Thank you for being (seemingly) the only person on HN who understands that startups are a lottery. A very, very expensive lottery.
As a founder, your job is to find your unfair advantage and execute on it. Startups that successfully find a valuable secret and exploit it become worth billions. Startups that have no such advantage usually die.
I thought the article was getting at this, but it seems like a lot of the folks here missed it. Twitch succeeded because, as justin.tv, they were in a position to notice rising demand for gaming livestreams. And then when they did, they executed against it very effectively - look at Emmett's user interview lecture for how they systematically gathered feedback from prospective users to convert them to current users. [1]
That's what Justin's talking about when he says "Trust your metrics and your growth." They had an information advantage over VCs - there was very good reason for believing VCs were ignorant there, because in this case, they were.
So, for an alternative view:
This is not an unfair advantage at all. I was in exactly the same position. We however thought that having game sessions streamed was terribly boring (none of the people in our office were gamers), and so, instead of catering to this niche (which I'm sure hit us well before it hit justin.tv simply because we started much earlier) we threw the gamers out and concentrated on the people.
They found another home and Justin absolutely ran with it, he recognized the opportunity that we squandered and I'm very happy that he made it.
There is absolutely nothing unfair about any of this.
And VCs were already funding fantasy sports, casual gaming and other game related activities, they just never made the link with screencasts that Justin did.
But long before then they already won the lottery in the sense that they got more money to work with than anybody in the space up to that point. The biggest deal in that space up to then was probably spotlife, a Logitech / Philips collaboration around the theme of live video, they picked up $30M.
For Twitch, being gamers who also ran a video streaming site was a huge unfair advantage, because they were in a position to recognize a trend as it just started. There was no reason, if you look at statistics or data, to believe that this was a combination worth a billion dollars - that moment had never happened before in the history of business, and will probably never happen again. There was a lot of reason, if you look at personal experience of them and their early customers, to believe it would be.
Similarly, Mark Zuckerburg was a college sophomore at an elite institution who had also built a machine-learning music player. He had a huge unfair advantage, because he realized what he could do with the personal data of a few thousand students. I was also a college student at the same time, at an elite college, and was (as a volunteer) involved with writing our own campus social network. It never occurred to me that it could be a business, let alone a $300B one, because at the time I thought that software companies were things that sold high-performance databases to Fortune 500 companies for real money.
What other unfair advantages do Hacker News readers have that they don't realize are advantages?
There was no reason not to believe the opposite either.
I think I have a problem with your use of the word 'unfair'. Unfair to me means 'cheating', 'foul play'.
Having first spent the required time to create a video service put them in the position to realize that there was another trend brewing and they capitalized on that.
It's a classic pivot into a niche that was unproven, it could have been worth absolutely nothing (and it looked for quite a while that it wasn't going to be worth anything, even long after they already bet the company on it). At least, that's what it looked like to me from the outside. I was more than happy to be rid of the gamers.
> It never occurred to me that it could be a business, let alone a $300B one, because at the time I thought that software companies were things that sold high-performance databases to Fortune 500 companies for real money.
Well, that's just sour grapes. And I'm pretty sure that Mark Zuckerberg is just as surprised as you are at the $300B. That you failed to capitalize on the same opportunity as someone else because they realized something that you did not has very little to do with Mark Zuckerberg being a college sophomore at an elite institution, and even less with a music player, it has everything to do with recognizing an opportunity when one comes along (and whether he acted fairly towards others in that same project or not is not the subject).
If you want to argue 'unfair advantage' you will have to shift your viewpoint to the third world.
Notice how I could have written that Justin had an unfair advantage over our team because he was in Silicon Valley and we were not. But I did not write that because I know that it wouldn't have made a shred of a difference. What matters is that he took the chance and we did not.
> What other unfair advantages do Hacker News readers have that they don't realize are advantages?
Hacker News Readers' advantages are: a great channel to communicate with like minded individuals, access to some of the smartest people that I know, a collective experience that dwarfs even that of the most seasoned individuals in the industry, access to capital, access to YC if you want it and you pass muster, in general a good or even excellent education, not to have to worry about what they're going to eat tomorrow (well, probably not everybody, but most of us anyway) and so on. In short, all the privileges that we as an industry (the IT industry) take for granted and that other people have to fight for.
But between us there is no 'unfair advantage', you're looking at a minute difference between two sets of individuals already from one of the most privileged groups on the planet.
I certainly don't harbor any sour grapes toward Zuckerburg - that is the nature of business, he was prepared & prescient enough to capitalize on his opportunity and I was not. And it's not like life has turned out badly for me in the meantime anyway. :-)
Unfair has a very negative connotation.
> And it's not like life has turned out badly for me in the meantime anyway. :-)
Excellent :)
I think the word that succinctly communicates what you really mean in this thread is 'insight'.
Successful startups are about exploiting insights that seem obvious to you but not to others.
There is a degree of chance (lets stop using luck) about both start ups and sportsbetting. They depend on forces outside of one's control.
However, a lottery mathematically dictates that you will have a poor outcome of winning and all you can do is increase your probability by buting tickets. A startup has more control over how it operates.
A gambler can watch tapes and use past performance to find a perceived mismatch between the spread or gaming lines, and their appraisal.
Many gamblers are unsuccessful. However there is a reason that the same couple guys seem to make it to the end of the world series of poker every year[0].
Peter Theil discusses it in depth in You're not a lottery ticket[1]. Startups are risky as hell and even smart people with good ideas fuck them up. However, smart people with good ideas only rarely win the lottery[2]
[0]amnended qoute from rounders.
https://m.youtube.com/watch?v=g7VMjutSNHk
[2]http://m.nydailynews.com/news/crime/mit-students-scammed-mas...