The Rise and Fall of Lessons on Company Failure

As a startup founder, you might be familiar with the phrase “fail fast, fail often”. It’s a mantra that’s been embraced by many in the tech industry, and for good reason. Failure is a natural part of the innovation process, and many successful companies have experienced failure along the way. However, as important as it is to embrace failure, it’s equally important to learn from it.

In this blog, we’re going to take a deep dive into the rise and fall of, a company that was founded in 2007 and eventually shut down in 2014. We’ll explore the company’s evolution, the reasons for its failure, and the lessons that can be learned from its experience.

The Birth of was founded in 2007 by Justin Kan, Emmett Shear, Michael Seibel, and Kyle Vogt in San Francisco. The idea behind the company was to create a video streaming site that would allow anyone to create their own livecast. The company was named after its founder, Justin Kan, who became the face of the company by live streaming his life.

Before, the founders had already launched another startup called Kiko, a digital calendar web application that allowed users to integrate their calendar with other email services such as Gmail. However, Kiko became redundant after Google launched its own calendar app, and the founders had to sell it on eBay to recover the investment made by the Y Combinator accelerator.

After the sale of Kiko, the founders had the idea to create a live streaming site that would allow anyone to create their own livecast. The concept was new and attracted a lot of attention from the public, with thousands of people tuning in out of curiosity to see what Justin Kan was up to.

Initially, only Justin Kan was able to live stream himself while other users could comment on his life via the public chat room. This unique approach attracted a lot of attention and thousands of people tuned in out of curiosity to see what Kan was up to. However, it soon became clear that it was unsustainable for Kan to continue creating engaging content on a daily basis, so the company decided to pivot towards live streaming different types of content.

The team opened up the site to other people keen on starting their own livecast. One such user was iJustine, a female web designer from Pittsburgh, who eventually became an extremely successful YouTube star.

As the popularity of the site grew, expanded its platform to enable anyone with a mobile phone to start a stream. The company was able to generate tens of millions of monthly pageviews while users created tens of thousands of channels.

However, not all of these streams were legal, with many displaying copyrighted material such as NFL games and movies. While the team made efforts to take down such channels, the sheer number of illegal channels made it difficult to police the content.

To finance the company’s pivot away from livecasting towards livestreaming different types of content, the founders raised $8 million from Alsop Louie Partners and Felicis Ventures.

The platform was rebranded in October and the team even convinced the Jonas Brothers to host a live stream to celebrate the relaunch, which brought in more than 80,000 viewers. The platform continued to innovate at a rapid pace, for example by releasing integrations with the likes of Facebook, Twitter, and Myspace or adding digital video recording (DVR) functionalities. By March 2009, the platform had managed to attract more than 20 million unique monthly visitors.

However, the platform faced some major challenges that would eventually lead to its downfall.

Challenges Faced by

The most significant problem for was its inability to curb the rising instances of copyright infringement on its platform. Many of the platform’s streams were displaying copyrighted material such as NFL games, movies, and more. While the team made sure to create means of taking those channels off, for example by allowing users to file take-down requests, the sheer number of illegal channels was simply too hard to keep up with.

Platforms like Napster and LimeWire all suffered fatal blows as a result of their inability to police content, so the team needed to find a way to eventually make it work. Unfortunately, was still not generating revenue and essentially living off of its funding.

That, however, changed in September 2009 when the platform introduced sponsored channels in partnership with other advertisers. Its first advertiser became Amazon-backed e-commerce company The Talk Market, which began to issue 1-hour broadcasts.

The platform’s growth continued, with attracting over 20 million unique monthly visitors by March 2009. The company also continued to innovate by releasing integrations with social media platforms such as Facebook, Twitter, and Myspace, as well as adding digital video recording (DVR) functionalities. even ventured into other side projects, such as Camtweet, which enabled users to send out live video feeds to Twitter, and Live by Justin TV, a dedicated Facebook app that allowed users to share their live videos on Facebook.

Despite the introduction of sponsored channels, continued to face legal issues. In January 2011, the UFC filed a lawsuit against the platform due to its ongoing failure of taking down illegal livestreams.

The company was facing numerous lawsuits from media conglomerates such as FOX and the UFC, who were accusing the company of not doing enough to combat the broadcasting of copyrighted content on its platform. This issue became a significant obstacle for the company and caused it to face increased scrutiny from regulators and competitors.

