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Accel Invests $35M. in 99designs…After Years of Trying

April 28th, 2011 04:00 admin View Comments

Accel Partners has invested $35 million in the crowdsource design service 99designs– a monster of a series A. Of course, 99designs is not your average early-stage startup. Born in Melbourne, Australia out of an older company called sitepoint.com, 99designs is bootstrapped, profitable and growing revenues at a rate of about 120% a year.

A few strategic angel investors also participated including Michael Dearing, Stewart Butterfield, Dave Goldberg and Anthony Casalena. Accel’s Andrew Braccia and Ryan Sweeney will join the board along with Dearing.

The growth helps explain why Braccia has been courting this deal since 2009. And he wasn’t alone. 99designs CEO Patrick Llewellyn says several VCs have been pinging the company, and until now, they’ve all been turned away. They all seem to find out about the company the same way: One of their portfolio companies uses the service to get a good, cheap logo. In Braccia’s case, it was Cloudera.

99designs was reluctant to take money for the good reasons: They didn’t necessarily need it, and without it the four owners were able to control the company’s destiny without outside meddling. But as the number of design contests doubled in the last four months, it became clear they were onto something and it was time to scale, says Llewellyn. After all, more than 90% of 99designs’ customers come through word of mouth. Imagine if the company actually invested in sales and marketing?

But the clincher was how hard 99designs found it to hire once they moved the sales part of the business to the Valley. “Any employee you look to hire here asks, ‘Who funds you?’” Llewellyn says. “You realize there’s a psyche that’s very different from Australia. To go to the next level and bring on the talent we wanted was going to be hard being a bootstrapped company from Australia.”

A good portion of the cash will go to the founders, who don’t have an operational role at the company. Meanwhile, the deal frees up new options for the team. The rest of the cash will juice sales and marketing, hire some engineers to build new features, and maybe buy a smaller complementary company or two, Braccia says.

So why’d Accel win? Persistance and its increasingly international focus that expands beyond just China and India, Llewellyn says. This is the third Australian deal the firm had done in less than a year.

Why’d Accel want to win so badly? As the above numbers show, 99designs is growing like a weed. It has paid out $20 million to designers over the last three years and some 6.5 million logos have been submitted. These days it’s paying users more than $1 million per month. It’s part of a wave of companies that are finally leveraging the Web to cost affectively sell to small businesses– something that’s talked up every five years or so, but rarely really fundamentally changes. “We’re starting to see Vegas emerge from the desert,” Braccia says. “This is a big investment thesis for Accel.” Indeed Accel companies Groupon, Etsy and Dropbox all play into the same trend.

This growth — and no doubt the funding news– pisses a lot of people off. 99designs is hated by a vocal segment of the graphic design community, because it relies on designers presenting unpaid work to compete for work. Google “99designs” and “99designs scam” is the first phrase that pops up in the auto-complete. Many argue this devalues their work and ultimately destroys an industry. This backlash has caught 99designs by surprise. Especially because the contest model wasn’t the company’s idea. It was something that happened organically on the wonky designer forums that were a part of an older company called sitepoint.com, the older company 99Designs spun out of three years ago. They simply gave the community a platform to do what they were doing already, and, of course, took a cut of the transactions. (Cue more haters saying the company is getting rich off free, spec work.) “We still take it very personally,” Llewellyn says. “We feel like what we’re doing is helping designers”

It’s important to underscore the haters are an intense, vocal minority. Many more-established graphic designers hate spec work, but don’t have to because they have established careers. 99designs isn’t competing with them. And many entry-level kids out of school like the idea of competing for the chance to make a few hundred dollars per job, rather than doing free work to build up experience and a portfolio. And 99designs’ most successful members use the site as a lead generation engine, keeping the customers they meet on the site for future work and never giving 99designs another dime.

The haters are missing two things: An obvious reality and a hidden reality. The obvious one is: The Internet does this to nearly any business where a service provider is charging a premium because of an inefficient market. Graphic designers should be thrilled that it took so long to get to them. Go cry to travel agents, independent bookstores, music industry executives and anyone in old media. It’s a sucky reality, but a reality nonetheless.

