One of the most interesting stories that have emerged from world of Web 2.0 companies has been the evolution of livestreaming, with streaming site Justin.tv in particular.   As of present, Justin.tv and its branch-off Twitch.tv have garnered billions of active viewers, generated millions in revenue, and positioned themselves on the forefront of the streaming phenomenon.

Justin Kan

Establishing some context requires one to start at Youtube.com.    Justin Kan began Justin.tv as a Youtube channel.   Sometime in 2007, Justin began live streaming his life through a webcam attached to his baseball cap, recording and broadcasting his daily routine to his viewers.   The experiment attracted a frenzy of media coverage, and the concept of “lifecasting” began the subject of conversation for youtubers around the globe.

Through his experience “lifecasting,”   Justin recognized that continuous, real-time streaming was a internet phenomenon that was attracting alot of interest and viewership.   While social media had previously limited real-time internet interaction to text-based communication forms (e.g. Facebook status updates),  the upsurge in the viewership of streaming video and advances in video streaming technology had set the stage for a exciting new business platform.

Later that year, Justin Kan collaborated with Emmet Shear, Michael Seibel, and Kyle Vogt in starting up Justin.tv, a dedicated website/web company that hosted video streams that streamed a variety of content in realm time.  Categories included Featured, People & Lifecasting, Sports, Music & Radio, Gaming, News & Tech, Animals, Entertainment, Divas & Dudes.   The Gaming streaming section was later split off to Twitch.tv, and is now the company’s most profitable and widely visited category.   Now Justin.tv and Twitch.tv are the two sites dominating the live streaming market, hosting millions of streamers and viewers every single day.

At the height of the dot-com boom, a literal multitude of ambitious start-ups came and went.  The medium of the internet had created a plethora of opportunities for forward-thinking entrepreneurs.   Michael Nardy, then a Boston College undergraduate, decided to take a leap into the pool and started Electronic Payments, one of the foremost online payment processors/e-commerce sites.   Starting out by designing and programming auction software to big software firms, Nardy realized that he had stumbled onto a gold mine of opportunity.   The handling of money transactions through the internet was a service that was actively in demand by almost everyone doing business in the every growing internet market.   Nardy correctly forecasted massive growth in this new market niche, and in 2000, he started operations for Electronic Payments in his dorm room.

If one asked Nardy what his business boiled down to in a word or two, he would probably respond “selling transactions.”   Like any form of currency, online transactions are a commodity sold by a market that has been growing ever since the internet started booming.   Nardy stated in a 2003 interview that “Transactions are a commodity.  So if you can buy a transaction like you buy flour and wheat, you’re going to find success.”   Successfully identifying ecommerce as the market of the future, Nardy capitalized on the demand for transactions through the internet.   Electronic Payments now processes $1.5billion in transactions worldwide, and racked up over $17million in profits in 2008.

One of the lessons that has stuck with Nardy the most through the years of running his own firm has been dealing with rejection and working harder to overcome that rejection.   When he first started, he approached a number of major credit card and financial institutions, looking to establish partnerships with them.   He was flatly rejected.   Instead of giving up on the project, he took the experience and transformed it into an even stronger resolve to succeed.

“The internet, like your mom, is fickle and ruthless.”   Wise words coming from the cofounder of one of today’s hottest social news and entertainment sites: Alexis Ohanian of reddit.com.   Of all the entrepreneurs that I have been researching for this blog, Ohanian seems to be the  most in touch with the six senses that Pink mentions in his book “A Whole New Mind.”   “You’ve absolutely got to make something people actually want or they’ll never stick around, let alone come back,”  declares Ohanian, drawing on his knowledge of the quirky culture that has evolved around social websites on the internet (think 4chan).   The internet is nothing if not high impact, and delivering a product to such a market requires some significant time investment into zeroing on the problem before developing your idea on how you would solve that problem.

Ohanian, a son of mixed Armenian/German parents, has degrees in History and Commerce from the University of Virginia.   He began development on reddit with co-programmer Steve Huffman after graduating, identifying the need for a social community/entertainment site and acting to solve that problem through code.   Reddit was released soon after his graduation, received initial funding from Y Combinator, and was eventually aquired by Conde Nast Publications for millions of dollars.   It is now the 86th most popular website in the world, being named one of the hottest San Francisco companies of 2010, as well as drawing in hundreds of millions of visitors per day.

What exactly is reddit?  The site name is a portmanteau of the words read/edit, which summarizes much of the site’s functionality.   Marketed as the “front page of the internet,”   reddit is a collection of subreddits, or bulletin boards grouped around categories of interest, on which users can post text and links as well as comment on those posts.   The upvote/downvote system regulates visibility of posts, while other site features integrate social networking with group discussion to deliver the unique experience that is Reddit.

What does Ohanian have to say to up and coming entrepreneurs seeking to emulate his success?  For one, he tells people to go ahead and try, whether their idea succeeds or fails.   “Just do it,”  he states, citing the vast range of problems that need to be solved through entrepreneurial innovation.   Looking around at the daily problems that “annoy you,”  Ohanian says, can lead to the next big thing.   He accurately points out that “So many successful companies start out like this: the founders were having a problem, and they found a way to solve it.”

