LISA: From Gimlet Media, it’s StartUp. I’m Lisa Chow.

ALEX: And I’m Alex Blumberg. And we are back! Season 3. It seems like just yesterday we were in our old studios with moths flying all around, wrapping up the last season of StartUp. And here we are, on a brand new season.

LISA: It’s beautiful.

ALEX: Can you feel the excitement?

LISA: I do!

ALEX: And we’re gonna be treating this season a little differently than in the past. I’ll be poking my head in every now and then, but mostly you’ll be in the capable hands of my colleague on mic two, Lisa Chow and her incredible team of producers and reporters. You’ll be hearing from many of them this season—Kaitlin, Molly, Bruce, Luke. You don’t know them yet, but you will. And the final and maybe biggest change this season—instead of a bunch of stories about one company, we’re gonna be bringing you stories about many companies. Each company caught in this moment, when something needs to change and it’s not clear what will happen next.

LISA: Our team has been reporting these stories for months now. Over the course of the season, you’ll be meeting entrepreneurs from different parts of the world in all sorts of businesses. We’ll hear from smugglers, prisoners, tech geeks.

ALEX: This is StartUp afterall. There will be boardroom showdowns. Actual weapons will get drawn. And you will hear two founders who are running out of money record themselves wrestling with what to do next.

LISA: Endings and almost endings. That’s what we’re going to be exploring in this new season of StartUp. Is it over or is it just about to start?
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ALEX: A quick warning—there’s explicit language in this episode, so if you’ve got kids around, you might want to wait for another time to listen. And Lisa, we are gonna kick this very first episode of this brand new season off with a story about startups that happens all the time, but that often doesn’t get told. The story involves these two guys.

LISA: —Emmett and Justin. They had been friends since second grade and they went to college together, and when senior year rolled around…as most people were interviewing for jobs…they found themselves wanting to do something different. It was 2004. Facebook had just launched. Silicon Valley was on the rise. And Emmett and Justin thought, hey, maybe we should start our own company. I met the two of them at a bar recently—they still hang out every week—and they told me the story of how they came up with the idea for their company. It happened the moment they saw a new product that Google had launched, called Gmail.

JUSTIN: We saw Gmail came out and then it was like, "Oh, there could be a calendar version of this", or like a calendar accompaniment. So it was more like an MBA startup in that way actually where you just, like, think of an idea you think could be a thing and then try to, like, make it happen.

LISA: I mean, that’s really—you were just like "Gmail, calendar", or ...

EMMETT: Yes. Literally that was, “oh, this Gmail thing is brilliant”. Like, you can make applications on the web. They made email. What goes with email? Oh, a calendar. Someone should make a calendar.

ALEX: A classic thought. Someone should. Lots of people think it. Entrepreneurs actually do it, even when sometimes they shouldn’t.

LISA: Emmett and Justin started coding. They dreamed of creating a calendar on the web that acted just like the calendar on your desktop—create an event, click on it, move it, delete it, without ever having to reload the webpage. They launched, got some press, got some users. Then, almost a year into their company, and you probably saw this coming: The creators of Gmail, well, they had the exact same idea.

STEVE: I remember—the day Google calendar launched—seeing it and thinking, “well, these guys are dead.”

LISA: That’s their friend Steve. He was working on his own startup at the time.

STEVE: There was the notion that summer of Google was a company to be feared, that, if you were in Google’s path you were dead. So don’t do something that Google would ever consider doing.

LISA: All their friends could see they were doomed. But not the founders. Here’s Emmett.

EMMETT: We spent about 3 months in denial thinking, like, this is just like any other competitor. We'll, like, invent the next thing we can build that will put us out ahead of them. And then we increasingly realized over the course of 3 months that there is no next thing we can build that's gonna put us out ahead of them, but it's like, thinking of features, ‘cause they've built most of the stuff that we've thought of and they have a Gmail integration, and, like, I don't know, like, what else are we going to do? So about three months in we're like, fine. Like, we basically admit defeat and that we can't come up with any other good ideas.

