Twitch: Emmett Shear

In 2011, when Emmett Shear pivoted the live streaming service Justin.tv into the video game platform Twitch, people warned him that gaming was just a niche. But unlike his first two ventures, video games were something Emmett instinctively understood: he and his co-founder Justin Kan had been playing them together since they were kids. Emmett built a user base on Twitch by asking streamers exactly what they wanted and giving it to them: revenue opportunities, streamer fan clubs, customizable emoji. As it grew, Twitch attracted users from the darker corners of the web, but Emmett believes the site is first and foremost a way for people to come together and build supportive communities. In 2014, Emmett sold Twitch to Amazon for just under a billion dollars but stayed on as the CEO. Today, the platform has 31 million daily visitors who stream trillions of minutes of live video every year. Not bad for a niche business. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

  Our presenting sponsor today is Anthropic, the team behind Claude. Every founder on this show started with a hard question. Not the marketing plan, the 2 a.m. kind. Is this idea any good? Am I the one to build it? Should I quit my job? Anthropic got built the same way. A public benefit corporation founded on one hard question. How do we make sure AI goes well for people? So they asked over 100,000 people their hopes and their fears and are publishing what they find, even the uncomfortable parts. Me? I've got my own hard question about AI. Here it is. If everyone has access to something that can help them write the business plan,

• 0:46Guy Raz?

  build the prototype, analyze the market, maybe even come up with the idea, what separates the people who actually build something from everyone else? I don't have a clean answer yet, so I've been sitting with it with Claude. There's hope in hard questions. Ask yours at claude.ai/hibt. We get support from U.S. Bank. A question I love asking founders. What's the one decision you almost didn't make? The one that changed everything? Because it's never the obvious stuff. It's never, I decided to start a company. It's the small, boring, Tuesday afternoon decision you barely remember making until you realize it's the reason everything after it either worked or didn't.

• 1:32Guy Raz?

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• 2:14Guy Raz?

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• 2:58Guy Raz?

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• 3:40Guy Raz?

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• 4:23Guy Raz?

  And it reminds me a little bit of the founders I talked to on this show, because the best ones obsess over things their customers will never see. Tiny details, invisible improvements, relentless iteration. And not because anyone's watching, but because it makes the product better. That's what the mobile brand does. It engineers fuel the same way great founders engineer their products. Mobile Supreme Plus Premium Gas helps keep engines three times cleaner, which can mean better performance and improved gas mileage. It's for people who care about what's under the hood, even if they never see it. Three times cleaner compared to mobile regular gas in port-fuel-injected engines. Actual results may vary.

• 5:07Guy Raz?

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• 5:15Guy Raz?

  There are lots of people who are saying, who would want to watch other people play video games on the internet? I mean, how many times do people say that to you?

• 5:24Speaker 01

  I mean, I used to get that question every interview. Then usually what I would do, actually, is I'd ask them, well, first of all, just tell me, what, do you watch TV? Oh, well, what do you watch? Oh, you like watching the NFL? You like watching football? Oh, interesting. Well, it turns out people who like video games do the same thing.

• 5:40Guy Raz?

  Right.

• 5:40Speaker 01

  But the best news fundamentally is, I don't need them to understand it, because I got it, and the people watching got it, the people streaming got it. For the people who loved it, it was self-evident. The instant they saw it, like, they were like, oh, this is, yes, this is what I want. This is what I've been waiting for.

• 6:04Guy Raz?

  Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 6:15Guy Raz?

  I'm Guy Raz, and on the show today, how Emmett Shear turned a 24/7 livestream of his best friend into a billion-dollar gaming platform, Twitch.

• 6:35Guy Raz?

  What if I told you you could make money, a lot of money, by taking fruit and arranging it like a flower bouquet? You might say, wait, doesn't edible arrangements already do that? And the answer is yes. Except, back in the early 1990s, before edible arrangements was created, the founder, Tariq Farid, would tell people about this idea. And most people thought it was ridiculous. I mean, who would want a bunch of shish kebab-like fruit skewers delivered to their door? Well, it turns out, a lot of people. Edible arrangements would go on to become a half a billion-dollar business. It took Tariq Farid's foresight to see that opportunity.

• 7:18Guy Raz?

  Now, say I had another idea about 15 years ago around video games. My idea: to create a website where you could watch other people play video games. You might think that's a cool idea, but very few people at the time would have agreed. A wise investor might have asked, who's going to spend hours watching other people play video games? Well, we know the rest of this story, because today, video gaming is a multi-billion-dollar industry, and watching other people play is a huge part of that. And Emmett Shear, the co-founder of Twitch, had the foresight to build a streaming platform for those fans.

• 8:01Guy Raz?

  Last year, gamers and viewers spent one trillion minutes on Twitch. And today, it's the biggest streaming video game platform in the world, with over 30 million daily users. But the idea for Twitch was, at the time, a gamble. Emmett and his co-founders had already built a livestream website called Justin TV, and they were starting to turn it into a social media platform. But a small, tiny number of users happened to be gamers. And Emmett believed that the future of the business depended on serving them. So in 2011, he started focusing the platform on gaming and changed the name to Twitch. The bet paid off.

• 8:44Guy Raz?

  Just three years later, Twitch was bought by Amazon for almost $1 billion. And Emmett is still running the company. Now Twitch has had its share of controversy, but Emmett has always seen it as a community, warts and all, which we'll talk about. Emmett grew up in Seattle and his best childhood friend was actually the person he would eventually create a multimillion dollar business with, Justin Khan.

• 9:14Speaker 01

  We actually grew up three blocks away from each other, like right, almost next door. But I didn't know him until I was eight, when I switched to Evergreen Elementary, where he was already attending. And yeah, we met in second grade and became friends almost immediately.

• 9:31Guy Raz?

  That's amazing, because you would later go on to found huge companies together. And you were like, met in second grade.

• 9:40Speaker 01

  And we were reasonably close, maybe not in second grade, but certainly by third, fourth, fifth grade, we'd be over at each other's houses pretty often. I think I went over to his house more often. He had two brothers, and more importantly, he had a video game system, which my parents would not buy for me.

• 10:00Guy Raz?

  What did he have?

• 10:02Speaker 01

  If I recall correctly, it was a Super Nintendo, when we were, and then later other stuff. So his house was the superior house for hanging out, because there was more video games.

• 10:12Guy Raz?

  Got it. Okay. So you guys went to the same elementary school into middle school, and then you went to different high schools, and then you go off to college, to Yale, and he does too. You both go to the same university, your childhood friend, like your closest friend in elementary and middle school, and then you both end up at Yale.

• 10:31Speaker 01

  Yeah.

• 10:31Guy Raz?

  Was that just coincidental?

• 10:34Speaker 01

  Totally coincidental. No planning there at all. Actually, Justin had been planning to go to Wharton, and kind of changed his mind at the last minute. And so that was real happenstance. And in college, I think, you know, I certainly reconnected with Justin in a deeper way. One of the really interesting things was I found I liked His dorm just had a collection of people that I really connected with more deeply, more easily. And so I just wound up spending a ton of time with Justin, but also with all of his roommates. I was kind of an unofficial, you know, fifth member of the room.

• 11:08Guy Raz?

  And when you got to college, did you, I know you studied computer science at Yale, did you have a sense of what you thought you were gonna do? Like, did you figure, okay, you know, I'll get this degree and then I'll go work for a tech company?

• 11:19Speaker 01

  I actually purposely didn't take any computer science because I loved programming already. Like, I enjoyed programming a lot as a hobby. And I kind of didn't want to ruin it by making it a profession or a career. And then it got to be junior year, and I'd spent freshman and sophomore year taking entirely electives, whatever I wanted. And I was like, I have nothing that resembles a major. What am I going to take, you know, another, you know, 11 courses in in the next two years? And I was like, well, I know I'm good at programming. I know it's something I love. Maybe I'll try taking computer science. And I almost immediately was like, oh, this is silly. Like, I'm, not only am I, do I,

• 12:02Speaker 01

  am I good at this, but like, I really, really enjoy the pro, like, the work is fun. And so then I just took, you know, took 80% computer science for the next two years and finished the major.

• 12:12Guy Raz?

  And while you were an undergraduate, and you sort of got in with Justin's kind of cohort, there was a guy named Matt Fong. And from what I understand, at a certain point in college, he, he said to you and Justin, maybe others, hey, we should start a business. Was, is that, is that what happened?

• 12:33Speaker 01

  Yeah, Matt, Matt's a really good friend. He was one of Justin's roommates freshman year. Matt is my most like, finance oriented of my friends. And I don't mean that he's interested in money. I mean, like, he looks at the entire world in terms of like, what's underpriced and what's overpriced, and what should I be doing based on that today? And he looked around in college, and he said, specifically, not that we should start a company, but we have better access to intellectual capital today than we ever will in the future at a lower opportunity cost. And so we should take advantage of that. Which means we should start a company.

• 13:05Guy Raz?

  Hmm. I mean, he's just any, I mean, did he have an idea of what?

• 13:09Speaker 01

  Nope.

• 13:09Guy Raz?

  No. Wow. So when he was like a 20-year-old at Yale, he was like, hey, we're at Yale. We're surrounded by all these like world-class professors. We have access to these amazing libraries and, and resources and they're just part of our tuition. Let's use it and start a business.

• 13:25Speaker 01

  Yeah.

• 13:26Guy Raz?

  Wow. I mean, just to think about that, and this is like 2004, 2005, like that's, that's pretty, you know, pretty prescient.

• 13:34Speaker 01

  Oh, absolutely. I mean, Matt is, Matt's always been a few years ahead of everyone else, I think.

• 13:39Guy Raz?

  And while you were at college, hanging out with these guys, presumably you all played a lot of video games together.

• 13:45Speaker 01

  Oh, yeah. A lot.

• 13:46Guy Raz?

  What was your game?

• 13:48Speaker 01

  During college, mostly World of Warcraft, which came out my freshman year and is, you know, incredible game that I, I played for the duration of college.

• 13:56Guy Raz?

  Sure.

