Table of Contents:
- How a buried feature in Game Neverending became Flickr
- Why Caterina Flake greeted every new user on Flickr
- Know who you are, who you’re for, and what you stand for
- Reid Hoffman on creating — and then restricting — a connections game on LinkedIn
- Why Caterina Fake invested in Etsy — and why Reid didn’t
- How Etsy fostered connections between users
- Why Caterina Fake invested in Kickstarter
- Why Caterina Fake invested in Blue Bottle
- “What you tolerate is what you are."
Build a more human internet
CATERINA FAKE: You are the framer. You are the framer of the Constitution in this world that you are building. You are the Abraham in the series of begats.
REID HOFFMAN: That’s Caterina Fake. She’s the co-founder of Flickr, and arguably the Abraham of social media. Flickr begat a whole series of innovations that would shape the way we use social media.
Back in 2004, which is basically biblical times in Silicon Valley, Flickr was home to a tiny tribe of people who started sharing their photos online. Photo sharing begat the idea of “followers.” Followers begat activity feeds. Activity feeds begat more followers. And then bots pretending to be followers. It’s actually astonishing how many conventions of social media were begat by Flickr.
And when Caterina looks back through that long series of begats, and beholds her creation, what does she say?
And to anyone who lumps Flickr together with Facebook, Twitter or Instagram, she wants to make one thing clear: That was not what she was trying to beget.
That’s why I believe every founder of an online community has to shape the culture from day one, because the tone you set is the tone you’re gonna keep.
Maybe you don’t think you’re on an online community. Maybe you think you’re a platform or a marketplace or social media. Maybe you think you’re a commerce site with reviews, or a content site with comments. I have news for you: those are all online communities. And given the year we all had in 2017, we all have a lot to learn.
And I say this recognizing that no site or platform can 100 percent control what its users do — particularly when they run in the millions to billions. Some of them will run amok. Count on it. But that’s all the more reason to put guardrails in place, before it’s too late.
Those early users are a bit like a primordial amoeba — just moments before it evolves into a more advanced life form. Lightning strikes, and what crawls out of the muck is anybody’s guess.
What you can control, however, is the climate in which this microscopic community evolves. You can make it hospitable to good behavior or to bad behavior. You can get the troll-like creatures to shrivel up and die. Or you can let them grow to grotesque proportions and lord it over everyone.
One rule of scale: Whatever you are when you’re small gets amplified when you’re big. Take a really close look at what you are, the good and the bad.
And if there’s anyone who believes founders can and must shape their communities — it’s Caterina Fake. I wanted to talk to her about this, because she played a key role in shaping so many iconic companies that set the standard for what an online community could be. Her first company, Flickr, launched many of the conventions now common in social media. It’s hard to overstate the influence she has had.
She also played a role — as an investor, advisor, and board member — in shaping many other iconic online communities. Companies like Etsy, Kickstarter, and Stack Overflow, which expanded our very definition of what an online community could be. Her eagle eye for the seeds of communities that can scale have made her an impressive investor.
Caterina’s fascination with online communities began as a teenager in the 1980s. Back then, the internet was like a gathering of ham radio enthusiasts who were tuning in and out of each others’ conversations. Caterina had dabbled with computers and early chat rooms. But what hooked her was a long-distance connection around a shared passion.
FAKE: The real thing that got me interested in it was I was really into Borges.
Jorge Luis Borges, the Argentine writer, who in many ways predicted the internet.
HOFFMAN: If you have no familiarity with Borges, you’re not alone. In fact, you’re in the majority. It’s the Borges fans who are more likely to feel alone, which is exactly what drew Caterina to a primitive chat room of fellow fans.
FAKE: I found a group of scholars in Denmark who were Borges scholars online. And then I contacted them. And this was over BBSs, or Waves. I don’t even remember how we were getting in touch with each other. But this was back kind of pre-web, and we were having all of these fascinating conversations across the world. And this to me just was astonishing. I was, you know, this New Jersey kid in Reagan America, and you know, a bit of an oddball, interested in all these peculiar things in a football and cheerleading town; it was a revelation. It was amazing.
