I’ve got a passion for photography, both personally and through business. When I was working at FortuneCity, I worked with the team to create MyPhotoAlbum, one of the leading photo hosting destinations. I met Allen through another entrepreneur and it was only fitting to run this interview because I’ve got a photography lesson this weekend in Central Park. Also, the interview is fairly in-depth and fascinating.

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Please welcome the CEO and Founder of PhotoShelter, Allen Murabayashi.

Please state your name, title, and years at current company/position:
Allen Murabayashi, CEO/Founder. We officially registered PhotoShelter as an LLC in February of 2005, and launched our first product, the PhotoShelter Personal Archive in late June of 2005.

What are you currently up to? If entrepreunering (my word), tell me about your startup. If investing, what are you looking at?
I currently run PhotoShelter, which has two main services for photographers. The first is the Personal Archive, which is a subscription-based, “business-in-the-box” service that allows photographers to archive, distribute and sell their images. Over 20,000 photographers worldwide use that product.

We recently launched our second product, The PhotoShelter Collection, which is a stock photography platform that sits between flickr and Getty Images. Basically, we allow anyone who is interested in selling an image commercially as stock to upload images, go through our editing process, and then we market the image to ad agencies, publications, graphic designers, et al.

Why are you doing this? You could be doing so many other things in the world, what about this particular idea strikes you?
I’ve been interested in photography since junior high. In 2001, I purchased a digital SLR, and started hanging out with a lot of professional photographers. The shift from film to digital presented some pretty unique problems, but it also was a huge opportunity to take these digital files and use the Internet to solve the problem of distribution and photographer rights.

With the explosion of digital and the increasing demand for content, we see so many opportunities to take a hugely diverse group of photographers from amateurs to pros, and assemble them in a community with the primary mission of licensing the photos. The buyers love it because they get the diversity of flickr, but with the ready-to-license capability of the mega stock agencies. And the photographers love it because we give them the best cut in the industry, and treat them like artists, and not just suppliers.

All startups should be addressing a problem in the market. What is that exact problem and how are you solving it?
We believe that image buyers are constantly seeking new sources of imagery, and they have real budgets to spend on getting the right image to illustrate their concept. The current models of selling stock photography are outmoded and don’t address 1) the diversity of contributors that exist, and 2) the velocity at which buyers need to find and then license work.

I like to use eBay as an example because they are the prototype for the online marketplace. Ebay treated suppliers and buyers democratically, built a community and a platform, and once they created some fluidity in the marketplace, they grew dramatically. They proved that there was a need for diversity, and that you didn’t have to go through traditional channels to create commerce. We believe that we can follow the same path.

Have you thought about your business model yet? I’m assuming so, so tell us a bit about it.
The PhotoShelter Personal Archive has a monthly subscription, and we take transaction fees from sales originating from The PhotoShelter Collection.

If you’re looking at an ad-supported model, how are you going about it? Do you have in-house ad sales? Using a rep firm? What are the challenges that you’re facing with getting ad dollars?
I’m a bit anti-ad-supported model because it typically only works for the largest of consumer plays. And I think that a lot of the large companies are still trying to figure out how to make money. I personally prefer a much more direct revenue model that isn’t a function of traffic, but rather of buying activity.

If you’re selling a product/service/subscription, how is that coming along? What are the challenges? Are you using the freemium model?
Yes, we offer both a free, limited account, as well as paid subscriptions with the Personal Archive. The free account acts as a great funnel for acquiring paid users. It gives us an interested pool of users, who in some ways, are really looking to be upsold on a product that can solve some of their fundamental problems of archiving, distribution, marketing and sales.

Conversion points and conversion % will always be the challenge. You can always work to improve the conversion, and we’re learning a lot about how people perceive our product when we examine the conversion possibilities.

As an entrepreneur or investor, what are your thoughts on competition? How do you view competition?
The competition is really Getty Images, and in this respect it’s tough because they are a very well established player with lots of big contracts in place. However, there’s also a lot of unrest in the industry and people are looking in particular for ways to license images very easily for usage on the web. In this respect, there is a huge opportunity for an Internet upstart to come in and shake things up. Getty uses the Internet as a channel; they are not an Internet company. We think this distinction actually ends up being pretty crucial in the operating philosophy.

If your competitor called you up to have coffee and discuss shop, what would you do? Would you go? What would you divulge?
Of course! There is so much to be learned by talking to people, especially the competition. And in some ways, I appreciate the academic challenge of growing a business, and am very interested in people’s philosophies of success. That said, “loose lips sink ships” so I wouldn’t divulge anything that I felt would comprise our success.

Is the current state of the economic market playing to your favor? If so, why? If not, why? What is your forecast of the market throughout 2008 and do you see affects? Macro and Micro economic theory would be interesting to hear about.
I’ve never felt that as a start-up that we were so affected by the markets. If you’re starting from zero, there is a huge opportunity for growth, so to use the economy as a reason that you can’t make your first $1, $100, $1000, $10000….it’s silly. If we were making $10MM a month and much more mature a company, I can understand how the economy would affect the bottom line, but we’re in growth mode. Maybe I’m naïve about this stuff, but I think at this stage, blaming a lack of success on the economy is an excuse.

How much of your time is spent working? How much is spent with family? Have you found the entrepreneurial quality of life yet?
I work 6 days a week. I absolutely refuse to work on Saturday, and this is more of a sanity thing. I find myself working a little more than I’d like, but at the same time, it’s enormously satisfying to be able to create change as execute plans and “turn the ship” when we think we need to. It helps that I’m single, that’s for sure. It would be very difficult, if not impossible, for me to have a family while doing the entrepreneurial thing.

Thank you very much Allen, we really appreciate you taking the time! Please leave questions and comments for Allen here and he’ll be sure to answer.