Justin.tv / Twitch.tv / Socialcam - Emmett Shear, Justin Kan, Michael Seibel, & Kyle Vogt

I don't have all the details as an outsider, but Emmett Shear (CEO of Twitch.tv and original cofounder, CTO of Justin.tv) just shared publicly about this today on Hacker News [1]:

Actually Twitch is a 100% pivot of Justin.tv. We took the entire team working on JTV, the platform, the cap table, etc. and pivoted to a specific vertical that had been promising on JTV. (I'm the CEO) [Nathan: This is exactly what PayPal and X.com did]

So Twitch is a pivot of the original Justin.tv, with the same cap table, i.e. people and investors.

And Justin.tv had a stake in Socialcam ever since it was spun-out with the original Justin.tv CEO and engineers who worked on it [2]:

Justin.tv cofounder and long-time CEO Michael Seibel will become CEO of Socialcam, bringing a small team of Socialcam’s original engineers with him. Justin.tv cofounder and current CTO Emmett Shear will be taking the helm as CEO at Justin.tv. And Justin.tv will have a stake in Socialcam, which is currently in the process of raising additional funding.

Vogt could have easily raised funding independently, forgoing the roughly 7% equity stake YC takes in its portfolio companies, but he chose to reenter YC in early 2014. Though loyalty to his old friends almost certainly played a role, Vogt says the decision made business sense for Cruise because YC alums tend to raise venture capital at higher valuations and because the weekly dinners foster a competitive environment that pushes companies to move faster. "When you have all these hyper-intelligent people showing their progress, you're able to achieve far more than you'd ever be able to on your own," says Vogt, adding that the decision to reenter YC was not really a decision at all. "It was a no-brainer," he says.

[...]

The four founders went through the Y Combinator program in 2007, during which they set the culture of the company. That culture remains unique in my now-16 years of experience as a venture capitalist: The four co-founders each owned exactly the same number of shares and for the next four years did not make a single decision without gaining the approval of all four founders, including the ultimate decision to break the group into separate companies during 2011.

[...]

Emmett Shear, VP Engineering: Emmett was the only one of the Yale graduates who actually had a degree in computer science and was trained to write code. (Justin and Kyle also did a lot of the programming as time went along.) It turned out that he’s really good and fast at coding, as well as hiring outstanding programmers and designing distributed systems and – playing video games.

[...]

Kyle Vogt, CTO: Kyle was recruited by the Yalies out of MIT to be the “hardware guy”, the one who could figure out how to make the laptop work with cellular networks and build the backend systems that would allow the video to be delivered on a scalable basis. Being a “real” geek (since no one who graduates from Yale can be considered a real geek…), Kyle was the guy who figured out how to build Justin.tv into a scalable system that could distribute petabytes of real-time video to hundreds of millions of simultaneous users at a competitively significant cost.

We were the only VC firm crazy enough in 2007 to invest in four kids (age ~22) with a really crazy business – promoting video broadcast 24 hours and 7 days a week by an individual, after whom the company was named: Justin.tv Inc. Indeed we were the only VC firm (joined by Draper Associates, Tim Draper’s eponymous personal investment vehicle) to re-invest in the company in 2008 in a second financing on the way to the company becoming profitable and self-sustaining. That company has now morphed into four separate companies, in every one of which Alsop Louie Partners is a shareholder and from every one of which we have or expect to make a profit.

The story of Twitch starts in Seattle. That’s where its founders, Shear and board member Justin Kan, grew up, childhood friends living three blocks away from one another in the city’s Capitol Hill neighborhood.

But it was as classmates at Yale University that the two first worked together, launching a web calendar startup called Kiko in 2005. It didn’t last. One month after launch, Kiko — designed to combine the power of Microsoft Outlook with the modern web sensibilities of Google’s then-new email product Gmail — was buried by a different solution: Google Calendar.

Google’s clout and resources alone probably would have been enough to stop the startup. But as Kan recently said at Startup Grind, a startup event in San Francisco, the young co-founders weren’t heavy calendar users themselves and didn’t have the savvy to find any power users for feedback.

“One of the things I’ve learned the hard way over the years is that you should use your own product,” said Kan, now a full-time partner at Y Combinator.

In an interview with Re/code, Shear said needing to use calendars in the professional world, for more than college classes, has made him appreciate what he and Kan could have done differently.

“Now I’m an extremely heavy calendar user and I have all these ideas for things that are annoyingly wrong with Google Calendar, that I use today,” he said. “Now I have all these ideas, but then, I didn’t know. We didn’t talk to anyone, and it was a huge mistake.”

After 14 months, Kiko did find an exit, however … it was sold on eBay, for $258,000.

“We thought we had hit the lottery,” Kan said, having expected no more than $50,000 from the auction. “Maybe startups were not so bad after all.”

That money kept them going, and they learned from a series of further fizzle-outs like a Facebook-for-families social network and a company that would sell glow-in-the-dark gene-spliced roses. Then the duo landed on one idea that Y Combinator founder Paul Graham was willing to invest $50,000 to see: A reality show devoted to broadcasting Kan’s life on the Web, 24/7.

Kan recalled another seed investor saying, “I’ll fund that just to see you make a fool of yourself.”

Justin.tv began broadcasting in early 2007, and quickly scored some major headlines; Kan even wound up on NBC’s The Today Show and ABC’s Nightline. Shear said that part of what made the Truman Show-esque experiment work was that this time, the product was something its creators wanted for themselves.

“If we had any success with Justin.tv, it’s because we were our own user,” he said. “We knew what was important because it’s stuff we wanted.”

In time, though, viewers began complaining about the generally drama-less show (“We did not understand reality TV,” Shear acknowledges) and, more crucially, asking how to make their own live video shows. Kan said outsiders often assume that turning Justin.tv into a broadcasting platform for others was part of the plan all along. Those outsiders, he clarified, are wrong.

“The honest truth is, we weren’t that smart,” Kan said. “It was only later on that the lightbulb went off.”

The site opened up to other broadcasters in October 2007. Three years later, Justin.tv had raised $7.2 million in venture capital and was claiming some 31 million unique users per month.

It was at this time, in late 2010, that the company began working on two “skunkworks” projects. One project, a Justin.tv mobile initiative led by Michael Seibel, would spin off into an Instagram-for-video startup called Socialcam, which sold to Autodesk for $60 million in 2012. The other, a taskforce led by Shear to grow the audience for videogame content on the site, would also become its own product: A new site called TwitchTV.

“It’s kind of counterintuitive, right?” Shear said. “You want to be as big as possible as a startup, why would you pigeonhole yourself in just one kind of content? It took us a long time to realize that was a good idea.”