TLDR: BitTorrent was brilliant tech, but never should’ve been a business

by Backchannel (these highlights were provided for you by Annotote)

“ BitTorrent — the [open source] protocol — was a genius way to transmit large amounts of information over the net by breaking it into small chunks, sending it through a peer-to-peer network, and reassembling it … surely there was a business to be made from it. But from the start, BitTorrent had a branding problem — pirates used it to share movies illegally, making it the Napster of entertainment [when it wanted to be the new Netflix]. Because the protocol was open-source, BitTorrent (the company) couldn’t stop the pirates.


“ 170 million people used the protocol every month … [even] Facebook and Twitter use it to distribute updates to their servers … the protocol moves as much as 40% of the world’s Internet traffic


“ The latest chapter of BitTorrent’s saga begins in earnest in 2015 … when Accel’s Ping Li decided he wanted out. He’d been invested in BitTorrent since 2006 [and] a group of investors offered to step in.


‘ Accel’s stake was bought by DJS Acquisitions in an “unusual transaction”: DJS offered no cash, but instead a $10M promissory note plus a minority stake in BitTorrent. Yes, they bought shares of BitTorrent with [fewer] shares of BitTorrent, because Accel didn’t have many other options.

#illiquidity


“ [DJS had a controlling stake, so it appointed its own founders] Delamar and Johnson as co-CEOs [of BitTorrent]


“ They went on a hiring tear, boosting headcount by 26% [in 5 months], with most of the new hires in marketing and sales … to pursue their strategy of turning BitTorrent into a Hollywood behemoth.


“ The pair moved quickly — at great expense — to spread the word in Hollywood and beyond that BitTorrent was a smart option for distributing movies and music, one that allowed artists to be in control of their distribution and had the potential to reach large audiences.


“ By the end of the summer, it had become clear the strategy wasn’t working. The pair blew through more than a third of the company’s existing cash reserve, while revenues declined … the company had $14.9M in cash, and forecasted ending the year with just more than $8M


“ In October 2016, a year after DJS struck its deal with Accel, the promissory note came due. DJS reportedly was unable to pay. DCM’s David Chao, the remaining venture investor, reportedly stepped in to pay the note, assuming control of their shares


“ It’s unclear what’s ahead for the company.


“ to a person, every last one agreed on one thing: the technology that Cohen invented was brilliant … Perhaps the lesson here is that sometimes technologies are not products. And they’re not companies.

^ e.g. TCP/IP protocols, HTTP, Wikipedia, et al.