The good news is in any period of industry volatility, there are huge opportunities for people to out-earn what they could have made under the old system. Consider tech media: Arrington has become a millionaire, as thousands of journalists who didn’t embrace new media have lost their jobs. Since I jumped from old media, my income has gone up, and I’d guess the bank accounts of Erick Shonfeld, Om Malik and Kara Swisher would say the same thing. If you hustle and you’re talented, there’s still plenty of work. Come to the Valley where there’s a full-scale war on for great designers. And, I say this as a wife of a graphic designer who’d never do spec work, but doesn’t exactly lose sleep over its existence either.

That’s the obvious reality. The more hidden reality is that services like 99designs are giving equal opportunities to talent around the world– particularly in emerging markets where making a few hundred dollars for a winning logo can be a life-changing amount of money. We’ve already seen this trend with services like eLance and oDesk. Now, it’s just being pushed up the skill ladder, from basic coding to more aesthetic skills like design.

99designs may create opportunities for a kid in San Francisco to get his foot in the door of an industry or a single-mother in Minnesota to earn income on her own time, but in emerging markets the impact is more staggering. In the Philippines, one designer was winning so many logo bids that he won an extra $10,000 sweepstakes 99designs was offering. The total was several times his annual salary as a registered nurse. In Pakistan, a man won so many contests he was able to pay for his sister’s wedding– a huge sign of pride and prosperity in a nation with few options for high-margin, creative jobs. Indonesia has been one of the most aggressive 99designs markets, which was no surprise to me. There is so much creative talent in Indonesia, and unlike other large demographic countries, there aren’t a flood of multinational jobs or foriegn venture capital ferreting them out and putting them to work.

The potential impact of something like this is beyond these individual stories. Juicy markets throughout the Middle East, Africa and Southeast Asia– where Western investment doesn’t flow quite as freely– have an ecosystem catch-22. With more than half of the populations under the age of 25 and job creation paltry, high-growth entrepreneurship is imperative for these countries– and frequently for America’s national security interests in these regions. But without more signs that high-margin, skilled jobs like design and engineering pay well, people train for jobs they know they can get instead of following their passions. Local examples like the ones listed above, have tremendous ripple effects in these markets, that taken along with greater social, technology and financial changes have the potential to transform the “other half” of the world’s population only now surging into middle class modernity.

Source: Accel Invests $35M. in 99designs…After Years of Trying

18 Hardcore Months In The Making, Glitch Is Ready To Roll — Cut The Beta Line Here

April 16th, 2011 04:27 admin View Comments

Starting next week, there’s a new massively multi-player online game launching in beta that you’re going to want to play. It’s called Glitch, and it’s been in the making for well over a year. From what I’ve seen, it will be well worth the wait.

Over a year ago, I sat down with Tiny Speck (the company behind Glitch) co-founder Stewart Butterfield to go over some of the aspects behind the game. A few days ago, we caught up again to go over how far they’ve come leading up to the beta.

“We’ve been going hardcore for the last 18 months,” Butterfield says of the Tiny Speck team. “But only in the last four months have things gotten much clearer,” he continues. While they initially expected to launch in beta late last year, it has taken a bit longer than anticipated. But now he feels they’re ready to roll, undoubtedly helped by a big new influx of funding and a lot of new employees (they’re up to 22 now — minus former design lead Daniel Burka who moved on, but remains involved, Butterfield notes).

For the past six months, they’ve been testing Glitch with a select group of users for about a day every week. At most, there have been about 250 people at any given time testing it out. But with the beta, Butterfield expects to ramp that number up to 1,000 quickly. And the virtual world will be open all of the time.

He expects the beta period to last anywhere from eight to fourteen weeks and over that time, they’ll let in the “tens of thousands” of users who have signed up to get early access (we have some cut-the-line invites below). They’ll be using a RockMelt-style invite system in which users are given invites and can easily see which of their friends want one.

In terms of the technology they’ve built to power the game, Butterfield seems most proud of the fact that they’ve brought a web-oriented approach towards software development to the game. He walked me through a bit of the backend to show me just how easy it is to tweak elements of the game on the fly, and to add new things.

