Anyone who is reading the interwebs lately in the startup world is aware of the Series A crunch many startups are experiencing.

This week, the everpix crowd announced they are shutting down their service. In these posts, there have been a bunch of metrics, and the whole schmozzle keeps going through my mind, so I thought I’d post some of my thoughts.

I’m not going into their product, but reflect on their numbers and business model; freemium.

The Verge had this article, worth a read in context, i.e. having to pay Amazon for $35K in hosting.

The Everpix team posted this in their blog – we gave it our all

I also came across this too, which is the most startling.

It would seem to me, that the everpix had a working business, however their costs were way out of proportion, and perhaps the attitude to save their software was misguided.

1. They had 6 FTE’s to service 6,800 paying customers and 48,200 non paying users This is ratio of 13%, or 1133 paying customers per FTE. Since people costs are the highest of any, this is totally out of place. Who cares if they are ex Apple or ex Starship Enterprise, it’s irrelevant.

2. They were paying Amazon $35K per month to host their photos. From what I have personally seen Amazon is a place where old servers go to die dressed up in all this cloud hype.

3. They did a last ditch effor to sell, aqu-hire, raise funds to try and save themselves, it failed.

My thoughts on what they should have done.

1. Become businessmen, and chased their user base for revenue instead of running around pitching all the time. It seems they forgot the correct order of priority, Customers, Team, Investors. Putting investors first reverses this order, first hitting the team then the customers.  Get over this whole billion dollar  bullshit.

1. With an averag $4 per month, the 6800 paying users would net $27,000 per month, this should be enough to support the service plus 2 FTE’s

2. They should have abandoned freemium, and purged the freeloaders or converted them to paying. This would enable them to tremendously cut the server storage costs, as well as the overhead associated with the 48,200 freeloaders.

3. Cut overheads, this includes salaries and office space. 2 people can code from home.

4. Reduce expectations, living from a full salary with a six FTE startup is crazy nuts. They should have lived like bootstrappers with no salary

5. Co-locate their hardware, even in their office/home. With US based internet being awesome, they could get decent internet upload speed and could with the user cull storage and build their own SATA based storage and saved a king fortune.

The above would not have been palatable for the “team” but it could have meant surviving sustainably, and likely resulted in an increase of monthly income from removal of the freeloader factor. If their product was that good, the free people would have paid – hey they all had an investment in the service by uploading their photos.

Posting photos of smiling over beers at your startup close, laughing at yourself does not really sit to well with my personal ethos, especially when in my view their service could have been saved.

What are your thoughts?

Sam, @samotage