Thursday, June 19, 2008

Learning from Flickr's Co-founders on Their Way Out of Yahoo

In June 2005 Yahoo! acquired upstart Canadian photosharing web site Flickr
and the web hasn't been the same since. Yahoo, on the other hand,
didn't change nearly as much as everyone expected it to. Pre-CEO Jerry
Yang told
then-Business 2.0 writer Erick Schonfeld six months after the deal "I
look at Flickr with envy, it feels like where the Web is going."

Flickr co-founders Caterina Fake and Stewart Butterfield have now cashed out and officially left the company.
Though Yahoo! doesn't appear to have internalized many of the lessons
of Flickr, it's not too late for the rest of us to look at those same
key lessons for inspiration in our work on the web.

Industry Context

There's a lot of photo sharing services on the web, but here's where
Flickr stood. Flickr was the trailblazer, the high-profile media
darling and one of the first major Web 2.0 acquisitions. Webshots
was much older, had been bought and sold for twice as much money but
never embodied the social media ethos the way Flickr did. PhotoBucket
is a year older than Flickr, has always been much larger and was
acquired by Fox for almost 10X Flickr's pricetag in the same week that
Flickr was pegged to replace the entire Yahoo! Photos property.

We've been critical of some of Flickr's strategies around everything
from censorship to data portability, but the big picture is that the
service is fantastic. Even though it wasn't the first and it wasn't
purchased for a particularly large sum (est. $35m) Flickr is still the
beacon of innovation in this sector. Here's why.

Customer Service is The New Marketing

One of the most important elements of Flickr's early success was its
incredible engagement with its users. Flickr management spent what
might have seemed like a totally unreasonable amount of time welcoming
new users to the site, participating actively and promptly in forums
and highlighting the best photos uploaded.

That kind of engagement can turn passing early adopters into ongoing
community stakeholders and advocates. It's something that any startup
could benefit from emulating and a role we're seeing formalized in an
increasing number of companies hiring community liaisons.

The Bleeding Edge Can Go Mainstream

Flickr proved that experimental, bleeding edge web 2.0 features
didn't have to be limited to early adopters. When Flickr brought
geo-tagging, the addition of location data to photo metadata, onto the
site - more than 1 million photos were geotagged in the first 24 hours.
Now that location aware services are heating up, who's in one of the
best positions to serve media up in that environment? Flickr is.

Flickr's APIs have been wildly successful. Mashup and API directory site ProgrammableWeb
lists more mashups using Flickr APIs than any other API on the web,
short of Google Maps. More than Amazon, more than eBay, more than

Flickr's FlickrAuth user authentication API was a key model for the standards based oAuth protocal - now employed by Google's OpenSocial and hopefully soon by countless other applications.

Flickr broke new ground in numerous ways and proved that technical
experimentation didn't have to remain in the early adopter niche.

Being a Freak Will Not Kill Your Business

Butterfield wrote a great letter of resignation,
which was leaked to the bottom feeders at Valleywag but is a great
little read none the less. All parties say it's hardly out of character
and indeed, in my own passing interactions with the man, he was never a
fakely-nice typical business type worried about what might come around
someday from being nasty to any little blogging piss-ant that got in
his way.

Flickr came from Vancouver, British Columbia - in Canada. They must
be the national web 2.0 pride and joy of that freakishly wonderful

The next time someone gives you a hard time for being a freak at work, just cluck at them knowingly and think about Flickr.

Other Lessons

Other people have raised other issues that they think are key to
learn from the situation as well. Flickr power user and exec at rival
startup Zooomr Thomas Hawk offered some obviously heart-felt feelings about what the Flickr story said about acquisition and innovation.

"[They] developed an amazing product. Cashed out (smart).
[They] could have had incredible impact on the future of social search
and innovation at Yahoo but were thwarted by a band of disorganized
bumbling executive idiots who wouldn't recognize talent if it hit them
in the face. Most important opportunities to innovate came under Terry
Semel's watch who was more concerned with being the highest paid CEO in
America than either innovation or shareholder value."

(In response to Hawk's comment, Robert Scoble humorously replied
that Yahoo! "reminds me of Podtech. Had lots of superstars under their
roof and then couldn't listen to them to make things happen.")

Dave Winer told us that the move
makes him concerned about all the data that users have entrusted to
Yahoo! "Whatever emerges from this, the new company should immediately
embark on a program to make users' data portable," Winer said. "Users
have been an abstract thing to Silicon Valley, it would be great if now
that the superstars are leaving Yahoo, the industry could turn to the
users for inspiration, and start to trust them with their own work."

Flickr's handling of user data was generally accepted as a fairly
good work in progress. Now that the original minds behind the company
have left the building, it would be great for the new leaders there to
cement user trust in regards to their data by instituting some formal,
easy-to-use measures for users to make sure their photos are safe and


It would be fantastic to see Fake and Butterfield start something
new but they're certainly due all the relaxation time they want, too.
Once you've got a few million dollars in the bank, though, starting
more internet businesses may be a sign of limited imagination more than
anything else. For the rest of us still plugging away, Flickr offers
some great inspiration.

We're sure there are readers here who have been much more engaged in
the Flickr community than we have. What kinds of business lessons have
you learned from the company?

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