- Unheard Roots
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- Unheard Roots of Youtube (PT.2) 🔨📈
Welcome to Part 2 of the awe-inspiring story of Youtube :)
You’re going to be totally confused if you only read this issue so make sure you read Part 1 first.
Youtube is born 🎇🎆
At the time Youtube was founded (2005~) anyone could take videos with cameras and upload them to their desktops.
Problem is there was no way for them to share the videos.
You’d just have a bunch of video files sitting on your desktop.
Plus you also needed to download and use a bunch of players (i.e Windows Media Player, Quicktime, etc) just to watch the videos.
The Youtube founders wanted to build something that would be seamless and instant - you would be able to load up the website, upload any video file, and watch + share it instantly.
Google had launched Google Video a week after Youtube launched but Google required users to download a video player on their devices and it would take a week for a video to be live on the website.
The Youtube founders knew if they wanted to build something big they needed to make it seamless (no download or player required) and instant (videos are live and ready to share instantly).
Hiring engineers & designers 📱🔨
The vision for Youtube was not a simple vision - especially technically.
A lot of new technologies had to be pioneered to make the vision of an instant and seamless video streaming & sharing platform work.
Luckily the Youtube founders had a massive advantage - they were friends with lots of world-class engineers from their Paypal days.
The first technical team of Youtube was all former Paypal engineers who were working for completely free.
Bootstrapping & Maxing Out Credit Cards 💵💳
Here is a lesser known fact about Youtube - it was completely bootstrapped initially. Talk about being the first indie startup :)
The founders had enough cash from the Paypal acquisition to fund the early days of the startup.
Unfortunately, like all good things, the cash dried up and soon enough Steve Chen was maxing out his credit card to fund the startup.
“It was about 9 months, we were self-funded and towards the end of right before we received funding from Sequoia Capital - I didn’t know you could do this - I was reaching my credit card limit on a monthly basis but you can actually pay your credit multiple times during the month.”
Luckily the CFO of Sequoia Capital (a major VC Fund in SF) was the former CFO of Paypal so the Youtube founders were able to use that connection to get VC funding for Youtube.
By the way, remember the guy from the me in the zoo video? Yea, thats Jawed Karim and he left Youtube right before it got funded. Why? He wanted to go back to school. Jawed still got equity for his work in the early days but left right before Sequoia funded Youtube.
Marketing & Monetizing in the early days 💵
Up until the Google acquisition the founders refused to monetize the site at all - they believed it would hurt the user experience and virality of Youtube.
“The easy way to advertise or monetize would have been to just put pre-rolls in and interstitial ads in front of videos. And just video ads make a lot of money but at the end of the day I think it’s about user experience and virality of the website.”
As for marketing, the majority of early growth came from word of mouth and press.
The Youtube founders told all of their friends about Youtube and those friends told everyone they knew about Youtube and you know how the rest goes.
Youtube also scored a huge PR win when the TechCrunch of the time featured the startup in its front page. That helped the team get more publicity from other blogs and major tech publications.
The team did have their fair share of marketing flops like when they tried to put flyers around the Stanford campus (like they did in the early days of Paypal).
Getting Acquired by Google 🥂
The startup tenure of Youtube was relatively short since a year after being founded it was acquired by Google.
Youtube was officially founded on February 14, 2005 and it was acquired by Google on November 13, 2006.
Fun Fact 📚
Here is a fun fact about the early days before we wrap up this issue, Youtube was almost not going to be a thing. Jawed Karim decided he wanted to go back to school and Steve Chen had accepted a job at Facebook right before Youtube was launched.
If it wasn’t for Chad Hurley and his ability to persuade, Youtube would have never been a thing. Luckily he was able to convince Steve to quit the job and build Youtube with him.
Lessons from the story of Youtube 📜
Find a wave your startup can ride
Youtube was able to catch the early days of Facebook, Twitter, and other major platforms and ride the social media wave.
Sharing things on the internet was becoming thing right around mid to late 2000s and the timing of Youtube was perfect.
If you’re building a startup right now, think about upcoming waves and how you can use them to your advantage.
Work at a early-stage startup before starting your own
Is this a must? No. But will getting early in on a startup as an employee give you an advantage. Absolutely.
The Youtube founders were able to:
Fund Youtube using money they earned in the Paypal acquisition
Hire engineers & designers they knew from their Paypal days
Get funding from Sequoia Capital using their former connection from Paypal
Make your product as seamless and instant as possible
There is a critical product lesson in the Youtube story, they achieved the monumental success they did by building a product that was seamless to use and did things instantly.
Even the smallest things that add friction to your user experience provide a gap for your competitors to utilize.