From Capitol Hill to Venture Capital

15 Nov 2017

The CEO of Y Combinator on how a ‘dumb idea’ became the world’s top videogaming community, the core of being an entrepreneur…and pizza

On the website of Twitch, the “world’s leading social video platform and community for video game culture”, are some impressive numbers: 10 million daily active users; 2.2 million unique content creators per month; 106 minutes watched per person per day. Its closest competitor in live streaming is none other than YouTube who, according to TechCrunch, is still a long way behind.

The same TechCrunch report reveals that “the money (and crowd) is still at Twitch” despite YouTube’s best efforts, which would be music to Twitch’s parent company, Amazon, which paid US$970 million for the video streaming platform in 2014. Not bad for a website that started with founder Justin Kan’s idea of broadcasting his life 24/7 from a webcam mounted on a baseball cap, heralding the start of lifecasting.
 
“Justin told me about this idea [in 2006] with me over dinner with his dad in D.C. and I said, ‘That’s the dumbest idea I’ve ever heard,’” recalls Michael Seibel, one of the four co-founders of Justin.tv, which went on to become Twitch.
Seibel, now CEO of startup incubator Y Combinator – Y Combinator was an early investor in Justin.tv – recounted how he got into the tech business in a fireside chat at the sidelines of the recent Lee Kuan Yew Global Business Plan Competition.
 
Seibel had just completed his stint as the finance director for former NAACP President Kweisi Mfume’s unsuccessful campaign for the U.S. Senate when Kan, a schoolmate at Yale, invited him on a road trip to San Francisco with Emmett Shear, who still serves as CEO at Twitch.
 
“I didn’t know at the time that they’d packed everything they owned into Emmett’s Honda Civic,” Seibel recounts of the four-and-a-half-day drive to start Justin.tv in San Francisco. “To give me a seat they had to throw away a quarter off their belongings,” he tells the audience, sparking chuckles. After spending a couple of weeks helping Kan and Shear find an apartment and buying the budding entrepreneurs a futon, Seibel returned to D.C. despite Kan’s invitation to join the company. A week and a half later, Seibel got an email from Kan.
 
“They said they found this other guy, Kyle [Vogt, now CEO of Cruise Automation], and he’s gonna build our camera. They sent me this 16-page PDF complete with prototypes of the camera and it looks legit. I thought, ‘Maybe this could work.’”
 
Turning down an opportunity to work on what would be the Obama campaign – “I didn’t know it at the time” – Seibel “had to sell everything I owned, basically break up with my girlfriend, and two weeks later I’m sleeping on the futon that I bought for them in the living room of the apartment I found for them.”
Once settled in, the co-founders settled into their roles: “Justin was the frontend guy, Kyle ran video, and Emmett ran backend” of Justin.tv, which soon attracted up to 30 million unique users.
 
“One weekend, the video system goes down hard and Kyle’s out of town – he’s in Tahoe,” Seibel says. “Emmett’s doing this thing that I always love, which is, ‘It’s not my system and I don’t know how to fix this but I’m gonna try,’ and he’ll bang away at the keyboard and every five minutes he’ll go, ‘Michael, find Kyle!’
 
“We’re in San Francisco, Tahoe is a three and a half hours’ drive. I’m thinking to myself, ‘How do I physically touch somebody who is three and a half hours away?’ Then I thought, ‘How do you get something to someone’s house quickly?’ And the only thing I could think of was pizza. Pizza gets to people’s house pretty quickly.”
 
He continues: “So I called up a local pizzeria at Tahoe and I told the guy on the phone, ‘Look, here’s what I need you to do: Go to this address, knock on the door and tell the person who answers that the website is down.’ The guy replies: ‘This sounds serious. I’m gonna get my manager.”
 
Manager: “OK, and do you want us to send a pizza?”
 
Seibel: “Hell no! This is an emergency!”
 
Manager: “To do this we have to put a pizza in the system. What kind of pizza do you want?”
 
Seibel: “Cheese pizza.”
 
Manager: “Unfortunately a cheese pizza doesn’t meet our delivery minimum.”
 
“I was screaming for him to put extra cheese,” Seibel recounts to roars of laughter in the audience. “This poor guy gets sent out to Kyle’s house. He knocks on the door and he says, ‘I don’t know if you know what this message means but the website is down.’ Kyle starts swearing and he turns round and ask the delivery guy, ‘Is there a pizza?’"
 

 

Last updated on 15 Nov 2017.

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