Paperless Post Grows Up

It all started with a party at Harvard. A cynical sophomore was looking for a way to corral his guests online for his 21st birthday in a way that reflected the vibe of the party and his personal style. In the absence of a suitable digital platform, this young entrepreneur created one. Within a month of the founder’s 21st birthday party, the president of Harvard was using this product for alumni events.

In 2008, James Hirschfeld and his sister Alexa (also a Harvard grad) came up with the idea for Paperless Post, a tool that allows users to create online cards that combine the convenience of email with the aesthetics of traditional stationery. The company officially launched in April 2009 and, according to FastCompany, closed three rounds of funding totaling $6.3 million. They’ve been cash-flow positive since the 2010 holiday season. As of September 2011, 42 million Paperless Post cards have been sent, up from fewer than 1.5 million at the end of 2009.

While starting an online invitation business in a space dominated by Evite might seem like pushing a boulder up a hill, the Hirschfelds’ focus on design, look and feel, and the creation of a dynamic experience immediately set them apart. Unlike similar products with ad revenue models, users are also able to customize their messaging without advertisement. Paperless Post charges users through pricing units called “stamps” and one stamp is required to email each invitation. Users can also pay to add more customization to their stationery, such as envelope liners or logos.

Cofounders and siblings Alexa and James (27 and 25 respectively) sat down with NY Report executive editor Daria Meoli to talk about the power of marketing through partnerships, what defines a successful entrepreneur, and creating invitations for Bella and Edward’s wedding.

Daria Meoli: How did you come up with the idea for Paperless Post?

James Hirschfeld: When I was planning my 21st birthday party, I put a lot of thought into the party that I wanted to throw. I had a vision for how I wanted people to feel when they were there. It was going to be very intimate, but also really cool and festive. When it came down to actually corralling everybody into coming, I realized there wasn’t a way to communicate that experience online. There was no product out there that would allow me to put the same kind attention to detail into the invitation or into the messaging that I was creating around the event. That was the spark that led me to look into what kinds of products were available for communicating in a high-touch way online and what tools there were for creating personalized messages that were more than email.

Email is wonderful and it’s revolutionized the way that we communicate, but if there’s one drawback, it’s that all emails look the same. If you see any email from two feet away, you can’t tell them apart.

We started to look into what the market was like, how it shook down in the offline world, and how much money was being spent every year by consumers on paper products—not only invitations, but also holiday cards, personal stationery, thank-you notes, and birth announcements. I became pretty confident that we could create a product that would be able to substitute and improve on the best parts of offline communication in terms of customization and look and feel. But we could do that cheaper, more efficiently, and with better delivery. It is tied into a backend that stores the responses, and when people say, “Oh, what a beautiful baby,” that gets stored forever.

Alexa Hirschfeld: It’s what stationery would have been if it could have been interactive. I had a different business idea that had more variable costs associated with it. It also was a customization tool, but it had offline goods. What was so cool about James’s idea was that it represented something that costs money in offline world and people immediately associate with value, but it has no variable costs. They approach zero. The fact that there was no physical good was a really important part of why we really liked this business idea. Over the years, I keep realizing how smart the idea was and I can say that because it was James’s idea. In the offline world, these products are, in large part, virtual goods, too. In the case of greeting cards, they’re sold for 300 times their physical value, because the value is the design or the joke. It’s always sold at a premium and that’s the same sort of game we’re playing.

DM: How has your business model changed since you launched?

AH: The vision has stayed the same, but what’s changed is the model around how we offer that vision. Our business model has changed but I don’t think we’ve ever thought of that as a pivot because we never really changed what our core was. We just kept changing the model for distribution, revenue, and market reasons.

We first had a ticketing model, and then we had a paid consumer model. The ticketing was for 501(c)(3)s [federal tax exempt nonprofit organizations] to sell tickets to events, and then we realized consumers were using us and they were much easier to serve. So we decided to charge consumers on volume and customization.