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Thinking Bigger / Thinking Smaller with Justin Kan (Twitch/YC)

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    The Twitch Founder & YC Partner welcomes us in his house, and opens up about how he had to think bigger — and sometimes think smaller — on the way to Twitch’s near-$1B exit.

    Justin Kan, Twitch Founder and YCombinator Partner: You know, you gotta make it a Snapchat show.

    Tim Anglade, Executive in Residence at Scale Venture Partners: Yeah, I don’t wanna compete with you, though. I just, you’re doing a really good job.

    Justin: It’s not a competition, we just need more content. People are always asking me, like, where’s, what additional entrepreneurial content is there on Snapchat.

    Tim: So there’s a lot of people there now, right?

    Justin: There’s Mark’s sister, there’s like, Gary Vee, there’s a, you know, you’re doing a really good thing with those Q&As, and so, I dunno, I kinda feel like you have to find your lane, though, you have to find your voice for it, it’s just, it’s a bit crowded, right?

    Tim: Uh, I don’t think it’s that crowded, but you do want to find your own voice, I think.

    Justin: But so, like, that’s essentially, you know, it’s very funny, ‘cause when you started doing the lifecasting thing, I mean, that was pretty radical, now it’s like, okay, we’re in 2016, people are like, oh, this guy’s like webcasting his life, you’d be like, sure, whatever, my neighbor does that, but. When you started doing that originally, I remember like, being like on the audience side, being like, this is kinda crazy, and kinda stupid, to be honest, it felt like, really really really weird, like a lot of radical ideas do. And then of course it turned into like, Justin.tv, like the service, and like a ton of people signing up for that, and eventually it seems like it’s sort of morphed into Twitch and of course like the huge success that it is, and so that was particularly striking to me in kinda your background in that you kinda morphed all of these experiences kind of fairly continuously one into the other. It feels like they organically became the next thing, but maybe that’s not true at all, maybe it’s a bit of a false premise. So what was that like, kinda going through all these phases for your idea?

    Tim: Well, it was, you know, I think we were kinda stumbling in the dark for a long time, trying to make a company. We had this idea that we were gonna make a company, and it was our second company, actually. We had been working on Kiko, which is a web calendar that was like Google Calendar but not as good, and came out, you know, a month before Google Calendar came out, so. We decided, hey, let’s start another company. The only idea we had, well, we had a couple ideas, but the idea that Paul Graham was like, willing to fund was us making our own reality TV show called Justin.tv. He thought that would be just crazy enough it might work. And so we decided to go for it, didn’t know anything about how to create livestreams online, in fact there wasn’t really much out there. So we had to build all this technology that enabled us to put our own stream up, and then we did that, spent six months doing that, launched our show, and then boom. All this press, right? A lot of hype, because there was this real-life Truman Show type thing. And unfortunately, people were, came to us and said, like, your show is really boring. You gotta do something. We’re programmers, right, we’re sitting there, like, working on the site, trying to make it, like, stable. And we ended up going to, we ended up, well, we ended up taking that feedback and luckily they said hey, we also want to create our own livestreams, so the lightbulb went off and we pivoted into a platform. But that wasn’t the original intention.

    Justin: Right, so you weren’t thinking like, oh, we love this cool little app, this little content, of like, me livestreaming my life, and then you know, like, we’ll encourage others to also share on the platform, you were just kind of really taking that step by step and the idea of like, opening the platform to others really only came from the…

    Tim: From the user feedback.

    Justin: Makes sense.

    Tim: And from the feedback of the community of people who stopped on our site and checked it out.

    Justin: Right, and it was very general, right, the Justin.tv platform, right, you seemed to welcome like a lot of different people doing a lot of different things.

    Tim: There was all sorts of stuff, from people streaming their bike races to people making their own live talk show, to people just broadcasting themselves kinda like I was on their daily, doing their daily thing. Almost like Periscope, but before Periscope was, you know, six or seven years before Periscope.

