I was working on my own startup at the same time Flickr was created; the funding climate then was brutal. Flickr was expensive to run, and growing like crazy. This was before things like AWS, so scaling was much harder. Selling to a large company with the ability to scale it easily may have been their only option. So I doubt it was a matter of cashing out.
It's amazing to me how quickly people can take the last decade or so for granted. Back when I started my first company, we had to buy a PBX and even install our own mail servers. Uphill, in the snow, both ways!!