Jim Clark is back with photo startup

The entrepreneur behind Netscape Communications Corp. (NYSE:AOL), SGI (NYSE:SGI) and Healtheon Corp. (Nasdaq:HLTH) has formed Shutterfly.com Inc., a Redwood Shores, Calif., startup that is developing new ways for consumers to share and print photos using digital cameras.

While not disclosing many details, Clark said the company will offer its own service to print photos and mail them to consumers, bypassing conventional film processors. Owners of digital cameras will transfer images to Shutterfly, which will use a process that keeps images in a digital form until the final print is made, unlike some existing processing methods.

The digital process, developed by former Silicon Graphics engineering manager Dan Baum, will generate better prints at lower prices, predicted George Zachary, a partner at Mohr Davidow Ventures, a Menlo Park, Calif., venture firm that helped to start the company.

Crowded field
Shutterfly will face plenty of competition. Several old-line companies and a rash of startups have either launched or announced services that allow consumers to post photographs from digital cameras or photos fed through a scanner onto the Web.

Eastman Kodak Co. offers a similar service through PhotoNet Online, and the photographic behemoth is also working with America Online Inc. (NYSE:AOL) on the company's You've Got Pictures service, which allows consumers to have pictures loaded onto a Web site when they take them in for developing.

Hewlett-Packard Co. (NYSE:HWP) has announced its Cartogra Web site, where consumers can share pictures online. In August, a new online photo site, Zing Network Inc., raised $14 million in venture financing led by the Menlo Park venture firm Kleiner Perkins Caufield & Byers. Both Zing and the Kodak services allow consumers to create online photo albums and order reprints off the Web.

Shutterfly also may face competition from increasingly sophisticated computer printers that will allow consumers to print pictures on their own. But Clark, Shutterfly's chairman, said those devices can be hard to use and produce images that fade more quickly than chemically processed prints.

Clark, 55 years old, argues that most companies are concentrating too much on posting and organizing pictures online, rather than creating a place where people can go to order prints that are as good as those they would get from their local photo shop. "The problem is that everyone's approaching digital imaging from an online [perspective] as if everyone's going to be carrying a computer to share pictures," he said.

Shutterfly, which expects to launch its service in December, was the brainchild of Baum and Eva Manolis, another former SGI engineer. Baum, who is an avid photographer, will serve as vice president of lab operations, and Manolis will be vice president of Web systems.

The company has raised about $13 million from Clark and the Menlo Park, Calif., venture-capital firm Mohr Davidow. In addition, Clark said he is willing to sink an additional $20 million of his own money into the company, if necessary.