Emerging Technology

BEST OF THE WEB: How Yahoo! ruined Flickr – and its entire internet strategy

Patrick Stafford /

Yahoo! hasn’t had the best week: Or, for that matter, the best year. Just a few days ago former chief executive Scott Thompson resigned in a scandal about over-embellishing his credentials, saying he had a computer science degree when he didn’t.

And over the past few years, its shares have plummeted more than 30%. Page views have shrunk as well – this internet giant is becoming smaller by the day.

Over at Gizmodo, there’s an interesting explanation as to why photo-sharing site Flickr is at the centre of this decline.

Back in 2008, Flickr was at the top of its game. It called itself “almost certainly the best online photo management and sharing application in the world”. And it was – it was very good. It enabled people to share their high quality photos very easily and people loved it. It was incredibly popular, with millions of users.

But it’s hard to say that now. Instagram and Facebook have taken over in the photo sharing department. But why?

Yahoo! picked up the company in 2005, after co-founders Stewart Butterfield and Caterina Fake – who are married – spent a significant amount of time crafting a genuinely good product. It immediately gained a lot of popularity.

After Yahoo! bought it, it increased storage limits almost immediately, giving the little start-up some scale.

“Yahoo! was a good fit initially,” Fake told the publication. “We had offers from various companies, including Google, and I honestly think that Yahoo! was a great steward. It was a great steward of the brand. It was allowed to flourish. In the subsequent two years after the acquisition, Flickr blossomed.”

Then it all changed. Immediately the business was straddled by engineering requirements it had to meet. Human resources were spent working these deadlines, which the publication argues “created an untenable cycle that actively hampered innovation”.

“The Flickr team was forced to focus on integration, not innovation.”

The story goes on to describe some specific problems the company had, including a massive issue with its login structure, and some anger from long-term Yahoo! users who didn’t care for mishandled change. And when Yahoo! wanted customer care to move to its existing departments, former community head Heather Champ said the writing was on the wall.

“I came out of that meeting knowing I couldn’t continue in my role. I didn’t want to stay and watch them dismantle everything we’d worked so hard to build.”

Slowly, Facebook took over. And even though Flickr attempted to join the App Store revolution, there was no luck there either.

“Among other problems, it wouldn’t let you upload several photos at once, you had to go in and manually submit them one at a time. It was downscaling photos to 450 x 600, murdering image quality.”

“Users had to log in via Safari rather than in the app itself. It was striping EXIF data from photos as they uploaded—precisely the kind of thing Flickr’s photo nerds wanted to see.”

“It somehow managed to get Flickr’s two key strengths—photo sharing and storage—completely wrong.”

Flickr was such a huge opportunity – but now it’s gone forever. It faces competition from not just Facebook and Instagram, but sharing services such as Google Drive and DropBox.

And with the continuing decline of Yahoo!, Flickr’s founders most likely can’t help but wonder how it might have gone differently.

How Goldman Sachs ruined the Facebook IPO

Facebook is set to float this week, making Mark Zuckerberg and a horde of others very, very rich.

But there’s an interesting story in how Goldman Sachs is involved in all of this –and how it managed to blow a golden opportunity.

Morgan Stanley and Goldman Sachs have been two of the most popular firms when it comes to handling tech IPOs. But in the last few years, according to Business Insider, there’s been a shift in the balance of power.

It all has to do with relationships, which most tech IPOs are still based on. And it actually goes back to the LinkedIn IPO – and how Goldman started sucking up to the wrong people.

“Like most companies, LinkedIn held what is known as a ‘bake-off’ before formally choosing its underwriters. Specifically, it invited bankers from several Wall Street firms to pitch its executives and board and make a case about why LinkedIn should choose their firms to manage the IPO.”

“Both Morgan and Goldman made strong pitches at the bake-off, a person who sat through them says. But Morgan included in its pitch-book a list of all the work Morgan had already done for LinkedIn, for free, while [Goldman Sachs’] Scott Stanford was buttering up the wrong guy and Goldman’s bigger hitters were off, focused on other deals.”

“And the relationship Morgan built through all that free work all but sealed the deal.”

This is a fascinating story about a missed opportunity in one of the biggest deals of the year.

…and speaking of Facebook’s IPO

It’s happening in just a couple of days. Are you up to speed with just how much money the social network stands to make?

Over at The Guardian there’s a handy piece of animation about Facebook’s history and how exactly it grew to be worth $US100 billion.

If you’re not familiar with the story, now’s the time to brush up.

“I’m not sure I know what AirPlay is”

AirPlay is a technology Apple has included in its devices that allows them to share music and other media wirelessly. Its used in iPhones, so users can play music over standalone speakers, and is behind the tech that allows users to stream film and television shows over an iOS device to an Apple TV.

And the chief executive of one of the largest cable companies in America hasn’t heard of it.

“I’m not sure I know what AirPlay is,” Time Warner Cable chief executive Glenn Britt told the New York Times, although he added he is a big Apple customer.

It’s an interesting admission for someone who’s at the top of the cable industry. AirPlay is a disruptive technology because it allows people to watch content on their television using a variety of means – that includes pirated video as well.

It’s more than surprising that a chief executive in the same industry hasn’t heard of it.

“Today we want to be on every screen. Today it’s a little bit clunky to get programming from the internet onto the TV — not so hard to get it on your iPad.”

“What’s hard is the plumbing, what wires do you connect, what device do you use. So the current Apple TV, the little thing, the hockey puck, really doesn’t do anything to help enable you to get internet material on your TV.”

This isn’t a long story, but it’s worth a read – even if it’s just to read the astonishing quote in question.

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Patrick Stafford

Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.

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