A focused family business
Ever the proud father, Chris MacAskill screens 20-year-old home movies of his sons -- Ben singing about a stegosaurus, Mark getting a mohawk -- on his laptop.
“This is the negative of working with family members,” a red-faced Mark, now 26, says before retreating to his cubicle.
Meet the MacAskills, Silicon Valley’s version of the Waltons: seven members of a close-knit clan, ranging in age from 23 to 63, who run SmugMug Inc., which helps families share their own Kodak moments online. They are holding their own against photography services on the Internet run by corporate giants even though they have never taken a dime from outside investors.
They started on a shoestring budget in 2002, not moving into real offices in Mountain View, Calif., until April. Before that, the MacAskills and their employees set up shop in the five-bedroom home of Chris and his wife, Toni. Engineers bunked two to a bedroom. Blow dryers and vacuums routinely blew circuit breakers. Barking yellow Labrador retrievers chased tennis balls up and down the stairs.
Toni, the SmugMug matriarch, referees family squabbles. When things get out of hand she sometimes jokes that she’ll send everyone to their rooms for a time out.
The MacAskills deftly blend business and family -- a radical concept in the youth-obsessed Internet industry, which admits adults, particularly of the gray-haired variety, only reluctantly.
The company now employs 28 people -- all MacAskills, family friends and SmugMug customers they hired -- in five countries. The MacAskills have signed up more than 100,000 paying subscribers despite mounting competition from free services, in part by emphasizing their family-friendly approach. They post their own family photos and home videos on the website, spend countless hours chatting up their users in the company’s online forum and send lively customer service e-mails such as “Who loves you, baby?”
They also reward customer loyalty. Two years ago, when SmugMug raised its prices, it grandfathered in all its current customers. Every year, SmugMug organizes “shootouts” for its customers: roving expeditions to national parks with expert instruction on how to get the perfect shot.
And once, as payment for photo services, the MacAskills accepted livestock.
That personal touch has won over customers, some of whom traveled from as far away as Boston to attend SmugMug’s recent fifth-anniversary party, where they dressed up in colorful costumes courtesy of SmugMug and mugged for the camera. Others have been so taken with the company that they quit their jobs to work there.
” Google went to great lengths to create a dorm atmosphere,” said Don MacAskill, the 30-year-old chief executive and “chief geek.” “We work in earnest to create a family atmosphere.”
At the head of this Mormon family is Chris, 54, a Stanford-trained geophysicist and lifelong shutterbug. After a stint at Steve Jobs’ Next Software Inc. in the 1990s, he caught entrepreneurial fever. With his family pitching in, he built Fatbrain.com, an online bookstore for geeks, and took it public in 1998. Barnesandnoble.com bought the company in 2000 for $62 million. The money was distributed among the many stakeholders, with most of it going to outside investors.
SmugMug employees and customers know Chris as “Baldy,” not because his hair is thinning (it is) but because he once shaved it off during a motorcycle ride in Mexico -- a trip he took seeking catharsis after he witnessed from a New York board room the collapse of the Twin Towers on Sept. 11.
In 2002, Chris became the first to join his son Don, a programming prodigy then working on his seventh start-up, which soon became SmugMug. Together, they recruited Toni, 56, a motorcyclist like her husband. In addition to helping customers and coining the company’s name, she handles SmugMug’s finances as she did in the early days of Fatbrain. She calls herself the “countess of cash.”
Before long, Don’s brothers dropped out of college to lend a hand. Ben, now 28, was going to school to pursue a career in biotechnology, and Mark was eight months away from a degree in actuarial science. Ben, the “czar of testing,” hunts down software bugs in new features. Mark, the “stats geek,” is in charge of figuring out how people use SmugMug’s site to improve it and draw more users.
They were followed by their sister. Anne MacAskill Bean, who is 23 and expecting her first child, provides customer support (her specialty is printing) from her home in Columbus, Ohio.
Chris’ sister, Robin MacAskill, 63, of Bethesda, Md., telecommutes part-time as a customer service representative.
The MacAskills have found family to be a competitive advantage. SmugMug’s revenue has doubled every year, this year reaching $12 million, and the company turns a profit.
The ties that bind families such as the MacAskills can lead to both great fortune and great friction, management experts say. Relatives who go into business together often work selflessly toward a common goal, but family problems can spill over into the workplace.
“Families have the advantage of a common bond for life, and the disadvantage of a common bond for life,” said David Russell, director of Cal State Northridge’s Family Business Education and Research Center.
