From Gimlet Media, I’m Alex Blumberg and this is Without Fail, the show where I talk with artists, athletes, entrepreneurs, visionaries of all kinds about their successes and their failures, and what they’ve learned from both.
So recently, I was walking home from work with my wife Nazanin, as I do from time to time, recording our conversation.
<<ALEX AND NAZ TAPE ON WORKING TOGETHER>>
ALEX: I’ll just start with a biggie. This whole situation.
NAZ: Which whole - which one?
Alex: Us, as in, the fact that we are married and running a business together. The business of Gimlet, the company bringing you this podcast, and many others. And if you’re joining this podcast for the first time, there’s this whole backstory here, which we’ve talked about on this podcast and other podcasts, but all you really need to know is that my wife and I, we work together. At this company. Gimlet. A company that my co-founder, Matt, and I started a couple years ago. And for Nazanin and I working together at a start-up. It’s a lot.
NAZ: Yeah. It’s I don’t know what to say about it. It’s a prison of our own making.
ALEX: (LAUGHS) A prison. Say more about that. How do you feel trapped?
NAZ: Umm. I’ve always taken a lot of, it’s always felt like such a relief in every other job I’ve ever had just to know that I could leave this tomorrow. I don’t have to work here. I have to work, but I’ll find another job. This is a bad time to try to record an interview.
ALEX: New York City.
NAZ: Constant sirens that won’t go away is a good metaphor for our lives.
ALEX: So you were saying you always felt like you can leave.
NAZ: I’ve always felt like I could leave. I didn’t realize what a freeing feeling that always was in my other jobs. Until now where I can’t, I could leave, but I still wouldn’t escape. (LAUGHS)
ALEX: It’s like being in the mafia.
NAZ: Yeah, like I’d really leave. I’d have to leave our family, which I don’t want to do.
ALEX: You can leave.
NAZ: But it’s a big deal.
ALEX: It would be like getting divorced if you left Gimlet.
NAZ: I would feel guilty leaving you. I don’t know. Just being like see ya, good luck.
ALEX: Oh god.
NAZ: I don’t know.
ALEX: I feel the same way; the same oppressive feelings of Gimlet, it dominates our lives and we got to bed and that’s what we talk about. It’s really annoying. And so I have to remind myself not to talk about Gimlet at times when I want to. But the flipside is that it’s comforting to be in it together.
NAZ: I feel the same way too. I get it. I feel like I get it all.
ALEX: It’s complicated though. Do you ever actually worry that it could lead to us, that it could damage our relationship.
NAZ: I can’t believe, this is the first conversation we are having on tape that I don’t think we’ve actually had at all in real life. (LAUGHS) Do I worry at all that it could damage our relationship? Yes. Absolutely. Yeah.
ALEX: Do you feel like it is now? Or do you just worry about it.
NAZ: No, I don’t feel like it is now.
ALEX: Does it feel unnatural what we’re doing? Being married and being in this thing.
NAZ: It weirdly doesn’t. Does it feel unnatural to you?
NAZ: That’s weird.
ALEX: Why is that you think?
NAZ: I don’t know. That part doesn’t, like people are always like oh my god you are married and work together I could never do that. The fact that we are married and work together it doesn’t feel unnatural.
ALEX: It makes sense.
NAZ: Yeah. It seems fine.
<<END NAZ/ALEX TAPE>>
ALEX: It doesn’t feel unnatural, but it is pretty unusual. I don’t know many people, in fact, I don’t think I know anyone personally, whose work life and home life are so bound together as mine and Nazanin’s. And that was just one of the reasons I wanted to today’s guest. Her name is Caterina Fake, and today, she runs a VC firm with her life partner. Earlier in her career she was an entrepreneur, and she founded a company with her then husband, called Flickr. And during our conversation, she had a lot of really interesting insights on work and family, and how those two realms can be merged.
