Interesting, if unsurprising, to see that a large factor in the interest in YouTube was based purely on location, as well as knowledge of the people working there, their backgrounds, and who specifically they were funded by.
Where you are and who you know often outweighs having the best product, features, etc.
I didn’t get that at all. They talked about the funding round as a signal for what the asking price might be, and then “Mike from Sequoia” because they know Mike and therefore know which partner at Sequoia to reach out to broker a conversation.
These very commonly considered success-probability multipliers and derisking factors -- at this stage, the makeup, expertise, and reputations of the individuals leading a company are the biggest success factors. Even if the acquisition fails, having a strong (and nearby) team adds a lot of value to the acquirer.
So basically the only reason they were considering YouTube was to either deny it to their competition, or force their competition to pay more for it.
It sounds like they expected it to die on a backroom shelf somewhere if they made the purchase. This seems anti-competitive behavior even during what might otherwise be viewed as their "don't be evil" phase. They didn't see it as valuable for their own needs, they just didn't want it to grow into competition itself or via another competitor and so considered buying it to let it die.
I think you’re mis-reading the thread. Jeff Huber says YouTube are cranking features, but their backend probably won’t scale and they don’t have good monetization. That ultimately ends up being what they do — after acquiring YouTube, they re-built it using Google’s distributed systems infrastructure and software. And the monetization model today is in fact (mostly) ads.
What you then see in the thread is someone else saying: yeah we’re going to catch up, we just need a couple of more devs.
And then the counterpoint that well, even if Google doesn’t end up doing it, at least it makes it harder for Yahoo.
The original motivation isn’t just to make it harder for Yahoo. It’s that Huber wants to bring these people on board because they are really good at innovating, and Google can help make it really successful. But there was some pushback, and then other reasons were presented to continue with the conversation.
At these companies (any company?), sometimes to get what you want you have to present a diverse set of reasons, even if only one of them is the principal reason why you want to do something.
It seems fairly obvious that what the people are discussing in the linked email thread is anti competitive behavior. Here are some excerpts:
> and were thinking about a acq with Yahoo
> and it would be nice for y! not to have them
> their content quality is worse than ours ... if we pick them up it would be defensive vs yahoo
> I think we should talk to them, if nothing else to make it more expensive for Yahoo
You don't make statements like that and then explain it with "It didn't seem like they would scale and we don't have enough devs". The decision on if the buy YouTube or not (or another video company), was clearly influenced by the "risk" of Yahoo buying the very same company.
[Edit: I see the feature quote now] I don't see it.
They're saying it's nothing special-- they're not aware of a significant talent pool and there are "no big video brains".
From there, the first two reasons stated for actual consideration in acquiring YouTube are as a defense or because even talking to them will make it more expensive for someone else to acquire them.
Wow, thank god we had the geniuses at Google to give them their unique monetization model: ads!
I don't get it, that first paragraph describes just about every startup ever. And I'm sure had Yahoo acquired it, it would have been "re-built using Yahoo's distributed systems infrastructure and software". Don't you know it, they would have updated the letterhead too!
>It sounds like they expected it to die on a backroom shelf somewhere if they made the purchase. This seems anti-competitive behavior [...] They didn't see it as valuable for their own needs,
I think you're reading too much conspiracy motive into Larry's terse email.
Based on various interviews, Susan Wojcicki was head of Google Video at the time and she acknowledged they were losing against the upstart Youtube. She originally thought Google Video would succeed because Google was "playing nice" by negotiating legal licenses with broadcasters like NBC whereas Youtube was just a bunch of pirated content.
It was a big risk to acquire Youtube because the Viacom piracy lawsuit was looming. Google decided they could handle it and went ahead with the acquisition. They saw the value in Youtube and didn't have any intention of killing it.
Based on these emails, the very first consideration that sparked their interest-- no matter what came later-- was to deny it to their competition or drive up the price.
Just because upon investigation, YouTube actually seemed to have some value does not negate the fact that their first motive was based upon limiting competition.
One of them wrote something like that, and seemed against the idea on that basis because there were other options Yahoo could go for. That was basically an argument for not doing the deal because it would only, maybe have those effects, but that wasn’t the opinion of the others. Ultimately that’s not why they bought them anyway. So no, not really.
Ultimately that’s not why they bought them anyway. So no, not really
That's not relevant to the fact that limiting competition was their very first consideration.
And other competitors were seen as lesser value because of their location, not to mention the fact that the reply to that argument was that just talking to them would still hurt competition by making any acquisition more expensive.
Just because Google ultimately found YouTube to be valuable doesn't change the fact that their first motive was to limit competition.
I was at Google during this period, and did a lot of work with YT ads, 2009-2010. Their backend was still Python then; I have no idea about now.
Memory: I was over there and someone was introducing me to a group of folks and said "he's from Google." I spread my hands around and said "we're ALL from Google."
