products and markets.

Silicon Valley has successfully created an ecosystem of these attributes so there’s a lesson to be learned here. There is a mix of biomedical, consumer and technology companies all concentrated in the Valley. There’s also sufficient capital available, a dense level of highly educated talent who’s attracted by the natural beauty of the Bay Area, and sufficient provision of reward for hard work put into wealth creation and innovative problem solutions.  
So I think we need to replicate this on a national basis – we need to identify markets that have a high potential for innovation, a concentration on education and sense of entrepreneurship, which will allow us to continue to grow great companies on a global basis.  

Boyden: Who has been an influential mentor to you?

Housenbold: One of my mentors and my business hero is Howard Schultz. Who would have thought that there was room for a simple idea like his – to provide people with a better cup of coffee? No one did. The naysayers said you could get coffee at a 7-Eleven or McDonald’s, but he believed that a simple thing like coffee could make for a little bit of affordable luxury and respite in people’s hectic lives. That Starbucks experience is exactly what we’re trying to do at Shutterfly as well – create a brand and a service that makes sharing memories and staying connected a fulfilling and memorable experience.

For me, it’s all about innovation and thinking about the world of possibilities, and in that regard people like Howard Schultz and Steve Jobs, who have not taken “no” for an answer, are true inspirations. They’ve pushed through barriers and obstacles, and have had a tolerance for failure.  Look how many times Steve Jobs failed until he got it right. I think we as a society can learn from such great success stories.

Boyden: You and your wife both juggle very busy lives and a full house of three kids. What’s your approach to finding the right work/life balance?

Housenbold: I don’t have the “secret sauce” but one of the things that’s definitely helped is that I married a true saint who’s my best friend and who understands that being a CEO is not just a job but a way of life. My wife Ruth and I have open communication and we try hard to balance forward-planning, with spontaneity. We also try and focus on quality over quantity – so the time I spend with my family and friends is high quality time versus just casual encounters that are greater in frequency but not meaningful. Engaging in shared experiences with loved ones is another great way in which we try and use limited time well to create meaningful memories. For instance, when we have work friends come over on the weekend and also want to work on a community service project, we just combine those two together to create a shared experience, which really creates deeper bonds.  

All in all, there are many factors that contribute to the smooth running of this equation – good communication, an understanding partner and my phenomenal personal assistant, Erica. Also, the fact that I live in the Silicon Valley helps, where I’m not an outlier because many people are working very hard, have dual income families and, like most of us, are trying to balance career aspirations with family and community. There’s an understanding and cultural norm in the Valley network that makes it easier to juggle compared to other places in the country.

Boyden: If you had to give one piece of advice to somebody who was an up and coming manager, what would it be?

Housenbold: I’m not sure you’re going to be able to keep me to one.  I’d say first, treat people the way you want to be treated.  Second, think about the long-term – and try to solve your boss and their boss’s problem.  The only thing you really ever have is your reputation so make sure you act with a long-term view and high integrity and respect. Then I have a phrase that says, “If you’re not getting promoted or fired, you’re probably not doing your job well,” which means don’t be afraid to take appropriate risks and innovate.  Don’t be afraid to fail, and if you’re going to fail, fail fast.  Run a series of experiments because ultimately greatness comes from these varied experiences. So that’s some of the advice I give people about management.  

More broadly speaking, the advice I tend to give is more about leadership.  It tends to be a little more philosophical.  Something else that’s really important is to always be flexible and look to continually grow personally.  You should never assume you know everything and are the smartest person in the room.  You can always learn from others.  

Conversely, be careful not to let them mess with your swing. If you have a strong conviction, don’t let all the naysayers stop you from hopping on that voyage to find a new world.  Find people with similar risk appetites and a belief in your vision and work really hard to make it happen because it’s easy to say

Acknowledgement

We would like to thank Dan Grassi of Boyden Atlanta for making this edition of Boyden’s Leadership Series possible.

The views and opinions expressed here do not necessarily represent the views of Boyden; only those of Mr. Housenbold.