Don acknowledges that at first he wasn’t sure whether the MacAskills and the people they work with at SmugMug would be able to separate family and business.
“I worried that new hires would feel alienated or steamrolled by the family,” he said. “Now that we have been doing this long enough, we in the family are in the minority, and those fears are evaporating.”
He also said the family hadn’t seen any conflicts turn into “real family feuds or anything like that -- knock on wood.”
The MacAskills are determined to retain control of their business, turning down all offers to invest in or buy the company. Employees, who include “sorcerers” (engineers) and “support heroes” (customer service staff), agree that SmugMug wouldn’t be the same with outside influence.
SmugMug may have one of the most distinctive corporate characters in Silicon Valley. After all, this is the company that in January gave a couple, Naomi Smith and Roger Brimacombe from Fetlar, one of Scotland’s Shetland islands, a lifetime SmugMug membership in exchange for a sheep. As part of the lighthearted deal, the ram, which remained on Fetlar, was christened Smuggy, and SmugMug’s green smiley face logo was spray painted on his coat, where it remained until he was sheared this fall.
In 2005, to celebrate hitting their company’s sales goal, the SmugMug family -- babies and dogs included -- dyed their hair green and gathered for a photograph. For corporate photos posted on the site, the company hires a professional face painter to make up employees as superheroes.
Few ham it up quite like Chris. Fellow motorcyclist and SmugMug customer Glen Heggstad once took an around-the-world ride and sent Chris what appeared to be a loincloth from Africa, so Chris donned it -- and nothing else -- for a spin around the neighborhood. When Heggstad saw the photos, he sent Chris one of tribal women wearing the garment as intended: like a halter top.
In more ways than one, SmugMug has defied conventional business wisdom from inception. Undaunted by the prospect of starting a company amid the ruins of the Internet crash and rising competition from major players including Hewlett-Packard Co. and Eastman Kodak Co., the MacAskills set out to build a site they would want to use. That meant sending no spam, running no ads next to people’s photos, offering unlimited storage and taking great care to protect photos from unwanted viewers.
Rather than giving away the product like some photo-sharing sites, they decided to offer three levels of paid subscriptions to appeal to amateurs and professionals alike. In doing so, SmugMug has found its niche, albeit a much smaller one than other online photo companies.
SmugMug has a fraction of the monthly visitors of its biggest competitors, but by catering to people who are willing to pay for privacy and storage, the company has become “one of the big winners” in its field, IDC analyst Chris Chute said.
“They really started off as a very realistic service and business model,” he said. “They weren’t trying to take over the world and become the next Kodak, and that has served them well.”
For example, the MacAskills camped the night on a Palo Alto sidewalk to be among the first to buy iPhones and promptly produced a photo service for the device that became one of Apple.com’s top picks. They are also getting into video, recently rolling out a high-definition video service for SmugMug users despite the high bandwidth costs.
It’s partly that gadget-head spirit that has made SmugMug such a hit with customers. Chris has been building computers from scratch with his sons since they were little. Don spent so much time on the computer that he had to be banned from it for the second half of second grade because he hadn’t turned in a single homework assignment.
“We used to dread parent-teacher conferences,” Chris said.
Customers crowd an online forum, Digital Grin, where they get to know the MacAskills one on one.
Sean Rogan, 33, was a SmugMug customer who used to keep readers of Chris’ motorcycle forum on the edge of their seats with his tales of life on the road. While he was passing through San Francisco on his way to Guatemala, Chris surprised him by offering him a job as the company writer.
“I thought: Could this have really found me?” Rogan said.
The MacAskills enfold their employees, Rogan said. Nicknames, inside jokes and spirited debate are common at the dinner and conference room table, which is Don’s repurposed kitchen table. Employees get $500 to decorate their cubicles.
Everyone is treated to annual bonuses, matching 401(k)s, stock options and health club memberships. And SmugMug picks up the entire tab for medical coverage.
Each day, the company takes everyone out to lunch. In the afternoon, Chris, who recently converted some SmugMug employees and even customers to vegetarianism, whips up a fruit-and-vegetable concoction. Toni serves up freshly baked goods, like she did in her kitchen when the kids brought friends home after school.
The company runs on what it calls “collective consciousness,” with everyone getting a say.
No one punches a clock; early risers and late sleepers set their own schedules. All have to be nudged to log off and go home at night.
“We just have this love of the business,” Chris said. “We would rather do this than anything else.”