This one is personal – now that the deal is done, I have to start working on losing 40 pounds. So if you are making plans to meet me for a drink – not going to happen. Given that how wrong I was on this one, you shouldn’t really read any further. By the way in a poll last month, 19% predicted that YouTube would sell for over $1.5 billion. A whopping 55% said YouTube will be taken out. With that out of the way, lets see who are the winners and losers of this deal.


  1. Sequoia Capital, which invested about $11.5 million in two rounds and owned 30% of the company, which translates to about $495 million. via who else, Dr. Kedrosky.
  2. Steve, Chad, and Jawed – the three co-founders of You Tube, who must be walking away with at least $200 million each. They own close to 50% of the company
  3. Facebook, because now we can expect a knee jerk reaction from someone, probably Yahoo.
  4. Ferrari dealerships, cat litter companies and of course, the real estate brokers.
  5. Litigation lawyers
  6. Michael Arrington
  7. MC Hammer, who visited both Google and YouTube last year. Or as he sings – Can’t touch this!


  1. Yahoo, which is now going to make a move, well that is a move.
  2. Mark Cuban
  3. Me
  4. Google, because I think this is Compaq-DEC, Skype-eBay kind of a deal for them in the long run



losing 40 lbs is very EASY OM…just buy some Level3 with me and puke your 40 off every time they dive in price…anyway you cut the waist line, Level3 is the LEANEST MEANEST VIDEO machine out there now that Google is the SUGAR DADDY to YouTube and YouTube is hooked to Level3 transmissions=======Video is King and Crowe just proved his fantasy that Bandwidth GROWS and GROWS!


Just because it happened doesn’t mean that Cuban was wrong. He is not an idiot (jackass maybe, well, jackass) but he is not stupid.


Since this was an all stock deal, not a bad way to spend some funny money on a ton of eyeballs. Valuable video eyeballs.

The real story here is the future threat to the old MSO/Satellite video distribution model.

In the million channel universe, IPGs and set top boxes are your pappy’s Oldmobile TV. Good luck finding anything you want to watch beyond standard bearers. Consumers are frustrated already.

Content providers want to widen their grasp as well. Hard to do with so much noise, so many sources of content. Notice how we went from ABC alone to all networks streaming shows online in a year.

So, run the clock forward to TVs with built-in browsers and broadband connections. Turn on your TV, and bammo blammo, personalized content right on your GoogleTV “IPG.” Basically, any IP-connected video device can become an outlet for content. Then watch the players line up to get on GooTube.

Yeah, yeah…I know…QoS, security, yada yada yada. Those things always catch up and follow the money. When all those infrastructure challenges match old skool TV in capabilities, watch out.

Don Dodge

Om, I think it is too early to declare winners or losers. Well, there are some early winners or losers but mergers like this take years to play out.

Could YouTube fizzle like Skype at eBay? Will Google be sued? Will another competitor emerge that is better than YouTube? Too early to tell.

I wrote a bog exploring all of this today.


From way out in left field… might this move be confirmation that Google is building a monster network to serve all these bandwidth-hogging goodies? I can think of a few nets, say AT&T and Comcast, that will balk at giving this gorilla a free ride. Battle of the TV 2.0 titans is next.



i think you should tape your daily workouts and meals and post them on youtube in an effort t add a “healthy lifestyle” show to your growing media empire



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Jacob Varghese

Considering how overpriced Google is and that this is an all stock deal, this isn’t nearly the rip-off that skype was.

Slav Pidgorny

A smart move of Google’s. They create another opportunity to increase ad revenue, and also tempting the competition to folow Google’s footsteps into the “Internet video revolution”. That will further cripple Yahoo’s and Microsoft’s market position.

However, long term this is bad for both Google, industry and the society. Whether we see a monopoly in making, or it’s reincarnation of .com craze, the outcome isn’t something I’m looking forward to.

Larry Borsato

I’m doing 20 kms on an exercise bike every night while reading or watching tv, and I’m down about 15 lbs in 3 weeks. I have a protein shake afterward, and at breakfast, and I find I’m eating less too.

Hey if I can do it so can you. :)

Cynthia Brumfield


As Nick Hawkins pointed out, you can drink all you want…just steer clear of beer (low-carb kind OK once in a while) and mixed drinks.


Cynthia B.