But I also wanted to talk to Caterina because over the course of her life she’s followed a unique path. Today, she’s widely recognized as one of Silicon Valley’s leading visionaries. And I’m not just saying that. She actually won a visionary award -- that’s actually what it’s called -- from a leading Silicon Valley non-profit called the Silicon Valley Forum. But back when Caterina was just starting out, Silicon Valley royalty was the last place she expected to find herself:
Caterina: (Laughter) Well, you know I was, this is actually my lost career. I was a, I was a Renaissance Studies aficionado. I was planning on going into academia. I’m an accidental technologist. There were certain things that I love about the Internet that drew me to it and it wasn't the technology itself. I was, had two major interests I was interested in Renaissance literature and I was interested in Post-Modern Literature and I was reading a lot of Borges and then I got online and I started communicating with a bunch of Borges lovers in Aarhus Denmark. I was like this is amazing.
Alex: Borges is drew me to do dream to make it to the Internet
Caterina: But it makes sense think about it. I don't know if you ever read any Borges has but Borges anticipated the Internet in his writing. Right at the Library of Babel. It is internet thinking before the Internet. It's beautiful.
Alex: It's the least classic path to like sort of like being a tech entrepreneur that I've heard.
Caterina: Yes. Yeah exactly
Alex: It's like the farthest away from like computer science classes at Stanford that I think you can get.
ALEX: Her journey to Silicon Valley began after college. Aside from being a renaissance literature expert, Caterina was also a painter. And after college she moved to San Francisco and used her art background to get a job designing and building websites. This was when the first big tech boom was happening in San Francisco. And Caterina thrived. She ran design at an early web media startup, salon.com. She managed community forums at Netscape. And then, in 2002, she and her then husband, Stuart Butterfield decided to start their own company. A gaming company. They were living in Vancouver at the time, they had a small team, and their game was called Game Neverending, which was managing to attract a decent fan base. There was just one problem.
Caterina: We were broke. we had spent the I don't know. Hundred and fifty thousand dollars that we had raised. And we had two months worth of money with only one person getting paid because the rest of the team we were doing it for love. And the one guy who was getting paid was the guy who had three kids. So you think about this you read about like the Donner Party and how it was a single man who went first. And you know the married couples had hung on for a bit. And if you had children there's no way you're going to die. So it's a survival thing.
Caterina: He was the only guy getting paid and the rest of us eating cup noodles. And you know we were selling furniture to make payroll
Alex: Waiting to freeze to death. Metaphorically.
Alex: And so, Caterina and her team, decided they needed to do something drastic. Change direction completely. To something that would actually get them all paid. And that meant pursuing this other idea that they had. As part of the game, they’d developed this interface where players could create an inventory of objects that they would pick up. That inventory looked like this sort of shoebox of photos. You could drag those photos into group conversations for other people to see and you could annotate them. And you could share the photos with other people. And that was the idea that Caterina and the people on her team wanted to transition to. They thought that could be a more monetizable idea. But not everybody agreed.
Caterina: Everybody on the team had joined in order to build the game and they were really into the game and it took some time to convince the team to build this photo sharing thing which came out of left field for them. I think our team consisted of six people at that time and three of us had voted for building the photo sharing thing. And you know three of us had voted against. And so we basically bribed Eric the front end engineer to come over to our side. So we had to convince him and then it wasn't clear that we were going to be able to do this at all because we're rapidly running out of money. And then this thing happened which was we had not expected that we had applied a year before to the Canadian government for startup funding. So we had sent this in for the game. We got a rejection letter and we kind of wiped our hands and thought it was dead but then apparently we had checked a box that said re-submit for next year and we had received the grant. So we got this letter and I remember it was December 23. It was right before Christmas and we got this letter saying congratulations. We have given you and I don't remember the amount but I think it was approximately one hundred and seventy five thousand Canadian dollars. Which was huge. And that gave us about three months of runway. Of course they gave it to us for the game but we were working on this other thing which eventually became Flicker and that was what made it possible. So it was a Christmas present from the Canadian government.
Caterina: We were about to go under. I mean we we were almost dead. And so when this showed up and you know as entrepreneurs know it's just a matter of staying alive until you can get to the next level and nobody called it pivoting then.
Caterina: And it was not popular actually with the few investors that we did have.
Alex: What gave you the conviction that this was the direction you need to go though. Your team didn't want to do it. You guys I'm sure had gotten into it because you liked the game like that was the thing that you guys loved. Your investors loved it. What gave you the conviction that no we have to make this really difficult decision that nobody wants to make and go towards this other thing?
