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



A couple of thoughts…

-Google is now the deep pockets Hollywood has been looking for
-Video, and its content, is not searchable like text and does not leverage Google’s search engine strength
-Yes, Google can use the traffic to promote its toolbar, and thus its core business, but that’s probably not worth the price it paid
-Overall, I don’t think it was a good deal. Fortune’s recent article on Google talks a lot about what Google’s strategy, throw it on the wall and see if it sticks, but there doesn’t seem to been any cohesion to it. I think Google’s next strength will be free online apps, supported by its ads, not buying the YouTubes of world.


I like your analogy to Skype-Ebay. I’d add and Hotmail-Microsoft into the mix too. Seems like Google’s purchasing a value-added-feature rather than a revenue stream.

What troubles me is the significant IP litigation Google’s exposed themselves to. Whereas sueing Youtube for copyright infringement (and there were probably some trademark-infringing clips as well) wouldn’t have been worth the attorney fees, Google is a ripe target for such lawsuits.

I’m certain that Google’s attorneys have foreseen this near-certainty, and that they’ve probably got indemnity clauses against infringements which have already transpired, but a copyright-compliant Youtube represents a drastic change in what Youtube is. Fred Wilson faulted Google video for a delay between uploading and posting (likely for copyright checking) – won’t Google have to institute such measures on the new Youtube?

Peter W.

I’ve seen both ‘Goobe’ and ‘GooTube’ monikers used to describe yesterday’s merger.

However, ‘GoogTube’ confers more hype and seems much more bubbly.

Peter W.

patrick Hunt

Google may be looking at some advanced options for monetizing YouTube. But short-term, this is a perfect fit with their existing model.

By all credible accounts I can find, YouTube is by far the most-visited video-sharing site, and a top ten most-visited site overall. Here’s how I expect Google to get a quick ROI on their YouTube purchase:
1. Insert their AdWords products into the user experience, like the Ads by Google on the right-hand side of KnoxViews. But Google also already serves several other flavors of ads.

  1. Integrate YouTube content into Google results, feeding traffing from one Google property to another.

  2. Create and revise deals with media companies like NBC Universal (they already have deals with many for Google Video). If both companies are smart, this will be a no-cash deal… Google will get rights to show clips of shows, and integrate links from the clips directlly to the show page so that media companies get traffic (and therefore, pageviews and resulting advertising). YouTube becomes the online promotional aggregator. This would benefit NBC and other media because these clips become the television equivalent of theatrical trailers for TV shows.

  3. Move it’s Google Video platform onto YouTube’s, and ditch Google Video, which doesn’t seem to be getting much traction anyway. This transition would include using Google’s video search product on YouTube, allowing Google to continually refine and improve this appliance.

  4. Bring YouTube’s video advertising unit into the Google fold, and begin to insert ads at the beginning of the videos in the same way that c|net does.

It will cost relatively very little to accomplish most of this. In short order and with very little outlay beyond the purchase price, Google will have substantially increased the inventory for their existing advertising products, cut a money-sucking business (Google Video), create new ad inventory units, and own a platform for further development of an important future market (video delivery and search).

The fact that they are not paying any cash is huge. If they are smart, this can be a really great deal for both Google and YouTube.


How about some pictures to prove the deal? An I’m not talking about Google-YouTube here. If you make a deal, you need to make sure the deal sticks. Before and after pictures would be great! Loosing 40 pounds won’t be easy, let me tell you that much! I hope you will be going to a gym.



Christopher Haase

Om, I would ALWAYS bet on a google web deal over a person losing 40 pounds.

However, I will bet I can lose 20 by 2007 and help you lose 40 pounds following a few simple rules. If you want some support for your health goal… let me know ;-)

Otherwise, good read on the .com kings…


Mark Sigal


I think that this is a great acquisition for Google. The evolution from a text-based web to video-powered one is huge. The contextual power, reach and attention-consuming goodness of social networking is proven. Google goes from also ran to leader in one, player in the other.

Literally overnight, every company that had looked at the online video space as a “novelty with no dollars”, the “next Napster crash and burn” or “not ready for prime time,” has to re-calculate. A major land grab has just begun.

I wrote a post on this called, “GoogleTube: what it all means…” Check it out if interested:



vSocial: Say it with Video (


eBay definitely paid too much for Skype. Google for YouTube – we’ll see…


Good luck with the forty pounds, but I still stand by you, its a bad deal. Wonder what will become of google video?


this is a smart move on the part of google and cuban is the moron. youtube ranks #10 in terms of traffic today on alexa. google ranks #3 and myspace comes in at #6. several analysts pegged myspace with a value of $20B this week. even cutting that in half to $10B the youtube purchase by google is a friggin bargain. if anyone is naieve enough to think that google didn’t know exactly what was happening with regards to youtube’s discussion with studios or any other original content producer whose content may appear on youtube is a moron too. they knew exactly what was happening and what the impact would be and they hoodwinked the studio’s etc in a couple ways. they worked in parallel to get their similar deals done while knowing the exact same thing was happening in san mateo. the other sneaky deal is that the underlying value of tv, radio, print is that they provide a platform for advertisers to reach their audience. the fact that google is building an isp somewhat on the DL is a big FU to the tradional media in the sense that the 4th Network has a broader audience with the ability to zero in on a particular subset and be able to do that in real time while testing what works and what doesnt work in the realm of advertising. with the traditional media, that isn’t possible. trust me, when google launches the isp and everyone can get free broadband they will add and build applications and allow for everyone to add and build applications creating an ecosystem akin to salesforce’s app exchange but with 1M X the scale by virtue of the numbers of people connected. it will be the global village marshal mccluhan(i’m sure i spelled that incorrectly but oh well) envisioned back when he coined the term. this was the same vision that laid the ground work for @home network but a slew of things f’d that up.

Dismaster T

A very smart move by Google. YouTube is more disruptive than many think, not just in the internet space, but traditional media in general. This puts Microsoft and Y! back on their heels.

I listened to the webconference earlier today and there infact was a question on the future of Goog video and the reply was a strong “goog video is not gonna be scrapped” message.


Wonder what is going to happen of the google video guys. First time I can thik of google firing people of not delivering..

Dmitry Shapiro

I may be biased, but I think that this is a good deal for both companies. The space is just starting, and will be huge, and YouTube is clearly an icon.

Most sincere congratulations to Chad and company.

Dmitry Shapiro
Veoh Networks, Inc.


So what will happen to Google Video and it’s player ? shutdown -s -c[Om’s comment] -t[time, when ?]


I firmly believe this is insane to pay 1.65 billion for this, its too much. Google lawyers will be busy. This is the fisrt time google has bought something on this scale, it will be interesting how they take this challenge. I think this cost is more about not letting the competitors grab this opportunity, like what yahoo did with flickr, and news corp with myspace.

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