Om Malik

it is the distraction factor jesse which is going to be an issue. the copyright issues and all those other problems are going to strain google where it is weakest – management and control. i think it is basically that issue. imagine the chagrin of google employees who are ready to quit now to start their own companies because there is not that much upside to their stock.

Jesse Kopelman

I don’t see how this can work out that badly for Google. All they have to do is set aside a few $B for an exit plan in which they come to some sort of consent decree to pay X $B in damages and exit the user posted video business. Might as well risk those billions while you have them. The ridiculous stock multiples don’t last for ever, so it’s either risk a few $B now or lose $100B as soon as growth slows.


I still think Mark Cuban is right. Now that the entertainment cartel has a deep pocket to use (i.e. Google), they will. They were just waiting for the deep pocket idiot to roll by and buy YouTube.

Greg Kostello

Congratulations to YouTube and Google on the acquisition.

I agree with what Eric Schmidt said in his conference call, that “This is just the beginning of an Internet video revolution”. Again, in that same call, Google said that YouTube was “one of the many” acquisitions that they will make in online video. The YouTube acquisition simply confirms high value for innovative video and rich media companies that are nimble and innovative. So, we will see Google and other companies looking for video tool vendors, content aggregators and community plays that dovetail well with their current offerings.

I believe that YouTube media deals were instrumental in completing the acquisition by Google. Similarly, vMix has content related deals with Sony, Fox, Warner Brothers, MGM and Discovery Channel and as well as attracting original content from programs like Borat, Family Guy, Meerkat Manner, The Tyra Show and Project Runway. Content is still King and the ability to work well with media companies is critical in this new media space.

There is only one YouTube and they are now off the market. We should see more early stage acquisitions and investments as the established media and Internet companies look to capitalize on the online video growth.


This is a huge milestone for Flash developers. Flash pros are the biggest winners since this is basically a Flash app with a bunch of users. Adobe wins too. :)


Be on the watch for another Sequoia backed company Admob in the mobile advertising space.

George Tsiolis

Sorry, folks. It’s Thanksgiving up here in Canada. Om reported this morning that many content deals had already been announced:

“In addition to their reported “marathon negotiations over the weekend,” YouTube and Google were also working in parallel on the content licensing front, with announcements today that YouTube had signed the recalcitrant Universal11, as well as Sony BMG12 and CBS13, while Google had picked up Sony and Warner Music Group14 (with whom YouTube already has a deal15). The deals mainly allow legal use of labels’ music and music video content.”


Nick Hawkins

Sucks that you have to lose the 40lbs. But it’ll probably be good for you. Remember to drink water instead of soda. And you can still drink, but try to cut the carbs down. Hell, drinking will still make you feel better.

Still, I would have been a loser with you.

It’ll be interesting to see how this shakes out. I still think there’s an avalanche of lawsuits waiting to be unleashed now that Google has the pursestrings.

George Tsiolis

Arun, you can bet that Google already has some plans to address this and it probably involves:

  • a revenue split of the ads that will now appear on YT

  • official content deals that help the giants promote their programming

I just don’t see Google making this acquisition and making itself the instant “deep pocket” without having tested the waters first.



I think this safetly locks them out of Facebook, not that they were ever a contender for Facebook.

This could cause Yahoo or Microsoft to start getting friendly with facebook now that they don’t have Youtube to consider.


Google is brilliant!

Om, just cut out sugar and enriched flour. You’ll be down 40 in a year.


it’s not that bad. Founders have done a great plan. Google is king advertising sales around content Youtube is king in video content.
So it might not be bad for the user afterall, the user will probably get a better search kick back


I agree with George that YouTube was not IPO material, but I think Google could potentially face copyright issues. They need to figure out a way to stop users from putting out copyrighted videos on YouTube.

George Tsiolis

Om, I was a firm believer that YT could not go the IPO route, as many rumours over the last few months would have had us believe.

The Google acquisition probably proves it was not IPO material due to copyright concerns.

However, the Google acquisition makes plenty of sense. Google provides YT with the muscle, credibility and ability to come to terms with the media giants. In fact, I’m certain that Google tested the waters by speaking to some of the big players and would bet on seeing some news to this effect over the next 90 days.




So how much now for Facebook? Do we think Yahoo will have them by the end of the week?

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