Caterina: In some ways it was that we didn't have any choice but also because there is something about this idea that seemed extremely compelling and somewhat inevitable. There were a bunch of forces that were coming together at the same time which were that more than half of cell phones were shipping with a camera for the first time more than half of US households were on broadband meaning they could download photographs which previously had been a very slow and painful experience. So we kind of felt as if there was a there was an inevitability to it and it was also embracing the technology in a way that hadn't previously existed.
Alex: So you do the pivot which wasn't called a pivot back then, you muddle around, what was the first moment where you're like oh my gosh this is working?
Caterina: It was growing so fast that we were constantly about to fall down. I remember there was this you know server software graph that we would have where you know this red line would be creeping up you have so much server activity that your server is about to collapse. And we literally had the cell phone number of the customs agent down at Burnaby who would tell us when a shipment of a Dell server would be coming from Austin, Texas or wherever Dell was based. You know the custom agents would call us and then we'd you know we'd run down to the border grab the server run to the Colo, plug it in, load up our software and then you would watch the red bar go to green again. And we just we just did that over and over and over again the thing was growing just faster than we could we could we could keep it. We could barely keep up with it.
ALEX: And you couldn't you literally we're running out of server capacity like
CATERINA: Constantly. Constantly. And I remember we would be would post on the blog sorry the site's going to be down for a half an hour and I would play there's that song I think from the 60s going to a go go, everybody, we’re going to.. and I change it to go into the Co Lo - everybody.
Caterina: And then we put that up and
Alex: and Colo?
Caterina: The colocation center. It's a collocations center. It's like the server farm. And so I would put that up if you like were going to the co-lo and plugging in new servers so bear with us while we have some downtime.
Alex: Wow. You couldn't just go and stock up on servers ?
Caterina: With what money? With what money? We could only buy one server at a time. And even then you know we were maxed out credit cards were so maxed up. You know we were going to capital one man we were trying really hard to stay above water. I took out. I had bought I had bought my first apartment and put a second mortgage on that thing. You know it was like betting the farm. I mean really.
Alex: So this is 2004, the company that they had started had now officially become Flickr and it was growing drastically. But that brought a whole new set of problems. Namely they needed money, lots more money to keep up with the growth. And for that they needed investors. But to get investors, they needed a bigger profile. They were this little startup in Vancouver off the radar from what was happening in Silicon Valley. But there was a place where they could go to get themselves on the radar, to up their profile, to meet investors. It was the biggest, most important conference in the tech world called PC Forum. It was run by this well known and respected angel investor named Esther Dyson. The team knew if they could get into that conference, they could rub elbows with the people who could keep their company afloat. The problem was they couldn’t actually afford to get into the conference. They didn’t have enough money to afford the admission price to get to the place where they could ask the people for money. So, they sent a personal note to Esther.
Caterina: And we wrote to her and we said we really want to come to a PC Forum but it'll cost us ten thousand dollars which we don't have but if our company is successful we promise we'll come back and bring extra people the following year and got an email back from Esther saying no. And about a half an hour later we got another e-mail from one of her staff members who said yes and we were I was astonished by this and you know we said well obviously we're going with the yes.
Caterina: Entrepreneurs hear no no no no no. When you hear a yes when you finally hear a yes you have to go after that yes as hard as you can. So we took the staff members yes and then Esther the next time she was in Vancouver I think she was serving on a board for a Vancouver company so she was often in Vancouver which is where we were based and she wanted to know who these people were who had somehow shoe-horned their way into her conference and so we sat down with her and had breakfast with her and she at the end of the meeting said can I invest.
Alex: How did that feel. It was just it was it exciting.
Caterina: Yeah I mean it's exhilarating, it's exhilarating it's it's amusement park rides exhilarating. It was it was big you feel it.
Alex: After that investment, Flickr took off. They got other notable investors on board—people like Reid Hoffman who founded LinkedIn—and their user base kept growing, doubling month over month. And like with any successful startup, it wasn’t long before other companies started knocking on their door, hoping to acquire them. One of those bigger companies was Yahoo, and in 2005 Yahoo reportedly offered $25 million to buy Flickr. And remember Caterina and her husband Stuart founded this company together. This offer. One of them wanted to do it. And one of them didn’t. How they resolved that and what it felt like, coming up after the break.
Welcome back to Without Fail and my conversation with Caterina Fake.
