Why would AHAlife, a luxury commerce site, buy Kaptur, a photo sharing app?
AHALife, a luxury e-commerce site with 45 employees and $19.7 million in venture funding, has acquired Kaptur, a photo-sharing startup. The deal is a bit unusual, or, as those involved have called it, "creative."
Kaptur launched its group photo sharing app -- a precursor to Albumatic -- last March amid Instagram-fever. The app quickly amassed a large Facebook following, showing 250 million photos to 60 million users thanks to a viral sharing feature. The company raised $2 million from angel investors Archie Cox, Deb Meijer, John Quigley, Prakash Mishra, and Green Hat. But it did not have a solid monetization strategy. (It had experimented with options like syndicated content, advertising, and selling photo albums, President Tejpaul Bhatia says.)
Meanwhile AHAlife, which curates luxury goods from 2000 independent designers and positions them alongside editorial content, hasn't released its membership numbers or sale numbers, only stating that the combined entities will have 1.5 million users.
So basically, AHAlife has revenue but not many users. Kaptur has users but no revenue (or very little). The companies are about to find out if combining the two entities can solve each others' weaknesses.
AHAlife CEO Shauna Mei says that Kaptur's viral expertise is what her company needs to expand its user base. "They understand viral marketing down to a T," she says, noting that Kaptur can apply its algorithm to anything. "They can figure out ways to acquire traffic to anything, they just happened to have applied it to photo sharing because it was the hot thing to do when Instagram was going crazy."
It's a curious move given AHAlife's focus on luxury goods, which are by definition elite and not for the Facebooking masses. Despite that, Mei believes a luxury site still needs window shoppers, ie, members who don't buy. She compared the phenomenon to brick and mortar retail on Madison Avenue, where she previously worked as an advisor and consultant to brands like Matthew Williamson. "The window shoppers are just as important as the real shoppers," she says. "They might only buy one thing a year, but they also make the real shoppers feel special."
There's a bit of sick psychology at play -- the window shoppers, who want these luxury items but can't afford them (or simply don't want to shell out for them), make the luxury buyers feel more special that they can (or will). And all the while, the luxury brands are carefully grooming those window shoppers to grow up to be real luxury shoppers, Mei says. "It's building the base of people who start to appreciate luxury."
Previously, visible window shopping wasn't possible in the world of digital commerce. Online shopping is still largely done alone, at one's desk or on the couch at home. But social media is changing that. Call it the "WANT!" phenomenon, after the caption often seen on stuff-lust sites like Pinterest and Tumblr. Kaptur's social expertise and photo expertise is meant to bring some of that window shopping buzz to AHAlife, a site that has thus far grown on word of mouth alone.
It's almost counter-intuitive that a luxury brand that's worked to maintain its ivory tower brand identity as exclusive and elite would want to welcome in the web's unwashed masses. I've written a few times about how awkward that can get. My favorite example is Chanel, which is the most-pinned brand on Pinterest, despite the fact that it doesn't have a Pinterest account, let alone an e-commerce store. Chanel is pretty awful at Twitter, too. The brand's digital identity, similar to most of its luxury peers, is ice-cold.
Meanwhile other luxury brands have succeeded online precisely because of their adoption of digital. With its 15 million Facebook fans, Burberry is known for its forward thinking digital strategy. On the digital-first side, J. Hilburn is a new luxury brand backed by $26 million in VC funding. AHAlife will succeed only if it successfully straddles the line between elite luxury and the web's freewheeling, democratic social media bonanza.
The company will keep Kaptur alive as a separate app while it integrates the company's viral marketing engine into its own site. Mei believes that photo sharing and geolocation will become an important part of any digital company, which means AHAlife would have eventually built some sort of photo sharing engine internally. (The user-generated photo question opens a whole other can of worms.) Instead, AHAlife bought one. Photos are the new language of the web, whether the legacy luxury brands embrace it or not.
Image: A decorative set of hand-cut and engraved lead crystal pieces made by Czech artisans retailing for $1780 on AHAlife.