Flickr: 7 zesty lessons on how 2 broke founders transformed a failed project into millions

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Hey rebel solopreneurs

Bouncing from idea to idea because nothing feels quite right?

Here's the thing - the opposite approach actually works way better.

Stick with your "failed" idea and pivot it into something unexpected.

Meet Caterina Fake and Stewart Butterfield who were failing with their video game, but instead of abandoning it completely, they pivoted the technology into Flickr.

But how do you know when to pivot versus when to quit entirely?

The humble beginnings...

Caterina Fake grew up in Pittsburgh in a regular middle-class family.

Her parents encouraged her entrepreneurial spirit from age 4, when she sold crayon drawings for 10 and 25 cents.

She tried expanding into toilet-paper-roll art and popsicle stick crafts, but those ventures flopped.

After college, she bounced between jobs - investment banking, assistant to a painter, even working on Seinfeld interstitials.

In 1994, she moved to San Francisco and taught herself programming from scratch while crashing at her sister's place.

She built websites and became art director for Salon.com, creating one of the first popular blogs at caterina.net.

Meanwhile, Stewart Butterfield from Canada was reading her blog religiously, looking for ways to meet her.

When they finally met at a San Francisco party in 2000, she turned down his date request.

But he didn't give up - months later he invited her skiing in British Columbia, and she said yes.

During that trip, they fell in love and started planning to build a company together.

They got married in 2001, and two days after their honeymoon, they started Ludicorp to build an online game.

Then their money started running out fast...

Running out of runway

By 2003, Caterina and Stewart were in serious trouble with their video game called Game Neverending.

They had 20,000 people signed up to test it, but investors couldn't understand what they were building.

"If it wasn't a shrink-wrapped game sold at Best Buy, they didn't know what it was," says Caterina.

With only six people on the team and no salary coming in, they were facing a brutal choice: shut down or find another way.

But wait - instead of giving up, they got creative with their constraints.

Then Stewart got sick on a plane and everything changed...

The hotel room breakthrough

Picture this: Stewart's throwing up on a plane to New York, sick as a dog in their hotel room.

Caterina fell asleep while he stayed up all night, miserable.

When she woke up, he said something that sounded totally crazy: "I've got a great idea. Let's make a photo-sharing site."

This wasn't their plan, their experience, or even their passion.

But here's the crazy part - sometimes the best ideas come when you're not trying to be brilliant.

They built it as a side feature in eight weeks, using technology from their failed game.

But nobody cared about their photo-sharing feature...

The accidental game-changer

Their instant messenger with photo-sharing was flopping hard.

It had a critical mass problem - unless your friends were already on it, the sharing feature was useless to you.

Then they made one small decision that changed everything.

They allowed users to upload photos directly to the Flickr website, and made them public by default.

This went against every other photo site at the time, where photos were private by default.

They borrowed this idea from blog culture - when you publish a blog post, it's public for everyone to see, right?

That one decision triggered explosive growth, but they had no idea why...

Riding the perfect wave

Digital cameras were getting cheaper, broadband was spreading, and camera phones were emerging.

People were taking hundreds of photos but had no easy way to share them.

Flickr hit the market at exactly the right moment to ride this wave.

But get this - they never studied the competition in photo-sharing.

If they had, they would've discovered that big companies like Ofoto and Shutterfly were operating photo services as loss leaders.

"We were blissfully unaware of them and had only the vaguest idea of how they worked," says Caterina.

Can you imagine?

Their ignorance led to a completely different way to make money...

Flipping the money approach

While competitors made money from printing photos, Flickr charged for storing them.

They offered 20 megabytes free per month, or $24.95 per year for premium storage.

This was revolutionary - they turned photo storage from a cost into a profit center.

The old sites were "modeled on pre-digital paradigms," while Flickr understood the new digital world.

Users weren't just storing photos - they were building online identities and communities around their images.

By making photos public by default and adding tagging, they turned photo-sharing into social networking with actual purpose.

But growth brought unexpected challenges with their community...

Building love, not just features

In the early days, Caterina and team member George Oates personally greeted every single new user.

They spent 24 hours a day, seven days a week welcoming people and introducing them to other users.

But here's the genius part - they didn't just say "great photo."

They wrote long, authentic comments explaining exactly why they loved each image.

Other users started copying this positive behavior, creating a supportive community culture.

"I believe that you can shape the conversation of a community by joining the discussion early on," says Caterina.

Smart, right?

Then the buyout offers started pouring in...

The $35 million decision

Yahoo flew to Vancouver and made their pitch.

Stewart and Caterina weren't sure whether to sell - they were just hitting their stride.

Then Reid Hoffman, LinkedIn's founder and early investor, gave them perspective: "You can always do it again. And the amount of money you'll make will change your life in a way that you'll be entrepreneurs for the rest of your lives."

They sold Flickr to Yahoo for $35 million in January 2005.

The team had just 7 employees.

From near-bankruptcy to a life-changing exit in less than two years - wild, right?

Which brings us to their incredible outcome...

The epic win

What started as a desperate pivot from a failing video game became one of the most influential photo-sharing platforms ever built.

Flickr reached 3 million users by 2004, with usage doubling every month.

The $35 million buyout gave the team financial freedom and proved that accidental ideas could become intentional successes.

Most importantly, they proved that constraints and near-failure could actually speed up creativity rather than kill it.

Your turn to shine bright!

That's it, my fellow rebels!

Caterina and Stewart went from a failing video game to a $35 million photo-sharing empire, proving that your "wrong" ideas often contain the seeds of your breakthrough.

That project you're ready to abandon might just need a creative pivot instead of a complete restart.

I have a feeling you're about to surprise yourself with your own potential.

Keep rocking

Yours 'making success painless and fun' vijay peduru