A true startup veteran, the Justin Kan we know today has started multiple companies of his own, worked with hundreds of tech startups as a partner at Y Combinator, and has even personally angel invested in many. Looking back, the birth and eventual sale of Twitch helped him grow into the serial entrepreneur he is today, but it didn’t come without its fair share of challenges, difficulties, and occasional missteps.
“We launched this show and we thought we were so cool. A bunch of people thought that this was a real-life Truman Show or Ed TV. Back then, people were like, ‘Why do you want to put a video of your life on the internet? That is super weird.’ So it was this big media phenomenon and then we got interviewed by The Today Show and MTV and all this stuff.”
At the time, the one question Justin received the most was: How do you make a live stream on the internet?
It was then Justin realised the demand for such technology and decided to launch Justin.tv. In no time, the platform went viral. Within a couple of years, the company was at 20 million monthly active users. Through 2007 to 2010, the platform saw celebrities and different types of content being produced. From sports, entertainment and talk shows, they had it all.
It didn’t take long for him to realise that the platform had hit a plateau. They needed to grow, improve and stay sustainable by making sure they were relevant. Not all content was good live. Most was in fact better as a produced video, and to keep the company afloat, they had to constantly improvise and make sure they were giving the audience what they wanted.
What started as Justin and Steve Huffman, co-founder of Reddit, broadcasting themselves playing Xbox, soon developed into a new project for the company. Long story short, a small team was dedicated to focusing on the new gaming arm of the live streaming company. In a matter of 6 months, Twitch was launched.
“We were debating on the name. I remember I really liked some 4-letter acronym that was kind of like ESPN. It would have had X or G or TV or something like that. I don’t even remember what it was. There was absolutely no way we were going to do that. And then [Steve] had this idea of calling it Xarth. The domain was purchasable,” recalls Justin.
“I think we bought it for a couple thousand dollars. That was the placeholder name, the secret project name. So he was going to call it Xarth and then a few days before launch he found the site Twitch.TV. Twitch, like fast-twitch muscles. It sounded like gaming.”
With a killer product, a niche audience, and a formula for success, Justin had to keep the company sustainable. The original Justin.tv was advertising supported – if you were doing a live podcast, and wanted to take a short intermission, you could trigger advertisements. As Twitch grew, things started working themselves out. While advertising was still supported, it acted more and more similarly to Chinese sites like Douyu and Huya, where direct user donations were high, and virtual goods were purchased often.
Despite this, Twitch soon faced its fair share of setbacks. When seeking investors, it was clear that their product, a relatively new innovation in the industry, was not understood, holding investors back. This was one of the factors that pushed Justin to sell the company to Amazon for $970 million, not knowing that it could be a greater success since then.
Today, the audience for gaming video and streams far outweighs the combined audiences of HBO, Netflix, ESPN and Hulu. Back in 2007, Twitch seemed set for this trajectory by surpassing the movie industry – a phenomenon no one saw coming.
But whether a company was on the road to success depended on many things – one of which was having a good team leading it. In early days, the four founders, only 22 years old, knew nothing of management, having never worked a real job before. Decisions were made through heated arguments between the four, and the system fell short from a lack of trust in each other.
“You need to trust. You need to delegate. You need to have division of labour. But we didn’t do that because we didn’t know how to,” Justin recalls.
Today, the relationship amongst the co founders has adopted a healthier nature, one that is based on trust, delegation and ownership.
A key takeaway that has stayed with Justin from the creation and sale of Twitch was this: experience is valuable. Silicon Valley had often propagated the myth that everything had to be new, shiny and reinvented. It didn’t take long for him to realise that all it takes is one good idea, and hiring the right people with experience to execute and grow the company.
“Twitter is a great example. Look at the scaling of Twitter. Its growth was massively stunted by the downtime for years and years. And what I realised over time, experience can be really valuable. Especially around management stuff. The thing that I didn’t realise when I was younger was in Silicon Valley, I thought you had to rethink everything or rebuild everything from first principles. But not everyone’s Elon Musk.”
Most of the lessons Justin Kan learnt, he learnt them through experience. The most common mistake he saw in founders was a lack of focus. There was always the temptation to go as broad as possible, and a tendency to give up too easily. He also noticed that founders were fearful of relinquishing control to executives to help them scale, in fear of overspending. This limited the growth of companies.
As if to prove how important experience was in the field of entrepreneurship, Justin’s current venture Atrium, is what he calls a product of his problems and experiences as a founder. A top-tier technology-enabled law firm that delivers legal services to founders, Atrium streamlines and provides transparency of legal fees for companies. Many of their clients are multiple-time founders like Justin himself, or even later stage companies, and first-time founders – a company dedicated to helping startups grow faster and better.
So what did experience teach him? Justin recognises that to build a company bigger and better than the ones he’s left behind is to continue to be self-aware and level up and figure out what his strengths and weaknesses are – translating that invaluable knowledge into building the next successful company.