The company tried to address this issue by introducing sponsored channels and partnering with Vobile, a content detection and management company, to programmatically scan content on the platform to check for copyright violations. However, these initiatives were not enough to appease regulators or stop the influx of illegal content on the platform.

Moreover, was not generating significant revenue and was living off its funding. The company struggled to find a sustainable business model, and its attempts to introduce sponsored channels and paid content were not generating enough revenue to sustain the business.

Another significant challenge for was the rising competition in the live-streaming space. YouTube entered the live-streaming game in late 2010, and other competitors like Ustream were raising tens of millions of dollars in funding. faced intense competition, and its inability to differentiate itself from its competitors became a significant problem for the company.

Despite these challenges, continued to grow at a steady pace. In the midst of all these legal issues, the team continued to churn out new projects as well., in February, unveiled Socialcam. Socialcam was a photo and video-sharing app that offered some striking similarities to platforms like Instagram. Socialcam was a great success, and the company was eventually acquired by Autodesk for $60 million.

However, another project would ultimately catapult and its founders to Silicon Valley stardom. On June 6th, 2011, the team unveiled a separate live-streaming platform for gamers, called Twitch. The decision to launch Twitch was a smart move, as live-streaming gameplay removed almost all concerns of copyright issues since studios don’t have claims over material created by players. Moreover, the gaming industry was much more open to working with Twitch and the team, for example by sponsoring e-sports events. Twitch quickly became a dominant player in the live streaming space and captured over one billion minutes of viewed content within a few months of its launch.

The success of Twitch eventually led the team to focus almost all of its efforts on the gaming streaming platform. In February 2014, Twitch became so big that it ended up ‘swallowing’ under a new corporate structure called Twitch Interactive. Three months later, in May, the team announced that it would get rid of all of its archived content for Weeks prior, rumours began circulating that YouTube was eyeing to acquire Twitch. Reporters began to speculate that’s execs simply wanted to get their operational cost in check to beef up their numbers and make themselves a more attractive acquisition target.

On August 5th, 2014, the last proverbial nail was hammered into’s coffin. Co-founders Kan and Shear announced that they would shut down the service in the next month. Twenty days later, on August 25th, Amazon disclosed that it would be acquiring Twitch Interactive for a whopping $970 million. Today, Twitch is synonymous with live streaming and is by far the most dominant platform in its space.

Reasons for the failure of

The fall of can be attributed to several reasons, both internal and external. Let’s take a closer look at them:

Inability to monetize the platform

One of the biggest reasons for the failure of was the inability of the platform to generate significant revenue. Despite having a large user base, the platform was not able to generate revenue through advertising or other means. The founders tried to implement a subscription model, but it didn’t work out. As a result, the platform became unsustainable financially.

Learning for startup founders: It is important to have a clear revenue model from the beginning. Founders should focus on creating a sustainable revenue stream, either through advertising or other monetization strategies.

Legal issues faced several legal issues due to copyright violations on the platform

Although the company tried to take down copyrighted content, it was difficult to control a large number of users and streams. The company also faced a lawsuit from the UFC due to its failure to take down illegal live streams.

Learning for startup founders: It is important to understand and comply with legal regulations. Founders should be aware of copyright laws and ensure that their platform does not violate them.

Focus on the wrong product started as a live streaming platform where users could create their own live streams.

However, the platform failed to gain traction due to lack of compelling content. The company then pivoted to a different product, which was live streaming different types of content. This led to the growth of the platform, but the company lost its original focus and its core audience.

Learning for startup founders: Founders should focus on creating a product that addresses a specific need and provides value to the target audience. Pivoting can be useful, but it should be done with care and with the audience in mind.

Competition faced competition from other live streaming platforms such as YouTube and Ustream.

The company was not able to keep up with the competition, and its user base started to decline.

Learning for startup founders: Founders should keep a close eye on the competition and constantly innovate to stay ahead. It is important to understand the unique value proposition of the product and communicate it effectively to the target audience.

Lack of innovation failed to innovate and keep up with changing market trends. The platform did not adapt to the growing demand for mobile streaming, and its lack of innovation led to a decline in its user base.

Learning for startup founders: Founders should constantly innovate and adapt to changing market trends. It is important to stay up to date with technology and understand the needs of the target audience.


In conclusion, the rise and fall of provides several key learnings for startup founders. It is important to have a clear revenue model, comply with legal regulations, focus on creating a product that addresses a specific need, keep a close eye on the competition, and constantly innovate to stay ahead. By understanding these key learnings, startup founders can increase their chances of success and avoid the mistakes that led to the downfall of

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