Everyone else is writing about GooTube today. Yet I think my thoughts are original enough to be worth reading.
Another storage solution wrapped in an easy-to-use application, like iTunes, YouTube’s founders and venture capitalists have struck it big. Each of the founders will get about $600 million, while the VC gets a 40x return on its one year old investment. That is a home run.
More importantly, Google’s $1.65 billion purchase of on-line storage provider YouTube – iTunes in reverse video – is a concise lesson in the value of marketing.
Failure carries a price
I admire Google’s tech chops, as I’ve documented in several posts while I’ve been equally dismayed by their inability to gain market share in anything outside of search.
Google is an advertising company and the world leader in monetizing internet eyeballs. They also do a terrible job marketing their services. Google claims its Google Video product will live on, but with their brand recognition the real question is: why didn’t Google Video win?
The basic problem is that evidently no one told the engineers that the site had to be dirt simple to use. No finicky formats or video conversions for customers to get frustrated by. Just load and go. Like the Google homepage. Marketing is supposed to know things like that. Clearly, no one is minding the marketing store at Google.
The beginning of the end of Google’s culture
In its 21-month life, YouTube has created value at the rate of $80 million dollars a month, sending every venture capitalist and smart kid searching for the “next big thing” in Web 2.0.
Founder Chad Hurley has proved that even a BA in Fine Arts can end up a billionaire.
If Google can fail at video, what other failures lurk?
Google’s culture will suffer from the YouTube acquisition. Sure, the guys on the Google video team will wondering why they aren’t richer. But the bigger hit comes from knowing that YouTube isn’t about the technology, it is about the market. And there Google didn’t have a clue.
Every Google engineer has to be wondering if their next project will be superseded by something smarter hatched outside the company. And that also makes their founders culture heroes and insanely rich. Sure, Google is still a great place to work, but if it is no longer hatching the Next Big Thing, some of the top talent will get restless. As soon as they vest they’ll be gone.
I don’t think Google will ever get its marketing act together and reach their full potential. Nor is it clear that they will be able to maintain YouTube’s market dominance. Yet it is nice to know that YouTube is now backed by some of the deepest pockets in the world, protecting, I hope, the Fair Use provisions of the copyright laws.
Not sure I consider Google Video a failure.
Niall Kennedy suggests that Google Video is in 3rd place.
http://www.niallkennedy.com/blog/archives/2006/10/google-youtube.html
It’s Yahoo! that needs to move quickly now.
Jeremiah,
A distant third – with about 1/3rd the audience of the leader and just above MSN video. Not only that, and more importantly from a business perspective, much weaker in the advertiser-coveted 18-24 year old demographic.
Opinions can reasonably differ about this. Mine is that when you have $10 billion in the bank and one of the most visited sites on the web, a distant 3rd is failure. If being #3 was success, why buy #1?
Robin
I like the notion of YouTube being a storage, and indeed it is, with a good user interface. Now from technology point of view, any insight on how are YouTube and Google going to integrate their storage platforms? Maybe they will never. Looks to me video files are very different than what GFS and BigTable suit, especially these video files are often updated. ( I have never uploaded anything to YouTube. Are you allowed to delete the files you uploaded? ) It would be great if some information of the YouTube infrastructure can be discussed.
John, I’ll see what I can do to learn more about YouTubes infrastructure.
From what Google has said so far, YouTube will remain largely independent, moving into their new building as planned. From reports I’ve seen YouTube’s big advantage is on the user side. They designed their system to take whatever came in and turn it into a common format. Google Video insisted on pre-processing by users to put it into a common format, which turned people off.
Given that YouTube is reportedly profitable, with ad sales of over $5 million a month, Google doesn’t have a reason to worry about costs. I’d guess that they will be all over the ad opportunities as well as continuing to work the copyright issues, which I have no doubt they can. Infrastructure is likely to be a distant third if that.
Robin