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How YouTube Was Created ft. Founder Steve Chen
@ Sequoia Capital
12/05/24
Takeaways
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Sequoia Capital Cast
12/05/24
@ Sequoia Capital
I don't know if this company's going to be around in 3 to 6 months, but I can tell you it's going to be the most memorable 3 to 6 months of your life in your career working here. This is the largest, fastest-growing video service out there, and whatever it's going to do, it's going to be a story of the internet that people will know.
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Steve Chen
12/05/24
@ Sequoia Capital
Back in 2005, when YouTube was founded by Steve Chen, Chad Hurley, and Jawed Karim, broadband was just emerging in the United States, and it wasn't clear that the internet could even support video, let alone at the massive scale we take for granted today. YouTube was a longshot idea, and initially, almost no one noticed it.
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Steve Chen
12/05/24
@ Sequoia Capital
The first version of YouTube was a dating site, where users had to rate videos from 1 to 10 before seeing the next one. After one week with zero videos uploaded, we pivoted to allow any type of video to be shared, which led to the YouTube we know today.
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Steve Chen
12/05/24
@ Sequoia Capital
Even after pivoting from a dating site, YouTube initially saw no traction. I would check the access logs and sometimes there would be no records for 24 hours. It felt demoralizing to have a cool idea but not a single person visiting the site.
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Steve Chen
12/05/24
@ Sequoia Capital
The embed feature was crucial for YouTube's growth. It allowed users to share videos on platforms like MySpace, which helped create an organic virality without spending any money on marketing.
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Steve Chen
12/05/24
@ Sequoia Capital
The concept of going viral is synonymous with YouTube, but it didn't happen overnight. Initially, we would get one interesting clip going viral every week, which gradually increased to every few days, and eventually, every day there would be amazing new content.
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Sequoia Capital Cast
12/05/24
@ Sequoia Capital
I believed YouTube could become the destination for user-generated video on the internet. They had a spectacular team, and the product was delightful and easy to use, which led to Sequoia Capital backing YouTube's first financing.
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Sequoia Capital Cast
12/05/24
@ Sequoia Capital
In 2005, it became common to see people huddled around laptops watching the latest viral videos, marking a dawning era of the internet, with videos like a Saturday Night Live clip and a Nike ad reaching a million views, while we also realized that YouTube was consuming a significant portion of the internet's bandwidth, a technical achievement that many didn't fully understand at the time.
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Sequoia Capital Cast
12/05/24
@ Sequoia Capital
We leveraged early cloud infrastructure and open-source software to manage costs effectively, even before major cloud providers like AWS existed.
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Colin Corbett
12/05/24
@ Sequoia Capital
YouTube's rapid growth led us to negotiate our own bandwidth and server prices, allowing us to control costs more effectively as we scaled.
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Zahavah Levine
12/05/24
@ Sequoia Capital
As YouTube began generating advertising revenue, we faced legal challenges regarding copyright issues related to user-generated content.
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Zahavah Levine
12/05/24
@ Sequoia Capital
I joined YouTube as its first lawyer, tasked with navigating the legal landscape to ensure we could monetize user-generated videos without facing liability for copyright infringement.
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Zahavah Levine
12/05/24
@ Sequoia Capital
The Digital Millennium Copyright Act (DMCA) provided a potential safe harbor for YouTube, allowing us to build a business model that could benefit creators and copyright holders alike.
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Zahavah Levine
12/05/24
@ Sequoia Capital
Despite our belief in the DMCA's protections, the entertainment industry, particularly Hollywood, did not agree, leading to numerous copyright takedown notices and legal challenges.
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Zahavah Levine
12/05/24
@ Sequoia Capital
Negotiations with Universal Music Group turned hostile, highlighting the challenges we faced in establishing a fair licensing agreement while ensuring YouTube's survival.
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Sequoia Capital Cast
12/05/24
@ Sequoia Capital
The Silicon Valley mentality emphasizes a win-win attitude, focusing on creating value together rather than just dividing existing resources.
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Sequoia Capital Cast
12/05/24
@ Sequoia Capital
A pivotal meeting with Universal Music revealed a fixed mindset, where they aimed to extract as much value as possible, contrasting with the collaborative spirit of Silicon Valley.
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Sequoia Capital Cast
12/05/24
@ Sequoia Capital
The aggressive and hostile demeanor of Universal Music during negotiations was a turning point for the YouTube team, highlighting the seriousness of their copyright challenges.
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Sequoia Capital Cast
12/05/24
@ Sequoia Capital
The realization that YouTube's survival depended on selling to a company with more resources to handle legal challenges became clear after facing inevitable litigation from rights holders.
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Sequoia Capital Cast
12/05/24
@ Sequoia Capital
In 2006, YouTube's board faced a crucial decision on whether to sell the company or continue independently, ultimately leaning towards an acquisition due to overwhelming legal pressures.
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Sequoia Capital Cast
12/05/24
@ Sequoia Capital
The decision to pursue an acquisition with Google was driven by the need for legal support, as YouTube was too small to effectively manage the impending copyright battles alone.
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Sequoia Capital Cast
12/05/24
@ Sequoia Capital
The rapid negotiation process for YouTube's sale to Google was one of the fastest of its size, taking only five days from signing the term sheet to finalizing the deal.
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Sequoia Capital Cast
12/05/24
@ Sequoia Capital
Google's acquisition of YouTube for $1.65 billion included commitments to maintain YouTube's brand independence and invest in its infrastructure and legal battles.
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Sequoia Capital Cast
12/05/24
@ Sequoia Capital
YouTube's Content ID system, developed with Google's resources, became crucial for managing copyright issues and ensuring the platform's survival and growth.
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Sequoia Capital Cast
12/05/24
@ Sequoia Capital
The ruling in 2010 that YouTube was eligible for DMCA Safe Harbor protected it from copyright liability, marking a significant legal victory for the platform.
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Sequoia Capital Cast
12/05/24
@ Sequoia Capital
YouTube's evolution from a video dating service to a global platform has enabled millions to create careers and has become a primary source of entertainment and education worldwide.
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Sequoia Capital Cast
12/05/24
@ Sequoia Capital
If you have an idea, pursue it independently without seeking validation from others, as the experience of creating something can be incredibly rewarding, regardless of the outcome.
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Sequoia Capital Cast
12/05/24
@ Sequoia Capital
Susan Wojcicki, an early Google employee who championed YouTube's acquisition, played a critical role in its growth and served as CEO until 2023, significantly impacting the platform's trajectory.