• 13:57Speaker 01

  And then had to get, Justin, when we were starting our company right before we graduated, he, he had a real talk conversation with me, which I think was very fair, which is, Matt, I think you're going to have to choose the video game or the startup, which, which, which is it? Which is it? World of Warcraft or the startup? And I, I chose the startup and, and quit World of Warcraft, which I think, I think he was right.

• 14:13Guy Raz?

  All right. So Matt had this idea that you guys should, should start a company while you're in college. And what was the next step? It was like, okay, let's start a company. Yes, that sounds great. What should we, what should we do?

• 14:24Speaker 01

  So Gmail had just come out, you know, summer of 2004. So like, right before our senior year, I think we all looked at Gmail and we said, this is the future of like software. Like, everything's going to be like Gmail in the future. I think we could all just see that. It's, it's, it was like, uh, like having desktop software, but better. And what we did was, we're like, oh, well Gmail's missing a calendar. Like, there should be a, like Outlook has a calendar. There should be a calendar that goes with a email client. And so we, we just started building it because that seemed like the right thing to do. And I look back at it and there are so many things wrong with the thought process we were going through there.

• 15:04Speaker 01

  We didn't know who we were building it for. We didn't use calendars. We didn't talk to anyone who used a calendar. We really didn't have any idea what would make a good calendar. We weren't heavy calendar users.

• 15:15Guy Raz?

  Yeah.

• 15:16Speaker 01

  And so there's a lot of reasons why I don't think we were going to be successful. But the thing we did that was super important is we just kept grinding on it. We kept working and trying things, even though it was clearly not working.

• 15:30Guy Raz?

  OK, so you saw in Gmail this kind of new thing. You knew, you realized that this was going to be the next thing. And so a calendar integration would be cool. And just out of curiosity, was the idea that you all had, like, let's build this calendar? And I think you guys called it Kiko, right?

• 15:50Speaker 01

  That's right.

• 15:50Guy Raz?

  What did you think the problem people had was that you were solving?

• 15:55Speaker 01

  Their calendar isn't on the Internet, and it would be better if it was on the Internet. I mean, the biggest thing that Google Calendar does and that Calendly does is it lets you run collaborative joint calendars with anyone around the world without having to be on the same Exchange server, the way that Outlook requires. And that was the big win. Basically, we built Google Calendar roughly a year before Google Calendar was released.

• 16:17Guy Raz?

  And it was going to be a sort of a software company, but the idea was, let's start with a calendar. Was the idea that you guys had, was it sort of like, let's build it and then Google will buy it from us?

• 16:27Speaker 01

  Oh, no, not really. I don't think we were that sophisticated. It was more like, we wanted to do a startup. We didn't really know what that meant or how to go about it. We saw this, like, missing piece of the universe. Like, there is a mail application that runs on the Internet. There should be a calendar application that runs on the Internet. Let's go make that. And we just made our own separate calendar application-

• 16:51Guy Raz?

  I got you.

• 16:52Speaker 01

  -that worked like Gmail. And if you'd asked me what was our long-range plan, I actually think, if I recall, we were going to sell advertising based on the better targeting data of knowing what events were open in your schedule, what times were open for you at night. And you'd be able to opt in, basically, to like, oh, like, are you interested in finding something for Friday night? Like, click here to search right from your calendar for cool events you could go to. Which, there's a bunch of reasons why it's a colossally terrible way to monetize a calendar, which I did not realize at the time, because I- Wasn't a calendar user, but I'm pretty sure that was our plan.

• 17:34Guy Raz?

  Got it. Okay. So while you were at building this and students at Yale and presumably like doing your coursework, you hear about this new thing called Y Combinator, which was headed up by Paul Graham and was one of the really kind of early influential incubators and is now, of course, world famous. And you applied for to be part of Y Combinator, I guess, which they would give you a little bit of money and some support. And what was the, I mean, this was the product that you were, you were pitching them, this calendar product?

• 18:11Speaker 01

  Yeah, I'd been a, I'd been a Paul Graham, I don't know, almost like a Paul Graham fanboy through college. I'd been reading his essays. I loved his writing. When I heard like, oh, man, he's doing a incubator, this is perfect. This guy's really smart. He's had a successful startup before. And we had no idea how we'd like, how to raise money or like what we would do. We were going to start the company. And what that actually meant in terms of doing things was just, other than make a product and put it on the internet, we weren't really sure. And so it seemed like this, it was this, what an amazing positive lucky coincidence that this thing exists now. So we applied. And now we applied with Kegel Calendar, the

• 18:52Speaker 01

  thing we were building. The original YC was heavy on like, show us a demo. And interviews are now 10 minutes. At the time, you got 40 minutes per interview.

• 19:01Guy Raz?

  What do you remember about the interview? Was it, I mean, Paul Graham sort of is famous for asking like, well, what's your monetization strategy? And, you know, and how, but he also has an incredible instinct, obviously.

• 19:14Speaker 01

  Right.

• 19:14Guy Raz?

  Were you getting hard questions? Or did they seem encouraging?

• 19:20Speaker 01

  The YC interview always goes kind of the same. It's funny, even then, you had more time, but it's always the same thing, which is, what is it you do again? Oh, how are you going to get customers? Could this be big?

• 19:30Guy Raz?

  Yeah.

• 19:31Speaker 01

  Oh, yeah. How are you going to make money? Like, how will this make money eventually? And they're not looking to see that you have the right answer, because there is no right answer. And I think one thing YC really deeply knows is that it's going to change. But Do you, have you thought about this? Do you have an answer? Does your answer make sense, at least in theory? And then how do you respond to being challenged? I think what YC is looking for is people who can communicate clearly. But most of all, people who, when they're challenged, they neither rebel nor acquiesce. And I think that's one of the most important traits in startup founders, actually.

• 20:05Guy Raz?

  And you guys actually get accepted to this program. You get into Y Combinator, which I guess was in Cambridge, Massachusetts at the time. And so you and Justin are working on this thing. And I guess at the end of your time there, were you able to get some real investment?

• 20:23Speaker 01

  Yeah. We managed to convince two of Paul's friends who'd worked with him at Yahoo. We convinced them to invest in us and give us, I don't know, like between the two of them, I think like $100,000, which is enough to keep running the business for a year, effectively.

• 20:39Guy Raz?

  So as you were working on Kiko Calendar, at what point did you have like something you could actually launch and put out into the world? Because you started in 2005 or 2004. When was it ready for people to test it out and try it?

• 20:55Speaker 01

  We started working on it during college, sort of at the early part of 2005. We didn't really start working until we graduated and like, you know, could do it full time. We probably launched it three or four months later, something like that.

• 21:08Guy Raz?

  And how did you make people aware of it in the fall of 2005? I mean, most people are still on dial-up at that point.

• 21:15Speaker 01

  We got coverage on TechCrunch. Which was sort of getting started around that time and was basically known for doing startup coverage. We'd try to get other press sometimes. But honestly, that's a really good question that we would have. The answer is mostly we didn't. Mostly, we didn't get very many users. I think in the year and a half we used it, we had 90,000 people sign up for an account, which, you know, isn't tiny, but over a year and a half on the internet, it's actually not that many. And most of them just obviously didn't keep using it. And I think we had some good core instincts on how to design a calendar that worked. The problem was, we didn't have any instincts about...

• 21:59Speaker 01

  Finding an actual customer who might want it.

• 22:01Guy Raz?

  Yeah. Yeah, you didn't, you didn't fully understand like the user acquisition side, right? Because that's that, I mean, building it's hard, but getting people to adopt and use it is arguably harder.

• 22:12Speaker 01

  I would say even, yes, we kind of imagined what we thought people who use calendars were like, and then tried to solve that imaginary person's problem.

• 22:20Guy Raz?

  Yeah.

• 22:20Speaker 01

  But at no point did we go talk to actual calendar users.

• 22:24Guy Raz?

  Huh.

• 22:24Speaker 01

  But fundamentally, we were completely right. Gmail should have a calendar. Well, it turns out Google built the, did the falling off a log, obvious thing, and created Google Calendar. Of course, they were going to create Google Calendar.

• 22:36Guy Raz?

  Right. At what point did you come to the conclusion, did you and Justin come to the conclusion that it was not viable? This was not going to, this was not going to become a sustainable business?

• 22:46Speaker 01

  About two months after Google Calendar came out, we finally admitted to ourselves, we have no ideas for how to make our calendar better than Google Calendar.

• 22:54Guy Raz?

  Right.

• 22:55Speaker 01

  And Google has a massive, massive engineering, distribution, resource, everything, brand advantage over us. And we, we don't even have any ideas for how to make our thing better.

• 23:09Speaker 01

  And we're way behind, and we should give up. And we had to, we were faced then with like, well, okay, what do we do with it?

• 23:14Guy Raz?

  Yeah. But I mean, because you worked hard on it. I mean, you could just kill it.

• 23:20Guy Raz?

  You could presumably look for maybe somebody to buy it, but maybe nobody was going to buy it. So did you kind of start to go down that road?

• 23:28Speaker 01

  Yeah, we, our, our thought process was, well, we don't want to do this anymore. We've built this thing, and like, the code's fine. Like, it's a, it works. It is a calendar. It's a web calendar that exists. Someone must want this. Where could we sell our startup? And we decided, well, the obvious place to sell it would be on eBay, because eBay is famous for hosting, you know, selling weird stuff at the time. Still today, I guess it is. And so we, we created an eBay auction to sell our startup. We just, we just made a listing that said, you know, for sale, Kiko Calendar, asset sale, all of the assets of the startup, including the domain name, the logo, all the,

• 24:06Guy Raz?

  Wow.

• 24:07Speaker 01

  you know, software, all the customer relationships. We will sell you the whole thing. And Two Cows in Toronto bought it.

• 24:16Guy Raz?

  What is that, is that a software company?

• 24:18Speaker 01

  Yeah, it's a, it's a domain registrar.

• 24:20Guy Raz?

  Got it. So this, this company was basically buying the domain name, the underlying software, you know, and, and, and the, you know, the, the code, everything. And the domain name was kiko.com?

• 24:32Speaker 01

  Yep, kiko.com.

• 24:33Guy Raz?