A series of drop-down menus and pre-set data inputs makes this all possible. And it will allow Glitch to deploy in minutes what it has traditionally taken MMOs days or weeks to get out to their community. It will also allow for designers to push changes without having to bug the engineers.

The game itself is running on Amazon’s EC2 system. Butterfield notes that the biggest issue with that is the inter-sever traffic, but he says his team has engineered around many of those issues. They plan to stay on EC2 indefinitely partially due to what Butterfield learned with his previous startup, Flickr. “As a team we previously had to deal with storage requirements. If that can be someone else’s problem entirely, it’s better,” he says.

(He does acknowledge that at some point, assuming they grow quickly, it will make economic sense to have their own servers.)

The game itself is built entirely in Flash, which Butterfield notes can be a pain at times. But to get the polished look-and-feel that Glitch has, HTML5 simply is nowhere close where it needs to be, he says. “Maybe a couple years from now, but not now,” he says.

One of the most interesting aspects of Glitch is that they’ll have an API from day one that third-party developers can use to expand upon the game. In fact, some already are. Developers will be able to access Glitch characters that users create and do things such as modify them outside of the game, Butterfield says.

Eventually, this API is going to lead Glitch’s mobile approach as well. Because of the reliance on Flash, a mobile version of the game is unlikely anytime soon, but developers can come up with mini-games using the API, he notes. Butterfield says they’ll likely commission outside developers to do cool things on mobile devices and split revenues with them.

So where are the revenues going to come from? Glitch’s model is to be free for everyone, but they’ll have a subscription layer for the more hardcore players. These subscribers will have access to special features such as different character accessories.

There will also be in-game purchase options. Using a system Tiny Speck has built, users will be able to buy credits for something like 5.5 cents to 7.5 cents each. These can be used to buy power-ups and do things like teleportation to other areas in the game. Butterfield is quick to say though that they don’t want to make it easy for players to simply buy success.

PayPal payments should also be an option down the road. And eventually, Butterfield expects Facebook Credits to be a big part — Facebook still has to open these for use outside of their in-app ecosystem.

One thing that has surprised Butterfield so far is that while males make up the vast majority of the early testers, it’s females that are the most active players. This may speak well to the game’s appeal to a wide-range of players, as some of the most popular online games have similar ratios.

Again, while Glitch will launch in beta in a few days, there will still be a gradual roll-out to begin with. However, we’ve convinced them to give us 111 invites to cut the access line and get in front. So click this link and enter your email addresses quickly.

Source: 18 Hardcore Months In The Making, Glitch Is Ready To Roll — Cut The Beta Line Here

Glitch Has Finally Ironed Itself Out: Beta Next Week And $10.7 Million In New Funds

April 12th, 2011 04:06 admin View Comments

It has been well over a year since we first looked at Glitch, a new massively multiplayer online game from Tiny Speck. At the time, they were in their very early alpha stage, but co-founder Stewart Butterfield expected a full beta to happen later in the year. Obviously, that never happened. Despite progress, Glitch remained in alpha. But next week, the game finally opens up to beta testing, Butterfield has announced today.

Also announced: Tiny Speck has raised a fresh $10.7 million Series B round from Andreessen Horowitz and Accel to spur the full-on push.

Anticipation for Glitch has been high since its inception in part because of the talent working on it. Butterfield co-founded Flickr and brought former Flickr head of engineering Cal Henderson along with him on this new project. The team had also recruited top designer Daniel Burka, who worked on the project for well over a year until his departure last week to start the new incubator Milk with former Digg alum Kevin Rose. Other Tiny Speck co-founders include Eric Costello and Serguei Mourachov.

Interestingly enough, Glitch marks a return of sorts to the idea that eventually led to Flickr: Game Neverending. That MMO had a photo-sharing aspect that eventually became the focus for Butterfield and co-founder Caterina Fake. Then Yahoo scooped them up and now it’s the Flickr we all know and love today despite Yahoo’s questionable guidance.

Butterfield notes that while beta testing is starting next week, there are still “tens of thousands” of users waiting to get access, so the roll-out will be gradual.

Along with the new funding, Andreessen Horowitz general partner John O’Farrell will join the Tiny Speck board.