All of these people who were intelligent, interesting, fascinating, liked the same things that I did that didn’t live in Morris County, New Jersey were suddenly people that I could be in touch with.
HOFFMAN: Think about it: She felt more at home online than she did in her actual hometown. This is the power of an online community writ small.
Notice how she can’t even remember which tool she used for communication. To Caterina, the tool is an afterthought. What sticks out in her memory is the conversation, the connection she forged with her fellow users. And this deep-seated appreciation for these very human factors is one of the things that sets Caterina apart from so many other entrepreneurs and investors.
A lot of founders — especially the tech entrepreneurs — tend to think of the tool they want to build, as opposed to the community. The primary paradigm tends to be: Here is the tool. It’s a hammer, it’s a screwdriver. I give it to users to do a specific thing. And then the the secondary thing tends to be: Here is the interface. How can I modify it to make that behavior addictive?
You can see it in the craze in Silicon Valley for A vs. B testing. When a programmer says, “See, when the button is red and jiggles a little bit, you click on it a lot more!”
But Caterina doesn’t fight for clicks — she fights to create that homey feeling she first experienced in the Borges message room. The connection between people. That’s what she hopes to scale. She has a passion for human interaction that’s not exactly typical in Silicon Valley.
So how did Caterina, the Borges fanatic and liberal arts graduate, wind up in Silicon Valley? It was a logistical error, actually. She got waylaid on a trip to the Himalayas.
FAKE: I was on my way to climb mountains in Nepal. I was on a mountaineering expedition and decided to stop off and see my sister. And then my trip got canceled. So, I stayed in my sister’s spare bedroom. This was back when San Francisco, actually, you could have a spare bedroom.
HOFFMAN: For those of you who do not live in San Francisco, the cost of living has gone way up. A spare bedroom is hard to find.
FAKE: And then at some point, she said, “You know, have you ever thought of getting a job?”
I was an artist who moved here from New York. My resume did not appeal to employers, which was fine, because actually, I never really sought employment. You know, this kind of probably a very common thing with entrepreneurs, is that I distinguished myself and my unemployability.
And as a result, had to find my own way and build my own companies. And this is something that you can do if you have initiative, if you have freedom, and if you also happen to show up in San Francisco in 1994.
HOFFMAN: Back then, Silicon Valley was a Wild West of job opportunities. Caterina hopped from one startup job to the next, picking up new skills along the way. She worked for a CD-ROM company, a research lab. All the while she held fast to one enduring truth: People loved to connect online.
How a buried feature in Game Neverending became Flickr
Her first entrepreneurial venture was an multi-user game called Game Neverending. If that name rings a bell, congratulations — you’re clearly listening to this show carefully. A previous guest, Slack’s Stewart Butterfield worked on the very same game. You might recall how that early venture fared.
FAKE: It did not take off. And we went through that miserable, miserable march, where you just go from investor meeting, to investor meeting, to investor meeting, and you just, just pile up rejections. It’s a miserable march. I have been on that march. That march is not fun.
HOFFMAN: You can hear all about that miserable march on the Masters of Scale episode called “The Big Pivot.” I want to focus, instead, on its happy ending. There was a buried feature in the game that let players share photos and leave notes for one another. A conversation emerged. A community formed. And that photo sharing system would eventually form the foundation of Flickr, a service that did nothing short of rewrite the way people interacted online.
Remember that bolt of lightning that strikes an amoeba and creates a new lifeform? This was it. And it would grow faster than anyone could have predicted.
FAKE: Bill Gross at Idea Lab did this research where he looked at all of the different companies, 200, 300 companies that he had invested in over his career, and tried to figure out what it was that made them so successful. Was it execution? Was it the market? Was it their financing? Was it their team? What was it? And it turned out that it was their timing, and that they had found a parade and gotten in front of it.