  How, how, how much did they pay you for it? Or would they buy it on eBay for?

• 24:36Speaker 01

  It was on eBay, I believe $265,000 was the winning bid.

• 24:39Guy Raz?

  Wow.

• 24:40Speaker 01

  Thirteen bidders. And once you, it was an asset sale, so once you paid taxes on it, paid off the investors, and, and you, you divvended out all the money, Justin and I walked away each with, I think, about 65 grand.

• 24:54Guy Raz?

  Wow. That's pretty great.

• 24:56Speaker 01

  Yeah, it's pretty good. I felt like that, given that we'd taken this huge risk and like started a startup, I felt great about that.

• 25:03Guy Raz?

  Were there other examples of this, of, of other tech startups selling their companies on eBay?

• 25:07Speaker 01

  No, no one else had tried it.

• 25:09Guy Raz?

  Because you would, you're selling old baseball cards or like?

• 25:11Speaker 01

  Yeah, totally. Which is why it was genius, because it meant we got all this press coverage, which meant that everyone heard about it. Like, the biggest part about selling an asset like this is getting the buyers to hear it, it's even happening.

• 25:22Guy Raz?

  Right.

• 25:22Speaker 01

  Right?

• 25:23Guy Raz?

  Right.

• 25:23Speaker 01

  And so it was a very clever way to basically generate a bunch of publicity, which I think was a lesson that really we took with us to Justin TV.

• 25:30Guy Raz?

  Yeah. All right. So it's, it's 2006. You've sold Kiko for, and you guys each have about 65 grand. And did you both immediately know that you were gonna together, once again, start something new?

• 25:47Speaker 01

  We didn't even talk about it. It was just assumed. Like, I can't remember, I don't remember our conversation. I don't think we were like, oh, should we start another startup together? It was like, what startup will we start together? What's next was the only question.

• 26:00Guy Raz?

  Yeah.

• 26:02Speaker 01

  I think the other thing we did during Kiko that's super important to remember is like, every two or three weeks, we'd get I don't know, bored, dispirited, it wasn't taking off. And we'd have some other great idea. Like, we had this idea, we were gonna build a social network for families. Or we were gonna build YouTube, but for audio. And we would then go build and launch these products. In like, we'd like, spend three weeks and we'd do a sprint. And we'd just build this product from scratch. And we'd launch it. And then it wouldn't take off immediately. And we'd get dispirited, and we'd go back to working on Kiko Calendar. And so we probably built six startups in 18 months. I think we had this mental model, that the way you had success in startups is you have this great idea.

• 26:45Speaker 01

  And you build it, and then you launch it, and people are like, wow, this is amazing. And they just like, immediately it starts working. That was our mental model for like, what success looked like. And so we just, you know, we'll just take more shots. So we just, we took like, six shots on goal, on having something that would instantly take off. And of course, that is not how it works. And none of them worked. But through that process, we learned so much about how to build things, how people react when you launch something. And it was this real, it was like grad school for, for building a software company.

• 27:19Guy Raz?

  Hmm, wow. So, so after you guys sold Kiko, and by the way, at this point, you've graduated college, right? And you're, I think you're still in the Boston area. Were you still getting advice from Paul Graham?

• 27:33Speaker 01

  Oh, yeah. Paul was super encouraging. Paul's superpower is, you talk to him about the, what you're working on, or what you might work on. And you walk away feeling like you could, you're not only could you take over the world, but like, you're on to something, and like, you're going to. Like, this is, this is bigger than you think. And I really, really appreciated that. And so, basically, what happened was, we, we were like, okay, Paul, we figured it out. We wanna go do this company. And he's like, alright, hit me with the idea. And the idea we brought to him was, we were gonna make a service to let you print a blog, or a, you know, a Flickr website as a coffee table book. Which was a terrible idea. And he was like, that's not a good idea, basically.

• 28:18Speaker 01

  What, what else do you have? Maybe you have a second idea that's better than that one. We're like, okay. Well, we do have this other idea. We had this idea... Basically, our conversations are really interesting. People would love to listen to us talk, which I don't know if that was true, but we had the delusion. We should just record all of our conversations and then upload them. Oh, well, that's too much work. We should just record all of our conversations and stream them live all the time because we're not going to bother to cut them and upload them. Okay, well, if we're just going to stream our audio live all the time, why don't we just like stream everything, audio and video, live all the time? And we're like, sort of thought that was funny and then left it there. And then we started telling people, like, that was our startup idea. And I remember Chuck Forman at a YC, a little YC, like after happy hour thing, told Justin,

• 29:03Speaker 01

  like, "You're full of shit. You're never going to work on that." And I think, I honestly think in some ways, that was the deciding moment. We're like, "Yeah, we will. We'll show you." But Paul saw that this was bigger than we thought it was. It wasn't just us streaming. He was like, "Oh, you could let anyone do this. That could be a new form of entertainment." And we were like, "Yeah, totally. We could let anybody do this." And he's like, "Great." And we got a $50,000 check to go start our next thing.

• 29:30Guy Raz?

  So it was basically just on the strength of this idea that Paul Graham was like, "Yep, I believe in you guys and I want to put $50,000 into this idea."

• 29:41Speaker 01

  This is actually just how, I would say, a lot of angel investing in Silicon Valley, or in this case, in Cambridge, but like, tech angel investing works. In the beginning, the investable asset is not the idea, and it's not the execution, and it's not the research or whatever. The investable asset is the founders.

• 30:01Guy Raz?

  Yeah.

• 30:02Speaker 01

  And you're much better off investing in a good team that has no idea what they're doing, or that was a bad idea, than a bad team with a good idea, or even a okay team with a good idea. And Paul thought we were a good team, which I think, in retrospect, he was right. We were a good team. And so on the strength of the team, we got 50 grand to start our next thing.

• 30:25Guy Raz?

  When we come back in just a moment, how Emmett and Justin used that money to launch a live stream of Justin's life, capturing every minute of his day, including sleeping and bathroom breaks, and how that experiment eventually turns into Twitch. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

• 30:55Guy Raz?

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• 31:37Guy Raz?

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• 32:22Guy Raz?

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• 33:07Guy Raz?

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• 33:52Guy Raz?

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• 34:31Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's around 2006, 2007, and Justin and Emmett are kicking around an idea for their next business. An idea that, at the time, seems kind of bizarre: turning a camera on themselves and streaming it.

• 34:49Speaker 01

  The first idea was just, we should do a livestream of Justin's life. EVDO modem cards, which were the very first generation of sort of on-the-go internet, had just become available. So you could get broadband, video-streaming-capable internet anywhere there was cell coverage, like, literally, six months before that. So it had just become technically possible.

• 35:13Guy Raz?

  And explain how this would work.

• 35:17Guy Raz?

  Like he would wear a webcam? Or there would be a videographer following him around? Or what?

• 35:26Speaker 01

  Yeah, well, we couldn't afford a videographer to follow him around 24/7. That's expensive. So he's just gonna have to wear the webcam and be the cameraman also. Which, in retrospect, having someone be the cameraman and also the talent doesn't make any sense. But we couldn't afford to do it expensive. So that was the solution.

• 35:43Guy Raz?

  But I think you were able to build out the team a little bit, right? Because I think around this time, you brought on somebody new named Michael Seibel, who was a friend of Justin's?

• 35:55Speaker 01

  That's right. Justin reflected and noticed correctly that we kind of had a highly distractible way of engaging with our startup, where we wouldn't stay on target and we wouldn't, we would jump at the new shiny thing. We got overly inspired too quickly. And he basically thought we needed adult supervision, not like an older person, but someone who would like be a little more reasonable and steady. And Michael's a very steady, calm, also very smart person. And Justin was like, I think we need Michael on the team. In retrospect, he was totally right. Michael was an incredible addition.

• 36:34Guy Raz?

  And I guess you guys decide to launch Justin TV, not in Boston, but to go to San Francisco to launch it.

• 36:41Speaker 01

  Yeah, because if you're gonna start a tech company, San Francisco is like the place to do it. Still now, but especially then, Silicon Valley. And so we piled all of our stuff into my Honda Civic, all of our worldly possessions, me, Justin, Michael, and all of our stuff. And we drove across the country at like a sprint pace. Took us four days from New York to San Francisco. Because we were convinced that like, we, taking two extra days to go, you know, stop along the way was too much time. We needed to get started right away. And in retrospect, that was crazy. Like, of course, we could have taken a day to stop.

• 37:22Speaker 01

  But I think the sense of urgency was important. Like, it was silly for us not to stop driving across the country. And if we'd been the kind of people who would have stopped driving across the country, maybe we wouldn't have succeeded. Because you kind of have to have this feeling like it's really important and we got to go. Like, we had to go fast.

• 37:40Guy Raz?

  Yeah. So when you arrived to San Francisco, I think you launched it in around March of 2007. Does that sound right?

• 37:49Speaker 01

  Yep.

• 37:50Guy Raz?

  OK. And the idea was, all right, we're going to 24-hour livestream of this guy Justin's life, this totally unknown person. And it wasn't that-- and I'm trying to understand this, because it wasn't that Justin was like this exhibitionist. It was more like he was the guinea pig that would essentially be the test case for what this could be? Or is he an exhibitionist? I don't know.

• 38:19Speaker 01

  Yeah, I'd say it's a little bit of both. Exhibitionist isn't maybe the right word I'd use. Justin's always wanted a little bit to be famous. There's a reason why he runs a Snapchat channel and he has a YouTube channel now. He has all these Twitter followers. He's always wanted to be famous. And so I think it was both an opportunity for him to go become a little famous in a minor way and also a guinea pig for the system we wanted to build at the same time. So it was a good fit.

• 38:43Guy Raz?

  And it was his perspective, right? The camera would be mounted on his head, but also there'd be cameras inside the apartment?

• 38:51Speaker 01

  Mostly, it was just from his perspective all the time. And sometimes he'd take the camera off and point it at himself while he was doing something. But it was his perspective most of the time, walking around. Actually, one of the big things we discovered was, almost immediately, people liked him taking off the camera and talking to them more than they liked almost anything he could be doing. If he was doing something really interesting, like he's taking a trapeze lesson or something, then the point of view camera could be interesting. But 98% of the time, you actually would rather have him just be sitting at the computer talking to chat, which is in fact how everyone does it today, because that was actually just more compelling as content.

