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Posted Dec 9, 2015
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Creating beautiful, well-designed communication for people who live both online and offline.
Paperless Post was started in 2009, born from a desire of James Hirschfeld, co-founder and Harvard undergrad at the time, to send out a birthday party invite that accurately reflected the enthusiasm, thought and care that had gone into planning his themed birthday party.
Introduction to Paperless Post
At its core today, Paperless Post exists to combine the modern convenience of online with the personal touch and beauty of a traditional stationery. Said another way, Paperless Post sits at the intersection of “really great design” and “extremely easy-to-use functionality” and makes it “easy to communicate expressively on any occasion—from everyday correspondence to milestone life events.” The company has raised $47M to date, sent 100M cards and has 115 employees.
Paperless Post creates value by providing users with a convenient, and often cheaper, alternative to traditional stationery and by organizing and streamlining all the processes associated with hosting an event. This includes keeping track of invitees, responses and event details. However, the majority of the value it provides lies in the breadth of card designs, which is its primary differentiator versus competitors including Evite and Eventbrite.
Pathways to Just Digital Future
To capture value from customers, Paperless Post uses a “freemium model,” offering its core product for free and selling premium offerings to a smaller fraction of its customers. In order to use Paperless Post, free or not, users must register, allowing the company to collect valuable data and learn about customer preferences. Then, the user can choose from over 800 free card designs created by in-house designers. To continue as a free user, one updates card’s text, enters recipients’ names and emails manually or via an excel file upload, fills out relevant event details including location, and then hits send – all for free. Recipients receive a personalized message in their email, with an envelope that they can “open” by clicking to reveal the message or event invitation.
To continue as a premium user, one can choose from thousands of more intricate or designer cards (including Kate Spade and Oscar de la Renta) or add premium features to an existing free design, such as an envelope or envelope liner. Any premium feature or premium card costs coins – a basic free design plus an envelope and liner costs 2 coins per recipient and coins can be purchased for as much as $0.30 to as little as $0.06, depending on quantity purchased. Even these premium offerings are significantly cheaper than traditional physical invitations and approximately 25% of all users are converted to paying users.
Recently, Paperless Post introduced PAPER, which allowed users to design cards online and order printed cards. This new segment was designed in response to 60% of users requesting print version of their cards and in recognition of the fact that people are living in a hybrid world, spending time both online and offline. These print cards are offered for a range of prices which are competitive with existing print stationery.
To support this business model and to attract users, Paperless Post’s operating model is focused on offering a premium experience. The company’s employees are primarily comprised of designers and engineers, who are “focused on creating and improving on the ideal version of our platform, product, content, and partnerships for our users.” Specifically, designers create new card designs frequently to engage customers, while engineers focus on integrating with technologies such as gmail, calendar applications and Doodle for convenience as well as improving overall user experience on the website and iOS. The office culture also promotes this innovative environment by offering subsidized courses and conferences in the hopes that exposure to others in the industry or to new learnings will spark employees to design creative new ways to delight consumers. Another aspect of the operating model is the lack of advertising revenue and lack of sale of customer data to 3rd parties. This aligns well with the business model’s focus on providing an aesthetically pleasing and convenient communication experience for users – according to Hirschfeld, “an ad interposes itself in what should be a purely interpersonal communication.” While this operating model does not maximize revenue, it does enhance the customer promise. Additionally, when Paperless Post entered the print card market, they chose to leverage their existing engineers and designers to maintain consistency while partnering with a printing company located close to a major airport, to offer quick shipping to customers and reduce internal costs. Finally, in order to focus on what they do best, designing, producing and distributing personalized stationery, Paperless Post chose to partner with Carpathia, an Infrastructure-as-a-Service company that provides a high degree of responsiveness and flexibility across Paperless Post’s data infrastructure. Working with Carpathia allows Paperless Post to seamlessly deal with an uptick in traffic around the holidays and will allow it to scale up over the coming years, without having to pay for unused infrastructure today.
In summary, I believe that Paperless Post’s business and operating models are aligned to provide customers with an elevated and convenient communication mechanism.