    Justin: And it’s interesting, ‘cause you know, you could argue that now there’s a lot of platforms that serve that kind of lifestreaming audience, right, whether that’s Snapchat or YouTube or all that stuff, but back then I remember like, it being very, having its own little, like, little ethos, right? There’s just, there was like big content platforms for like traditional content and media stuff that wanted to be put online, and there was some experimental stuff on YouTube, but it felt like just in its own little kind of corner, right, where if you wanted to share something very very personal and kind of random that didn’t fit those kind of media stereotypes that this was probably the platform for you.

    Tim: Yeah, we had our own, it was a whole set of different video players, especially on user-generated content in 2008, 2009. There was us, uStream, Livestream, companies like Veo and Revver, and those all changed, yeah. There’s like, not very many of them actually survived, but we have these different communities.

    Justin: Right, but a lot of them seem to have gone towards, like, webinars and stuff like that now, with an audience, or like livestreaming concerts, you know, very corporate-ish type of things.

    Tim: These kinds of things that they could make money off of.

    Justin: Right.

    Tim: And so we grew Justin.tv, and it grew and grew, and became a pretty big community. Like, 20 to 30 million MAU. And eventually that growth flattened out and we decided we would need to work on some new products in order to, you know, have a company that was continuing to grow, and so we looked at the content and Emmett, one of my co-founders, really identified gaming as the only content that he liked watching, and it was really a nascent category on the site so he was like, we should work on this. We were pretty skeptical, to be honest, the rest of us. But we decided to take a chance on it, set some goals, and then start working on that, and, uh, it kinda grew and exceeded our expectations until we decided to put more resources on it.

    Justin: Right, and that’s an interesting twist, right, because by focusing the platform, in a sense, or maybe you’ll disagree, but from the outside, it seemed like by focusing the platform on gaming you were able to grow past that plateau, right, grow past that MAU number and actually make the platform bigger, is that correct?

    Tim: That’s right, it was very counterintuitive, right? Because you would think that gaming was this very small niche. Luckily, we were building into a niche that was growing quite big and now everyone’s talking about esports and esports viewership and people watching games and interacting with people online through games. But that wasn’t the case in 2011, when we started working on it. And so, you know, Emmett took a team internally and started working on that, and it grew and grew and grew, and it passed our expectations. In the beginning we said, in order for this to be important, we’re going to want to be as big as gametrailers.com, which was the biggest independent gaming video site, within two years. And that was, I think, 10 million MAU. And then we set goals of like, how much we would have to grow to hit that, and we exceeded those goals, and I think within six months we were around 80 million.

    Justin: So does that kinda, you know, this is kinda a repeating theme I’m hearing a lot of, like, you have the mix of inspiration of like, let’s go into gaming, and like, it feels right, it also maybe doesn’t feel right to some people, but, you know, we’re gonna do it. But also there’s this kind of discipline of saying, okay, like, we’re gonna set the metrics.

    Tim: Yeah, setting metrics a priori was really important for us, because we were able to measure our growth against those and say, hey, we’re actually doing what we thought we would, where, like, to be successful. We’re exceeding our expectations to what success means.

    Justin: So we’re mapping out the kind of three really big iterations, I’m sure there were like much smaller, kind of small iterations or pivots in the middle, was there a time where you were like really kind of battling your intuition versus like what the metrics were telling you, and I guess, how would you recommend people kind of decide whether, like, it’s time to quit and do something else?

    Tim: Well, I think that it’s easy to get emotionally caught up in how you feel any given day or any given week, and think oh, it’s not working, but when it’s just, you’re growing, it’s growing, you’re in that first part of an exponential growth curve, right, so it looks like it’s linear, it looks like it’s not growing very well. And so I’ve seen that with a lot of friends’ startups, right, and part of it is having the discipline to stick to a certain goal and say, if we achieve this goal, then that’s, it’s working. And remove the emotion from the choice. I think that, for us, we spent a lot of time building products where we didn’t measure, actually, which was horrible, and I think that only when we did start talking to our customers and really setting a goal and trying to hit that goal were we really successful.