• 39:30Guy Raz?

  Was it? I mean, he would walk into a restaurant, or a bar, or a store, or something, and I guess this, people probably didn't know what was going on. Like, people didn't know that they were on this video stream, right?

• 39:46Speaker 01

  It's interesting, right? It was a stunt. I think we learned something from the eBay experience, which was if you do something that's a little bit provocative and crazy that people want to talk about, people will talk about you.

• 39:56Guy Raz?

  Yeah.

• 39:57Speaker 01

  So that definitely worked. When we were walking around San Francisco, people might not have understood that they were on a live stream, but they definitely understood there was a camera. It was novel. I think now, everyone, well, first of all, everyone's being recorded all the time because of smartphones.

• 40:12Guy Raz?

  Yeah.

• 40:13Speaker 01

  But it's, there's a whole culture around it. At the time, it was like, oh, cool, am I on camera? Like, what are you filming? What's going on?

• 40:19Guy Raz?

  What did he do when he slept?

• 40:21Speaker 01

  We put the camera on a tripod and pointed it at him.

• 40:24Guy Raz?

  As he slept?

• 40:25Speaker 01

  Watched Justin sleep, yep.

• 40:27Guy Raz?

  What about when he took a, what about when he took a shower?

• 40:30Speaker 01

  24/7, even in the bathroom. In the bathroom, we pointed at like the wall, or like a shower curtain or something, but uh...

• 40:37Guy Raz?

  But you could hear, like, if you went, if you went pee, you could hear it?

• 40:40Speaker 01

  Yep, you could hear, hear it going pee, that's right.

• 40:42Guy Raz?

  Wow.

• 40:43Speaker 01

  There was a whole thing, one time he neglected to wash his hands, and there became this whole meme and chat of them, people making fun of him, and reminding him to wash his hands every time he went to the bathroom from that point forward.

• 40:52Guy Raz?

  And what about, I mean, I hesitate to say this, because this is like not, you know, I don't really go there normally, but what about like, his, you know, romantic life? I mean, was it just, how did he handle that?

• 41:06Speaker 01

  He went on some dates. I mean, he was up front with, you know, what he was doing.

• 41:09Guy Raz?

  Yeah.

• 41:10Speaker 01

  I don't think any of them went... That well most of the time because like, you know, it's a like awkward experience. But there was an incredible experience after he went on one of the dates where it just felt like it went well. And he was walking home and people start streaming out of the buildings. All of our friends lived around there and they ever start streaming out of the building and coming up to him and congratulating him on having had a good date. And you watch the date and then you're watching that. And that was a really interesting, like, that was a cool experience. Like, there was a, you could see this glimmer of something happening there that was kind of dynamic and interesting.

• 41:46Guy Raz?

  And, I mean, people knew where you lived. Like, you were getting, people were sending like hundreds of pizzas to your door and like calling 911 and the police would show up because there was a report of like a robbery or, right? I mean, all kinds of things were happening in your apartment.

• 42:02Speaker 01

  All the harassment that streamers deal with today, we got in spades because we were the one, the one target.

• 42:10Speaker 01

  I had a gun pulled on me. There's a, they reported a stabbing in our apartment and the police came in, weapons drawn. And, you know, I had a pistol pulled on me by the police. They pretty quickly realized, wait, this is a bunch of engineers like in their underwear programming. Like, this is not a stabbing. But that was a really scary moment. And, you know, we had, we had the fire trucks called and even if the fire trucks had showed up, we would deal with it off camera so that there wasn't a reward for the person doing it. And that, it definitely, over time, cut down on the amount of harassment we experienced.

• 42:48Guy Raz?

  Did you, having launched, I mean, when you launched Justin.TV, did that attract investors? Were there investors who were like, hey, there's something here? Did you start to get interest?

• 42:59Speaker 01

  No.

• 43:00Guy Raz?

  No.

• 43:01Speaker 01

  About 100,000 people watched it in the first month. And our CDN bills just started piling up. CDN is like for the, a content delivery network for the video.

• 43:09Guy Raz?

  Yeah.

• 43:10Speaker 01

  We wound up with just these huge bandwidth bills and we like, we were like, oh crap, we have to raise money stat. Uh, so then we went out hat in hand trying to raise money, uh, and really struggled.

• 43:20Guy Raz?

  Because they thought it was a gimmick? They just were like, who, what is this? This is like tabloid-y. I mean, is that what the response was?

• 43:26Speaker 01

  I think it was more like, how is this gonna get 10 times bigger?

• 43:30Guy Raz?

  Right.

• 43:30Speaker 01

  Like, what's the pathway for this to get really big? But some number of investors believed. We got, we raised, I think from about, from like five investors, we raised like maybe $350,000 total, which was enough to pay our bandwidth bills for a little bit and keep us going.

• 43:45Guy Raz?

  Right.

• 43:45Speaker 01

  And once we launched, let anyone stream, uh, that started driving more growth for us.

• 43:50Guy Raz?

  But, but the first nine months, I think it was just Justin's life, right? In real time.

• 43:54Speaker 01

  Maybe for six, I think.

• 43:55Guy Raz?

  Six months? I mean, it sounds really boring. I mean, 24 hours a day of anyone's life? I don't care if you're like, I don't know, like a Marvel superhero. Like even parts of your day are gonna be boring.

• 44:10Speaker 01

  Every, everyone sleeps like eight hours a day roughly, right? Like that's definitionally one-third of the time. If you are the most interesting possible human, you're still not interesting.

• 44:22Guy Raz?

  No.

• 44:22Speaker 01

  No, no, this was a terrible idea, like fundamentally terrible. A 24/7 livestream is a gimmick. It was a good gimmick. It got us a lot of attention. And then the other people who were streaming on Justin TV using the technology didn't do 24/7 streams. They did, they did three-hour streams of something interesting.

• 44:39Guy Raz?

  Right.

• 44:39Speaker 01

  And, uh, I think Justin TV worked to some degree because our actual customer was the streamer. And because we were trying to build something that worked for us as a streamer, uh, we built something that actually worked because we deeply understood the needs of our customers because we were the customer.

• 44:57Guy Raz?

  Right.

• 44:58Speaker 01

  We discovered actually very early on, although we didn't, I don't think we fully realized it at the time. People found community hanging out, watching Justin. And I think that was a really big insight. And we did a lot of things right leaning into that. Making chat good, making moderation good.

• 45:17Guy Raz?

  And how many people, as you made it available to anyone, was there like a flood of people coming in?

• 45:24Speaker 01

  We had a pretty long beta list. A few hundred people signed up for the beta. In the first month of the beta, we had probably 80 people streaming. And then as we opened it up, we had hundreds, thousands of people stream, eventually tens of thousands.

• 45:35Guy Raz?

  And what were they streaming? What were people doing on it?

• 45:38Speaker 01

  All kinds of stuff. Someone guided street art and streamed himself doing sidewalk art and stuff like that. Ijustine had a show. We had talk shows. We had some gaming. We did some of the very early gaming streams. We hooked up our Xbox and we streamed ourselves playing Call of Duty.

• 45:58Guy Raz?

  And what were your biggest expenses at the time? I mean, I'm assuming you guys were not paying yourselves much, but still you had to pay for servers and what else? What were your expenses?

• 46:13Speaker 01

  Rent, 500 bucks a month each in spending money. And then infinite bandwidth bills forever that were constantly crushing us. It was so expensive. Delivering the video was really expensive.

• 46:27Guy Raz?

  And so how did you finance it with just a few hundred thousand dollars?

• 46:31Speaker 01

  We went and we raised more money. So about six months later, I'm trying to remember exactly when we raised our Series A. We raised $2 million. And $2 million was enough for us to continue. We could hire some employees. We could continue paying our bandwidth bills. And then we were like running out of money again. At this point, we'd grown quite a bit, which was great, except... We weren't, we had still made no money. We had not turned on any monetization.

• 47:02Guy Raz?

  But how did you, as you started to acquire, or as you started to get more and more users, you were not monetizing it. The idea had been, hey, we'll eventually just have advertising around this?

• 47:12Speaker 01

  Yeah. It's literally just like YouTube. The idea had been, we'll, we'll sell ads eventually. And I think everyone else looks at us and they're like, you're going to get crushed by YouTube, more or less, I think was what they thought.

• 47:23Guy Raz?

  Right. Because YouTube, I mean, the idea was that YouTube would just become a live streaming platform and you would, that would be the end of Justin TV.

• 47:30Speaker 01

  And they did actually eventually launch YouTube Live like five years later, but, but it took them a while.

• 47:36Guy Raz?

  Right.

• 47:36Speaker 01

  And so then we, we raised, uh, we raised, we raised an additional, I think, $4 million, $6 million plus $2 million in venture debt, something like that.

• 47:46Guy Raz?

  Yeah.

• 47:46Speaker 01

  And then the 2008 crash happened. And thank God we raised that money when we did because...

• 47:51Guy Raz?

  Because you would have been in trouble.

• 47:53Speaker 01

  We, we would have been dead.

• 47:55Guy Raz?

  Nobody was, nobody was giving money out. No, no one was, was, you could not raise money after the financial crisis.

• 48:01Speaker 01

  Especially not for a money losing business that's whole, that's like, don't worry, we'll figure out monetization later. And so immediately after the crash, we were kind of like, oh, man, we, we've got to get profitable.

• 48:13Guy Raz?

  So, so what'd you do? How did you do that?

• 48:15Speaker 01

  Well, the first thing we did was we just threw Google AdWords on the site because that was the fastest way to get some money immediately.

• 48:23Guy Raz?

  Right.

• 48:24Speaker 01

  We sold our, we, we made our mobile apps cost money. It's funny, like that, that sounds so ridiculous now. Like, of course, the Twitch app is free, but we were just pulling every lever we could to try to make, make money.

• 48:35Guy Raz?

  Okay. So, so one of the ideas was, was a mobile app and mobile was new. I mean, 2008, 2009, this is like early, early days.