YouTube did rewrite on Google infrastructure - there was a paper they published c. 2008 about how they were leveraging Google's cloud to scale. It was largely back-end stuff; IIRC they moved from MySQL to BigTable, adopted Google's blobstore & CDN, integrated with Google's machine-learning systems, etc. They were allowed to choose which parts of Google's infrastructure they wanted, though. AFAIK the front-end was still Python when I left Google the first time in 2014, and it wouldn't surprise me if it still is now.
I remember going to a talk by the Dodgeball founders, a recent acquisition, and thinking "these guys are never going to make it at Google." I was right.
Maybe because they were productive in their own environment (like the email mentioned)? Might be an "if it ain't broke don't fix it" mentality, but I imagine that would've also applied to many other companies they acquired.
> "I think we should talk to them, if nothing else to make it more expensive for Yahoo."
Love this.
Another thing: Jeff Huber thought that having 2.5 Google engineers would be enough to outcompete YouTube at the time. Given that they eventually acquired YouTube for over $1B, was that essentially paying for their ~2 best engineers?
YouTube grew explosively between the time of these messages (Nov 2005) and their Nov 2006 acquisition.
I made my Reddit account in Nov 2005, and remember for the first half of that period, YT was just one of several competing video sites, particularly in the shadow of one called throwawayyourtv.com (see https://www.reddit.com/domain/throwawayyourtv.com/ )
Then suddenly by the end of the summer, YT was pulling away from the pack, seemingly unstoppable.
I was also on Reddit at the time and noticed something funny on YouTube, it'd recommend other videos featured on Reddit because their algo saw unrelated videos being watched by the same group so thought it should recommend the others, although they were irrelevant.
Jeff Huber did not think that. [redacted], the product manager of Google Videos, wrote the 1.5 engineers comment and "we have all of their [Youtube's] features in our q4 plan".
The email thread indicates that [redacted] wanted Google Video to win and wasn't listening to Jeff. Jeff then raised the Youtube acquisition with his peers, and then to their CEO.
A year later, [redacted] proposed a deal to link "Flip Video" cameras to Google Videos in the hopes of competing with Youtube's exponential video production. That gambit was squelched by his boss.
"I think if we had one more good java/ui engineer we'd be kicking butt vs youtube."
Unfortunately, this very attitude continues to be the bane of every large company. Thinking they can throw a body on the problem can make them invincible.
YouTube finally sold for $1b to google. And at that time everyone felt that was an unjustifiable price for a company that was burning millions per month on bandwidth and possibly will run out of cash any time.
A bigger concern was that by the time of the acquisition it was clear that Google was buying a legal mess in the form of lawsuits that were spinning up from various Hollywood media companies. What wasn't clear (to many of us on the outside, at least) was that Google was prepared to deal with that and not go broke doing so.
I'm basing this on nothing, but at the time I thought Google figured that if Youtube lost the lawsuits it would destroy the video market for everyone, so they bought them with the intention of defending the lawsuits better than Youtube could have on their own.
Yes but the instant Google bought them they stopped burning millions on bandwidth, because even at that time Google had more latent fiber than anyone else. As I've said here dozens of times hardware has been the key to Google's success. Fiber in the ground is a big part of it.
YouTube had peering agreements in place even before the acquisition. And the instant the contract was signed, Google's fiber wasn't near YT's (then) five-six locations, so it was of little use. Actually, in November 2006 YT had a lot more (frontend) egress bandwidth than Google, whose dark fiber was mostly for its internal backbone. It took a couple of years before there was an unified CDN, at which point YT had already grown many times over.
Considering it’s de facto global video sharing platform the fact that it’s only 15 billion per year is surprising and makes me uneasy about equity valuation in general in tech space
Google has invested a lot on its computing infrastructure (I guess ~20B per quarter nowadays?) and a large part of this should be attributed to YT given the heavy computational nature of video processing. I wouldn't be surprised if cumulative OpEx on YT is several tens of billions after the acquisition.
I wonder what led up to that. If I were the YouTube founders at the time bleeding millions with no business model, I'd probably have taken the $10 million.
Talking about bandwidth, aren’t we talking anymore about how all those big services clog the pipes by delivering content that users want instead of small websites who deliver content that users want, and how this is unfair and how we should tax the hell of Youtube and Facebook and Netflix for being most of the bandwidth that is consumed?
What's Larry up to now? Instead of using his brilliance to build some new venture he's hiding out off-grid on a private island in Fiji[1] and getting New Zealand residency[2]. Pretty weird stuff to be up to IMHO. Is he smarter than all of us and bugged out for the apocalypse now or something?
Google and their services are indispensable for billions. Doesn't he deserve a personal life where he can do whatever he wants to do instead of being beholden to humanity and serve it with his brilliance forever?
I'm not criticizing his morality. Billionaires like Larry Ellison buy private Hawaiian Islands, but they mostly go there on vacation and don't just disappear there for months! I'm just asking why Larry? Why are you bugging out like it's the end of the world? Is there something you know that we don't? :/
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Where you are and who you know often outweighs having the best product, features, etc.