    Justin: And so, you know, it’s obviously getting gigantic success, right, you know, in many different ways, like Twitch has turned, you know, whether that’s kind of from a financial sense with the exit or with the number of people that are broadcasting or watching a stream or even the cultural impact it has on an entire generation, to be very honest. And this seems like a really, really big thing, but it also in some ways seems smaller than maybe what you were trying to do originally, and so I’m wondering is there some tension in your mind towards that, you know, do you still feel like, hey, it’s one way this concept of, like, you know, livestreaming and lifestreaming has succeeded, but like, there’s many other ways we could have succeeded, or do you look at it and see, like, oh no, that was the way to go, and I’m glad we found it.

    Tim: Well, I think there are probably many other ways that we could have succeeded, but it’s not smaller than we had thought originally, right, like, I mean, as a company in general, than we would have dreamed. It’s bigger than we would have ever dreamed of, you know, the last announced numbers were 100 million monthly viewers and sold it for a billion dollars, which is, I would say, when we started off I remember thinking, if we make a company where I can make a million dollars I would be set, right, that would be like, my wildest dreams. So yeah, I think we, I’m always like, man, I can’t believe that Twitch is so big.

    Justin: No, it’s definitely affecting a lot, and you know, it’s kind of also a bit of maybe a two-way relationship, right, we talked about like growing the idea or focusing the idea, but to what extent do you think also like, society changed during those seven years, and you know, if you had done video games from the start or sooner, rather than…

    Tim: I think timing mattered. I think we got, a lot of entrepreneurship is dedication, being smart about how you’re pulling your resources, and not giving up, but a lot of it is also luck. We were lucky that we found a wave that was happening. I think the best entrepreneurs capture something that would happen with or without them, right?

    Justin: Yeah, but people, I mean, people talk about timing quite a bit, but you know, I’m wondering if there is something maybe a bit more intricate about it, you know, and to what extent do you feel like Twitch made this kind of move towards watching game broadcast and esports and all that happen versus benefited from it happening, you know, at the right time.

    Tim: Oh, I think it’s both, right? Probably grew the audience of people who are interested in this content, and built our own community, where there’s things happening that are, I’d say, we built, Twitch is a community that generates content now. Like, Twitch Plays Pokemon was really popular in 2014, where the community was controlling this Pokemon screen, right, and that’s not content that would have existed without Twitch. But at the same time there was all these people interested in building esports, esports communities, the gaming companies realized that competitive gameplay was a great driver for their games, and so there were, without the game companies making these competitive modes, this would never have taken off.

    Justin: Right, and so it’s a bit more than just kind of being in the right place in the right time, right, you can also make your luck to some extent, or help shape the community, help shape the movement, right, that benefits you.

    Tim: I think it’s both, right, you need both.

    Justin: Right, so that kind of, you know, lines up, you know, historically, in terms of those different phases, so what are some of the stuff that you feel like from the livestreaming and lifestreaming and like, live video is obviously like a huge thing right now, between Facebook, of course, pushing it a lot, and YouTube, you know, now finally kind of letting everybody broadcast live and all that stuff, so what do you think are some of the next big kind of frontiers in terms of like, livestreaming and lifestreaming, what are some of the stuff that you feel like you wish you had as a user or you would do today if you weren’t busy with some other projects?

    Tim: Well, I think with live video, I think video in general, the way to compete against Facebook or Youtube, which are massive platforms with, you know, over a billion, a billion MAU, right, and uh, I think the way to compete with them is really to build a video, like, something that’s a community-focused product. That focuses on a specific community. That’s what Twitch did, right, Twitch was better than, is better than YouTube Gaming or YouTube Live because it focuses really on gamers and the Twitch community and there’s this network effect there where people have started to identify Twitch as the place to go for gaming content. And that was, I would say, a process to build up, it wasn’t like an overnight thing, it was a lot of focus on building a, on having a community development team that went out and like, talked to the community, were from the community, it was supporting people in the community before it was like, very clearly, the best economical decision, so I think that there’s, that’s a way that you can compete with the generalized platforms, and…

