After A Hot Start, Justin.tv Spins Off Socialcam, Its ‘Instagram for Video’ (opens in new tab)

(techcrunch.com)

38 pointsMazy14y ago10 comments

10 comments

8 comments · 4 top-level

andrewcross14y ago· 3 in thread

How would this work for the investors of Justin.tv? I know that Justin.tv has a stake in Socialcam, but to go from owning 100% of the value to something less seems like a lousy deal for the investors.

I suppose you could make the argument that this will enable Socialcam to grow more quickly and thus drive higher value for everyone, but it seems like quite a high risk.

byrneseyeview14y ago

Justin.tv owns some of it. What they're probably doing is having Socialcam issue some stock to investors, and to grant lots options to the founding team. Imagine that SocialCam has 100 shares now. They might have the company sell 50 shares to outside investors for funding (so Justin.tv owns ~67%, but that is 67% post-money, and the total value of the stake will be the same). Then the company could allocate 50 shares to an option pool for their founders. That dilutes Justin.tv's stake down to 50%. Nobody has to give anything up--the investors are putting in money, and the options are a form of employee compensation.

callmeed14y ago

I don't quite follow.

The investors in Justin.tv now own a smaller share (or none) of SocialCam, right? How is this allowed (without approval)? And who would approve it if growth is good?

2 more replies

abiekatz14y ago

Running an additional product, especially one that takes off requires a lot of resources and attention, is very difficult to manage when your primary focus is on a different business. From Justin.tv and their investor's perspective, they are able to maximize the chance of success of Socialcam while likely maintaining an equity stake. Also, the Justin.tv team can focus all of their energy on growing their primary service rather than managing multiple services.

I like the analogy that having a business with multiple very different businesses is like a multi-front war.

johnrob14y ago· 1 in thread

Justin.tv seems like it's doing really well (at least from the outside), which makes it difficult to understand why they keep launching new products.

JonLim14y ago

Why not? They're continuing to create really great products that scratch their own itches and are allowing the company to grow.

Seems like they have the resources for it and the drive and ambition.

tmcneal14y ago

Justin.tv's strategy of using their video-hosting infrastructure to aggressively pursue verticals within the video watching/sharing/hosting space is working out really well. They seem to have a knack for identifying how people use video and streaming on the web, and are creating products that serve the specific needs of each group.

terhechte14y ago

Interesting. I suspect that Instagram are also contemplating adding video sooner or later, given that in their API images are to be found in the "media" branch, and for each entry there the data-type is labelled as "image".

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