• 48:44Speaker 01

  Yeah, we were, we were pretty early to making mobile apps. It was, that was another thing where it was very clear mobile was the future.

• 48:50Guy Raz?

  All right, so some money's coming in, but I have to assume it's not quite enough yet.

• 48:55Speaker 01

  Actually, over the course of the year, by relentlessly cutting every cost we could cut, putting advertising everywhere we could think to put an ad.

• 49:04Guy Raz?

  Yeah.

• 49:05Speaker 01

  And charging money for the mobile apps. And I can't remember, there's probably another list of other things we did too that I'm forgetting now. We got to profitability. We had a doomsday clock on the wall where we had a weekly all hands with the employees. And every, every all hands, we're like, we are eight months from bankruptcy. We are seven months from bankruptcy. We are six months. And at first, it was falling at like, you know, we're at 14. And then the next month, we'd be at 12. It was like accelerating because as we grew, it was costing more money every month.

• 49:35Guy Raz?

  Yeah.

• 49:35Speaker 01

  And then, but then as we started to bring monetization online, we started to pull out of the dive. And the worst all hands was we are eight weeks from running out of money.

• 49:45Guy Raz?

  Wow.

• 49:45Speaker 01

  And then we were 10 weeks from running out of money. And then we were, you know, 20 weeks from running out of money. And then we were, we'd hit profitability.

• 49:54Guy Raz?

  And, but it wasn't, I'm assuming it wasn't massive profitability.

• 49:58Speaker 01

  We set a goal for the company that we'd get, we wanted to make a million dollars, we wanted a run rate of a million dollars a year of profit.

• 50:05Guy Raz?

  Of profit, wow.

• 50:06Speaker 01

  Yeah, of profit. Because we, once we got going, it was fun. We were good at it. And we said, we'd take the whole company to Hawaii if we got to a million dollars in profit, which at the time, we were making like $10,000 of profit. We thought it was impossible. And six months later, we'd, we'd gotten to a million dollars a year, a hundred thousand dollars a month of profit.

• 50:24Guy Raz?

  Wow. And that was purely through that triple strategy or that strategy of cutting costs, just advertising wherever you could get ads and the mobile app?

• 50:34Speaker 01

  The, those were the tactics, but like, the underlying thing we did was sit down every month and ask ourselves, like, go through the whole P and L, every cost, every, every line, revenue line it up and ask, how could we make this bigger? What else could we do? What else could we cut?

• 50:50Guy Raz?

  Wow.

• 50:50Speaker 01

  And just, it's just relentless focus on, on those lists.

• 50:53Guy Raz?

  And how many people did you have working for you in 2009, 10?

• 50:58Speaker 01

  At the start, maybe like 40. By the end, I think like 24, because we had, we did, we had to do a layoff because we just, we couldn't.

• 51:06Guy Raz?

  Couldn't afford all those people.

• 51:07Speaker 01

  We couldn't afford all those people.

• 51:08Guy Raz?

  Yeah. And how many users do you, do you remember? How many users did you have around 2010?

• 51:14Speaker 01

  I think 50, 60 million a month.

• 51:18Guy Raz?

  Wow, so that's a lot.

• 51:19Speaker 01

  Yeah, no, it was, it was, it was big.

• 51:21Guy Raz?

  Yeah, so it was, it was already pretty, it was already pretty big. Okay, I guess, I guess around this time, you start to think about, you know, the kind of taking this to the next level. And you guys started to talk about maybe trying out different strategies, different products. Tell me about the conversation. What did you start to think about doing?

• 51:41Speaker 01

  So, we had succeeded at getting profitable, but then, in doing so, we'd entirely killed our growth and we were no longer growing. And we, we started trying to reignite growth and we had all these ideas for these products we'd build and they pretty much all failed in a variety of different ways. And so, we were kind of bumbling around and, God, who was it? This guy from, who'd been like at YouTube, it's like a VC, you know, he came by and he told us, like, "You're doomed." Like, reigniting growth's almost impossible once it stops and, and if you're not growing on the internet, you're dying.

• 52:22Guy Raz?

  And why weren't you growing? I understand that you cut costs, but what, what, how, explain how that connects to, to the slow, slowing down of your growth.

• 52:30Speaker 01

  We'd been, we've been adding advertising, which makes it a worse experience.

• 52:34Guy Raz?

  Right.

• 52:35Speaker 01

  We'd been adding paywalls in a bunch of places.

• 52:39Speaker 01

  And, more to the point, I think we'd kind of like hit the natural size of the people using the thing we were doing without improving the product further.

• 52:48Guy Raz?

  Right.

• 52:49Speaker 01

  And so, we, we kind of had this moment, the founding team, it was just like, you know, he's right. We gotta, we gotta, we gotta have a second act. What are we gonna do? And we started having these conversations about that.

• 53:00Guy Raz?

  Like, what, what do we do? How do we actually reignite growth?

• 53:03Speaker 01

  Yeah, what, what should we focus on? What is the, what is the next thing we should do? And I think we all said, "Well, it's pretty clear that the biggest thing in live video, based on what we've built so far and looking around, is actually corporate, you know, webinars and, and video conferences."

• 53:20Guy Raz?

  Yeah.

• 53:20Speaker 01

  And we could go build that business. And we were all like, "Yeah, that's probably a big, multi-billion dollar business."

• 53:25Guy Raz?

  Yeah.

• 53:26Speaker 01

  "Does anyone want to work on that? No. Okay, we're not doing that." Like, we just didn't want to do enterprise software. That would have been, I mean, look at how successful Zoom is now, right? That would have been, I think we were right. But instead, we were just not interested in enterprise.

• 53:42Guy Raz?

  You were not interested because it was boring? You thought it was boring?

• 53:46Speaker 01

  We thought it was boring. We didn't want to do enterprise sales. We knew what that was going to, we had friends doing enterprise companies and we knew what that was going to get us into. It's not building great, beautiful software to win. It's building good enough software and great sales. And we just, that wasn't what we got into the game to do, I don't think. I mean, consumer software is like buying lottery tickets. You have no idea, like, when it's really successful, the biggest consumer-oriented companies are incredibly successful. Enterprise software is a little more rational, maybe more boring, but like, the pathway to success is more controllable. We decided we'd like to buy more lottery tickets instead.

• 54:23Guy Raz?

  Yeah, right. I mean, it's why everyone knows what Facebook and Google is, right? But not everyone knows what SAP is, even though it's a huge company.

• 54:32Speaker 01

  That's right. Exactly.

• 54:34Guy Raz?

  All right. Okay. All right. So you guys are, at this point, you're kind of at a crossroads, right? And from what I understand, you had a couple of different ideas about where you wanted to take the company. Like Michael Seibel, who was running Justin TV at this point, he had one idea, you had another idea. So what was yours? What did you want to do?

• 54:55Speaker 01

  The StarCraft 2 beta had just come out. And StarCraft 2 was a sequel to a game I played as a child, to the original StarCraft. And I was so excited because I like, I couldn't believe they'd finally made a sequel after, like, you know, 10 years.

• 55:10Guy Raz?

  Can you just describe what StarCraft is? I mean, I know we've done Riot Games on the show and others, so I know League of Legends and World of Warcraft. I don't know, I can't picture StarCraft.

• 55:19Speaker 01

  StarCraft is, think of like Starship Troopers.

• 55:21Guy Raz?

  Oh, yeah.

• 55:22Speaker 01

  If you've seen the movie. It's like, you know, bug aliens versus Terran space marines. So you're looking at the battlefield from the top down, but you're building an army and you're commanding it versus other players.

• 55:33Guy Raz?

  I see. Okay. I got you. So, and you love playing this game. And this game had been... There was a streaming element to this game already?

• 55:42Speaker 01

  Yeah, so the original StarCraft is a very deep multiplayer competitive game. Think of it, playing it is kind of like playing realtime chess plus poker at the same time. It has a very high skill cap. It's possible to get very, very good at it.

• 55:57Guy Raz?

  Okay.

• 55:57Speaker 01

  And so in South Korea particularly, it really took off. And there were basically, you know, esports stars became like, you know, StarCraft stars became like celebrities. And they had a cable TV channel devoted to, you know, the matches. And it became a whole league. And there was a whole culture around watching the very best StarCraft players.

• 56:20Guy Raz?

  And was anybody putting that content onto Justin TV when it became available?

• 56:26Speaker 01

  Yeah, yeah. I mean, that was, that was how I got interested in the idea in the first place. People started, Justin TV always had a smaller, small amount, 1%, 2% of gaming content. And so the StarCraft 2 beta came out, a bunch of people started streaming it. They'd run screen capture software, like you know, when you're on a Zoom call and you like, you like share your screen.

• 56:43Guy Raz?

  Yep.

• 56:44Speaker 01

  So they do screen share with the video game, plus their webcam sort of overlaid on top so you could see their face.

• 56:50Guy Raz?

  But this was a tiny number of people who were consuming this content.

• 56:54Speaker 01

  Yeah. It's maybe, it was maybe 50 streamers and like, maybe in total 500,000 people a month.

• 57:01Guy Raz?

  Okay. But you liked this, as just even though you worked for Justin TV, as a consumer, you liked that?

• 57:08Speaker 01

  It was the first time I'd ever actually enjoyed watching my own product. Like, we'd been running an entertainment product for like four years at this point. And I was like, this is fun. I like watching this live. This is great. I can ask the pro questions. I'm hanging out with other people who also like the same thing I do. And I know that if other gamers who I know understood what I, had the experience I'm having and understood it, they'd like it too. And so I was like, I think there's something here. I think if we focus on this, we could grow something really big. I think gaming is the vertical for us to work on.

• 57:42Guy Raz?

  Even though it was just 1% or 2%? So a tiny, a tiny subset of people who were, who were doing gaming. But you thought, you know, this is really, I think, I think people want to watch other people play video games.

• 57:54Speaker 01

  Yeah, I mean, I don't just think, I wanted to do it. And I was like, I don't think I'm alone.

• 58:00Guy Raz?

  OK, but again, at the time, Michael, who's the CEO, had a very different idea of where he wanted to take the company. So what was his idea?