LISA: Emmett and Justin spent the next two months in a funk, sitting on the couch, eating cheap chinese food and playing video games, trying to figure out, what do we do now. And this moment—when nothing’s working, when you don’t know how to save your company—this is the moment we’re going to be talking about this season. Because it’s a pivotal moment. It’s the moment when so many things can happen. You can quit the startup life all together, you can question your very existence, or you can find your next big idea.

ALEX: In the case of Justin and Emmett, the founders you heard from earlier with their calendar application, it was actually pretty clear. After Google came in, they knew it was time to hang it up. And they did. In 2006 they officially called it quits. But that’s actually a rare case in startup land, where it’s that unequivocal. Often, it’s the opposite. Failure isn’t clean and clear. Instead, it’s a near death experience, followed by a last minute reprieve, another brush with death, another resurrection. The cycling back and forth can go on for years. And that is exactly what happened with Justin and Emmett’s second company, the one they launched after Google killed their first attempt. And their experience there was pretty extreme even for the startup world. The near deaths kept piling up, the resurrections were even more unexpected and miraculous. And the way it all ended, well, that’s the story we’re gonna be telling today. Lisa Chow, take it away.

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LISA: In 2006, when Google obliterated their first company, Emmett and Justin were a year out of college, just 22 years old. They were living in Boston at the time, and they were still having those sort of college-y stoner-ish thoughts about the world. But because they were also into being entrepreneurs, those thoughts could turn into businesses. And one day, they had this idea—hey, our conversations are super interesting. What they thought next may sound a bit familiar to fans of this podcast. Here’s Justin.

JUSTIN: You know, we should just record these conversations. And, that, you know, maybe it’d be an interesting insight into, you know, how a startup works, or like, you know, a non-functional startup in this case.

LISA: And this is Emmett.

EMMETT: Justin had the idea of like, “Oh, well we should, like, record them and post them online.” And that somehow, like, we had another one of those conversations where it's like a nuclear chain reaction, right. So it’s like, “Oh, we should post this online...well, we're too lazy to do that. Why don't we just, like, live stream all of our conversations all the time? Well, if we're gonna do that, why don't we, like, do it with video also, because, like...you know, that would be, like, people might want to have the video.” I don't really know why they would want the video. And then it'd be like, “well if we're gonna live stream all of the conversations we might as well just, like, set it up to live stream someone's entire life 24/7.” Justin took the critical step, which is "I should actually stream my life 24/7 on the internet."

LISA: That should be our next startup, they thought. Justin was so excited about this idea. He started telling all his friends about it, friends like Dustyn.

DUSTYN: I thought it was the dumbest idea on the planet. Obviously, Justin was just trying to be a celebrity.

LISA: Then, there was his friend Michael.

MICHAEL: We were having dinner together and he explained this idea, and it sounded like the worst idea ever. It continually sounded like the worst idea for months.

LISA: Steve, the Steve who said Emmett and Justin were dead the day Google Calendar launched, he loved the idea of Justin live streaming his life 24/7.

STEVE: Oh, I was fully supportive, 100% supportive

LISA: But, not for the reasons Justin would have liked.

STEVE: I wanted to see my friends do something really stupid. And I thought it would be hilarious at best and extremely embarrassing at worst. And what’s the downside?

LISA: People’s objections to the idea were many. Mostly, why would anyone wanna watch a bunch of guys talking, sleeping, and doing the mundane tasks of daily living for 24 hours straight when there’s actual interesting things to watch on TV? But, also, even if people did want to watch, it wasn’t going to be easy for the team to pull off. Remember, this was ten years ago. People weren’t documenting their lives the way they are now. Most cell phones didn’t have video cameras. And video bandwidth was very expensive and not very good quality. They’d have to build all the technology—the camera, the way of making it portable and wearable and linking it to the internet. And they’d have to do it in a way that didn’t break their bank account.

These reasons were all so compelling that the company almost died right there, before it was even born. In fact, when Justin and Emmett finally started going out to try and raise money for their next venture, they didn’t even pitch the live-streaming idea at their first investor meeting. They presented a totally different idea—an idea so bad that it seems like satire to our 2016 ears—an on-demand service that would turn your blog into a coffee table book.

The investor said no, what else you got. And it was only at that moment that they said, well there is this live-streaming idea.

