Twitch's Profitability Path

Shaan shares a story about Twitch's long journey to profitability while he worked there.

"At Twitch we were always doing these planning exercises about profitability targets. Emmett had said pretty early on we modeled it out and it was going to take like 10 years probably and this huge number - X billion in revenue for us to break even.

I was like that's just a crazy idea that we need to get to X billion in revenue for this to be profitable. But that's exactly how it was playing out. It wasn't really a master plan though - it was more like 'Oh shit we got users, oh fuck the costs are really high, what if we raise money?' Then we'd have to tell investors how they're gonna get their money back, maybe this business model will work on this timeline.

We'd update that information every 2 years. Twitch had this thing where they'd say 'We're gonna be profitable in 3 years' and they've been saying that for the last 6 years. But that's very common for businesses. Entrepreneurs are generally pretty optimistic - like Elon's been saying self-driving cars will come out this year for 4 years. Entrepreneurs are usually right about the actual assessment but wrong about the timeline.

Someone gave me this great phrase: 'Don't confuse a clear view for a short distance.' It's like when you're driving and you see something so clearly, it looks like it's just right there around the corner. But actually that corner is like a 10 year odyssey that felt like it's gotta be just 2 or 3 years away."