So, when we left off, Flickr was considering an offer from Yahoo to buy the company.
Alex: Was it an easy decision or was it something that you wrestled with like how did you go. How did that come about?
Caterina: Oh I was very much against the acquisition scene and Stewart was very much for the acquisition. So it was a it was a divided issue. To be honest.
Alex: How would how would that that division manifest in your guys day to day? Would you like. Was it sort of like was it just sort of like discussion.
Caterina: I mean we were I mean I think what happened was and Stuart is very good at this. He made a you know he kind of drew up a examples of or a demonstration of the good that would come from this potential acquisition. And honestly all of the investors were on his side. It was it was kind of me against everybody. And I remember we did a phone call and I was like you know Shutterfly is preparing to go public.
Caterina: And I said I don't see why we couldn't be on that same path. And I remember they laughed. The investors laughed like no this Flicker thing will never be like that.
Caterina: And I felt I was kind of I kind of felt outnumbered.
Alex: What did that feel like?
Caterina: Just kind of bad. But the other thing too is that I mean this was 2004. Yeah. And there was you know there was no money around. It was not a time of abundance. It was a time of scarcity and it seemed I think to most people that this was the most reasonable outcome.
Alex: And I think it also to me that story resonates so much with me because I feel like I sometimes find myself in very similar situations where I'm sort of like I have one view which is based on because I'm the artistic one or whatever and I don't have the computer science degree and I don't put together a PowerPoint with like matrices or decision points and stuff like that like I'm the one who's just like I don't know if it feels wrong or it feels right. And I find myself in arguments with people who can sort of like lay out like no this is the case for this reason this reason and this reason and. And it's just this really sort of scary position to be in because it feels like the wrong thing to do and you sort of want to argue it. But at the same time you're like well what if I'm wrong. And also like I don't know what I'm doing. You know? And now I'm probably projecting entirely into your situation but was any of that going on with you?
Caterina: I do think that over time I have I mean I often find myself in the same situation where I am kind of deeply intuitively against or for something and then I'm presented with the data
Alex: Right and if the data is unequivocal I will go with the data like I'm not like the data.
Caterina: I feel like they feel that this is right.
Alex: But a lot and but a lot of decisions we make as entrepreneurs in those exact gray areas where there isn't data you have like you have a couple..
Caterina: There's no data there's no data. The future is a blur. It's it's it's not you can't really see it. There are kind of shadows being cast forward from the future into the present. You can't see it. Yeah. But somehow I think you can feel it. And I'm with you on that. I think that there are a lot of decisions that you have to make in spite of the data and in spite of received wisdom and in spite of the fact that everybody is telling us that oh no no no photo sharing is all sewn up there is Shutterfly and Snapfish and there's no room for you because that box has been checked and it is all over and it's done. And fortunately we were naive and optimistic enough to ignore that.
Caterina: And a certain naivete and optimism and cluelessness and recklessness and fearlessness makes these companies happen.
Caterina: Now you hear you know the kind of AirBnBs of the world telling the same story. How dumb is that that you're going to put an air mattress on the floor of your apartment and like rent it to somebody. Like how weird?
Alex: But it was like so you ignore that and were initially very very successful. But that in a certain point when it comes to the acquisition by Yahoo that sort of that sort of thinking actually carries the day like ok, well we got this far. But like the board and Stewart were arguing like that as far as we're going to get. We should just like get out while the getting out is good basically. What were you like. You were worried just about the opportunity. Were you also worried about like what will it be like once we sell our company and now we're now we're working for somebody else?
Alex: But eventually you guys did sell. How was that?
Caterina: And I think that the received wisdom was that once you're in a big company it throttles you and you're no longer it's no longer that feeling of the Hollywood road movie scene where you're in a convertible and the wind is in your hair and you're riding along and making your startup happen and suddenly you just hit a roadblock and there's tollbooths and traffic and you can't move. And so that's that's sort of the received wisdom and that's how I feared it would be. And so being the irrepressible optimist that I see myself as. I decided that I was going to learn what I could there and now that I was going to have a good time.