    Justin: And it show into a lot of different things, you know, to kind of maybe give people more examples, like just very basic things like the way comments work or even just the tone of the comments and the tone of the direction and the language that evolved in the platform, I think, you know, the users really recognize that, and that’s why people would rather kind of do gaming streaming on Twitch rather than somewhere else, right, so that kind of community focus, and it can take many, many different shapes from, sure, like high-level marketing and branding, but also like, just the way your features work or the way the community itself reacts, yeah.

    Tim: Exactly, I think YouNow is another great example, right. YouNow is being successful with mobile streaming, and they focus, I think, a lot more on the social broadcasters. I think there’s a lot more verticals where someone can create a verticalized video site whether it’s around fitness or beauty and, or ecommerce, right, and build something that appeals, like, very strongly to a small group of people, and the community kind of grows from there. The ironic thing with Twitch is that now that it has this big base of viewers, we’re, the Twitch team has put things that were originally on Justin.tv back on, right, like music or creative, like, people creating art.

    Justin: Or eating, yeah, I was checking that out.

    Tim: Social eating. So I think that the, like, focusing on the community and then building that really tight community and then going broader is kind of the way that you can compete.

    Justin: It seems like, you know, it’s like a, it’s a typical thing in like a multi-sided market, or other platforms where I do stuff, where you kind of zig-zag your way, you kind of build your audience one time and then you use that to kind of get another audience and the typical example is, you know, it’s like a night club where you do ladies’ night and then ladies get in for free and then that way you get the guys, right, so that’s a very, you know, maybe antiquated example at this point, but um, you know, this is kind of what you’re saying, in a sense, of like okay, you can focus on maybe gamers or some other niche, really kind of grow a lot and get a lot of MAUs that way, and then kind of move on to the next step and kinda keep growing your platform that way, the same way that maybe Facebook did that by doing colleges and then kind of growing into a bigger landscape, but it’s not necessarily the shortest path to go directly for the large audience and the general public, yeah. That seems to make a lot of sense. So yeah, like a lot of good stuff there in terms of like, when to grow and when to focus, right. When to go for a bigger target versus when to narrow down your idea and that helps a lot, so. Yeah, do you have any kind of just general advice on that, on when to grow and when to focus? It seems like that’s a typical struggle.

    Tim: Well, I think you always want to be talking to your customer, right, that’s what we talk about at YC all the time, you want to talk to your customer. That, really, the way Twitch grew, was that Emmett went out and talked to the gamers, and said what would it take to get you to broadcast on our site, if you’re not already, or broadcast more, and got their feedback, and a lot of things that we had thought about at Justin.tv but never implemented we ended up implementing because of the feedback, right, those were things like, helping people get paid, because they wanted to do this full time as their job, or increasing the quality of our streams. We thought our solution was good enough, but actually the quality wasn’t really good enough for gaming. And so you never really know what to focus on unless you’re talking to your customers, right? And observing, and looking at the data, the qualitative data and the quantitative data, right. You know, you don’t know, some of the times it might be the right thing to work on increasing the quality of service because if you add additional customers they’re just gonna churn, right. Or your quality of service might be good enough, but customers might be like slightly, they might be, they could be more satisfied, but they’re satisfied enough, so you should be focusing on growth. I think that you don’t know, and it’s different for every company, but the way that you get there is by really being in that feedback cycle of talking to customers.

    Justin: So again, there’s no silver bullets, but yeah, that’s kind of good advice, right, you know, it’s like you know, use the feedback loop, and use the metrics, right, to guide whether or not you’re going in the right direction with your ideas, so cool, that helps a lot. Awesome, I think that’s it.

    Tim: Cool.

    Justin: We’re keeping these pretty simple and short, and then, ‘cause you know how it is.

    Tim: Right, web video, online content. People can only have 10 seconds at a time.

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