Earlier this month, Inc. magazine crowned Airbnb its Company of the Year. But when we asked readers to vote on their favorite from among our top contenders, a different winner emerged. The people spoke--and a whopping 88 percent of them thought Twitch, the San Francisco-based video streaming platform, should have taken the crown. 

In case you're not familiar with what Twitch does, here it is in a nutshell: it's a site where you go to watch other people play video games. Yes, you read that right. You don't play the games yourself; you watch. It's the kind of site that could have only been dreamt up by a real video game fanatic. And that is precisely what Twitch co-founder Emmett Shear is.

One of the many interesting things about Twitch, which Amazon acquired for $1.1 billion in August, is how close the company came to never existing in the first place. Born in 2007 as the video game segment of live streaming site Justin.tv, Twitch didn't get its own website until 2011, after attracting far more traffic than any of the site's other verticals.

Founded by Shear and his childhood friend Justin Kan--classmates at Yale who previously collaborated on the calendar app Kiko--Twitch allows spectators to watch and interact with people playing video games. The site attracts more than 60 million unique visitors per month, more than half of which spend 20 hours or more per week on the site, according to the company.

In addition to monetizing the experience of watching others play video games by running advertisements and charging a monthly subscription fee, the company also creates a way for gamers to earn money doing what they love, as it splits ad revenue with individuals who broadcast themselves playing. A Twitch spokesman said the company does not disclose revenue figures.

Twitch's true beginning can be traced back to Shear's passion for playing video games, and more specifically, a single game: Starcraft 2, the sequel to the 1998 military science-fiction game Starcraft, which Shear says consumed more hours of his life than any other video game. 

"I had been waiting for Starcraft 2, along with every other Starcraft player, for like 15 years," he says. "It was probably the most anticipated sequel of all time." 

In 2009, the release of a beta version of Starcraft 2 shook up the gaming world, and it wasn't long before gamers started broadcasting themselves playing the beta version on Justin.tv. At the time, Shear, who says he had started watching Starcraft 2 on Justin.tv "obsessively," was trying to figure out the next move for the site, which had seen its rapid growth recently stall out.

"I thought, 'Wouldn't it be amazing if we could focus it down onto just gaming?'" he says. "What if we just supported this content really well?"

With dozens of streaming channels on Justin.tv from which to choose, however, the site's gaming vertical was an unlikely contender for increased attention.

"Frankly, everyone else on the staff thought it was stupid," Shear says. "None of the other founders or leaders of the company saw why the content was exciting. It wasn’t obvious upfront unless you were really into gaming." 

Even Shear had his doubts about whether focusing on gaming made economic sense, as Justin.tv's gaming channel accounted for just 3 percent of the site's total traffic. 

"You always have to have this double check of, okay so I like this, but are there a lot of other people out there like me, and is this something that could actually grow to be big?" he says.

To test his theory, Shear and Kan decided they'd only pursue the gaming channel if they were able to grow its traffic by 30 percent per month, a technique Shear says he would recommend to anyone considering a pivot to take their company in a new direction.

"Set that goal ahead of time and make it aggressive, because then you have that confidence when you hit it," he says. "You know at that point you're on to something."

Twitch's growth during its first months of existence far exceeded Shear and Kan's 30 percent hurdle rate, foreshadowing the company's bright future. 

So when did they know for sure Twitch would be a hit?

"I'd say we knew three months in, just based on the response and the level of fanaticism of the people on the website and how much they loved it," Shear says. "It was pretty clear pretty fast that we had something that was going to be pretty big."

At the time of its acquisition by Amazon, Twitch was estimated to have annual revenue of at least $72 million, according to Recode, which cited anonymous sources. 

Looking back, Shear says he owes much of his success with Twitch to his love for building startups and fun products, but--and here's the part that is sure to excite kids everywhere--none of it would have been possible were he not a lifelong gamer.

"That spark of passion is what drew me into it in the first place," he says. 

Published on: Dec 22, 2014