![]() Hastings flew from San Jose to Dallas for a meeting with Blockbuster who at the time had 7,700 stores worldwide renting mainly VHS tapes and selling microwave popcorn. ![]() Three years later, Netflix was losing money. ![]() The DVDs arrived in the mail in the now iconic red envelopes. But for the time, for $20 a month, subscribers could rent an unlimited number of DVDs, one at a time. The founders intended Netflix to become the media equivalent of Amazon. VHS tapes were still expensive in 1997 and DVDs were not widely used, but Hastings and Randolph decided to take a chance on the technology anyway. They also envisioned a website where movie watchers could order with a click of a mouse. Reed Hastings and Marc Randolph launched Netflix in 1997 with a $2.5 million initial investment - a chunk of which came from Randolph’s mom. That sounds like a great story, but it isn’t true. There’s an old story that says Reed Hastings got the idea for Netflix ( $NFLX) after he was forced to pay a late fee at Blockbuster. Almost five billion videos are watched on YouTube every day. 300 hours of video are uploaded to YouTube every single minute. Today, more than 1.3 billion people use YouTube per month. As of this writing, Google is trading at $1,256 a share. At the time the deal closed, Google shares were trading at a pre-split equivalent of $230 a share. Jawed Karim walked away with 137,000 shares which were worth $65 million. Steve Chen was given 635,000 shares of Google which were worth $326 million. Within a few months, YouTube became the second-largest search engine in the world behind Google itself.įounder Chad Hurley was given around 730,000 shares of Google which at the time had a value of $395 million. Within two days of acquiring YouTube, Google’s stock price increased by $2 billion - more than the whole cost of buying YouTube. Sequoia Capital earned $500 million for its 30% stake (off an investment of $11.5 million). On October 9, 2006, Google purchased YouTube for $1.65 billion in stock. YouTube was basically one lawsuit or one bandwidth bill away from going under when Google stepped in and saved the day. Many industry analysts were convinced that YouTube would inevitably be sued into irrelevance by the movie studios, networks, and record companies. At that point they were heading towards certain disaster.Īnother issue plaguing YouTube's early days was that the vast majority of videos being uploaded were copyrighted material. The $11 million in VC funding was long gone. During the first six months of 2006, YouTube was reportedly spending $1 million a month on bandwidth costs alone. On top of that, the company had no revenue streams - and no strategies for creating them. The company was hemorrhaging money on its bandwidth expenses -expenses that were growing very quickly as it grew in popularity. This extreme amount of attention created a bit of a problem for YouTube. And just like that, the whole world was introduced to sharing videos on YouTube. The only way to try to find the clip to watch was to Google “SNL rap video,” “Lazy Sunday SNL,” or “Chronicles of Narnia SNL.” The very first result on Google for each of these searches was a link to the video on YouTube. The next day, everyone was talking about that SNL rap video. At the time it seemed like no one at SNL had very much faith in that video short. YouTube really became known to the public in December 2005 after Saturday Night Live aired its first video short called “Lazy Sunday.” It aired at the very end of the episode, which also was the season finale. After a few successful months of operation, the trio put together a proposal for Venture Capital firms and eventually landed $11.5 million in funding from Sequoia Capital to get the business off the ground. On Februthe trio bought the YouTube domain name and began building the site. Hurley was a designer while Chen and Karim were engineers. YouTube was founded by Chad Hurley, Steve Chen, and Jawed Karim who met while working for PayPal. ![]() It has proven to be Google's most lucrative purchase yet. Google ( $GOOG) acquired YouTube in 2006 for a then-unprecedented $1.65 billion. This got me thinking: how did streaming become so popular? How did Netflix go from a DVD rental-by-mail company to the leading streaming service and award winning producer of content? How do the major streaming services match up when it comes to social and hiring data? I am one of the many people who have “cut the cord.” I listen to music on Spotify and Apple Music and SiriusXM. Today, I stream television shows and movies via apps on my Fire Stick. A decade ago, if you told me I would not have cable TV or a radio in my house I’d have laughed at you.
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