• 58:10Speaker 01

  Michael's insight was, it was obvious, mobile apps were going to be massive. There's going to be a wave of social media, mobile stuff. And we should focus on being video for mobile. No one had done great video for mobile yet. There's a lot of photo apps, but not a lot of video.

• 58:25Guy Raz?

  Right. This was before, like, Meerkat and Periscope came out.

• 58:29Speaker 01

  This was before Instagram had videos. This was before Snapchat. Like, this is, there was no, there was no video recording stuff on mobile yet, really. And so we had these two ideas, and we're like, we don't know which one is right. I felt pretty strongly, mine seemed good. Michael felt pretty strongly, his seemed good. We both thought the other person's made sense. So we got together as the founders, and we had like a four-hour meeting to figure out what to go do. And the conclusion was, they're both likely to fail.

• 58:58Guy Raz?

  Yeah.

• 58:58Speaker 01

  Like, doing anything new and risky is likely to fail. So let's fund two Skunk Works initiatives internally. We'll take resources away from Justin TV. We'll give each of them, you know, two or three employees, plus a founder, who are going to go focus on doing that thing. And Justin will sort of continue to run the core business in the meantime. And we set these, basically, growth bars. And whichever one exceeds the growth targets we hit for the first three months, we will pivot the company to do that.

• 59:28Guy Raz?

  Right.

• 59:29Speaker 01

  And so I sort of grabbed all the Justin TV infrastructure and focused it on sort of customizing Justin TV, building Justin TV to be better for gamers.

• 59:41Guy Raz?

  When we come back in just a moment, how Emmett is warned that gaming will never be more than a niche business, and how that niche grows to tens of millions of users. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

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• 1:01:48Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's early 2011 and Justin TV has basically split into two separate businesses, a mobile video service and a gaming platform that will soon become Twitch.

• 1:02:04Speaker 01

  The first thing I did was I asked myself, I had had this realization, I need to actually know who I'm building for. I need like, I'm, I'm tired. I was, I was sick of failing at product.

• 1:02:18Guy Raz?

  Yeah.

• 1:02:18Speaker 01

  And I was like, I need to know what the actual problems are. And the first thing I asked myself was, who's more important here? Do I need to, do I need to build stuff to make it better for the viewers? Or do I need to build stuff to make it better for the streamers? And obviously they impact each other, but like, who's my focus? And I realized there were about 200 people who were streaming video games across every service, including ours, who garnered maybe 80% of the total audience at the time. And I was like, oh, I just need to make them happy. I can talk to those 200 people.

• 1:02:49Guy Raz?

  Right. So just to be clear, there were other competing services that, that were doing something like this?

• 1:02:55Speaker 01

  Oh, yeah. I mean, and, and bigger than us too. It's like Ustream was a, a live streaming competitor. They had more gaming and they were bigger than us. Livestream.com, there was a European startup owned 3D that was, I think, already functioning at this point. Those were the primary competitors in the beginning. And so we did all these little customizations to Justin TV. We, we promoted the gaming content more. We made the front page promote a lot of gaming content more. And I just went out and I talked to a ton of streamers. And I just wanted to understand, like, how did you get started streaming? And what do you like about it? What do you get out of this?

• 1:03:30Guy Raz?

  Mm hmm.

• 1:03:31Speaker 01

  And the biggest surprise for me was how much they wanted to make money.

• 1:03:35Guy Raz?

  Hmm.

• 1:03:37Speaker 01

  And not because they wanted to make a living, like, they knew they would be. I was like, you know, you're going to be making like $17 a month, given how big your audience is and how much money we can make you. And the streamers would say like, yeah, totally. I know that. That would be amazing. I would love to make $17 a month streaming video games. And I was like, okay, like, I believe you. And so one of the very first things we did is we started this partner program where you could press a button and we would roll a mid-roll on your channel and we would give you half the money.

• 1:04:07Guy Raz?

  And, and advertisement.

• 1:04:08Speaker 01

  An advertisement, a mid-roll advertisement in the middle of your stream. Press button, run ad, get money. And it was, we invited like 50 people and they loved it. It was super popular, even though they weren't making that much money in the beginning.

• 1:04:20Guy Raz?

  Right. I think by, by June of that year, 2011, you, you.

• 1:04:26Guy Raz?

  Essentially moved Justin TV Gaming to a different site called Twitch.

• 1:04:31Speaker 01

  That's right.

• 1:04:32Guy Raz?

  That you called Twitch at that point. And that name Twitch, where did that come from?

• 1:04:36Speaker 01

  So we had been calling it Justin TV Gaming. We decided it needed its own brand and its own home over time for a variety of reasons. And all the names we had for the product were bad at the time. And I literally locked myself in a conference room and just for two days, just like went through, looked for domain names I could buy, looked for stuff that was available. And eventually I found Twitch through just free associating words associated with gaming. And Twitch gaming is a kind of like, you know, fast reaction gaming.

• 1:05:06Guy Raz?

  Yeah. Well, it's a muscle, right? It's your Twitch muscles.

• 1:05:09Speaker 01

  Yeah, fast Twitch muscles. Yeah.

• 1:05:11Guy Raz?

  Yeah.

• 1:05:11Speaker 01

  And it kind of had a correlation with like the liveness of the streaming in addition to gaming. And so I was like, okay, that kind of makes sense. And most importantly, I could get the domain. And we told everyone it was Twitch, and Twitch it was. And Jacob, our designer, made a logo in like two hours and we launched it.

• 1:05:30Guy Raz?

  I mean, you look, you look at it now and you think, oh, that's a no brainer. People want to, I mean, this is a huge, massive, growing industry, right? Creators, gamers, et cetera. But, I mean, in 2011, I would think that there were lots of people, because there still are people today who say this, but there are lots of people who are saying, who would want to watch other people play video games on the internet? I mean,

• 1:05:56Speaker 01

  Totally.

• 1:05:56Guy Raz?

  How many times did people say that to you?

• 1:05:59Speaker 01

  I mean, I used to get that question every interview. Now I'd say it's only half of all interviews. Then usually what I would do actually is I'd ask them, well, first of all, just tell me, what, do you watch TV? Oh, well, what do you watch? Oh, you like, you like watching the NFL? You like watching football? Oh, interesting. So you like watching someone else throw a ball around rather than you throwing the ball? Fascinating. Well, it turns out people who like video games do the same thing. People like watching other people do stuff. It's a core human desire.

• 1:06:29Guy Raz?

  Right.

• 1:06:29Speaker 01

  But it never worked. Nobody gets it. You can't explain it that way.

• 1:06:33Guy Raz?

  Because they would say, people would have said, yeah, but I mean, come on. I mean, Tom Brady, he's an athlete. And they would say, watching LeBron James play is superhuman. I mean, a video gamer, like, people would say, right? They would say that to you.

• 1:06:50Speaker 01

  Yeah. Boxer was potentially the most famous Korean StarCraft player. If you've never watched Boxer execute a three-site drop-tank attack at the same time, you don't understand the level StarCraft can be played at. It is a thing of art.

• 1:07:12Guy Raz?

  Right.

• 1:07:12Speaker 01

  But the best news fundamentally is, I don't need them to understand it because I got it and the people watching got it, the people streaming got it. Because for the people who loved it, it was self-evident. The instant they saw it, they were like, oh, this is, yes, this is what I want. This is what I've been waiting for.

• 1:07:32Guy Raz?

  Yeah, I mean, that's the thing. Like, when you finally launch it as a standalone site, what, they just, all of a sudden, this community kind of began to coalesce? And they just started walking into the front door of Twitch?

• 1:07:47Speaker 01

  No, so what's interesting is, we'd been growing at 25%, 30% a month for almost nine months before we ever launched Twitch. Like, it was fully validated by the time that we were launching a new domain name.

• 1:08:00Guy Raz?

  And that was simply because you were improving Justin TV Gaming for gamers?

• 1:08:05Speaker 01

  We had a very simple closed-loop growth strategy. We would make the product better for game streaming. We would go out to all the game streamers and say, we've made the product better. You should try it out. Hey, we'll pay you $1,000 to, like, switch services for the larger streamers. Or some of them would tell us, no, you don't do this, you don't do that. And that would become our feature request list. And we would go, we wouldn't always build the thing they suggested, but we would go solve the problem they were pointing out. And we'd make the service a little better. And then we'd go out and we'd recruit more streamers. And every time a streamer came on, they would onboard all of their audience. They would tell everyone who followed them online, hey, come check me out on Twitch. And then those people would watch the streamer they came to watch,

• 1:08:49Speaker 01

  but also spread out and watch other streamers. And it became this cascading, like, exponential growth process, where the bigger we were, the easier it was to recruit more streamers, who could then bring across more of an audience, which would then let us recruit more streamers, et cetera, et cetera.

• 1:09:05Guy Raz?

  And what could the viewer do initially? I mean, was it passive? Or you were watching somebody play a game, and you would see their face talking into a microphone about what they were doing? Or was there a chat already integrated into it? Or you could actually, you know, write your comments?

• 1:09:27Speaker 01

  From the very beginning on Justin TV Gaming, all the way through when we launched Twitch and through the whole time, there was always a webcam of the person's face over the video, talking to the audience. Because you're there, you come for the video, you come for the entertainment and the gaming content. But you actually stay for the relationship and for the chat and for the connection. That's been a core part, that was a core part of the Justin Show, it was a core part of Justin TV. You can talk to the people making it, and they can react to you. And you can impact what is happening on the stream in real time.

• 1:10:02Guy Raz?

  So you make this available, right? And of course, this exists. There are other streaming services. But I wonder, I mean, I'm thinking of like streaming movies. Like, if you started, if somebody went on Justin TV and started to just like play a Disney movie, I mean, Disney would go nuts, right? And it would be shut down instantly. Why weren't the video game companies similarly irritated by this? Because essentially, they could have said, hey, somebody's like making money off this thing that is ours, and we sell this product. Did any of the video game companies push back on it?

• 1:10:38Speaker 01

  We got some incoming requests where people were like, hey, you're monetizing our IP.

• 1:10:43Guy Raz?