Source: Glitch Has Finally Ironed Itself Out: Beta Next Week And $10.7 Million In New Funds

Glitch Has Finally Ironed Itself Out: Beta Next Week And $10.7 Million In New Funds

April 12th, 2011 04:06 admin View Comments

It has been well over a year since we first looked at Glitch, a new massively multiplayer online game from Tiny Speck. At the time, they were in their very early alpha stage, but co-founder Stewart Butterfield expected a full beta to happen later in the year. Obviously, that never happened. Despite progress, Glitch remained in alpha. But next week, the game finally opens up to beta testing, Butterfield has announced today.

Also announced: Tiny Speck has raised a fresh $10.7 million Series B round from Andreessen Horowitz and Accel to spur the full-on push.

Anticipation for Glitch has been high since its inception in part because of the talent working on it. Butterfield co-founded Flickr and brought former Flickr head of engineering Cal Henderson along with him on this new project. The team had also recruited top designer Daniel Burka, who worked on the project for well over a year until his departure last week to start the new incubator Milk with former Digg alum Kevin Rose. Other Tiny Speck co-founders include Eric Costello and Serguei Mourachov.

Interestingly enough, Glitch marks a return of sorts to the idea that eventually led to Flickr: Game Neverending. That MMO had a photo-sharing aspect that eventually became the focus for Butterfield and co-founder Caterina Fake. Then Yahoo scooped them up and now it’s the Flickr we all know and love today despite Yahoo’s questionable guidance.

Butterfield notes that while beta testing is starting next week, there are still “tens of thousands” of users waiting to get access, so the roll-out will be gradual.

Along with the new funding, Andreessen Horowitz general partner John O’Farrell will join the Tiny Speck board.

Source: Glitch Has Finally Ironed Itself Out: Beta Next Week And $10.7 Million In New Funds

Milk: Kevin Rose’s New Company Aims to Solve Big Problems on the Mobile Web

April 4th, 2011 04:00 admin View Comments

Well by Silicon Valley standards, that certainly wasn’t a long “stealth” period. Just weeks after he quit Digg, Kevin Rose is announcing details of his new startup. Knowing Rose, I can tell why he’s so excited to get started. He’s constructed a company that plays perfectly to his strengths in the early days– but will test his weaknesses long term.

It’s called Milk, and it’s going to be a development lab in San Francisco’s hipster Mission District for mobile Web ideas. Along the Silicon Valley grapevine people have been calling it an “incubator,” but that term usually implies an organization that accepts entries from would-be entrepreneurs, funds them and helps groom them for the real world. That’s not Milk’s playbook at all.

Milk is not only counter to the typical incubator thinking– it’s counter to a lot of Valley trends right now. Rose and a team of just five other coders, designers and thinkers are going to set out to solve a handful of big old-industry problems using the mobile Internet. A year from now, he expects the company won’t have launched 20 small, cool ideas, but it will have developed four-to-six big, audacious ones.

Unlike a traditional incubator, Rose’s hope is these ideas are so out-there that several will fail, and one or two will become viable companies that have a big impact. And a year from now, he expects Milk will still be a small, elite team of less than ten people– a world apart from the talent landgrab going on in the Valley today. “We’ve been upfront with investors that the lab’s companies are going after big ideas, not launching continuous small projects,” he said in an interview yesterday. “There is so much opportunity to disrupt old media and old business.” So no Kevin Rose take on a mobile photo sharing app? “No,” he laughed. “Nothing like that.” Wow–that alone is counter-Valley thinking these days.

Rose has always had a flood of creative, disruptive ideas, but he has struggled to focus on developing the good ones. He says part of that was the architecture of Digg, which constrained how quickly he could build them, endlessly frustrating him. But this environment will allow his team to throw ideas out in the world quickly, see how they do, and kill the ones that don’t perform. The latter is something that doesn’t happen enough in the Valley, he argues. “People talk about pivoting all the time now, but if something isn’t working after four months, we’ll just shoot it in the head and start again,” he says.

