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.
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Every Google engineer has to be wondering if their next project will be superseded by something smarter hatched outside the company.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.