ALEX: If the you of today were to go back to those like because this is the sort of your first big experience as like you know founding a company running a company and like sort of like having this big sort of pivotal decision to sell to Yahoo or not and so like you're pretty new at that point. Now you have you’re very seasoned, you're a VC. You've had many companies if you have today were to go back and have those conversations where like the board saying we should sell Stewart saying we should sell. Would you do anything differently. What would the you of today do in that situation.
Caterina: The me of today, I'm not sure it was possible for there to be another way. I mean I could I could have fought more fiercely for you know for my point of view. I'm not a big believer in these woulda coulda shoulda scenarios. The way I think about things is that that is what happened and I try to live forward and not backward and reflecting on what you have learned you can only bring into the future, you can't bring it into the past. So I'm always baffled by those questions people always ask that you know if you can go back to your teenage self and tell your teenage self something what would you tell her. I'm always baffled by this question to be honest because I just don't. I just my my you know I always think of that you know that Kierkegaard quote in that life can only be understood backwards but it can only be lived forwards.
Alex: Right. Yeah.
Caterina: And so, I'm not sure it serves you to continually question if you had done the right thing because you did what you did and it turned out the way it did and probably and possibly it could have had a better or a different or another outcome. But you don't know if that would have been worse.
Alex: Coming up after the break, I talk to Caterina about the thing that Nazanin and I talked about, about working with your spouse. And Caterina offers a very very compelling answer for why it doesn’t feel that unnatural. That’s after the break.
Alex: Welcome back to Without Fail and my conversation with Flicker co-founder and VC investor Caterina Fake.
Alex: I want to ask you about something that I think about a lot. Back when you started Flickr, you founded it with Stuart Butterfield, who was then your husband. My wife, she's not my co-founder but she's. She works at the company. She's on the executive team. She's like a big she's been a part of Gimlet since the very very beginning and, we walk to work together, we walk home together, we're in meetings together all the time like we're like talking about like the company is our life. And I'm always intrigued to talk to other people who've been sort of through that like for you and your relationship I don't know how was that for you? At the time.
Caterina: Well I don't know. I mean I I've always found it to be a question that men are not asked and women are for some reason. And you know I don't know how many times Stewart has been asked. So what was it like to work with your spouse.
Caterina: Because women are you know women are frequently framed as their success is not their own; their success is in relation to others.
Alex: Yes. And I want to be clear I'm asking purely as like sort of to trade notes because like the like for me it's like such a constant. Like my wife and I talk about it all the time. And it's exciting. Like there's like so many pros to it but I'm also just like we're always worried you know is there another shoe that's going drop. It's just it's just a big it's an interesting dynamic in our life. The fact that we're like sort of in the middle of this thing together.
Caterina: Once upon a time and in a pre-industrial era everybody's last name was Smith or Cooper and Cooper is a barrel maker and a Fletcher is an arrow maker and Smith is all kinds of Smiths but you know mainly blacksmiths and the Weaver family had a loom downstairs and your brother would weave and father would weave and that was the product right. You made you made bolts of fabric which you then took down to the marketplace.
Alex: And your last name was Weaver
Caterina: And your last name was Weaver. And I'm one of those people who spends a lot of time in thinking about the impact of technology on people and culture and our behavior and how it can help us become more human and live fulfilled lives full of meaning. One of the things that I think about a lot is how do you structure your life and your work in a way that makes you happy and thinking back to that time. There was a book that I read by Percival and Paul Goodman called Communitas and in it there was a graph of people's work and home life and there is this diagram that showed women and children were over on one side and then there was this gap and then on the other side was the workplace and that was where the men were. This book was written in the 60s and I think there was a few few women working but my experience actually after I had a baby mapped to this very strongly. And I felt that men's participation in the lives of their families and their children and women's participation in the work world were divided from each other and that if you had a kind of a life experience where everybody participated in living and the child rearing and the work altogether and it all fit together. I loved that. And so I thought a lot about that. I think part of the reason that I'm an entrepreneur honestly is that I can work for myself and design my work life in a way that I feel is very humane in a way that people many people's work life is not humane.
Alex: Yeah yeah.
Caterina: Being able to walk to work and you say you walk to work with your wife every day like that's tremendous. That's a tremendous gift to to to you and her and and your family.
