Amazon acquiring Twitch and thoughts on pivoting

News broke out that it was Amazon who eventually acquired Twitch, with nearly $1B cash, instead of Google whose Youtube seemed to be a perfect maison mère.

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What caught my eyes was the opening paragraph of the letter to users from Twitch CEO Emmett Shear:

It’s almost unbelievable that slightly more than 3 years ago, Twitch didn’t exist. The moment we launched, we knew we had stumbled across something special. But what followed surprised us as much as anyone else, and the impact it’s had on both the community and us has been truly profound.

The keyword here you're thinking about should be « pivot ».

This is a fancy verb that many English-speaking startups and VCs love to throw out every once in a while. It basically means changing direction when the old one doesn't work or when an apparent new path reveals itself.

The word had been much ridiculed in the (un-)surprisingly popular HBO series « Silicon Valley », specifically in Episode 8 when the geeky-looking Jared — who's actually an anti-geek and whose name has never been really Jared — tried to find a new path for Pied Piper, the ficitional compression algorithm startup, after their algorithm was stolen and preannounced by a giant competitor.

However, changing direction remains an essential part of entrepreneurship, whichever buzzwords you choose to describe it or not.

Disruptive startups, by definition, are trying to change a lot of things in an existing market all at once, if not creating an entirely new market. The market, however, is formed by consumers or businesses who collectively will decide how the market shall look like given the existing and new offerings. Any startup could have come up with a brilliant product or service but the market just doesn't want it, or more commonly, isn't ready for it. It is therefore essential that an entrepreneur reflect from time to time whether his current direction is correct or not. That's not to say one shall change everytime the pilot goes south — there is no shortage of successful startups who gained traction slower initially than their eventually dead competitors. However, the entrepreneur absolutely has to stay open-minded and observant and shall avoid getting defensive when multiple stakeholders challenge its current model.

In the case of Twitch, they started off as Justin.tv. Now I have to confess that there were a couple years where I watched quite some NBA games on Justin.tv — illegally but simply because my San Antonio Spurs were rarely on national broadcasts. That business model of course did not fly well with all the crackdowns and pressures from the media channel sources. Competitions were also high as all sorts of illegal TV streaming websites sprung across the world.

Back then, Twitch was but a video category on Justin.tv. The company however quickly realized that this one category had attracted more viewers than all others combined. In 2011, Twitch was spun off and by earlier this year, Twitch has grown so big that it consumed its mother company and Justin.tv was shut down.

Looking back it's such an obvious idea — many great ideas look obvious retrospective.

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After all, game watching as a pure entertainment goes all the way back, before internet was even invented. I remember back in the early 90's when as a high-schooler I would stand in the crowd in the dark, stinking gaming shop, watching people dueling off on Street Fighters.

In the early 2000's, Starcraft got so popular in South Korea that at one point they've had 3 or 4 TV channels broadcasting live games. I remember vividly during a business trip to Seuol I had my eyes fixed on the crappy hotel TV for 2 hours watching korean masters fight off each other, even though I understood nothing the Korean anchor said and I was never even a real gamer!

It's probably surprising that the Koreans had not tried to do their Twitch before Twitch even existed. But what's more important is that the Justin.tv entrepreneurs recognized the trend and promptly made the right decision, which led to the $1B exit today by a great acquirer that shall be able realize synergy.

Bottom line? However funny the poor Jared appeared in Episode 8, pivoting shall always remain at the back of your mind, my fellow entrepreneurs.

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