To their surprise, the investor liked this one. He thought it was weirder and the ambition behind it was bigger. If you’re gonna disrupt something, why not go for something big like TV, not the coffee table book industry. And so he gave them 50 thousand dollars. Near death, resurrection. In one pitch meeting.

With the new seed money, Justin and Emmett decided to move to the Bay Area, where a lot of tech companies were starting up. They put out a call to their friends, “hey we’re going on a road trip to California. Does anyone want to join us?” Michael, that friend who said their idea was the worst idea ever, he thought, why not? He needed a vacation. He had been working on a Senate campaign that had just lost, and so the three friends packed into a Honda Civic and spent five days on the road, driving out to San Francisco. Here’s Michael.

MICHAEL: The day we got to the city—I’d never been to San Francisco before, I’d never been west of Kentucky—we were at Treasure Island, it had this beautiful view of downtown. And it was October. And it was sunny. Beautiful weather. And it was fleet week and the blue angels were practicing, so there were fighter jets flying over the city. and I was just like, “this is magical!”

LISA: This was vacation for Michael. But for Justin and Emmett, all they could think about was getting to work. And Michael found himself pitching in. He helped them find an apartment, open a bank account. Meanwhile, Justin and Emmett recruited someone from MIT to help build the hardware.

And when Justin was driving Michael to the airport to return home to the East Coast, he asked him, why don’t you stay here, and join the company. Just think about it. Michael was like, sure, whatever, and went back to Baltimore, to figure out what was next for him. But when he was home, he couldn’t stop thinking about Justin’s offer.

MICHAEL: A couple of things occurred to me. One, when is your great friend going to ask you to start a business with him? Like, everything else in life, all of the companies I could work for, all of the campaigns I could do, they are always coming, right, they’re always there. This might be the only time this ever happens in my life. And that was a little intimidating, almost. It was, like, oh man, I can’t just ignore that. The second thing was, they did have fifty thousand dollars, which at the time, it was like, that’s an unlimited amount of money. And they had this guy who was gonna build the camera. And so, somehow my brain morphed from, like, I will never work at this company, to, oh, like, basically this is all legit. Like, we’re gonna clearly win.

LISA: But I’m curious what you thought of the idea still.

MICHAEL: I might have still thought it was a bad idea. Yeah, I don’t know. Because it seems like a very big logical inconsistency, right? Like, I think, like, you know what the difference is, is that like, I think there’s a difference between the idea and company. I think I convinced myself that a company existed, like, was happening. And the idea, I think I somehow separated that and was just like, well, something’s gonna happen. And like, I still think the number one thing that got me was, this is once in a lifetime. You know, people always say, like, life gives you opportunities and you gotta take them. And, like, everyone else thought this was a bad opportunity, but I was like, if it’s a unique opportunity, that means something.

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LISA: So two weeks after that flight home, Michael packed up all of his stuff and moved into the same two-bedroom apartment he had helped Justin and Emmett find their first week in California. He set up his bed in the living room.

MICHAEL: And I do remember the first night sleeping on that futon, and like, our apartment actually had a view of Alcatraz and there’s a lighthouse, and so every thirty seconds, like, the light flashes through the living room of the apartment, all night, and I just remember thinking, like, what did I do? Like, literally, like what did I—I moved my entire world to the opposite coast. It was very far away from family. I had this girl I guess I was technically dating who now lived a six hour flight from me. I had no money. I was like, what did I do? But, like, not like as a negative, but just more like, almost like, look at what I did.

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LISA: Coming up, Michael, Justin and Emmett learn that recording your startup 24/7 is a giant pain in the ass and doesn’t always go the way you plan. That’s right after these words from our sponsors.

LISA: Welcome back to StartUp. I'm Lisa Chow.

So here’s the team that’s launching this company. The president was Justin, the charismatic ideas kid from Seattle with a love of silly pranks and a double major in physics and philosophy. The CTO was his childhood friend Emmett, who majored in computer science and who many considered the smartest person they knew. Michael, the former political operative—who, if you remember, called this company, “the worst idea ever”—he was now CEO. And there was a fourth co-founder, the guy from MIT who was going to build the hardware, who actually dropped out of college to join the team, a guy named Kyle. He’d be VP of engineering.

