Market Overview

A Snapshot of Caterina Fake, Co-Founder of Flickr and Hunch

Hello and welcome to Zing Talk, where Benzinga brings you the biggest names and brightest minds from New York City to Silicon Valley.

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Today our guest is Caterina Fake, the co-founder of the popular photo-sharing service Flickr as well as a great new “collective intelligence” site known as Hunch. How ya doing today Caterina?

Great, I'm doing good.

Could you start off by telling us how you got your start in the business world?

I was a late-comer to the business world. I was an English major at Vasser and I did a lot of odd jobs. I did a job as a production assistant on Seinfeld, I worked at a Dive Shop in Arkansas, I was briefly an investment banker and I worked as a painter's assistant. Those were the things I did until I was twenty seven or twenty eight years old, until I discovered the web. It was the thing I loved to do - the love was immediate. I started working in web development and design in 1994 at Organic Online - an early web development agency. The most notable part of my career began in 2002 when I was co-founder of a company called Ludicorp which was formed to build a game and which eventually after we ran out of money, developed a photo sharing site called Flickr.

How did Flickr evolve from that when you started producing a game?

Well we ran out of cash, we were completely broke. We had about three months of money to keep going, and we knew we couldn't finish the game. It was really a hail mary into the end zone - it was entirely different than the game we were developing.

Flickr is commonly hailed as being one of the first websites to truly usher in the “Web 2.0” movement, integrating social networking and “crowd-sourcing” tools that automatically feature popular content. What really sparked the ideas for those features?

All of these features accumulated over time - they were in the air. I think social networking was adopted from Friendster - it's the most frequently cited influence on most social networking sites out there. It had started even earlier with Six Degrees in the web 1.0 era. The ability to take photographs from your camera and the ubiquity of broadband - these added to social networking and add that to the idea that people were getting used to creating profiles online, publishing content online, blogging was reaching its crescendo - there were a lot of things that led to Flickr's genesis.

This really just took on a mind of its own as you went through it?

It was a juggernaut. It was quite remarkable when we launched it. It wasn't always that way - we started with a chat client, where you dragged and dropped photos into conversations - that was not particularly successful. Within 6 months we had found the formula that made Flickr grow - sometimes 200% month over month.

Looking back on this time, while you were going through all this and building Flickr, did you ever foresee these new features taking such an enormous role in today's web? Or is the progression a little bit shocking?

We felt we were onto something - you have a sense of that when you're building these things. The tagging, ability to post your content on other websites, permission structures with viewing content online - you have a sense that these are interesting and important features. And you have to remember, in 2003-2004 there wasn't a lot of competition. We were just emerging from the nuclear winter of 2001-2004 - consumer internet was very out of fashion, unlike today where there are startups everywhere. The crop of companies coming out of that era, there were very few people building internet sites.

After Flickr was acquired by Yahoo! (NASDAQ: YHOO), you joined the team in Technology Development group for a few years. As a former member of the Yahoo! team, what do you make of the current situation, with so many questioning its direction? Just recently another three executives left the company.

I do think that they really lost their product focus. All technology companies are product companies. It has to be about the product. I feel the organization never really rocked products. You look at a company like Apple (NASDAQ: AAPL), Apple is a product-oriented company, and wildly successful for that reason. It's too bad. I think that the industry is much weaker because Yahoo! is no longer a strong player.

As someone who has obviously had a lot of success on the web, what do you think Yahoo! needs to do to regain its edge?

It has had so many chances, so many chances. I am not sure - I hope they do. I had a great experience when I was at Yahoo! and I wish everyone well.

Now I want to talk to you about your newest venture, Hunch.com, which you recently co-founded with Chris Dixon. Could you tell our listeners a little bit about the idea behind Hunch and what separates it from other websites out there?

Hunch is an ambitious site - we're trying to map every person on the internet to every item on the internet and their affinity for this item. It will figure out what people will like and what they will not like, give them search results, recommendations, etc.

For example you arrive to a city you've never been before - say Dallas. None of your friends have been there recently, so you'd want to book a hotel, you want to find restaurants, and events that you may like, shops you want to go to - maybe even people you want to meet. Hunch should be able to suggest things for you.

I've gotta say, I love the site. I spent a good half hour yesterday just clicking through the questions. It's quite addictive. After answering 100 or so questions it had already predicted my favorite type of pizza, my favorite humor websites, the web browsers I use and my main sources of news. Could you shed some light on how the whole thing works?

Well, it's a very algorithmically driven site. We have a whole cadre of MIT PhDs in machine learning. There's a lot of computer science behind what we do. We deal with huge datasets. We have personal data as well as data on objects/items/services/books/poets, any kind of thing under the sun. We are mapping everything on the back end. It's a very complex and complicated business doing it.

Okay, what do you think is the most useful question that Hunch asks in determining a variety of recommendations?