They had found larger societal and cultural movements that were happening. And if you look at when we started Flickr, we started it in 2003. More than 50 percent of all cameras were shipping with digital phones. And nobody had any idea where to put these photographs. And so, Flickr was born at exactly the right moment.
Why Caterina Flake greeted every new user on Flickr
HOFFMAN: So their timing was impeccable. But it wasn’t the only secret to their success. Caterina did more than just get users to click the “upload a photo” button. She shaped their conversation. From day one, she volunteered to greet each and every new user on Flickr, personally.
HOFFMAN: These early interactions set the tone for everything that will follow. And in every kind of community — from a company to an online photo-sharing site — culture cements very quickly. It’s critical to get in front of it. But that’s not to say it’s easy.
FAKE: In the very beginning of Flickr, each of us — you know, we were a team of five or six people — were posting an average of 50 times a day in communication with our user base. It was kind of like a remarkable amount of communication directly with the users.
FAKE: If you do that, and you do it well, and you do it, it will carry through. And then 500 people will be behaving the same way. And then 5,000 people will be behaving that same way. And then eventually, 500,000 people will be behaving that same way.
HOFFMAN: Culture sticks. It’s hard to appreciate just how much it sticks. The tone you set from day one — from the first greeting — is the tone you keep. Caterina understood this instinctively. And as counterintuitive as it may sound, she knew it was worth her time as a founder to get it right.
What really astonishes her is how quickly founders try to distance themselves from the community they’re trying to build.
FAKE: It’s very rare these days for there to be direct communication between companies and their user base.
In fact, they’re seen as a customer service problem, eating up customer service hours. And actually, most companies actually try to prevent you from getting in touch with them. You know, they just can’t spend all of the time to kind of nurture each individual person.
HOFFMAN: Caterina understood instinctively not only the importance of cultivating a community, but also the complexity. Have no doubt: Community-building is complex, and it’s filled with traps. It’s not sufficient to simply say “hello” to new users and send them on their merry way. Remember, you’re building a civilization. You have to lead by example. But — it will only take you so far. Sometimes you have to assert your values at the risk of losing users. And you may be surprised how quickly users test your values.
Know who you are, who you’re for, and what you stand for
Flickr was tested very early and very vocally by its users. And this shaped Caterina’s fundamental approach to online communities: You have to know who you are, who you’re for, and what you stand for.
FAKE: A very interesting case came up very early on in Flickr, which is that a great number of the users were from the United Arab Emirates. And at the same time, Britney Spears was ascendant with her bare midriff outfits. These two things were incompatible. You know, the Muslim community did not like the bare midriffs photographs that were all over Flickr. And we had to make a decision. And we came down on the side of the bare midriff. We were like, the bare midriff is okay here. And that is the decision that we are going to, from on high, are going to make. And many of the community members went away.
HOFFMAN: This bare midriff issue may sound trivial. In fact, decisions like these are the lifeblood of your community. It isn’t that any one decision is the right decision. You can imagine other, flourishing communities coming down against the bare midriff. But you have to decide.
This is what I mean by creating a hospitable climate for certain types of behavior. Every founder of an online community must grapple with it daily. If you’re not grappling with it — you’re living with a false sense of neutrality. You’re actually allowing your most extreme users to make the decision for you. Because in these cases, a non-decision is also a decision.
Reid Hoffman on creating — and then restricting — a connections game on LinkedIn
There was just one problem: As users got a bit too hooked on the game — and inevitably, some of them would — then that connection score would signify nothing. It would represent a pointless tally of how many hands a user could shake a day. In fact, I remember one person on LinkedIn who amassed 32,000 connections. There’s no way he knew 32,000 people. So we capped the score at 500. After that, the score remained fixed and you got stuck with a boring old “plus” sign. 500-plus. Game over.
That said, some small percentage of people started putting their total number of connections in their headline because they wanted to keep playing the game. C’est la vie.