  Right.

• 1:10:43Speaker 01

  And our response is always the same. You're totally right, and that's totally your IP. And if you don't want us to do it, just tell us. We'll turn it off. We'll tell every streamer, stop streaming your game. And the reaction to that was universally the same, whoa, whoa, whoa, let's not be hasty. Because they recognize the truth that watching a movie for free on a service instead of buying the movie to watch it is a substitution for what you're doing. But watching someone else play a game is actually marketing for the game.

• 1:11:12Guy Raz?

  Because then you want to buy the game.

• 1:11:13Speaker 01

  Then you want to buy the game, or you want to play the game more, you want to buy the sequel. And like, it's just good for, you can't pay for that kind of advertising. If anything, they should be paying us, which in fact, mostly they do, they buy advertising with us. So if anything, game companies would like even more exposure, rather than less.

• 1:11:29Guy Raz?

  Yeah.

• 1:11:30Speaker 01

  And that was actually, that insight was one of the reasons I was so excited about gaming. I pushed us to go into gaming because I was like, this is the only category where we have this great IP and the people who own the IP are excited about us using it.

• 1:11:43Guy Raz?

  So, all right. This, this is really taking off. Like, I mean, I think within a year and a half, it's got 20 million users. And was it, I mean, were, at that point, were investors just like banging down your door to get involved in this thing?

• 1:12:03Speaker 01

  Nope.

• 1:12:04Guy Raz?

  Huh.

• 1:12:05Speaker 01

  We talked to 40 VCs, everyone turned us down.

• 1:12:08Guy Raz?

  Why? What were they saying? Same thing? Who's going to watch people play video games?

• 1:12:12Speaker 01

  It's a niche. It's great, you found something cool, it's a niche.

• 1:12:14Guy Raz?

  It's a niche.

• 1:12:15Speaker 01

  It's not going to get, you're going to, you're nearly saturated the market already, you're going to run out of people who want to do this, it's not going to be big.

• 1:12:22Guy Raz?

  I mean, they were right, it was a niche, except, except only a massive niche.

• 1:12:26Speaker 01

  Right. It turned out that niche was a, I mean, to be honest, I, one of the problems I had trouble raising money is that VCs go off of your own confidence. And I'm not very good at convincing myself of things that I, where I feel it's truly unknown. Like, I thought it could be big, but I didn't know how big it could get. And honestly, I've been surprised at how big it has gotten. I've like, I, if you'd asked me, you know, five years ago, how big can Twitch get? I don't think I would have believed it could be as big as it is today. But I knew for sure we were on to something. And it really, it felt like, between Justin TV and Twitch, it felt like I'd been bumbling around in the dark, trying to like, you know, solve a, solve a puzzle with the lights off.

• 1:13:11Speaker 01

  And I just turned the lights on, I was like, oh, this is, this is much easier. And And that was a really powerful experience.

• 1:13:19Guy Raz?

  Yeah. And by the way, I should just mention that you were, at this point, you were the CEO of Twitch. Justin was still there, but you were in charge. What was that like for you? Did you like managing people? Were you good at it?

• 1:13:35Speaker 01

  I was not a good manager.

• 1:13:37Guy Raz?

  Why not?

• 1:13:38Speaker 01

  I was bad at difficult conversations and giving hard feedback, bad at praising people when they did well, bad at delegating effectively, micromanaging when I shouldn't be micromanaging, but then being completely disconnected on things I needed to look at. Like, there's a whole craft to management, and I was, you name the thing that a manager's supposed to do, I did it poorly.

• 1:14:00Guy Raz?

  Huh.

• 1:14:01Speaker 01

  And I remember at the beginning, our point of view on management was actually, it was kind of common in the valley at the time. Why do we need managers, anyway? Google had like, every manager has 40 reports, because like, what do managers do anyways? People should just like, self-manage and do their thing. Why do you need managers? It's pointless middle layer. And that's not true. Managers serve a very important function in any kind of organization that's bigger than about 10 people.

• 1:14:24Guy Raz?

  Yeah.

• 1:14:25Speaker 01

  But that was sort of our attitude. And the result was, we didn't value the coordination function, and didn't really even understand it. And so it was this process, both of getting better at it, but also just coming to appreciate, what is the point of having a manager in an organization at all? Like, what does that person do for you and do for employees?

• 1:14:45Guy Raz?

  Yeah.

• 1:14:46Speaker 01

  It was a big personal growth thing for me. I think becoming a manager was, really helped me grow emotionally, grow socially. I'm really glad I got the opportunity to do it.

• 1:14:56Guy Raz?

  Yeah. So, when you launched it, right, when Twitch was like, the thing, it was free, right? It still is. It's free. I can go on now and watch stuff. But how was Twitch going to make money?

• 1:15:09Speaker 01

  I was pretty clear it was going to be advertising-driven. And I was very excited about the idea of getting to scale with a gaming video product and selling video advertising. And so my original plan was just advertising. And then, this streamer, Day9, He was a StarCraft streamer. I was at an event, we were talking, and he was saying how, "I have these people who really just love my stream, who come and hang out in the comments. And I think if you made a fan club for them, like a subscription, where they could pay $5 a month and get a badge, just so they could be a member of the club and be a supporter, I bet you'd sell a lot of those. Like, I think we could sell a lot of those. I think you should build that." And I said, "You know, that makes a lot of sense. I believe you. Let's try it."

• 1:15:53Speaker 01

  So we built a beta version of it for him. And, boy, did that work. It worked way better than we expected.

• 1:16:00Guy Raz?

  Where people were willing to pay money to join, like, a club that got, what? Extra features, extra access?

• 1:16:07Speaker 01

  No, you got a badge next to your name in chat. And when you subscribed, a notification happened in chat, and he said, "Thank you."

• 1:16:14Guy Raz?

  Right. And that suggests that maybe he would pay more attention to your comments?

• 1:16:19Speaker 01

  Yeah, sometimes. There was no promise of that. But, yeah, you sort of sense you might pay more attention to the comments. We pretty quickly added special emotes. So you got to use special emoji that were only for subscribers.

• 1:16:30Guy Raz?

  That you would pay money to buy a bunch of them?

• 1:16:32Speaker 01

  While you're a subscriber for $5 a month, you gain access to all the subscriber emotes. It's micro-patronage. You are getting the positive glow of supporting someone whose content you like and their gratitude for your help. And some of them really leaned into it. And I could see someone was making, I think, like $1,000 a month. And pretty quickly, I was like, "Oh, this is gonna be a thing." Because if they can make $1,000 a month doing it part-time, they're gonna go full-time. And now, yeah, we have many thousands, not tens of thousands of people who earn their living on Twitch. What's interesting about Twitch is we actually have this very thriving middle class because big streams monetize much more poorly per viewer

• 1:17:18Speaker 01

  than medium-sized streams do.

• 1:17:21Speaker 01

  And so there's this... Most of the money actually gets made, not in the top tier of streamers, not the people with many thousands of viewers, but in the people with hundreds of viewers. That's actually where the bulk of revenue happens. It is that middle class of streamer who can have the more personal connection, who has a more intimate community, where subscriptions really work great and where community gifts work. And there's this whole set of dynamics around that community supporting that streamer. That's what powers the jobs on Twitch effectively for streamers.

• 1:17:55Guy Raz?

  Emmett, I'm gonna put myself out there. I know people are gonna hate this, but I'm doing it because I like to have my mind changed. This is why I do what I do. I love hearing from smart people about what they do when I'm skeptical. And I've talked about this on the show before. I am, you know, I've got two kids who play video games, okay? And they, and they love playing video games. But I'm, I'm a little bit more like your parents were, which is, I don't love it. You know, I don't like, your parents didn't buy you a console because they didn't want you sitting in front of a television set, right? Like, I want my kids outside, jumping on the trampoline, going on hikes with me. I want them out, doing things.

• 1:18:34Speaker 01

  Yep.

• 1:18:35Guy Raz?

  But I understand, like, the, the world of people 20 and under today is, is much more of a virtual world. I, I get it. But I've watched a bunch of Twitch streams and, of course, they're, they're all different, different in different ways. But, you know, I see a lot of, like, shooter games, just blood, bloodied aliens or humans and, you know, young guys, being like, yeah, whoa, yeah, no way, F, yeah. And, I mean, I'm not saying that's, I know I'm being a bit stereotypical, but I don't know, part of me is just like, some of these really well-known gamers too, I'm sure they're

• 1:19:12Guy Raz?

  really nice people, but sometimes I, I don't know, I, there's a, there's, there's a, a part of it that feels not so nice.

• 1:19:26Speaker 01

  Yeah. I think, there's a lot in there. I think there's a bunch of really, no, they're all really important, really good questions. I'm trying to just take it to, to take apart the various pieces of it. So the first part is, uh, it's the screen time question, right? I'll note, that's not a new problem, right? TV. People watch eight hours of TV a day. People come home and the kid's plopped in front of the boob tube, right? And like the electronic babysitter. That's like a, this is not entirely a new problem for digital entertainment. Although I will admit, phones make it more omnipresent, right? More, it's easy for it to take over more and more time. There's a, there's another thing, which is, uh, video games themselves. And I, well, I admit there are shooters in violent games.

• 1:20:11Speaker 01

  I've learned so much from video games. Video games are incredible teachers. I've learned teamwork. I've learned analysis. I've learned critical thinking. I've learned, I've learned how, I've learned socialization skills. I've, I've learned so much from video games. And when we ask people, why do you use Twitch? Not new people, but people who have used Twitch for years, who are our core users, who, who love it, who come back day after day, is always the same. They don't mention entertainment. For our core users, we are not an entertainment product. We are a community product. I'm here because it makes me less, feel less alone.

• 1:20:48Guy Raz?

  Because they're together.

• 1:20:49Speaker 01

  Because they're together, because they're, and lots of people say they have community, but community is not a collection of people who all like the same thing, watching the same thing together. Community is fundamentally about, uh, communication between two people being witnessed by a third in that community.

• 1:21:09Guy Raz?

