Ten years ago today, Google snapped up YouTube for a then-hefty $1.65 billion. In the intervening years, our concept of what constitutes a “big startup acquisition” has been turned on its head — we’re looking at you, WhatsApp — but nonetheless, YouTube represents one of the most notable and important tech startup acquisitions in recent history.
Much has changed across the technology spectrum in the years since. Bandwidth has broadened, smartphones have become a thing, and video has emerged as big business, as it provides a lucrative channel for publishers to serve ads to viewers, with platforms taking their cut. This is why Facebook is investing heavily in the medium and increasingly treats YouTube as a second-class citizen.
YouTube is big. It has more than one billion monthly active users (MAUs), who apparently watch 46,000 years worth of content annually. But unofficial reports suggest that the video-streaming platform still doesn’t generate profit for its parent company, though it purportedly garnered $9 billion in revenue last year. Speaking purely in terms of scale and mindshare, however, YouTube remains a valuable product for Google (and Alphabet) and remains the biggest online video destination on the internet.
But how did it all start? Here’s a quick recap.
In the beginning…
Founded by former PayPal employees Chad Hurley, Steve Chen, and Jawed Karim, the YouTube domain was registered on February 15, 2005. But initial plans were more akin to the early vision for Facebook, vis-à-vis a dating site for rating people’s attractiveness. Indeed, YouTube was originally envisioned as a video version of HotOrNot, confirmed by this early version of the site as captured by the Internet Archive.
“I was incredibly impressed with HotOrNot, because it was the first time that someone had designed a website where anyone could upload content that everyone else could view,” explained Karim, in a 2006 interview with Time. “That was a new concept because up until that point, it was always the people who owned the website who would provide the content.”
The first uploaded video was from Karim himself on April 23, 2005, titled “Me at the Zoo.” And because of its notable status in history, it has notched up more than 30 million views, despite the fact that it’s 19 seconds of fairly ordinary chatter.
After opening to the public as a beta product in May 2005, YouTube soon snowballed in popularity — a Nike video starring soccer player Ronaldinho became the first to pass one million views in September 2005 (the original is no longer online).
The buzz around the platform led to a reported eight million views each day by the time it launched officially to the public in December 2005, at which point the company had raised $3.5 million in investment from Sequoia Capital. By March 2006, YouTube had grabbed a further $8 million in investment, and, by the summer, more than 100 million videos were being watched by 20 million users every month.
With its growing popularity, YouTube struck a deal with CBS for short-form video programming ahead of the acquisition, while Google inked separate deals with major music labels, setting the foundation for the duo’s official tie-up on October 9, 2006.
“The YouTube team has built an exciting and powerful media platform that complements Google’s mission to organize the world’s information and make it universally accessible and useful,” said Eric Schmidt, then Google CEO, in a statement. “Our companies share similar values; we both always put our users first and are committed to innovating to improve their experience. Together, we are natural partners to offer a compelling media entertainment service to users, content owners, and advertisers.”
In the ten years since, a number of milestone moments — beyond the insane number of viral videos that have sucked people in — have helped shape the YouTube we know today. Here are a few.
1. YouTube Partners
In May 2007, YouTube rolled out its Partner program, an initiative to help its most popular YouTubers (and YouTube) make money. This was a key moment in the evolution of YouTube, as it essentially gave some user-generated content (UGC) the same status as YouTube’s professional partners, such as CBS, and opened up revenue sharing and promotional opportunities to home video makers like Lonelygirl15.
2. Presidential debates
YouTube and CNN teamed up in 2007 for a series of televised presidential debates, with candidates answering questions submitted by the public through YouTube. This was a landmark partnership, representing a major milestone for YouTube as a mainstream medium and the web as a bridge between the electorate and politicians.
After experimenting with various formats for some time, in late 2007, Google finally revealed how its new ads would look: They would constitute semi-transparent overlays that appeared across the lower fifth of a video.
Google and YouTube’s ads have gotten more sophisticated in the intervening years, but this is when it all kicked off.
Though YouTube already offered some older full-length feature films for free, in January 2010, it entered the movie rental market, starting with just five flicks from indie filmmakers. That offering was later expanded, though it never quite took off in the way Netflix did.
5. Going live
In 2010, Google confirmed a deal to livestream the Indian Premier League cricket globally, for free, with the company claiming this as the first major sporting event to be streamed around the world. Later that year, Arcade Fire was beamed live from Madison Square Gardens, before YouTube went on to launch its official livestreaming platform in April 2011.
6. Target markets
Over the past 18 months, YouTube has embarked on a rigorous program of targeting (sizable) niche segments of the online video market.
In February 2015, YouTube Kids launched with a focus on family-friendly entertainment, while six months later, YouTube Gaming was unveiled as a hub for watching other people play video games. Later that year, YouTube Music arrived on the scene, specifically to help music fans discover, well, music.
In October 2015, YouTube launched YouTube Red, a $10 monthly service that ditched ads and served up offline access, along with other perks, including access to Google Play Music and original programming.
Taking a global perspective, one of Google’s stated aims is to target the “next billion” internet users. And last week, the company announced a brand-new standalone YouTube app built from the ground up for the Indian market, with offline access and granular settings that let users choose the video resolution.
YouTube has changed a lot over the past decade, but whatever happened to Hurley, Chen, and Karim, the trio of entrepreneurs who kicked it all off?
Where are they now?
Chad Hurley is said to have made around $400 million from selling his company to Google, and he served as YouTube CEO until 2010. After that, he and Steve Chen went on to found Avos Systems, an internet incubator of sorts that acquires startups (including Delicious) and builds products and companies. In 2013, Avos launched a video editing app called Mixbit, which would later become the Avos’ sole focus, as Hurley and Chen parted ways. Hurley’s other investments include basketball’s Golden State Warriors and soon-to-launch soccer club Los Angeles Football Club.
Steve Chen reportedly made around $300 million from the sale, and he served as chief technology officer (CTO) at YouTube until his departure some time in 2008, though he remained at Google after that. After Avos Systems spun out Mixbit in 2014, Chen joined Google Ventures.
Jawed Karim was the least-known of the three YouTube cofounders, largely due to his role at the company. Though he was involved in drawing up the YouTube concept and getting the project off the ground, Karim was never actually a formal employee, as he was studying at Stanford University at the time. Karim continued to serve as an informal adviser to the company, and though he had a smaller equity share than Chen and Hurley, he reportedly still cashed in to the tune of around $60 million when Google came a callin’.
Karim later went on to found Youniversity Ventures, or Y Ventures, which has invested in a number of noteworthy startups, including Eventbrite and Airbnb.
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