You're probably looking for a few key things as you work on getting your new company off the ground.
You need an epic idea.
You need people to believe in that idea and fund your startup.
Importantly, you need a great product/market fit -- you need to know the demand is there.
In the American greeting card industry, the demand is definitely there, to the tune of an estimated $7-8 billion a year. Yet in this market, Hallmark and American Greetings loom as large as Coca-Cola and Pepsi do in the soft drink industry. Competition isn't just fierce -- major competitors define the market.
Yet a small startup in Boston is going all-in on greeting cards. Are they nuts?
Meet lovepop, an Ambitious and Disruptive Boston Startup
I spoke with Wombi Rose, co-founder of lovepop, about his startup ambitions. Wombi and his co-founder John Wise are two of the young entrepreneurs I mentor as part of the TechStars incubator program here in Boston.
Like so many successful entrepreneurs before them, Wombi and John aren't looking to dominate their market. They want to completely shake it up; turn it on its head.
At a glance, the $7 billion American greeting card industry may seem like the last market a fledgling startup should tackle. In the five years preceding 2013, US greeting cards revenue fell 5% as customers shifted to digital. At the time, IBISWorld predicted US revenue would decline further, to $4.3 billion by 2018.
Hallmark, the most dominant force in the market, has seen its revenue shrink from $4 billion in 2012 to $3.8 billion in 2014, despite efforts to monetize their digital offerings. Hallmark's biggest competitor, American Greetings, is doing about $2 billion a year in sales, despite major restructuring including its acquisition of Carlton Cards and subsequent privatization in 2013, under new owners the Weiss family. So what's going on?
With those two established goliaths duking it out for domination in the paper and electronic greeting cards market, you'd have to be foolhardy to place your startup dreams here. I mean, if they can't innovate and stay ahead of the digital trend, who can?
The Greeting Cards Industry is Broken
Decades ago, sending and receiving paper greeting cards was meaningful. Now, although Americans still send 25 to 30 cards a year, it has completely lost the elements of surprise and delight.
E-cards, while more convenient, further sucked the joy out of greeting cards. They aren't unexpected and you can tell how little effort went into each one. Often, they're simply lost in the clutter of our screens and inboxes.
On paper or via email, today's greeting cards are mass-produced, impersonal and downright cheesy. Hallmark's entire brand was built on the idea you could share a special experience, yet the whole concept has been reduced to a chore. For these reasons, Wombi said, the greeting card industry is broken.
Lovepop wants to fix it, by disrupting the greeting card industry in much the same way Airbnb transformed the hospitality business.
Originally trained as naval architects and marine engineers at Webb Institute, Wombi and John were inspired by the incredibly artistic and intricate handmade cards they saw on a Harvard Business School trip to Vietnam. A born entrepreneur, Wombi immediately went to work to bring the joyous experience of receiving these cards to the United States.
"I fell in love with this ancient art, and I'm an engineer by training, so the design aspect is just really fun. That's why I got excited about it. We're a customer-driven brand, direct to consumer, and we spend a lot of time with our customers. Watching their reactions showed me how special it was."
They aren't just making a different type of card, though. They're offering a new kind of experience.
Lovepop identified three elements that make greeting cards truly special. "Humans are hardwired to make others feel special through something that is personal, tangible and unexpected," Wombi explained.
Digital cards don't feel personal and aren't unexpected, he said. Birthdays, the most popular greeting card occasion, are acknowledged more than ever thanks to Facebook, but that hasn't necessarily resulted in people sending fewer cards as a result, according to the American Greeting Card Association. Traditional paper cards are tangible, but still lack the elements of surprise and personalization. The industry has become stale, as the great innovations rolled out by the major players have really just meant the digitization of old methods and messages.
Enter lovepop's custom designed and engineered 3D cards.
"For this to be personal, we don't prewrite messages in the card. How can it be personal and special if it's the same message being printed 100,000 times? We offer a service where we'll handwrite whatever message you want into the card. That's where we have the opportunity to make it personal," Wombi said.
Investors like the idea-over 450 of them backed lovepop on KickStarter, raising $23,000 to help them get the new company off the ground.
"Our hope is to become the go-to place for doing something unexpected for the special person in your life. Goal number one is to innovate in engineered paper art, and on integrating that into the modern workflow so it's easy for you to get that to the people in your life," Wombi said. "As we move forward, we want to offer more ways to share -- we already have requests for larger-than-life cards, which we're working on and will release soon."
Even this early on, Wombi and John have already learned a few important startup lessons. "You need to focus on research before scaling and be ready for it," Wombi said. "We opened a couple of unprofitable shops and part of that lesson was that we weren't ready to roll out at the pace we were doing. Every step of the way, you want to really understand how everything works; always ask, "Why?" and refine your model to scale from the beginning, which will allow you to scale that much faster."
Now poised and prepared for growth, lovepop is focused on building their e-commerce business and has seen their revenue grow 10x since January.
For Wombi, the move from naval architecture to greeting cards has the feel of destiny. His father was an entrepreneur, who lived by the attitude, "I have to make something happen." Wombi says that philosophy was ingrained in him at an early age.
So, though he trained as a naval architect, he is excited to devote his engineering skills to greeting cards.
"It's an incredible way to have an impact on our customers as well as all of the people in their lives. Ultimately, that's what really matters. You see a whole lot of things in the world, but I really haven't seen anything that causes the same delight and joy as opening a lovepop. That was enough for us to get going on this."