The point is, you need to imagine those interactions in vivid detail. You need a hypothesis for how the community should behave, so you can model the behavior you want to see.
And as you see that good behavior emerge, you’ll have clarity about the way forward. You can set the guardrails that keep interactions from veering off course in the often unpredictable ways that humans can.
Why Caterina Fake invested in Etsy — and why Reid didn’t
Caterina always had a clear idea of how people should engage. And this helped Flickr grow quickly and civilly into a platform with remarkably few trolls among a remarkably large user base. In March 2005 — less than a year after their pivot — Flickr sold to Yahoo. And Caterina found herself, for the first time, with both money and time to pursue what she loved. And what she loved — as much as community and art and Borges — was entrepreneurs. She started a parallel career of angel investing, in early stage companies — especially ones that had all the signs of a flourishing, fledgling community.
FAKE: A very strong motivating force in all of the work that I have done has been building a more human internet, building a very thoughtful people-oriented internet. If you look at the companies that I subsequently invested after Flickr, they have a lot of things in common. Etsy is a very strong example of that. It’s a very community-oriented product. It’s very person to person. It’s very human.
HOFFMAN: Etsy. The marketplace for small scale artisans selling homemade goods, from quirky ceramic mugs to whimsical fuzzy socks. The company went public in 2015 with a valuation of roughly $3.5 billion. Revenue in 2016 was north of $350 million. But in 2005? It was a different picture. They had around 2,000 users, a few staff members, and a dream.
FAKE: Some of the people that I’ve invested in, including, for example, Rob Kalin of Etsy, just had a story. They had nothing. And Rob had had no prior work experience at all. Zero. He was a college student.
HOFFMAN: A college student who wanted to create a marketplace for home-knitted hats. It was not an obvious win. But Caterina saw something that others — including me — missed.
FAKE: Etsy, to me, was a — I loved it immediately. And I actually brought it to you. I don’t know if you remember.
HOFFMAN: I do remember. It was one of my regrets.
FAKE: And your, your comment was, “So, let me understand this. This is a bunch of women knitting sweaters and then putting them into a marketplace.” And I was like, correct. Not only is it that, but it’s a movement. It’s this sort of rebellion against big box retail, and people want their soap to come from a grandmother in Peoria. They do. It’s a kind of a way of life.
At the time, it just—it kind of seemed ludicrous. Like really, people are making tassels in their bedroom? And—
FAKE: And this is gonna be a big business? How?
HOFFMAN: I told Caterina that I regretted passing on Etsy, and I do. What I missed about it was this:
It was pitched as handmade goods. Literally handmade goods are the opposite of scale. I mean I can hire a bunch of people maybe to make handmade goods, then it’s kind of a factory and “how many can they make? How do you grow your business? How scalable is that?
It’s a little bit like are you creating the corner bookstore or are you creating Amazon, right? Are you creating a gourmet chocolatier which is really cool or are you creating Godiva or Nestle, right? I was kind of like well that’s cool but it isn’t really a good investment.
My mistake was not realizing that once you get to a network connected world that what business people call TAM, total addressable market, isn’t significantly higher than you think. Because like, for example, I was going “well, is it just like the gourmet chocolate store in San Francisco?” It was like no, no, because it’s an online marketplace, it’s the gourmet chocolate store in every city, each different, and you get a piece of them. And I would have gone “oh, actually an early stage investment in that might actually be reasonable.”
So part of the mistake was, when she presented to me it was before it was venture invested, right? I could have put in money essentially as an angel. I don’t know what Etsy’s valuation is today, two billion dollars, something like that. That would have been a, probably 50X investment, oops. Maybe 20X, oops.
But this latent potential is what Caterina saw from the start. I asked her about it…
HOFFMAN: When you were looking at Etsy as part of this, what made you see that in this marketplace, there was something that could sufficiently scale into a breadth of humanity? What made you look at Etsy and go, this isn’t just a knick knacks thing. But actually in fact it is a handmade or a custom-made revolution.