Milk also reunites Rose with his designer from Digg’s glory days Daniel Burka. The two of them can lose days brainstorming on product ideas– one of which was the short-lived but pretty file sharing service Pownce. I once described Burka as the Robin to Rose’s Batman– an analogy Rose liked a good deal more than Burka did. Burka had been at Glitch, an online game built by Stewart Butterfield’s Tiny Speck. Burka says he loved working at Glitch, but couldn’t pass up the opportunity to be Robin again. (Sorry, Daniel.) He officially joins Milk as a co-founder today.

But reuniting of Batman and Robin aside, this isn’t a Digg do-over. This time around, Rose is the CEO and says he’ll remain the CEO– that’s a huge change from the early days of Digg when he wanted nothing to do with the business and only wanted to innovate on the product. “I’ve grown a lot in the last six and a half years,” he says. “I didn’t know what I was doing at Digg, and I gave away too much control. That’s part of the reason I got antsy at Digg. I know the mistakes we made at Digg, and I’m excited to start something new and ready to do this as a CEO.” Rose wouldn’t share details on the funding announcement, but we’ve heard it’s just a matter of finishing up the paperwork and that the roster includes a lot of Digg’s investors.

I’ve always seen a lot of similarities between Rose and Evan Williams. Williams, too, eschewed the idea of being the CEO after Odeo saying he never wanted to be “the guy” again. Then a year later, he took over as CEO of Twitter. Now, Williams has left Twitter and is getting back to his product roots too, with a new quiet company. If I had to guess, I’d say it’s a re-do of Odeo his product lab that spawned Twitter– and sounds a lot like what Rose is building with Milk. It’ll be interesting to see what the two will come up with unencumbered from big companies and existing products.

Source: Milk: Kevin Rose’s New Company Aims to Solve Big Problems on the Mobile Web

If You Only Have Time To Read 5 Stories A Day, Let Summify Pick Them

March 30th, 2011 03:00 admin View Comments

As a person who consumes dozens, if not hundreds, of articles on the web each and every day, it’s easy to remember that I’m an extreme outlier. Most people would prefer to read only a few articles a day — only the ones that they know are worth their time. That’s what Summify does in a nutshell. They survey the content on the web and condense it into the articles that will interest you the most.

Today marks the formal launch of Summify. After a few months in beta testing, they believe their social algorithms are ready for the world to try. And they also have a fresh round of funding to further spread the service.

Here’s how Summify works: it asks you to enter at least one account you use on the web to get information. This can mean Twitter, Facebook, or Google Reader. And if you can enter two or all three, even better. Summify then analyzes your social graph and the data flowing through it to see which stories it should serve up for you.

The default is to do this on a daily basis, but you can set it longer (weekly) or much shorter (every 6 hours). When the summary is returned, you’ll find a nicely laid out digest of the five or ten most important stories that you should read at that time. This includes which of your friends shared the story on Twitter and how many likes it got on Facebook.

It works very well. Each of the stories served up to me were the ones that I cared about (though it did miss a few major ones I would have also liked to read). But the best part is the end of the summary which reads “that’s it, you’re done!” How refreshing.

Techmeme, My6Sense, and even Google are trying different techniques when it comes to web curation, but Summify may have the most straightforward approach: these are the five to ten articles you should ready today.

These digests are served to you on the web and via email. And next quarter, there will be a mobile experience as well, we’re told.

The nature of social media is such that even the most devoted users miss more than half of what comes at them, so we started with the idea that you can’t and shouldn’t read everything — read just the good stuff which is typically what your friends and sources are talking about the most,” is how co-founder Mircea Paşoi explains the service.

Obviously, we had to put a lot effort in making sure it doesn’t become a popularity contest, and I think we’ve struck the right balance of highly relevant and diverse stories,” he continues.

To help with the cause, Summify has closed a new seed round of funding from Accel Partners, Rob Glaser, Stewart Butterfield, Steve Olechowski, and Canadian super angel Boris Wertz. The amount is undisclosed and follows a smaller round from August of last year.

The company is based on Vancouver, British Columbia.

Source: If You Only Have Time To Read 5 Stories A Day, Let Summify Pick Them

Awesome Augmented Reality App Could Save Librarians Hours

March 27th, 2011 03:30 admin View Comments

libraryshelf150.jpgIf you’ve ever worked in a library, you’re familiar with the drudgery of shelf reading. That’s the process of verifying that all the books on a shelf are in the right order, based on their call numbers. Books get out of order fairly easily, when they’re taken off the shelf and examined, for example, or when they’re just stuck in the wrong place.

