Stewart Butterfield: Was it a mistake to sell Flickr to Yahoo? It's complicated...
For much of the 2000s, if you wanted to post a photo to the Internet, whether for a Craigslist ad or a blog post, Flickr was your first and last choice. Even Blogger lacked its own photo-uploading tool, instructing users to create a Flickr account to do so. When Stewart Butterfield, Flickr's cofounder and tonight's PandoMonthly guest, sold his startup to Yahoo for $25 million -- an astoundingly high price for a consumer Internet company in 2005 -- the company was poised to become one of the biggest sites on the planet.
And yet, today it's dwarfed in size by Instagram, not to mention Snapchat and a host of other native photo tools utilized by Facebook and Twitter. With the exception of a brief moment in late 2012 when a change to Instagram's terms and conditions raised overblown concerns that the Facebook-owned company would "exploit" users' photos, Flickr has faded into second class status.
So what happened? The easy answer is, "Yahoo killed it." But the issues with Flickr went deeper than that, and largely came down to a question of bad timing, according to Butterfield.
It's easy to ask, "Why didn't Flickr jump on the mobile revolution?" But as Butterfield noted at tonight's event, it's also easy to take for granted that mobile phones were about to become the future of computing and connectivity.
"At the time that Flickr was acquired, the coolest phone that you could not get, because they were flying off the shelves, was the Motorola RAZR," Butterfield said. "We forget that the iPhone was announced in 2007. It didn’t actually get released until the middle of 2007. There was no App Store."
In fact, the concept of apps didn't even begin to take off until 2009, and at that point Butterfield and his co-founder -- and then wife -- Caterina Fake had already left Yahoo. The Flickr mobile app designed in their absence was a disaster, with early user reviewers calling it "painfully slow" with "terrible navigation." That's a shame because Flickr was actually among the earliest web platforms to offer a usable mobile site, way back in 2006.
As we all know now, Flickr's loss was Instagram's gain. It came on the scene after the App Store had already enjoyed widespread adoption and, just as importantly, was able to operate outside the confines of a huge corporation like Yahoo.
So were Butterfield and Fake wrong to sell to Yahoo? It's complicated. If the year was 2014 when the acquisition was proposed, the answer would be yes. But back in 2005 the consumer web landscape was still feeling the hangover of the dotcom crash.
"It was the only exit in the consumer Internet for 5 years," Butterfield says. "There was no mindset then when you could say, 'No,' like Snapchat, and no partial liquidations."
On top of that, running a big successful consumer Internet company was far more expensive back then than today, as the cost of hosting, infrastructure, and software has all plummeted.
Furthemore, despite Yahoo's failure to bring Instagram into the mobile web, he makes a really point: "Almost everything people know about Flickr happened after the acquisition."
And finally, it wasn't just the mobile revolution that allowed Instagram to beat Flickr.
"Instagram just didn't do very much stuff," Butterfield said. "Flickr has an insane number of features, it's just crazy. And Instagram just did one very elegant thing."
[photo by Geoffrey Ellis]