Tuesday, October 10, 2006

Google Buys YouTube for $ 1,6 Billion - What the Founders Have to Say

Video is a compelling medium for delivering information or just pure emotion. So compelling, in fact, that Google decided that YouTube, which is the leading video sharing web site, is worth $ 1,6 billion.

According to GigaOM, "Sequoia Capital, which invested about $11.5 million in two rounds and owned 30% of the company", has made about $495 million from the transaction. "Steve, Chad, and Jawed - the three co-founders of You Tube, must be walking away with at least $200 million each. They own close to 50% of the company."

The founders have a video message (what else) about today's event which will change their lives forever, whether they admit it or not.



Going back to medicine, it is not a coincidence that leading medical journals like NEJM and JAMA started to offer video content. Cleveland Clinic is also there with HealthEdge videocast available for free on iTunes and Google Video.

Online video will likely radically change the way we get information and entertainment, the same way television did in the last century. Google realizes that and that's why they paid all those billions. It is probably cheaper to buy YouTube now rather that to wait a year and pay double that amount. Not a long time ago, Google had the chance to buy the social networking site MySpace.com for $ 300 million and they passed. Later, they paid $ 900 million -- not to buy it but for just for rights to deliver ads on the site. Google guys probably decided not to repeat the same mistake. It is a risky bet. Several years ago, Yahoo paid $ 5 billion to Marc Cuban and company for Broadcast.com and then they shut down the service.

One of the commenters on YouTube has some concerns:

"Google has bought youtube. If they buy Walmart next we might as well prepare for the end of the world."

Well, not really... :-)

References:
Goobed. GigaOM.
The reluctant co-founder: With YouTube, Student Hits Jackpot Again. NYTimes.

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