FAKE: One of the things that was missed was that it was a principally female marketplace, right? And at the time, it was 2005, 2006. There were a few examples of that. But Etsy was also a market that appealed to a certain kind of semi-countercultural group.
HOFFMAN: Caterina called this one right, because she was looking for different markers than I was. She saw in Etsy the start of a counter-cultural movement. A movement that placed value on the home-made, the artisanal, the local. It was another parade she could get in front of.
FAKE: There is definitely something to be said for positioning yourself as outside of something, or as counter to something. It gives you a stronger sense of identity. I stand for this, and I’m not that. I’m not big box retail. I’m not Walmart. I’m not Target. I’m handmade soaps by grandmas in Peoria.
HOFFMAN: Etsy also showed all the signs of a community that could thrive. When Caterina took a close look at those first 2,000 sellers, what she saw was not just willing merchants, but passionate community members.
FAKE: They were very passionate. It had forums, in which all of the people were mutually supporting each other.
They were forming their own sales groups. You could see that the activity in it pointed to all these really interesting behaviors that sort of surprised you, that you didn’t expect. You know, this unbelievable level of collaboration. Aren’t these people competitive? No, they were collaborating with each other. It was this sort of amazing kind of strange thing.
How Etsy fostered connections between users
HOFFMAN: Caterina served as Etsy’s board chair for eight years, and was intimately involved in growing the company. Her eye for community offered foundational insights. She knew that for Etsy to thrive, the founders had to include the community in decision-making.
These weren’t trolls but rather, passionately devoted community members who had a real stake in what happened inside their civilization. And that’s an important distinction. It’s critical to recognize the difference between members who care about the health of the community, and those who only care about themselves. When you recognize these members, you see the early signs of scale.
And this comes back to the theory: What you are when you’re small, gets amplified when you grow. The Etsy leadership knew they had to water these seeds of collaboration — by including the community in key decisions and fostering the connections between them.
In the early days, these decisions helped Etsy stay true to its home-spun culture. And they also played to an advantage Etsy had in the commerce world. Rather than competing, the sellers were collaborating. Another sign that this commerce-driven community would have the self-propelling power to go the distance.
FAKE: In the very beginning, a lot of the customers of Etsy were actually also the sellers, so they were buying from each other, and it was this positive feedback loop. It was constantly feeding into itself, the happy seller becomes the happy buyer, and then invites their friends, and then gradually expands in this fruitful way. If you’re building a movement, a community, a culture, it kind of just happens organically.
It’s rare, and very few people can pull it off, but you know it when you see it, and I think customers know it when they see it too.
Why Caterina Fake invested in Kickstarter
HOFFMAN: Caterina clearly knows it when she sees it. In 2009, she made another bet that had other investors scratching their heads.
FAKE: I invested in Kickstarter when it was a PowerPoint deck. They had nothing.
HOFFMAN: Kickstarter. The crowd-funding platform that lets fans fund projects by artists and makers. It sounded unlikely at the time, but it would go on to fund nearly 150,000 projects, to the tune of 3.5 billion dollars pledged. What initially drew Caterina was what this community of communities could mean to the world.
FAKE: I grew up wanting to be a writer or an artist, and nobody in my family thought that that was a viable career choice for me. They were like, “No, you’ll be a starving artist. You won’t be able to support yourself.” And so I lived with that, and of course I tried. I went to art school. I was living on like $9 an hour working as a painter’s assistant.
And I struggled as an artist. And then, to hear about these companies, Etsy and Kickstarter, as these ways in which these people who have this inspired creativity, would actually have the possibility of making their work possible, that’s huge. It’s a dream. It’s blue sky. It’s a magical outcome. I think that was what ended up getting me involved.
HOFFMAN: Caterina would go on to found and invest in many companies, drawing impressive returns. Her latest venture is an investment fund — with her partner Jyri Engestrom — called Yes Ventures. They’ll specialize in seed and pre-seed investments. And yes, you can predict that cultivating communities, broadly defined, will be at the center of what they do.
