It's probably not commonly known, but YouTube was not intended to be video streaming site - at least not in the sense of what it is today. When YouTube's founding team of Steve Chen, Jawed Karim and Chad Hurley thought up the idea for a website where users would upload video-dating profiles.

Video summary of the article:

The Idea: Build a video-based dating site where users can publish videos to share information about themselves and the types of date they're looking for, mitigating the arduous process to fill out lengthy forms, upload picture...etc. 

The flop at Launch: In Feb 2005, when the product was first launched, it was major failure. At one point, the founders were so desperate to get users that they posted an ad on Craigslist offering to pay users $20 each to post a video on the site - to no avail. What was initially thought as a problem that the platform was addressing, the market had little to no interest in it.

Enter Super Bowl XXXVIII: This event is where the infamous Justin Timberlake and Janet Jackson wardrobe malfunction incident happened on Live TV. The founders realized they couldn't find any videos of it on the internet and there was no platform where users could simply upload, view and share videos. 

The Pivot from Dating to Video Sharing: The pivot was to allows users to upload, publish and view streaming videos within a browser. Jawed Karim, uploaded the first 18 second YouTube video, titled "Me at the zoo", on April 23, 2005, where Karim is at the San Diego Zoo, talking about Elephant trunks.

In May 2005, YouTube launched its beta version to the public for the first time. A few months after the launch, Lauded investment firm Sequoia Capital invested $3.5 million in YouTube's Series A round. One of the partners learned about YouTube after using it to upload old wedding and honeymoon videos.

By October of 2005, the video of Brazilian soccer player Ronaldinho receiving his pair of "Golden Boots," goes viral (for that time) and reaches a million views. By December of the same year, YouTube is made available to the public and reached 8 Million views a day. 

As the demand and watch time continued to grow on YouTube, more investments poured in. In April 2006, VC firms Sequoia Capital and Artis Capital Management invested $8 million in YouTube's Series B funding round. This is around the same time, when Google and Yahoo start taking keen interest in the platform. At the end of 2006, Google comes out on top and acquires YouTube for $1.65 billion, netting the cofounders nearly $400 million each.

Fast Forward to 2020-2021: Since, the first time YouTube was acquired by Google almost 14 years ago, Google provided the video platform's ad revenue. 

YouTube generated $14 billion in 2019, 9% of parent company Alphabet's total ad revenue. According to Statista report on November 16, 2021 - YouTube's worldwide advertising revenues amounted to seven billion U.S. dollars in the third quarter of 2021, representing a 43 percent year-over-year increase. 

Google also suggested that YouTube Shorts - a rival offering to TikTok, have been a huge success, hitting 15 billion global daily views (up from 6.5 billion in March of '21). 

Needham & Company analyst Laura Martin has suggested that, "YouTube would trade at $300B as a separate public company because streaming and growth investors will NOT buy the GOOGL conglomerate, but would pay 10x EV/Revs for an independent YouTube (Roku's multiple), we believe,".

A $300 billion valuation would make the video-sharing platform the 15th largest company in the world by market capitalization ahead of Exxon Mobil, Bank of America, and AT&T. 

Takeaways for Entrepreneurs: 

  • Continue to test the product / market fit with users
  • Pivot as quickly as possible, aligning with market and user demands
  • Scale fast to ensure first mover advantage
  • Have an exit strategy (YouTube was always intended to be acquired)