In 2003 Stuart Butterfield had a problem. His online gaming venture, Game Never Ending, was running out of money. Looking for a solution, Butterfield twisted the technology into a photo sharing site called Flickr.
Five years down the track and several years after Flick's acquisition by internet giant Yahoo, Butterfield is back where he started, out on his own after having recently left Yahoo (presumably quite a few million dollars richer).
In this interview with ZDNet.com.au during a trip to attend Australia's X|Media Lab in Melbourne this week, Butterfield shares his thoughts with us on the web, Google, Microsoft and Flickr's acquisition by Yahoo.
What do you see on the web as exciting right now?
A project that has received probably less attention than it deserves is the "[Flickr] Commons Project". I think there is five organisations participating — The Smithsonian [Institute] and the Library of Congress, which are both enormous in the States. Also there is the Toulouse Museum, and a big museum from the UK and another from NY.
Flickr founder Stewart Butterfield
(Credit: Stewart Butterfield)
They are putting their public domain archival photos online. These are things that belong to everyone, but they are not really available unless you happen to go to Washington DC or Toulouse or Landon or wherever these things are kept.
They are using Flickr in a very Web 2.0 way to add details which aren't possible for a small number of researchers and archivists to add themselves, even though they have a lot more expertise in the subject, say racing cars in 1920.
However, if you put a couple of hundred thousand people on the subject, everyone has a little bit of expertise. They are also tagging all those photos. Just putting in the basic things like man, tie, the objects that are in the photos.
Did you find it difficult working under the bureaucracy of Yahoo compared to having your own company?
Yes, compared to running my own company certainly. But we actually had a lot of freedom. I think what was more of a problem was that in the first two years or so we actually had a lot of problems getting the resources we needed to do things. We were both successful enough in what we were doing and stubborn enough individually to maintain our autonomy.
When you first began, how did you manage a company that was rocketing like Flickr?
It was really hard. We got the idea to do Flickr in early 2003, from the Game Never Ending. In 2002 we started the company, we were making a game, we made a prototype, we had a couple of thousand people testing it.
We did that, then it was the middle of 2003. It was a terrible time for investment, especially for consumer internet stuff. No one wanted to invest in it. Venture capitalists weren't investing, angel [investors] weren't investing.
We were running out of money, the one person who got paid was the guy who had kids. We knew there was just no way we were going to finish the game, which is a pretty intensive project from a technical perspective.
We wanted to take the work we had already done and leverage it towards something. The idea for Flickr came to me all at once in a case of food poisoning in New York. Except it wasn't what you see today, it was this horrible version of Flickr that didn't really work.
Technically it was very cool and very innovative, but as a product it was kind of worthless because the chance that someone you actually cared about was online at the same time as you were close to zero, so it was a real critical mass problem, because people already used MSN messenger or AOL or something like that.
But it was technically impressive enough that it generated enough interest. We decided to do it in December 2003, we launched in February 2004 and maybe by May or June 2004 it had evolved to pretty much what you see today.
And soon after you were acquired by Yahoo.
The acquisition closed in the early part of 2005, just a little bit over a year after we launched. The deal was pretty much done 11 months after we launched. It was a pretty intense year.
You were asking about dealing with the growth. It was pretty much one per cent per day, sometimes one per cent before lunch. One per cent doesn't sound like a lot, but when it's compounded on a daily basis, it's crazy. We were often doubling every month. We were rewriting code constantly, adding new servers constantly.
Getting new people in?
Well you know it was a pretty small team, at the time we were acquired there were 11 people in the team total, including one part-time customer service person. Of those nine were part of the acquisition.
At the time the acquisition closed there was probably about 400,000 registered users. Now I think there is around 28 or 29 million registered users. We had around a million, a million and a half visitors a month and now there is around 50 million unique visitors a month.
Depending on what you're measuring, it's been 50 to 100 times growth.
Then what was Yahoo like?
Yahoo was both good and bad. In one sense we had a lot more resources than we would have had, and in another sense we had a lot fewer resources. It wasn't up to me to decide when we were going to hire people. We had a budgeting process that was bigger than my boss's boss. They would stop hiring before the end of a quarter to make the quarter look better. A lot of that sort of stuff went on. There was a hiring freeze that went on for a couple of months while we tripled in size.
What did you think of the Microsoft-Yahoo romance?
It was ... not so great. It's a little bit sensitive obviously. Once the ball was rolling I would rather have seen the acquisition happen. Obviously a lot of damage was done to Yahoo not only from a share price perspective but from a company morale and leadership perspective.
But I think it's a little bit of live by the sword, die by the sword. I felt like the biggest problem while I was there was the management was oriented a little too much towards the quarterly results. It's not a strategy really. It may be a tactic in certain circumstances to produce certain numbers in a given quarter so the share price stays stable so you can do something with the share price.
But if the entire focus of the company is to have a certain amount of operating free cash flow or a certain amount of capital expenditure, it's not hard for certain people to out-manoeuvre you when they are not so concerned about those things.
I am sure that the management at Google, despite their outward proclamations, is every bit as concerned about those numbers, but they are also taking bigger strategic risks and many web start-ups are as well.
Do you think that's why they are winning in the search game?
Neither of them, to be honest, seems to be better than the other [in search].
But in terms of branding, Yahoo is dead basically. If it wasn't for the deals that Yahoo had for distribution, and the brand that they had maintained in some of the Asian markets like Taiwan and obviously Japan, where they're huge. A little bit less so in China, but still significant.
There is actually a great study from a little while ago where searchers unbranded search results form different pages and then got people to rate them. Then they also showed Microsoft, Yahoo and Google search results in each others' branding, and then asked people to rate the searches.
Eighty per cent, I don't remember what the exact figure was, but upward of 80 per cent of people perceived accuracy in the search results was due to brand. So for example if you put Yahoo results in a Google branded page or Yahoo results in a Google branded page then people would rate the results as very accurate. People don't like to admit they are influenced by that stuff.
What were we talking about before, Yahoo right?
Yeah, Yahoo. You later left the company, why?
I didn't leave because of Microsoft stuff. We had really a three-year commitment, and I had been there for a little bit over three years, so I stayed a bit longer than the original agreement. It was three years there and three years prior to that, staying basically in the same job.
That's the longest I have done anything. That's a significant chunk of my adult life. So I'm taking some time off, doing some travelling.
So no great project in the works, just a sea change?
Yeah, I am thinking of all kinds of different projects, and I am very fortunate that I could raise money now, even if I had a stupid, terrible idea.
It's again the same branding issue. But people do have a good reason to invest in people rather than ideas, because ideas are mutable, they can change. We did that a lot, not just from the game to Flickr, but within Flickr itself. Very few things are common between the current version of Flickr and the original version. In the original version of Flickr there wasn't tags, you couldn't look at an individual picture on a web page.
There was a social network but it worked in a totally different way. There wasn't the concept of friends and family.