Why Caterina Fake invested in Blue Bottle
And her investments that interest me the most are the ones I never would have made myself — because they’re just too far outside the area of my expertise. I asked her about the one that’s the farthest out for me. It was another investment in a passionate community — but of a totally different sort.
HOFFMAN: What was your vision of the possibility in Blue Bottle? How did you see it as something that could interestingly scale into being a great product and a great company?
FAKE: You could see that there was this incredibly strong culture, and a very strong seed had been planted. It had that very human element. It had that mystique. It had a creation myth. It had this eccentric location in this alley, and there was something about it that you felt was true, that was real, that was not contrived, was not grafted on marketing speak and inauthenticity. It was real.
HOFFMAN: Blue Bottle was valued at over $700 million, with 50 locations worldwide. And the customers? They’re as passionate as ever. So once again, you can see how the earliest interactions with users, or customers, sets the tone for the community as it grows. Whether it’s a physical store or a virtual community, the same principles apply. And when something goes awry, you can place a pretty good bet that what went wrong — went wrong early on.
“What you tolerate is what you are.”
FAKE: This is a very controversial position, because a lot of my colleagues in building these kind of like social platforms don’t believe this. But I do. Which is that, I believe that your moral compass, the things that you believe, and these systems are so big that they are trying to encompass all. And I think that that’s why they’re failing. And I think that one of the things that Heather Champ, who is a community manager, the first community manager on Flickr says, one thing she says repeatedly is that what you tolerate is what you are. So, if you tolerate white supremacists on your platform, you’re a platform for white supremacists. And you just have to accept that. And that unless you draw the lines, unless you say what is and is not acceptable on your platform, it just becomes a disaster.
HOFFMAN: I generally agree with Caterina. In the case of Flickr, they tolerated the bare midriff and they welcomed the Britney Spears fans. But they drew a bright red line at white supremacists.
And the truth is, every founder of an online community tends to draw lines like this — in their heads. They just tend to get a bit sheepish about stating them aloud — and with good reason.
There is a standard way of thinking about this in Silicon Valley, which argues that large online platforms are inherently objective, and do not have values of their own. I think this is incorrect. All platforms are in fact value-laden. The question for a very large platform then becomes: How do you create a set of values that has a kind of a shared objectivity?
For example, on the Facebook side, they say, “Well, what people click en masse demonstrates their actual preferences, what they actually like. And so, we have a democratic platform that promotes what people click on. It’s a reflection of actual behavior and preferences.”
You might reply: “Well, if you let that run wild, we would all be clicking on the seven deadly sins all the time.” Whether it’s nude pictures, hate speech, a photo of a baby cheetah sitting on your new Maserati — and that’s real, by the way. Look it up on Rich Kids of Instagram, if you don’t believe me. Anyway, the list goes on. We know that those are our triggers, and we don’t want to be collectively reduced to our basest instincts. We don’t want to become a quivering mass of the seven deadly sins.
On the other hand, when people say, “Well, you know, Facebook should have human editors!” I think, “Oh? Human editors? And they’ll decide what the 2 billion people who use Facebook today should and should not see? Who are these trusted supervisors who will oversee Facebook’s ministry of truth?”
So it’s a tricky question. I’m not sure I know where to strike the balance between editorial anarchy and Orwellian control. The question has actually dogged the creators of online communities since the invention of the internet. But if we reframe the question as, “How do we invigorate good behavior, so that it drowns out the bad and the ugly behavior?” Then the solutions come into view.
First, invigorate the good behavior from day one. Make that the foundation of your community. At the very least, you’ll have a wall between your first users and the barbarians at the gate.
Second, never tell yourself the battle for civility has been won. It hasn’t. It never will be. The barbarians are coming. But if you arm your community with good tools, good manners, and good examples from day one, you’ll be ready.
I’m Reid Hoffman. Thank you for listening.