As told to Michael Fitzgerald

Stewart Butterfield asked Caterina Fake to start a company with him before he asked her to marry him. Butterfield and Fake, both Web design consultants who had been involved with start-ups, started their company in 2002, two weeks after they got back from their honeymoon. That company would morph into the photo-sharing site Flickr, which would quickly become one of the most popular sites on the Web, a cultural phenomenon, and--because of its design, technology, and user-generated content--a defining member of the new generation of Web 2.0 start-ups. Last year, the 37-year-old Fake, the 33-year-old Butterfield, and their seven employees all moved from Vancouver, British Columbia, to Silicon Valley after Yahoo (NASDAQ:YHOO) bought Flickr for a reported $30 million.

Fake: We started the company to build a game called Game Neverending, which was really conceived as a context for social interactions.

Butterfield: The game was about making and trading, buying and selling, interacting with other people. We had become kind of addicted to Neopets, even though it was intended for children, and we really liked the idea of making something whimsical for adults.

Fake: If the business were a play, Act One is: Woohoo, bright and bushy-tailed. We're going to make something great! Act Two is: We're six months behind on back-end development. We're trying to raise venture capital. We're trying to figure out what furniture we should sell to make payroll.

In November 2003, Stewart and I went to the State of Play conference, which was in New York. And Stewart got sick on the plane. I knew he was really sick because the movie was Freaky Friday, and I look over at one point, and Stewart's got tears streaming down his face. And I'm like, what the…

"We greeted every person who came to the site. All of these people are your potential evangelists. You need to show those people love."

Butterfield: It was touching! [Laughter]

Fake: And then he got up and went to the bathroom and got sick. And we arrived, and we're racing down the Van Wyck Expressway in bumper-to-bumper traffic, and he made the cabby pull over and just rolled down his window and threw up. And then we arrived at the hotel, and the doorman at the hotel opens up the door to the car, and he throws up again, right on the carpet. It was terrible. And then he stays up all night. I fall asleep. I wake up and he's like, "I've got a great idea. Let's make a photo-sharing site." And that was the impetus.

Butterfield: The front end of the game was done. You could drag objects around, pick things up. You could manage inventory, send instant messages to people, drag items onto people's names to give them things. The new idea was to replace all the objects of the game with photos, so you have this real-time interaction around photos.

Fake: We only had money for one last shot, and we knew we could deploy Flickr faster than the game. But first, we had to convince the team. They were there to build a game.

Butterfield: December 8th, we had the vote about whether to do Flickr. And it came down to a tie. So I had to go talk to Eric Costello, who did all the front-end code, and guilt him into voting with me. Then we revoted, and Eric voted for Flickr, kind of reluctantly.

Fake: It was still dire straits. I think the only person getting paid was the guy who had three kids. Then right before Christmas, we got the letter from Telefilm [a Canadian small-business agency that gives film, music, and new media companies loans that are repaid only if the project becomes profitable], telling us we had a loan for up to $450,000 [Canadian]. We had applied for it the year before and had been rejected. We just resubmitted it, just like, "What the hell." If we'd received the loan in late October, we would have stuck with the game and Flickr would not exist.

Butterfield: Our friend Ben came up with the name Flickr.

Fake: Ben was saying, "Oh, but it's like, you know, like, kind of like if you see the flickering of the metaverse…" And we're like, "flicker!" We tried to get "flicker" with an e, but the guy who had the Web domain wasn't willing to give it up.

Butterfield: In February 2004, we launched Flickr.

Fake: George Oates [a Flickr employee] and I would spend 24 hours, seven days a week, greeting every single person who came to the site. We introduced them to people, we chatted with them. This is a social product. People are putting things they love--photographs of their whole lives--into it. All of these people are your potential evangelists. You need to show those people love.

We did all kinds of dumb, stupid things. But our unofficial slogan was, "F--- up fast." Make mistakes rapidly, learn from them, and move past them.

Butterfield: By June, July, Flickr was growing and starting to look really interesting. And that's when we first came down to meet with Yahoo. We had a meeting in the morning with Yahoo and in the afternoon with Google.

Fake: It was actually a terrible meeting with Yahoo. We did a terrible demo, we found a major bug right in the middle of it. We didn't feel the magic. And then they called us back six months later and were like, "We wanna talk again." That time we felt the magic.

Yahoo shared the vision, agreed on the direction and how we were going to run the business, and that was the main thing. I've learned a lot here--the kind of experience that you can get here is not something you get outside a big company.

Butterfield: We used to call our guy at Dell and put stuff on our credit card and get the servers three days later and then go install them. Here, there's a hardware review committee and a procurement process, and it takes weeks and weeks.

Fake: There are all these factors that went into the decision to sell. One of the first investors was Stewart's friend. He was extremely ill, and he stood to make a lot of money if we sold the company.

Butterfield: You never know when an Asian currency crisis is going to happen or 9/11 again or the market tanks or whatever. So we definitely believed that Flickr had a lot of potential life, but at the same time, it was a great result for all the people who had agreed to invest and who trusted us. We shouldn't have sold when we did, but you don't know that until after the fact. And it's not like we have some tragic life story. We're on the cover of Time magazine and the cover of Newsweek. Reid Hoffman [an early investor in Flickr] said, "You can always do it again. And the amount of money that you'll make on this will change your life in a way that…"

Fake: "…you'll be able to be entrepreneurs the rest of your lives."

Butterfield: Our friend Ben came up with the name Flickr.

Fake: Ben was saying, "Oh, but it's like, you know, like, kind of like if you see the flickering of the metaverse…" And we're like, "flicker!" We tried to get "flicker" with an e, but the guy who had the Web domain wasn't willing to give it up.

Butterfield: In February 2004, we launched Flickr.

Fake: George Oates [a Flickr employee] and I would spend 24 hours, seven days a week, greeting every single person who came to the site. We introduced them to people, we chatted with them. This is a social product. People are putting things they love--photographs of their whole lives--into it. All of these people are your potential evangelists. You need to show those people love.

We did all kinds of dumb, stupid things. But our unofficial slogan was, "F--- up fast." Make mistakes rapidly, learn from them, and move past them.

Butterfield: By June, July, Flickr was growing and starting to look really interesting. And that's when we first came down to meet with Yahoo. We had a meeting in the morning with Yahoo and in the afternoon with Google.

Fake: It was actually a terrible meeting with Yahoo. We did a terrible demo, we found a major bug right in the middle of it. We didn't feel the magic. And then they called us back six months later and were like, "We wanna talk again." That time we felt the magic.

Yahoo shared the vision, agreed on the direction and how we were going to run the business, and that was the main thing. I've learned a lot here--the kind of experience that you can get here is not something you get outside a big company.

Butterfield: We used to call our guy at Dell and put stuff on our credit card and get the servers three days later and then go install them. Here, there's a hardware review committee and a procurement process, and it takes weeks and weeks.

Fake: There are all these factors that went into the decision to sell. One of the first investors was Stewart's friend. He was extremely ill, and he stood to make a lot of money if we sold the company.

Butterfield: You never know when an Asian currency crisis is going to happen or 9/11 again or the market tanks or whatever. So we definitely believed that Flickr had a lot of potential life, but at the same time, it was a great result for all the people who had agreed to invest and who trusted us. We shouldn't have sold when we did, but you don't know that until after the fact. And it's not like we have some tragic life story. We're on the cover of Time magazine and the cover of Newsweek. Reid Hoffman [an early investor in Flickr] said, "You can always do it again. And the amount of money that you'll make on this will change your life in a way that…"

Fake: "…you'll be able to be entrepreneurs the rest of your lives."