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When they were young

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When YouTube was young: the early years

YouTube had 100 million video views at less than 18 months, was acquired by Google for $1.65 billion

Innovation series by Steven Loeb
October 5, 2016
Short URL: http://vator.tv/n/4767

As our readers know, Vator has started a series called: When they were young.

It's a look back at the modest days of startups, how they evolved in their first few years, and what traction they had at the time. In the end, we hope to have a good glimpse into what great startups looked like in their first three years.

Stories like these are always well received, because it reminds us that anyone, regardless of pedigree and environment, can rise above the noise and have great influence. They show us the value of being resilient, persistent and committed. If we can follow their footsteps, maybe we too can have similar success.

Today's segment is on YouTube.

YouTube's First Year ------ 

Founded: The domain name "YouTube.com" was created on February 15, 2005.

Founders (age at the time): Chad Hurley (28), Steve Chen (26), and Jawed Karim (25), who were all early employees of PayPal.

Hurley and Chen comes up with the idea after they had trouble sharing videos online that had been shot at a dinner party at Chen's apartment in San Francisco.

Initial company description: The original idea is a video version of dating site HOTorNOT, which encouraged its users rate prospective mates on a scale of 1 to 10, based on their attractiveness. That idea only lasts for a few months 

"I was incredibly impressed with HOTorNOT, because it was the first time that someone had designed a website where anyone could upload content that everyone else could view. That was a new concept because up until that point, it was always the people who owned the website who would provide the content," Karim told Time in 2006.

Another initial idea is to allow users to post videos for online auctions, but the site is opened up to all types of video when people started posting whatever they wanted.

Product, at two months from founding: The first YouTube video, uploaded on April 23, 2005, is called Me at the zoo, an 18 second long video with Karim, at the San Diego Zoo, talking about elephants. It has been viewed 33.7 million times. 

Launch, at three months from founding: In May 2005, YouTube opens a public a beta test of the site.

Traction, at six months from founding, three months from launch: In the company's pitch deck for its Series A funding, it is revealed that, by the end of August 2005, it has reached over 100,000 video views a day, and it had around than 7,000 users.

Traction, at seven months from founding, four months from launch: In September 2005, a Nike advertisement featuring Ronaldinho becomes the first video to reach one million views. It now has 1.5 million views. 

First funding, at nine months from founding, six months from launch: In November 2005, YouTube raises $3.5 million in funding from Sequoia Capital. 

Roelof Botha, partner at Sequoia, writes an investment memorandum in which he recommendeds that the firm invest in YouTube. He describes the company in this way:

"YouTube represents an interesting investment opportunity. The company's goal is to become the prmary primary outlet of user-generated video content on the Internet, and to allow anyone to upload, share, and browse this content. 

The three entreprenuers are scrappy and smart. They have built a very easy-to-use, fast growing service that taps several strong veins: user generated content, online advertising, wide proliferation of inexpensive digital video capture devices, and continued broadband adoption."

Product, at 11 months from founding, eight months from launch: On December 15, YouTube officially becomes a corporation and comes out of beta.

Traction, at 11 months from founding, eight months from launch: In December 2005, YouTube is seeing 8 million videos a day. 

The same month, the company sees its first viral hit with Lazy Sunday, an SNL Digital Short, featuring Andy Samburb and Chris Parnell rapping about eating cupcakes and going to see The Chronicles of Narnia.

The video is viewed more than five million times on YouTube before NBC Universal forces the site to take it down over copyright infringement in February 2006.

The video was later credited with increasing YouTube's popularity, and influence, eventually leading to its sale to Google. 

YouTube's Second Year ------ 

Traction, at one year from founding,  nine months from launch: By February of 2006 YouTube is serving up more than 15 million videos streamed per day, nearly 465 million videos streamed per month, with 20,000 videos being uploaded daily.

Second funding, at one year and two months from founding, 11 months from launch: In April 2006, YouTube raised $8 million in a Series B round from Sequoia and Artis Capital Management.

Product, at one year and three months from founding, 12 months from launch: In May 2006, YouTube gives its users the abiliy to upload video via their mobile device.

Accolades, at one year and three months from founding, 12 months from launch: YouTube is named as one of the Top 10 Best Products of 2006 by PC World Magazine. 

Content, at one year and four months from founding, one year and one month from launch: In June 2006, YouTube strikes a deal with NBC. allowing the site to shows clips of some of its TV shows, including Saturday Night Live" and The Tonight Show with Jay Leno.

Traction, at one year and five months from founding, one year and two months from launch: In July 2006, YouTube reaches 100 million videos being viewed a day, with 65,000 videos uploaded. 

Monetization, at one year and six months from founding, one year and three months from launch: In August 2006, YouTube launches its first advertising concepts: Participatory Video Ads and Brand Channels. 

YouTube's first Brand Channel partner is Warner Bros. Records for Paris Hilton around her debut album, Paris. The Paris Hilton Channel is sponsored by Fox Broadcasting Company's Prison Break.

Hilton also creates an original broadcast for the YouTube community taking advantage of the new PVA offering on the YouTube homepage. Fox Broadcasting Company also utilizes the new PVA in conjunction with the Paris Hilton sponsorship to promote the Fall Season launch of Prison Break.

Content, at one year and seven months from founding, one year and four months from launch: In September 2006, YouTube signs a deal with Warner Music to post content, including music videos, interviews with artists and behind-the-scenes footage. Bambi Francisco aptly calls out that YouTube is ushering in the Internet soap genre.

Acquisition, at one year and eight months from founding, one year and five months from launch: On October 9, 2006, it was announced that YouTube would be purchased by Google for $1.65 billion in stock.

Following the acquisition, YouTube would operate independently and all YouTube employees would remain with the company.

The deal was completed on November 13, 2006. At the time, it was Google's second largest acquisition ever. 

Accolades, at one year and 10 months from founding, one year and seven months from launch: On December 25, 2006, Time magazine chooses "You" as its Person of the Year, recognizing the people who contribute user-generated content to services like YouTube, MySpace and Facebook.

"It's a story about community and collaboration on a scale never seen before. It's about the cosmic compendium of knowledge Wikipedia and the million-channel people's network YouTube and the online metropolis MySpace. It's about the many wresting power from the few and helping one another for nothing and how that will not only change the world, but also change the way the world changes," Time wrote.

The cover features a computer with a YouTube-like video player:

Image result for youtube person of the year

— YouTube Today —

 YouTube turned 11 years old this year, and currently has over a billion users, almost one-third of all people on the Internet. Every day people watch hundreds of millions of hours on YouTube and generate billions of views.

YouTube overall, and even YouTube on mobile alone, reaches more 18-34 and 18-49 year-olds than any cable network in the U.S.

It's available in over 88 countries, in 76 languages.

In February of this year, YouTube unveiled its first original series on YouTube Red, its paid subscription service. It included feature length movies, including  Dance Camp, from AwesomenessTV, as well as Scare PewDiePie, a reality-adventure series starring PewDiePie, from the creator and executive producers of "The Walking Dead."

Over the summer, YouTube announced that even more original content will be coming. 

0,000 users and only 100,000 views per day
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