Shutterstock Creates First Silicon Alley Billionaire
Jonathan Oringer, the founder of Shutterstock Inc (SSTK)., became a billionaire today as shares of the world’s largest stock photo and video marketplace rose to a record.
Oringer, 39, owns about 55 percent of Shutterstock, which has about 28 million licensed photos, illustrations and videos available for sale on its website. His 18.5 million shares, which he controls through closely held investment company Pixel Holdings Inc., are valued at $1 billion, according to the Bloomberg Billionaires Index.
“I’ve never been very flashy or high-profile,” Oringer said in an interview at his 34th floor office in New York’s financial district last month. “I’ve always stayed under the radar.”
Shutterstock has more than tripled since selling shares in an initial public offering last October. Oringer is the first billionaire to be created in Silicon Alley, a collection of technology startups in New York, according to Andre Sequin, an analyst at RBC Capital Market.
Oringer’s wealth surge comes amid a bull market for acquisitions of New York technology companies. Stratasys Ltd. (SSYS), an Eden Prairie, Minnesota-based maker of printers that can create three-dimensional objects, agreed to buy Brooklyn-based MakerBot Industries LLC for $403 million last week.
In May, Yahoo! Inc (YHOO). bought New York-based blogging network Tumblr Inc. for $1.1 billion.
Shutterstock shares were up 4.1 percent to $55.78 as of today’s close in New York.
Oringer founded Shutterstock in 2003 with 30,000 of his own pictures.
“I shot images of everything I could find over the course of a year,” said Oringer. “I would go all over the world and take pictures. In a day I could easily take thousands.”
Today, the company sells images to 750,000 customers in more than 150 countries for use on websites, as well as for digital or printed marketing materials, according to the company. Net income rose 117 percent to $47.5 million last year, while revenue increased 41 percent to $169.6 million.
“It’s one of the most solid companies in the Internet space,” said Sequin. “When you compare it to the recent tech IPO’s, it’s one of the few that has a proven track record of profitability.”
Shutterstock estimates that the market for digital imagery will grow to $6 billion in 2016 from $4 billion in 2011, according to documents filed with the U.S. Securities and Exchanges Commission. The company competes with online image marketplaces such as iStockphoto Inc. and Fotolia LLC, and photo archives managed by Seattle-based Getty Images Inc. and Corbis Corp., which is owned by Cascade Investment LLC, the holding company controlled by billionaire Bill Gates.
Unlike Getty and Corbis, Shutterstock doesn’t own its content. The site’s contributors -- photographers, illustrators and artists who so far have been paid more than $150 million, according to the company -- retain ownership of their copyrights. The arrangement has allowed Shutterstock to keep its capital expenditures low and its talent pool deep.
Oringer’s rising fortune coincides with an uptick in New York’s technology sector.
“There is a change going on in the city that is leveraging the inherent strength in New York,” said Frank Rimalovski, managing director of New York University’s Innovation Venture Fund, which manages $20 million to invest in technologies developed by NYU’s students and faculty. “Think about Tumblr and Shutterstock. They didn’t have to break any new laws of computer science or electrical engineering to build their business.”
According to Ian Sigalow, partner and co-founder of Greycroft Partners LLC, a New York-based venture capital fund that usually invests between $500,000 and $5 million in early-stage technology companies, 70 percent of all the media purchased in the U.S. is managed from Manhattan.
“Salespeople are going to want to be where the customer is, and that’s New York,” said Sigalow. “Even entrepreneurs I meet in Boston say that the next company they start, they want it to be in New York.”
About 40 percent of venture funding occurs in Silicon Valley, twice the amount in New York and New England combined. Firms such as Union Square Ventures and Spark Capital have spent years trying to revive the East Coast technology industry.
Universities also are tapping into New York’s blossoming technology scene. Cornell University and Technion-Israel Institute of Technology are developing a technology campus on Roosevelt Island. The universities won a contest last year to build the campus with a land grant and $100 million for infrastructure improvements.
Oringer’s favorite piece of technology, apart from a photo camera, is the AS350 B3 AStar Eurocopter helicopter that he owns.
“I don’t own a helicopter because I want someone to bring me places quickly,” he said. “I own it because it’s an incredible machine that I like to fly and learn about. I like the complexity of it.”
Oringer said he has no plans to vacate Manhattan by chopper for the West Coast.
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