Miami University’s Augmented Reality Research Group (MU ARRG! – that exclamation point, I confess, is my addition), led by Professor Bo Brinkman, has developed an Android app that could save librarians a lot of time and hassle. Using the Android’s camera, the app “reads” a bookshelf, and with an AR overlay, quickly flags those books that are misplaced. It will also point to the correct place on the bookshelf so the book can easily be re-shelved correctly.

The app can also aid with inventory, generating a report of what a library really has on its shelves.

There are a few drawbacks. Thin books, such as those found in the children’s section, would be difficult to tag. Also, this prototype only uses 16 bits on the tag, but Brinkman says the group is working on a version that would allow them to put around 72 bits on a tag, allowing the system to scale up to work with any library collection.

The app was developed by undergraduate research assistant Matt Hodges, and it will be demoed next month at the Association of College and Research Libraries 2011 conference.

via Reddit; photo credits: Flickr user Stewart Butterfield

If you’d like to learn more about how companies are using augmented reality for marketing in both desktop and mobile-based experiences, be sure to check out our latest premium report on the subject, Augmented Reality for Marketers and Developers.

Source: Awesome Augmented Reality App Could Save Librarians Hours

Flickr Head of Product Steps Down: Is It an Omen?

March 14th, 2011 03:26 admin View Comments

While Yahoo has said that it is “absolutely committed” to social picture sharing site Flickr, the same might not be said for the folks at the top of the company. Today, Flickr head of product Matthew Rothenberg announced that he would be “stepping away from Flickr,” the third such departure since Flickr co-founders Stewart Butterfield and Caterina Fake left in 2008.

Can Flickr hang on in the photo sharing realm or will other niche social photo sharing services and Facebook – the biggest photo sharing site on the Internet – take its place?

Rothenberg made the announcement on his Twitter account today, writing “Here goes: after 5 years, I will be stepping away from Flickr. Will miss working with such a talented, hard-working, and hard-drinking team.”

A number of products at Yahoo have been on shaky ground lately, with the company announcing last fall that it would shutter Delicious, MyBlogLog and Buzz. Now, as Facebook continues to dominate social photo sharing on the Web, and photo sharing apps like Instagram and PicPlz take off, confidence in Flickr’s ability to stay afloat could be waning as well.

Professional photographers may also be abandoning the site, as it has had troubles lately with censorship and even accidentally deleting thousands of photos and telling the owner they were gone forever.

Does Rothenberg’s departure spell serious trouble for Flickr? It could, but it doesn’t sound like it does for Rothenberg. “And yes, I know what I’m doing next,” he later tweeted, “but not announcing it just yet.”

Source: Flickr Head of Product Steps Down: Is It an Omen?

Flickr Burning As Yahoo Fiddles: Head Of Service Walks Away

March 14th, 2011 03:28 admin View Comments

When you ask Yahoo who is in charge of Flickr, they always point to one man: Matthew Rothenberg. Well, technically, there are people at Yahoo above him in charge of the group of products that Flickr is in (Applications Division). But it’s Rothenberg, as head of product, who they’ll tell you is leading the day to day.

Not anymore.

Rothenberg is out as head of product for Flickr. He tweeted the news himself earlier today. He had been on the team for five years, dating back to when original co-founder Stewart Butterfield and Caterina Fake were still running the ship. They left long ago, but Rothenberg stuck around.

One funny thing here is that we had been hearing for weeks that Rothenberg was leaving. But Yahoo kept denying it until the bitter end. But it’s hard to deny a public tweet, I guess.

Here’s their official statement:

Matthew Rothenberg has made the personal decision to move on to a new endeavor.  In the interim, Markus Spiering will be stepping in as head of product management. Flickr continues to have an innovative, energetic and creative leadership team that is dedicated to its community of members. Flickr remains a key priority for Yahoo! and we are fully committed to making it the best photo-sharing experience on the Web.

More to come.

Source: Flickr Burning As Yahoo Fiddles: Head Of Service Walks Away

Flickr Should Have Built Instagram. But They Didn’t. Here’s Why.

