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YouNow Is the Live Video Amateur Hour That Nearly Died. Now It's Booming. Here's How.

A pivot-free story: "Audacious" video chat service that looked like it was a goner a year ago has new life.

YouNow

What would happen if you crammed YouTube, “The Voice” and instant messaging into one service?

Up until this year, the answer was a bummer for YouNow CEO Adi Sideman, who had done just that: You’d attract a small, passionate group of users, then watch your growth flatline.

But since last spring, YouNow has been on a crazy tear. New investor dollars have followed, and YouNow has a new lease on life.

This is normally where we tell you that Sideman pivoted himself out of a hole by abandoning his old idea and going in a radically different direction. But that’s not the case. YouNow in 2014 looks a whole lot like YouNow in 2013 — a very young group of users flock to the service, using their phones, to watch each other sing, dance and talk.

Except now, many more people are doing it:

YouNow

It’s too early to say that YouNow is going to be a success. But we can explain how it got a second chance this spring: Sideman concluded that he had the right idea but the wrong execution. And his investors, who include Union Square Ventures and Oren Zeev, the early investor who backed Houzz, let him take one last stab at it.

An Audacious Idea

The best way to get a sense of what YouNow did, and does, is to download the app today and cruise around. You’ll find a wildly varied mix of amateur performers, most of whom are broadcasting live to a very small audience — many times to fewer than a dozen people at a time. “Performers” is also a loose definition for many YouNow users. Some of them point the camera at themselves while they listen to their fellow users talk about them. Others intentionally fall asleep.

But if you want to get a sense of what Sideman thought YouNow was going to be, check out this video of his demo at the Dive into Media conference I hosted in 2013, where he’s frenetically trying to convince the audience he’s got his hands around a global phenomenon. It’s a tough sell.

https://www.youtube.com/watch?v=Z7558Sk15WM

Sideman founded YouNow in 2011 after spinning it out of Oddcast, a video animation startup. A friend introduced him to Zeev, a fellow Israeli, and Sideman pitched him on a “new modality” of communication — live, real-time performances, distributed via phones, from amateurs, who could vote each other up or off, Gong Show-style.

“The concept looked audacious,” Zeev said. “I thought it was really risky.” He helped Sideman raise $500,000; YouNow would eventually raise a couple million dollars, via two more rounds, through the end of 2013.

But while the service had loyal users, it never found many of them. Sideman says his numbers stayed below five million visits a month for a couple of years, no matter what he did to tinker with it or market it.

“Nothing was really moving the needle in a big way,” he said, while insisting that he knew he’d figure it out eventually.

Sideman’s backers weren’t as sure. “I didn’t think it was going to be a writedown, but I thought it would probably make more sense for someone else,” said Union Square’s Andy Weissman, who had started investing in the company in 2012.

A Stealthy Hail Mary

By the summer of 2013, Sideman had created a last-ditch plan to save the service and convinced Weissman, Zeev and his other investors to let him try. “It was a very close call. It’s not an automatic decision to support something just because you’ve supported it in the past,” Zeev said. “I could have been on the other side.”

The thing about Sideman’s Hail Mary is that it doesn’t look like one. When he was done, YouNow still did the same stuff it did before — it just used different rules.

Instead of having to wait in line, for instance, users could show up at YouNow and instantly start performing live. Sideman took out the ability to give a performer a thumbs down — positive feedback only. And he gave up trying to sort the users into different rooms based on themes. Instead, users grouped themselves, via hashtags they created.

Sideman, who only had about a dozen employees at the time, concentrated his resources completely on his mobile apps.

YouNow started rolling out the changes in January and finished them by April, when it gave users the ability to start broadcasting immediately. That was the most important one, Sideman says. “We knew it was working within a few days.”

In retrospect, you can see why users would respond to Sideman’s changes. Letting them sort themselves by their own interests and affiliations, for instance, opens the site up for users and uses that YouNow wouldn’t have been able to anticipate. Example: This summer started seeing a big influx of Arabic speakers, from Gulf states like Saudi Arabia. Sideman says those users now make up about 40 percent of YouNow’s community.

And cutting out the wait time before you can broadcast means digital celebrities from other platforms like YouTube, Vine and Instagram can drop into YouNow and immediately start tapping into a new potential audience. That makes them more likely to come back, and tell their other fans to come with them.

Share the Wealth

Now Sideman is trying to keep that virtuous cycle going by using virtual goods and revenue sharing. Users can spend money on items that can be used for their favorite performers, like a “50 thumbs up” award; some of that money will now go to YouNow’s most popular performers, via a new partner program.

Sideman won’t break out how the payments work — unlike YouTube, there’s no standard revenue split — but says more than 100 users are getting payouts now. He boasts that many of them make more on YouNow than they do on YouTube.

YouNow also has new funds to work with. Venrock’s David Pakman, a fan of user-generated content companies, had been checking in on YouNow since the spring of 2013. “I really wanted to find a reason to invest, because I really loved the thesis,” he said.

A year later, when its growth started skyrocketing — but before other investors had picked up on it — Pakman approached Sideman and ended up leading a $7 million round. “This is so easy to laugh at and make fun of,” he said. “Then you watch the kids using it and you get blown away.”

Update: An earlier version of this story incorrectly reported that YouNow had fired two employees.

This article originally appeared on Recode.net.

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