Alex: Yeah and it's very nice. And I think the thing that happens sometimes with like especially with one person's on sort of this entrepreneur sort of thing it becomes can become so all consuming and when you're in it together like the downside is that you talk about is work. But the upside is that like you are actually sharing this experience together and you're sharing the burden of it and you're sharing the excitement of it. And like it's a pretty unique experience and it's hard to sometimes translate to sort of like outside people you can feel a little lonely within it. And when we're in it together just feels like we're just like we're together. It’s good. It brings us closer.
Caterina: I know I'm currently you know Yes VC I am doing with my life partner Jyri Engestrum too. And so this is not something that a lot of people kind of understand or appreciate. And they you know think that it's odd but honestly I think that it was the way that work was traditionally always done.
Alex: Right as as as almost always like throughout history family most businesses were family businesses. Most work was done collectively by the family unit. Yeah I think you're right. There's something about it that feels that so funny like I feel like throughout this interview. Your perspective as a student of 16th century literature is coming to bear. You have this very global view of like sort of like oh this is how people have organized themselves this is how families organise themselves. This is how work has been organized historically and we're in this little blip and things are changing quite a bit. But like you know if you look over the larger sweep of time what we think of as normal now was historically not very normal. And like actually being in the midst of your livelihood as a family as a family unit that's actually historically more normal probably. That's super interesting.
Caterina: Well the other thing is that there are pockets of this in the world. For example the Amish who are characterized as anti-technology are actually technology adopters in many ways. And they ride horses and buggies but they analyze, every technology there's some kind of period during which the technology is is being evaluated. You know like a five year period or something like this where they look at does it bring us closer to God and does it bring us closer to each other. And if it divides us we won't use it. And so it's a different way of looking at technology. You know they've kind of rejected cars which enable people to live farther away from each other and cell phones which they should really just ride up to somebody's house and talk to them instead but have adopted technologies such as solar. And it's not that they don't have websites but they distinguish between owning and using. And they will go to the public library and use the computers there and design their websites and whatnot and go online but will not have them in their house which I think is a very deliberate use of considered use of technology.
Caterina: And so there's there's bits of this I'm not sure. Yeah I wouldn't as a woman want to be part of the Amish culture I think there's fewer opportunities out there.
Alex: They haven’t figured everything out.
Caterina: Yeah there's there's there's certainly aspects of Amish life that I would be deeply reluctant to embrace. But there's other aspects of it which I think that we can take learnings from.
Alex: Yeah. So, I want to talk a little bit because you have such a such an interesting background in how you arrived at this. I'm interested in how you think about this question. You are now a VC you are in, sort of like you are almost by definition you're trying to parse out like who's going to be successful who's going to fail. What have you learned through like sort of funding companies and through building your own. What do you look for how do you try to answer that question for yourself?
Caterina: I've always been very interested in you know as you can tell from my prior comments about work life and what do the Amish do. I think a lot about you know the past moving from you know into the present and into the future. I think about that all the time. That's what I do. Honestly. What will happen? It's you know I read a lot of science fiction when I was a kid as well as Renaissance poetry. And I think about the past and I think about the future and I think about the present and I look at people's behavior and I kind of feel the tremors in the ground. And so when you when I looked back at the most successful investments that I had done they all had this feeling of find a parade and get in front of it. And when I look at companies that are out there and try to think about what does this mean to people and society and how people are behaving. And what troubles are are they having and what problems are they trying to solve and where is society and culture going. And where do they want to go. That's how we look at things.
Alex: Do you ever think what would have happened if you if you had stayed in academia.
Caterina: I worked out. I think I took the right path. (LAUGH)
That wraps up my conversation with Caterina Fake.
If you want to hear more from Caterina, this coming February, Caterina will be hosting a new podcast called Should This Exist? — it’s a collaboration between her, the business and news site Quartz, and the creators of the hit podcast Masters of Scale. Caterina will ask entrepreneurs about to release a radical new technology into the world to make the human case for their invention. She will ask them, how is it good for us? And she’ll also ask a question that is rarely asked in the beginning, what could possibly go wrong? Check out the Website ShouldThisExist-dot-com to learn more.
Without Fail is hosted by me and produced by Sarah Platt. It is edited by me, Nazanin Rafsanjani and Devon Taylor. Jarrett Floyd mixed this episode. Music by Bobby Lord.
If you like Without Fail, leave us a review! Tell your friends about it.
Thanks for listening.