How A Site That Streams People Playing Video Games Became A Billion Dollar Business

The genesis of Twitch, one of the most popular gaming-related Websites and applications in the world, can be traced to a few informal meetings in the fall of 2010, including one with Gideon Yu.

The former chief financial officer of YouTube, who negotiated that site’s $1.65 billion sale to Google and parlayed some of his windfall into a 5% ownership stake in the San Francisco 49ers, came by’s offices — which by then had raised $8 million in venture capital and had begun to generate revenue by morphing from a site originally conceived to stream the life of co-founder Justin Kan into a platform where anyone can stream video.

According to Michael Seibel, another co-founder, Yu came in and gave the company the kick in the pants it needed.

“He came by and basically said, ‘You guys have got something, it’s making some money, but you haven’t really made anything of significant impact, so you can sit on your ass and make a salary and not run this like a startup, or you can build something real out,” Seibel said.

That meeting, coupled with other conversations like one Kan had with SAY Media’s Matt Sanchez, convinced the team to start a few skunkworks projects internally. Taken together, the discussions with Yu and Sanchez marked the start of a process that would eventually morph into two companies with two different missions — Twitch, a site consisting of video streams of people playing video games, and Socialcam, a mobile app for sharing video.

It also marked the beginning of co-founder Emmett Shear’s evolution from engineer to executive, an unlikely ascent that transformed Twitch into one of the most valuable video-streaming companies in the world. Now Twitch is among the companies on Google’s shopping list, being eyed for a reported price of around one billion dollars. (The company announced Tuesday that it would wind down’s operations in order to devote all of its resources to Twitch.)

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