Future Wpromote Founder and CEO Michael Mothner was in an interview for an analyst position at international investment bank Goldman Sachs when he was queried by the interviewer why he, as the owner of a growing and successful SEO company started in his dorm room as a sophomore college student at Dartmouth, was applying for a analyst job at an investment bank instead of expanding the company that he had started.  Mothner was initially flustered, but then realized that the interviewer had a great point.   He promptly thanked the interviewer and walked out to grow Wpromote into the industry leader that it is today.

Mothner started off in the formative years of the search engine, when future powerhouse Google, Inc. was just coming into strength.  Wpromote’s ability to adapt to the constantly shifting world of search engine optimization was a credit to Mothner’s dedication to entrepreneurial flexibility and adaptability in his business.   Initially using his unique SEO strategies to push his website to the top of relevant searches, he discovered a whole new market in applying his strategies to leverage the power of Google’s pay-per-click advertising model (Mothner recognized the growing power of Google’s search engine and tailored his services to match) by applying PPC campaigns to Wpromote’s clients.

Sales immediately rocketed for his clients, leading to the spread of his business through word of mouth and his top position on google search which initially started Wpromote on the track of SEO.  Wpromote now boasts a plethora of Fortune 500 clients, most notable of which would be HP (Hewlett Packard).   Sales have grown to the tens of millions, and Wpromote is an industry leader in the SEO/PPC campaign market.  Mothner’s ability to recognize opportunity and jump on that opportunity, whether it be the risk of starting his own business instead of taking a stable job, or jumping into a new internet market instead of staying in already established markets, has made him the outstanding young entrepreneur he is recognized as today.

Ever heard of Napster? A little more than 10 years ago, Napster was the hot topic of every user of internet back then. Co-founders Shawn Fanning and Sean Parker created a peer-to-peer software program that streamlined the sharing of files. What Napster ended up as was a place to share audio files through downloading and uploading into a network that could be indexed and searched.   Although Napster as it was back then was eventually taken down through a barrage of lawsuits from the music industry, it marked the beginning of a decade of conflict between online music sharers and record companies that still goes on today.   The idea of peer-to-peer file sharing was extraordinarily innovative, harnessing one of the greatest strengths of the interconnected network that is the internet.

Spotify was developed and co-founded by Swedish serial entrepreneur Daniel Ek.   One of his more recent high-profile posts has been CEO of uTorrent, the world’s foremost P2P (peer to peer) sharing software program.   Ek is no stranger to the music scene on the internet; he capitalized on his unique knowledge of the music streaming industry to start and run Spotify.   For those who have never heard of Spotify, it is an online music streaming website that offers DRM (Digital Rights Management) protected music rented from major record labels to both free and paid customers.   Over 20 million users and 5 million paying members have joined since the company’s launch, seating Spotify firmly on top of the online music streaming industry.

Daniel Ek has been an entrepreneur from birth.  After starting his first business at age 14, he went on to found Advertigo and hold leadership positions at Tradera and TradeDoubler.  A technology enthusiast, Ek has been deeply involved in the dot-com business world from day one (his first company pioneered unique technology back in 1997), eventually leading him to cofound Spotify with Martin Lorenzton in 2006.

Spotify has transformed the music industry in a number of ways.   For one, it has granted access to streaming music to anyone with an internet connection (streaming is limited weekly in all countries except the United States, Malaysia, and Singapore).   In doing so, it has really cut down on the amount of music piracy that has plagued the music industry for years.    However, many artists claim that Spotify does not adequately compensate them for their music.   Spotify operates on a freemium model, where users can stream a certain amount of music with ads per month, with the option to pay for a subscription service that allows one to access the Spotify app and stream unlimited music without advertisements.   Spotify pays the artists of the streamed music a royalty for every time the song is streamed.    Several artists such as Nigel Godrich and Thom Yorke have pulled their music from Spotify in protest of what they call “extremely low royalty rates,”  calling out Spotify for exploitation of their intellectual property.   Ek responded to the criticisms with some advice of his own: “I’m not surprised, but I’m saddened by it,” Ek said, when asked about artists’ frustrations. “[The move from physical music to digital] is the single-biggest shift in the industry since the invention of the recording. We’re selling access, not ownership; that’s something very, very different. And, you know, the focus of the artist ought to be how you maximize the number of streams, because that, in turn, will be better long-term for you.”

Spotify has heavily relied on Facebook for its growth.   It has generally required a Facebook account to register, and its utilization of Facebook promotion through its app which users signup to have skyrocketed its membership.   The app publishes the music streamed and seeks to connect Facebook friends with like-minded music tastes.   A company that owes a primary portion of its growth to social media is an example that is quickly becoming commonplace in the current internet-based market, and Spotify has really leveraged Facebook integration to spread their listening membership.