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Get the door. It’s the liquor store.
December 9, 2015Greg says:
Paperless post was able to successfully outsource most of the aspects of its business (data centers, distribution etc), retaining only web design and product design. Why do you think they haven’t out lasted?
December 13, 2015Rachel Sam says:(Video) Webinar: Paperless Court for Administrators - How to Design a Justice System with Low-Code Approach
I think it’s really interesting that PP chose to enter the print market. On the one hand, they do have certain assets they can leverage for print, as you point out.
On the other hand, it seems like a whole other ballgame of production, logistics, etc. Also seems like a different target market — and a shrinking market — than the one they were originally going after with the electronic-only approach. Seems counter-intuitive and risky that they would make an investment in a dying industry that’s not fully aligned with their existing operating model.
Final minor point: people who buy print are spending more money and probably inherently care more about the quality of their invites. I would imagine they would prefer to go to a company that allows them to see and feel the invites before making a full order — does PP offer that option?
December 13, 2015khaaaan!! says:
Rachel’s points make a lot of sense, but I actually think it’s smart of PP to move into the print market. It’s hard to convince people to pay for things like e-cards online. PP obviously creates a lot of value for the event-planning process; how could they better capture this value? One obvious way is big events, like weddings, where people’s general willingness to pay for the perfect save-the-date or invitation is much higher. Weddings, however, are one of the few places where consumers still expect print, and PP almost have to get into print to capture this segment.
Furthermore, PP has the right assets: the wedding industry is hugely lucrative, and many businesses pay a lot for access to the susceptible groom or bride at this specific point in their life. PP already has access a loyal base of customers who are used to doing things online, a large database of designs that these customers love, and a data-centric understanding of customer taste and how it might evolve. They can drastically extend the average customer lifetime value if they can capture even a limited number of customers during big “print” events in their lives.
December 14, 2015KA says:
This post was really interesting! And I think Khanh hit the nail right on the head. This weekend I was watching Shark Tank and LovePop (founded by HBS grads: https://www.lovepopcards.com/) was featured. One of the investors was making that exact point that for special occasions like weddings, consumers are much less price-sensitive. This is why I agree that it was very smart for PP to move into the print market — while their consumer base may be smaller, they’ll be able to capture that much more value from those consumers. In terms of creating even more value & leveraging their core competencies, I wonder if they could provide a full end-to-end wedding invite experience online + offline? For example, it could be interesting if they decided to move into a space to compete with Wedding Wire or The Knot, specifically helping with wedding website management.
December 14, 2015LR says:
Great post! I’m curious how Paperless Post attracts customers to its site in general and converts folks who may otherwise use the Facebook Events functionality (and associated invite/notifications feature), especially since I imagine that PP’s advertising budget must be quite limited. Is it primarily word of month and the fact that each invitation functions as a mini Paperless Post ad, and as a result, the company reaps the benefits of network effects? Also, I wonder how popular the service/functionality is outside of the US and the impact that has on design. Lastly, is this service more popular in particular parts of the country and/or amongst a certain demographic, which would in turn impact the card types and styles that are created for the site?(Video) Capacity Building Workshop – Implementing Cross-border Paperless Trade and Emerging Technologies
December 14, 2015LRoberge says:
Ish – thanks for choosing Paperless Post. I’d have to agree that PP is a cut above its competitors, particularly Evite. I’m going to take the comments above a step further. Do you think PP could take the info they’ve learned from their customer base and expand into event-planning itself? The points were touched on above, but PP probably has great insight into event trends and how its customers are celebrating special moments in their lives. My vote is for them to take these insights and run with them!
December 14, 2015Elena Del Real says:
I’m curious what they are doing with the data they collect on users if they aren’t making it available to 3rd parties.
I also think Freemium models can be tricky. I’m surprised that 25% of users convert to the paid option given that one of the big value-adds is a digital envelope. I’m wondering what they could do to increase this number even more and how they can attract more users at the top of the funnel. As LR mentioned, there seem to be many other options available to accomplish the same goal.
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