December 25th, 2010 12:00 admin View Comments

Back in June, we reported on the departure of Kellan Elliott-McCrea from Yahoo. While not hugely known outside the developer community, we had received several tips indicating just how important Elliott-McCrea was to the Flickr team, where his role as “Architect” was supposedly “vital” to the service. So who better to answer questions about Flickr than Elliott-McCrea (who is now the VP of Engineering for Etsy), right? And that’s exactly what he’s done on Quora.

Specifically, someone asked the question: Why did Flickr miss the mobile photo opportunity that Instagram and picplz are pursuing? The mobile photo space is red-hot right now with several players beyond the two mentioned vying to become a common app on smartphones. And one of them, Instagram, was able to gain over a million users in less than three months. So why wasn’t Flickr, with all the resources of Yahoo behind them, able to dominate this space first?

The simple answer, according to Elliot-McCrea, is “Innovator’s dilemma”. That is, if Flickr had wanted to create a successful service that leveraged Twitter’s social graph, they would have had to sacrifice their own login system for that of Twitter’s — which until more recently was considered very insecure. “The Yahoo! Paranoids would have shut us down in a heart beat,” Elliot-McCrea says.

This is clearly a pain point for Elliot-McCrea as he was instrumental in creating the OAuth standard that Twitter and many other service now use to allow for third-party link-ups. So Flickr and Twitter linking up via OAuth should have happened right away, right? Nope. According to Elliot-McCrea, it took about two years — something which he detailed here.

But even with that link-up in place, there were several other factors that stopped Flickr from creating an Instagram-like service or experience. “Additionally we fell into the trap of thinking like an incumbent, we spent 6 months off and on talking to Twitter about preferred product placement rather then just shipping the integration we had built,” Elliot-McCrea writes. “We also spent *years* debating whether or not to build iPhone apps/iPhone optimized sites or bet on a HTML5/multi-device strategy,” he continues.

He also specifically calls out one Yahoo executive, Marco Boerries, as being particularly responsible for Yahoo’s lack of leadership in the mobile space. “Several Flickr internal attempts to build and ship native mobile experiences (going back to 2006) were squashed relentlessly. The Flickr iPhone app that eventually shipped was built by CL (Boerries “Connected Life” team),” Elliot-McCrea notes.

That is very much in line with a story I heard a few years ago that Yahoo was “rushing” to get a native app done for Flickr to secure the hot iPhone photo-sharing space. Instead, they dragged their feet and it took another year or so to get it out there.

So is this Yahoo’s failure? Another Quora answer by Flickr co-founder Stewart Butterfield sheds a bit of light on that. While the question asked isn’t directly related to the Flickr/Instagram idea, it is related to innovation at Flickr: Would Flickr have been more innovative since their acquisition if it had been Google that acquired them?

Impossible to know, but my instinct is that it would have made no difference. The problem at Yahoo! was being starved for resources and I’m pretty sure that would have happened at Google too,” Butterfield writes.

Elliot-McCrea also cautions that it wasn’t entirely Yahoo’s fault for missing the opportunity â€” as most people did. He cites a service called Radar as one that was trying to do something similar to the current mobile photo-sharing craze but never caught on. I know Radar well, I glowingly wrote about the service back in January of 2009, and loved their yes — Flickr — integration a couple months later. But they did fail to catch on, and their parent, Tiny Pictures, was sold to Shutterfly for a small price later in 2009.

And going forward: “It would actually be incredibly straightforward to build something like an Instagram on top of Flickr using the API, especially if you could convince Flickr to release an API to “Beehive” the friend finder tool, which among other things, benefits from Y! backdoor deal with Facebook,” Elliot-McCrea says.

The problem now is that Yahoo seems much more interested in “sunsetting” services to reduce costs rather than actually building new things once again. And that really, really worries me with regard to Flickr. We’ve heard some unconfirmed whispers of outside parties interested in purchasing the photo-sharing service from Yahoo. Given some of the light Elliot-McCrea just shed on internal workings there, perhaps we can only hope there’s something to those rumors.

Source: Flickr Should Have Built Instagram. But They Didn’t. Here’s Why.