The team worked for six months before launching the site. Remember, this was before most cell phones had video cameras, before the first iPhone had ever been released. So live streaming your life was a lot more difficult back then. The plan was Justin would clip a camera to a hat he’d wear all day long. That camera would be connected to a thirty pound computer that he’d carry around in a backpack, and that computer would send data over the cellphone network. Just to give you a sense of thirty pounds—that’s about the weight my three-year-old son. Imagine carrying a kid on your back wherever you went.

So that was how they’d livestream Justin’s daytime activities. When Justin would sleep, he’d put the camera on a tripod pointed at his bed. So you’d be able to watch his life around the clock. It would be the real Truman show. Justin wasn’t without his doubts.

JUSTIN: I remember distinctly pitching this idea for nine months. I mean, I thought of it in the summer of 2006 and we'd gotten funding, we’d recruited Kyle and Michael. And we had built this technology, and the night before, we were like, gonna go live, I was like, "Holy fuck. What did I agree to do?” I kind of like—before it was all a theoretical, and the night before it was like, "Oh, this is very real. This is, this is my life now. I agreed to do this."

LISA: Michael said, for the rest of the team, though, Justin put on his game face.

MICHAEL: If Justin didn’t want to do it, it couldn’t happen, right? And so when you’re seeing Justin, “Oh, no problem, I’ll strap a thirty pound backpack to my back. Oh, I’ll wear a camera on my head. I’ll, like, I will do all of these things, which I think some people might have thought were like, glamorous. But we were there. Nobody wanted to trade places.

LISA: In March 2007, Justin went live.

And people went to the site. They watched him fumble through an acrobatics class, pay a visit to a personal stylist and speed down the highway in a car with a friend.

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LISA: And for the first couple of weeks, Justin became a mini-celebrity in Silicon Valley. Ann Curry interviewed him on the Today Show.

ANN CURRY: Do you like your privacy? Well, one guy in San Francisco isn’t worried about it. He’s got his own cameras watching what he’s doing at all hours and he’s sending the video out to the world.

LISA: On NPR …

LAURA SYDELL: We really get to see the world from his point of view.

JUSTIN: Well, I mean this is a real, a true story, right? Basically, there’s—we’re not making this up. Everything’s unscripted. This is really what it’s like to, you know, be Justin.

LISA: And in an interview with Geek Entertainment Television. The reporter is sitting in Justin’s apartment where beer cans, socks and clothes are strewn everywhere.

REPORTER: What the hell were you thinking?

JUSTIN: I thought it would be awesome to let people see what it was like to be Justin. And, you know, it is awesome.

REPORTER: Yeah, it is very, very awesome. Maybe a little messy.

LISA: At any given moment, thousands of people were watching Justin. And companies like Zipcar, Bawls energy drink and GoDaddy signed up to sponsor the site. Suddenly, even though they were still four guys, working out of their apartment, they became super busy.

MICHAEL: Very quickly we just started having tons of work to do. There were tons of press people around, there were people chatting to us.

LISA: This is Michael, the CEO.

MICHAEL: The amount of work that I had to do started, like, ramping up by the minute. And then of course, Justin had to be a celebrity and Emmett and Kyle had to keep everything running. So yeah, no, it was like...it was not a slow and steady launch. It was a very violent, exciting launch.

LISA: Violent?

MICHAEL: Violent. Well yeah, it was just a lot of work. It was just very...people were really into it. There was about a month there where it was just, like, craziness.

LISA: The team had planned to start a bunch of live-streaming shows that they’d produce in house, one by one. They had already started plotting out their second show—a real version of ‘Sex and the City’—where they’d plant a camera of a young woman living in New York City. Their ultimate goal was to build something so cool, it would replace television. But very quickly, they realized their young startup faced a serious challenge, a challenge that was integral to the content.

DUSTYN: It was so boring.

LISA: This is Dustyn, one of Justin’s friends.

DUSTYN: People would actually end up watching him sleep. Which was creepy. He wasn’t doing anything. He was just him.

LISA: When you watch the footage, what stands out is how little happens. Like for example, here, Justin is sitting at his desk, in front of his computer. He’s chatting with someone about a website. He yawns, takes a sip of water.