It seems obvious, but male versus female. If we know if you're male or female that's actually the strongest signal. And then demographic information. Hunch builds a case profile that includes beliefs and values, aesthetics, political beliefs and all sorts of preferences in that regard. We hope the questions are fun and engaging, we generally find that to be the case, most people answer 150 questions. We have about 60 million questions answered at this point, probably moving towards 70.

Now I have to imagine this data is amazingly useful to businesses and advertisers for marketing purposes

Well yes, I think that the idea is that we're building a case profile of you, which you then own and can take to different websites. You can take it then to Target (NYSE: TGT), Neiman Marcus, Saks Fifth Avenue or what have you. You should be able to filter the internet through this lens, which should save you a great deal of time and energy.

Hunch was founded in 2009, which, to say the least, wasn't the easiest time to start a business. What was it like starting Hunch in one of the most difficult economic climates in a generation? Did it change the way you approach entrepreneurship at all?

Well having done that previously in 2002, I have to say it's a great time - everybody is running for cover, there are incredible opportunities out there for people who are not. There are more engineers out there - there are more people to hire. It's harder to raise money, but I feel constraints create creativity. Creativity flourishes under constraints. Flickr was built for less than $750,000. I think constraints can be your friend. Working in a climate when people are frightened or less confident is a good time to start a company.

Do you have any advice to give fellow entrepreneurs out there, like in the general approach?

I think the thing holding people back is that they hold off, they plan, they don't go for it. Whether it's just you or just you and your co-founder - you should just start building things. This is why building things for the web is so gratifying and so fulfilling - you get an immediate response. You build something in an afternoon and you put it up overnight and it has the possibility of reaching millions of people.

You've already won just a laundry list of awards and honors, ranging from inclusion in BusinessWeek's Best Leaders of 2005 to Fast Company's Fast 50 to even the Time 100. You've really bucked the idea that no one takes you seriously until you're 40 haven't you?

Well I did most of that in my 30s that is referred to there. But I just turned 40 and I look forward to more. I don't feel there's a lot of ageism in technology - we have the world's youngest billionaire. The world's youngest billonaires are usually in tech. I think I came late to it - I didn't find the thing I wanted to do until my late 20s.

For all the aspiring youth out there, what can you tell them is the key to achieving success early on?

I read a blog post about how working on the right thing is more important than working hard. Not to say that working hard is wrong - I work hard and many entrepreneurs work hard. But finding the right problem to work on is very important. We didn't know what we were going to build when we built Hunch. We picked, however, a great problem - search. People needing to find things. How do you solve problems for people? Search, as you can see from Google (NASDAQ: GOOG) is a great business. You don't know how it'll be solved, but keep working at it.

Alright, we're giving you the loudspeaker now to break any news or sound off on anything going on in the world you think is not getting enough attention or being sufficiently reported.

I think in the world of technology - I think that people can see the things that are going on in our industry and our world, which was not the case when I started out in the mid 90s, but even when I started Flickr. There was not a lot of opportunity to get word out. In some ways, I think it has become more difficult to get word out just because there is so much competition and because there is so much entrenched behavior. People go to Google habitually, people go to Facebook habitually. It's hard for a new-comer to break through. Now, I am a die-hard believer that two kids in a garage are creating “The Thing” that will destroy Google, or Facebook or Ebay (NASDAQ: EBAY). That is why working in technology is so gratifying and fun.

Okay, now that we've got the hard questions out of the way we have a few fun ones. What was your first, and what was your worst job?

My first job - at three or four years old, my mother told me I had to create a business for myself, so that you can earn a living somehow. So I started selling my drawing to her and my grandparents. I had a very small, but a very dedicated market. They all say $0.25 in the corner.

My last job is basically what I am doing now.

My worst job ever was working on Wall Street. No question about it. I really disliked working on Wall Street. The people who worked on Wall Street were interested in making money. They weren't interested in making widgets, websites, cars, working as a nurse, building a community. Those things were absent from people working in finance. People in finance were making money - and I just didn't like that.

Do you have a hero?

I am not much of a hero worshipper.

Have you ever had a “life-changing” moment?

I think my life changed most radically when my daughter was born. Bringing another person into the world, realizing that the universe, which you previously thought revolved around you, does not is a life-changing experience.

Tell us something about yourself that no one's asked you about in an interview.

Well, no one has ever asked me who my favorite poet is.

Well, who is your favorite poet?

My favorite poet is Wallace Stevens.

This last one is Benzinga's trademark question: What is the best, and what is the worst investment decision that you've ever made?

The best investment decision that I've ever made was investing in startups rather than in Wall Street. Many of the worst investment decisions I've ever made is investing in the public markets. I don't want to spend the time learning about the public markets. I am on the low end of the consumer hierarchy in the public markets. I understand venture, I understand startups. I think moving from investing in public markets to investing in private companies was my best investment decision.

Thanks Caterina. That'll do it for this episode of Zing Talk. Be sure to check out www.benzinga.com for market-moving news, actionable trading ideas and insightful commentary.

Posted-In: Benzinga Podcast Caterina Fake Flickr Hunch YahooMovers & Shakers General

 

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