  I get that, totally get that. And, and you know, and I, I appreciate that because people who listen to this show feel part of a community in a different way. And I've met people who say, if I go on a date and the person likes how I built this, then we're, and I know we're the right fit. Like, that's happened. But here's the thing, you gave a TED Talk, which I saw and was really good, but a real part of it made me so mad. Part of it made me so mad because you talked about video games as a new campfire. And I heard you tell a story that I really related to, which is when you were a kid, you'd go to friends' houses and you'd play video games. And I remember doing that. And I'm a little older than you, but I remember doing that. And you were in someone's room and you were playing a video game and watching somebody else, but you were in physically the same room.

• 1:21:54Guy Raz?

  That's very different than everybody being in their own space on their own computer, connected virtually. I get it, that's still a community, but it is different.

• 1:22:04Speaker 01

  I agree that it's deeply impoverished versus coming together in person. But I kind of think of, if you think of social stuff as nutrition, which I kind of think it is, I think it's essential for us. Social connection and community cohesion is essential for us, the same way food is. And we can, we can provide, like, not everyone who uses Twitch feels the same way. For some people, it's supplementary, there's other reasons. But there's a set of people from Twitch, it is the vitamin supplement they need socially. And it's, I think it's one of the most important functions we, we offer. And it's a stepping stone. It shouldn't be that you get all your socialization from Twitch. That's terrible. It's like getting all your nutrition from a multivitamin. Like, that's, that's not how you should live.

• 1:22:46Guy Raz?

  I, I think that's a great analogy, because you're right. You can't get all your nutrition from a multivitamin.

• 1:22:51Speaker 01

  Yep. How do we help you?

• 1:22:53Guy Raz?

  Go to the salad bar.

• 1:22:54Speaker 01

  Yeah, how do we help you go to the salad bar and take, take one more incremental step? And I will say that there's a lot of incremental steps there, because when I was a kid, what I realized was I wasn't capable of handling the intimacy of real human connection in a lot of ways, which is why instead of actually looking at my friends and talking to them about them, I looked at a video screen and not at my friends' faces, because my friends' faces were too overload. I couldn't handle it.

• 1:23:17Guy Raz?

  How long did it take you to, I mean, because it's a very self-aware thing to say, but you probably didn't come to that realization until later on in life.

• 1:23:24Speaker 01

  No, definitely not. I realized this, there's a, basically the last 10 years, I've been really like focused on a lot of emotional growth stuff. And I, I probably realized this maybe six years ago, I realized seven years ago, I realized like, oh, that's why I needed to play games so much as a kid. And like, I still play games, but way less now. And the reason was I couldn't handle actual social connection.

• 1:23:48Guy Raz?

  Yeah.

• 1:23:48Speaker 01

  And this was the scaffolding that got me there. And I, I think there's a role for it. I think it's great to get around and play games with your friends. And maybe that, hopefully, for me it was, and I think hopefully for many people, it can be a step towards eventually having deeper, more emotional connections. I view trying to help build community in this way as sort of my life mission. It's like the most important thing I do at Twitch, but it's beyond Twitch. It's the most important thing I think I can work on in a lot of ways.

• 1:24:17Guy Raz?

  It's really interesting. I think it's really interesting. One thing that you've said very explicitly is that we're not a free speech platform. Don't expect to come onto the platform and say or do whatever you want. We'll just take you down. And so it's a very different response than, say, some other tech companies. But in general, that's your position. You're like, we decide what people are allowed to say, what games they're allowed to play. And how do you sort of, tell me how you kind of think about standards and what's allowed and what's not allowed.

• 1:24:52Speaker 01

  So first and foremost, I think of Twitch as being, it's about community and about connection. And part of being in a community is being willing to join that community's standards. And it is not easy to set standards that work globally, that make sense. Right now, we tend to have one global standard, which I think is a good, safe place to start, but we can do better. And we're fortunate that, unlike most social media, you can't really go viral on Twitch. It's almost, because it's live, it can't go, you can't get to, oh, my God, look at this. Millions of people see it. It's like, however many people saw it, saw it. It's over.

• 1:25:31Guy Raz?

  It's real time. It's ephemeral.

• 1:25:33Speaker 01

  Yeah. And my hope is to engage our community more and more deeply over time in helping set rules for itself. I really believe that ultimately, as communities grow up, that there's a sense in which communities should become self-governing. And I don't think the right, there's a sense in which that could be an abdication of responsibility. Oh, not our problem. We'll let everyone just govern themselves. If bad things happen, not our fault. I don't want that, but I want to in a way that is levels up the level of nuance, levels up the level of buy-in, have our community over time help self-standard for itself more and more. And we're just at the very start of that journey.

• 1:26:14Speaker 01

  Right now, we're just trying to make the simpler centralized system work, but I would like to get there over time.

• 1:26:20Guy Raz?

  All right. So I want to ask you about the sale of Twitch to Amazon. And we've done this in the show before, where we've had many companies that were sold and acquired. And in most cases, was the right decision, right? And one that always comes back is Instagram. You know, people talk about Instagram and Instagram was bought for like a billion dollars by Facebook. And people, you know, people think of that as like, or even YouTube's acquisition by Google. To like, people call those like the bargains of the century. Now, that's sort of in hindsight, but of course, you know, you look at a company like Twitch, you look at a brand like Twitch and you think, my God, it's just so valuable today.

• 1:27:02Guy Raz?

  And in 2014, you were acquired by Amazon for a little under a billion dollars. Amazing outcome because it was mostly cash, but still, I don't know. I mean, do you think, you know, tell me about the thinking in your head about this.

• 1:27:17Speaker 01

  So we got paid a pretty good premium over like the last round we raised had been a hundred million dollar valuation. Not that long ago, like a year ago, year and a half ago.

• 1:27:26Guy Raz?

  Right. And I think your revenue, your reported revenue at the time was like $70 million.

• 1:27:30Speaker 01

  Yeah. Something like that. We weren't, we weren't, we weren't that big yet. Now, we were growing fast, so it was clearly a winner. There's a reason they were paying us a premium. But we, you know, we got, we got the forward valuation that I think makes the, if you look at it in an economic sense, yes, yes, Twitch is much more valuable today. But I think from an economic perspective, I didn't ever, I never really worried like, oh, I didn't make as much money as I should have made. And first of all, I made plenty of money to the point where it doesn't really matter. But also, I just, I feel like when you actually do the math, it was a good deal. The real question for me was like, what's the best home for Twitch? What's the best job for me? I mean, selfishly, like, is this, am I going to enjoy doing this? And I hated raising money and I really don't like investor relations. I like building the product. I like working with my team.

• 1:28:14Speaker 01

  I like working with streamers. And I really, I think the fact that I'm still out with Twitch and still at Amazon shows, I think we, we chose the right buyer. I get to basically really actually be the CEO of Twitch.

• 1:28:25Guy Raz?

  Right. And it's been almost eight years. You've been an Amazon employee for almost seven years. Yeah.

• 1:28:30Speaker 01

  That's right.

• 1:28:31Guy Raz?

  Because you can leave. You got your payday. I mean, you can, you can.

• 1:28:34Speaker 01

  We're well after the vesting period. At this point, I'm doing it because I love Twitch.

• 1:28:37Guy Raz?

  Yeah. And Matt, when you think about this journey that you've taken from, you know, starting out Kiko and.

• 1:28:45Guy Raz?

  Then Justin TV and then this kind of gamble, this kind of pivot towards streaming games, which became Twitch TV to the Amazon acquisition to where you are now. Seven years in, you're an Amazon CEO. I mean, a CEO of an Amazon portfolio company. How much of what you've accomplished do you attribute to? Your skills, your intelligence, how hard you worked in? How much do you think has to do with being lucky?

• 1:29:11Speaker 01

  As the famous quote goes, 50% luck, 50% skill, 100% concentrated power of will.

• 1:29:17Guy Raz?

  Yes.

• 1:29:18Speaker 01

  Yeah, I don't know if like, that's sort of a joke. It's sort of not a joke. I was very smart. I was very hardworking. I was very persistent in the face of a lot of failure. And then I was also very lucky. And for something to be as big and successful as Twitch, you kind of got to do all four. I guess more luck can make up for less of the other three. But the best you're going to do is like 50% luck. And I've now been around the valley for 15 years. And I came here with a bunch of people who started making companies. And I don't know anyone who persisted and tried again and then tried a new thing and then tried again, who hasn't had some level of success.

• 1:30:02Speaker 01

  Eventually, you do get lucky. Now, was it going to be Twitch-sized lucky? No, no, no. There's a lot of lower levels of lucky that are still success. Absolutely.

• 1:30:12Guy Raz?

  Yeah.

• 1:30:14Speaker 01

  And so I think at some level, that I was successful at all, I attribute to some combination of hard work, persistence, intelligence. That I was successful in anything resembling the scale of Twitch, that's, there's a huge portion of luck there that is undeniable.

• 1:30:33Guy Raz?

  That's Emmett Shear, co-founder and CEO of Twitch. By the way, remember when Emmett and Justin sold their first business, Kiko, for like $250,000 on eBay? Well, whoever bought it didn't do much with it because the domain name, kiko.com, is just kind of sitting there.

• 1:30:54Speaker 01

  They've never used it. They've never used it. They've sat on it for years. They've never used it. They've never sold it to anyone. It's actually, I have a fantasy someday I'll buy back Kiko. But I just, I think they'll want more money than it's than it. That's like a nostalgia purchase. It's not like a, I don't want to spend like the, what the, a four-letter pronounceable domain name probably costs these days.

• 1:31:17Guy Raz?

  Hey, thanks so much for listening to the show this week. If you want to contact our team, our email address is [email protected]. If you want to follow us on Twitter or Instagram, our account is at How I Built This, and mine is at Guy Raz on Twitter and on Instagram, at Guy dot Raz. This episode was produced by Josh Lash with music composed by Ramtin Arablouei. It was edited by Neba Grant with research help from Claire Murashima. Our production staff also includes J.C. Howard, Liz Metzger, Alex Chung, Kerry Thompson, Catherine Seifer, Elaine Coats, John Isabella, Chris Messini, and Carla Estevez. I'm Guy Raz, and you've been listening to How I Built This.