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LISA: Trust me, visuals do not make this any more interesting.

JUSTIN: We had zero media experience, right? Like, it sounds weird. Like, when we talked to people from media, I think they were like, kind of just like, “What are you doing? You don’t know anything about media and you’re not even going about something that’s gonna, in a way that’s gonna create usable interesting content. You know, I mean people film sixty minutes of content to make one minute of content, right? I mean, you know this, right? You record hours and hours and hours of stuff to just get five minutes. Well, for every minute of content we were producing, we were streaming out one min of content and fifty-nine seconds of that was boring.

LISA: His viewers noticed. They were constantly live chatting him, telling him they were bored, and couldn’t he go out and entertain them? Talk to some girls or something.

In a desperate attempt to get stuff to happen on camera, they started pulling pranks on him. When Justin went out to a restaurant, for example, people at home watching would recognize the street, the location, and start calling the restaurant and harassing the managers, as a way to create some excitement on the show. Some people called in fires at Justin’s apartment. One time, someone called 911 to report a stabbing, and police showed up at their place with guns drawn.

POLICE OFFICER: This is the police. Who’s here? Did someone get stabbed in the chest in here?

JUSTIN: No, no, no. Shit.

LISA: A month into their show—seven months into their company—Justin and the team realized their idea was not working. All the media attention had disappeared, despite the fact that Justin was still wearing the camera and carrying around this heavy backpack, which was killing his back. And for what? Justin says most people would come to the site, and then immediately leave and never come back. Roughly a month after launch, there weren’t thousands of people watching anymore. It was more like dozens.

JUSTIN: Feeling like things aren't working is, like, a horrible feeling, right? Like, you made all these promises to investors and to employees and to customers about how, like, awesome the future was gonna be. And when it's, like, not happening, you feel like you have way over-promised. I mean, I think I have a guilty personality. Like, I have a guilt complex personality generally, but it, like, really fire—you know, comes alive when you’re like, feel like you let people down, right? And you like, aren’t living up to expectations.

LISA: In Season 2 of StartUp, we called this period of a company’s life the trough of sorrow—when the adrenalin rush of starting your own company or launching your product has worn off, when nobody seems to want the thing you’ve created, when you’ve put months of work into something that just isn’t working, and there’s no telling if that will ever change.

And this is the moment when founders often question themselves, question the premise their company was built on, and wonder...should I quit...or should I push ahead?

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LISA: Coming up next week, Justin and his team answer this question and we’ll hear how this small scrappy startup wound up in a place they never thought they’d be—facing off against a multibillion dollar industry, an industry that has powerful friends in Washington.

CHAIRMAN: The Judiciary Committee has convened today’s hearings to discuss an emerging form of piracy—

LISA: Coming up, scenes from the season, after these words from our sponsors.

LISA: Over the course of this season, we’ll be telling stories of all different kinds of endings and people who are going to extreme lengths to hold their business together and keep it from shutting down.

MIKE: I’m going to put the invisible cloaking device on, which is a dark blue, pinstripe suit with wire-rimmed glasses and my hair combed. That’s a disguise for me.

LISA: We’ll explore what it means to run your startup when everything is falling apart.

MARY: We’re into our fourth year. I feel like we’ve plateaued and I am the one who’s standing there. “What can we fix?” is my mantra and it seems like it’s me.

LISA: And we’ll take you inside a company whose ending story is unfolding right now, in real time.

SHARON: When he told me that number, I was just kind of like, “Are you kidding me? You really do need to change direction.”

LISA: That’s all coming up on this season of StartUp.

This episode was edited by Alex Blumberg, Peter Clowney, Kaitlin Roberts, Molly Messick, Bruce Wallace, and Luke Malone. Additional research by Simone Polanen.

Mark Phillips wrote and performed our theme song. Build Buildings wrote and performed our special ad music. Matthew Boll mixed the episode.

To subscribe to the podcast, go to iTunes and subscribe to StartUp, or check out the Gimlet media website: gimletprod.staging.wpengine.com. You can follow us on twitter @podcaststartup. Thanks for listening. We’ll see you next week.