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Twitch's ex co-founder 'Justin Kan' revisits the time when they almost sold Twitch for $1 Billion

Image via Justin Kan & Twitch
Image via Justin Kan & Twitch
ANALYST
Modified 23 Feb 2021
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Justin Kan revealed that before Amazon offered to buy Twitch, Google had almost acquired them.

According to Justin Kan, the deal between Twitch and Google started as a near partnership between YouTube and Twitch. YouTube was going to put a “Twitch button” near the subscribe button to help boost Twitch’s traffic. Shortly after discussing the “Twitch button,” Google told Twitch founders that it would be best for both companies if Google acquired Twitch itself.

Twitch was open to talks about the deal and started receiving offers. The initial offer was 175 million dollars total, but after talking about it, Twitch refused. Many more offers came, each slightly higher than the last, and it gave Twitch only 24 hours to agree on the price. Twitch complained that it didn't like the one-day deals and eventually asked for 1 billion dollars.

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Google offered Twitch a deal that added up to exactly 1 billion dollars, and Twitch agreed. Twitch and Google went through all of the necessary paperwork with the intent of selling the company as quickly as possible. It had finally come time to put a seal on the deal and let the US Government decide whether the deal was a monopoly.

That was concerning Twitch because they wouldn't be paid or receive any money after signing the contract. They just needed to wait for approval from the government before they received the funds. Twitch founders did not want to be in a position where they lost money since Waze took an entire year with this process.

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Google told Twitch that there would be no problem and that it would be a fast process. If that were true, Twitch's founders replied, then Google would not hesitate to sign contracts giving Twitch 50 million dollars in operating costs as well as 200 million dollars if the US government vetoed the deal. Google refused entirely, and so Twitch pulled out of the deal.

Here is how Justin described the decision to pull out:

“It was devastating. It felt like we were snatching defeat from the jaws of victory. We were finally going to get that recognition that we desperately needed in Silicon Valley but it wasn’t going to happen just yet. It was heartbreaking.”

Later, as everyone knows, Twitch would be sold to Amazon for almost a billion dollars. Justin ends the video clip with advice, alluding to the sale to Amazon.

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Justin describes the entire sale of Twitch as a situation to learn from

What’s most important to note is that Twitch was willing to pull out from the beginning of the sale. Justin Kan claims Twitch wasn't in a position where they needed to sell, so it was easier for them to ask their price. He states that this is the only time founders should think of selling.

He states that two other lessons are that founders should know their value and that the sale of a company is tough. Twitch could request a billion dollars because its founders understood how valuable the company was to them. This would lead to Amazon’s acquisition for almost the same amount.

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This is why Justin reiterates the situation as a lesson. When it comes to acquisitions, he wants other founders to know that the process is not easy but that the right mindset is imperative.

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Published 23 Feb 2021, 01:45 IST
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