As for location. Totally. It was likely critical.
Disclosure: I work at Google.
It sounds like they expected it to die on a backroom shelf somewhere if they made the purchase. This seems anti-competitive behavior even during what might otherwise be viewed as their "don't be evil" phase. They didn't see it as valuable for their own needs, they just didn't want it to grow into competition itself or via another competitor and so considered buying it to let it die.
What you then see in the thread is someone else saying: yeah we’re going to catch up, we just need a couple of more devs.
And then the counterpoint that well, even if Google doesn’t end up doing it, at least it makes it harder for Yahoo.
The original motivation isn’t just to make it harder for Yahoo. It’s that Huber wants to bring these people on board because they are really good at innovating, and Google can help make it really successful. But there was some pushback, and then other reasons were presented to continue with the conversation.
At these companies (any company?), sometimes to get what you want you have to present a diverse set of reasons, even if only one of them is the principal reason why you want to do something.
Note: I work for Google.
> and were thinking about a acq with Yahoo
> and it would be nice for y! not to have them
> their content quality is worse than ours ... if we pick them up it would be defensive vs yahoo
> I think we should talk to them, if nothing else to make it more expensive for Yahoo
You don't make statements like that and then explain it with "It didn't seem like they would scale and we don't have enough devs". The decision on if the buy YouTube or not (or another video company), was clearly influenced by the "risk" of Yahoo buying the very same company.
They're saying it's nothing special-- they're not aware of a significant talent pool and there are "no big video brains".
From there, the first two reasons stated for actual consideration in acquiring YouTube are as a defense or because even talking to them will make it more expensive for someone else to acquire them.
I don't get it, that first paragraph describes just about every startup ever. And I'm sure had Yahoo acquired it, it would have been "re-built using Yahoo's distributed systems infrastructure and software". Don't you know it, they would have updated the letterhead too!
I think you're reading too much conspiracy motive into Larry's terse email.
Based on various interviews, Susan Wojcicki was head of Google Video at the time and she acknowledged they were losing against the upstart Youtube. She originally thought Google Video would succeed because Google was "playing nice" by negotiating legal licenses with broadcasters like NBC whereas Youtube was just a bunch of pirated content.
It was a big risk to acquire Youtube because the Viacom piracy lawsuit was looming. Google decided they could handle it and went ahead with the acquisition. They saw the value in Youtube and didn't have any intention of killing it.
Just because upon investigation, YouTube actually seemed to have some value does not negate the fact that their first motive was based upon limiting competition.
That's not relevant to the fact that limiting competition was their very first consideration.
And other competitors were seen as lesser value because of their location, not to mention the fact that the reply to that argument was that just talking to them would still hurt competition by making any acquisition more expensive.
Just because Google ultimately found YouTube to be valuable doesn't change the fact that their first motive was to limit competition.
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Memory: I was over there and someone was introducing me to a group of folks and said "he's from Google." I spread my hands around and said "we're ALL from Google."
She said, "No, this is YouTube."
By the time that was complete, the product had died.
For some reason, YouTube was allowed to keep their infrastructure.
https://www.cnet.com/news/dodgeball-founders-quit-google/
Perhaps giving a list of those dead products would be helpful for discussions, modulo those products with merely brand changes.
Love this.
Another thing: Jeff Huber thought that having 2.5 Google engineers would be enough to outcompete YouTube at the time. Given that they eventually acquired YouTube for over $1B, was that essentially paying for their ~2 best engineers?
I made my Reddit account in Nov 2005, and remember for the first half of that period, YT was just one of several competing video sites, particularly in the shadow of one called throwawayyourtv.com (see https://www.reddit.com/domain/throwawayyourtv.com/ )
Then suddenly by the end of the summer, YT was pulling away from the pack, seemingly unstoppable.
Or was it just “luck” and better content being uploaded?
The email thread indicates that [redacted] wanted Google Video to win and wasn't listening to Jeff. Jeff then raised the Youtube acquisition with his peers, and then to their CEO.
A year later, [redacted] proposed a deal to link "Flip Video" cameras to Google Videos in the hopes of competing with Youtube's exponential video production. That gambit was squelched by his boss.
https://9to5google.com/2020/07/31/google-flip-video-youtube-...
https://twitter.com/jhuber/status/1433863045613174784
Unfortunately, this very attitude continues to be the bane of every large company. Thinking they can throw a body on the problem can make them invincible.
Dead Comment
YouTube finally sold for $1b to google. And at that time everyone felt that was an unjustifiable price for a company that was burning millions per month on bandwidth and possibly will run out of cash any time.
[1] https://www.dailymail.co.uk/news/article-9816787/Google-foun...
[2] https://www.bbc.com/news/world-asia-58128475.amp
Google and their services are indispensable for billions. Doesn't he deserve a personal life where he can do whatever he wants to do instead of being beholden to humanity and serve it with his brilliance forever?
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