Episode 7: YouTube
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who got. The true. Easy, you is you busy, you sit me down, say straight.

Welcome to episode des seven of acquired.

I'm been gilbert. I'm David is though.

and we are your host today. We sit here on the eve the announcement that google is the most valuable company in the world to tell you about google.

Apple announced that they the most valuable company in the world.

Why google .

announced earnings? Yeah, people are speculating that I might have not checked. I ve been checked the time craze, but that google's market cat might .

pass applies tomorrow.

So mr.

Market will tell yeah in in steep contrast to what we Normally do on this show. That is just conjecture and and h hypothesize.

we never conjecture on this show.

We're going to talk about um kind of an older acquisition. When you look at the the companies we look so far, google acquiring youtube. David wanted to take a away with acquisition history .

and facts will do so. Youtube this is a big one um founded was founded early two thousand five by two former engineers and one former designer from paypal, part of the the much belly hood paypal movie。 And interestingly, we'll get more into this later. Youtube was one of the very first investments at zoia by another member of the paypal mafia. Roll off both um I just keeping in the family so I was founded in early two thousand and five uh and and then in november of two thousand five uh zoia and roll off come in, they lead to three point five million dollar series a and and then a few months later, IT was very, very early growth days having just released the product when the coia leaves the series ab a few months later in december of two thousand and five. Sl remember the lonely island days on S N L get lazy sunday I was comes out and so IT only took .

us seven episodes. Des, to talk about any sammer you are required .

iran if I know and dors no David .

looks like any sample there should be no inside jokes in um lazy sunday comes .

out and a whole bunch of people like video their TV and posted to youtube and I don't know if this was an agreed or just one of the versions of the clips of the clip of lazy sunday generate seven million views on youtube which was huge I mean like there were only one hundred thousand people on the site yeah I think even at acquisition um they .

had an audience of seventy two point one million but they are reporting nineteen point one monthly active users. I mean, to get that kind of view count that early and that .

was even i'm sure was a lot of college kids like me watching IT over and over and .

over again all the amazing thing thing about watching IT on um you know people filming their TV like that that's like what vine look like now yeah talking about kind of history .

writing itself so on the back of lazy sunday, among other viral hits uh April two thousand six the company raised in eight million dollar series b also from scope with artist ventures which I believe LED around and by the summer of two thousand six um youtube is has grown in july to about a hundred million video use a day. Um IT is pretty incredible and then um and a whole bunch of problems that arose with that which will get into in a minute. But uh very shortly after october eighth two thousand six h google announced that they are going to purchase youtube for one point six five billion dollars.

incredible. I mean this is just over year and a half after the found in the company, literally in a garage. They're only raised eleven and half million in venture capital. So the eleven and half million to one point six five billion, that's what one hundred.

one hundred .

twenty acting pretty good.

I mean, this kind of stuff. And this was two thousand six. This stuff didn't have IT in two thousand six. I mean, after the the internet bubble, the lingering after effects are still reverberating through the valley even a few years later. And the idea that the company would go from founding to actually being sold to a real company, google, not just to to going public with funny money. And um in eighteen months for over one and a half billion dollars course, even even instagram was that we talked about on more of our first was such a splash of one billion dollars.

And so google acquisition closes by december of two thousand and six in march of two thousand seven via on files a one billion dollar lawsuit against youtube accusing um the company uh the directors um and I can remember if google was named in the suit or not of knowingly and blaanor violating copy rate laws and posting material like snl and nbc property not a vico property but like lazy sunday knowingly allowing IT to persist on the site even though I didn't have youtube, didn't have the copyright right um so and that began this protracted battle over content rights and youtube that really was only finally resolved in twenty fourteen seven years later I was a whole series of dismissals and appeals and judgments and then finally the vaccine and google settled in twenty fifteen is hard to believe. okay. So this lawsuit happens but which is, you know we will talk about enough itself, but there's this amazing byproduct of the lawsuit, which is the disclosures disclosure process and we get to see like it's just public in the public domain, all of this incredible material and testimony about youtube um about sequoia investment and youtube about the acquisition. Um so uh you you can find this online and will link to IT in in the show notes as part of the discovery process. Google and roll ffs sqa and roll ffs investment memo for the series of youtube a is available and it's really incredible argument.

IT is incredibly fund to read. I mean, I was just looking over preparing for this show and the the key risks that they identify here could not be more candidate, could not be more real of concerns. And we're going to talk about this later, evaluating the acquisition and where the world is today and all that. But you know key risks competitions lash defensively. But here we are what ten years after the acquisition and facebook is stealing video share, I thought was .

really interesting. And we'll talk more about this through out the show and I think especially in the the themes um but um in the memo roll off and skua when the addressing competition and defensively, they say the team will need to remain laser focused on improving the user experience, which isn't what you would really expect when you think about defensively. Like nowhere in this memo is to talk about network effects. And youtube is you know on the surface, you think network affects defensive ability through having all the content, which all the viewers, which gets more content. But no, they're actually focused on improving .

the user experience. And I mean, that's not exactly how I would describe youtube today. Like when I think about the things that makes youtube great, that has pretty much as zero to do with the user experience of youtube .

yeah and in a lot ways youtube has actually, I think, really failed like google take youtube that com and then discovers something or searches for something on youtube. No, you come through other channels and then you leave.

Yeah i'm often, well, I want to this later, but I think it's it's worth talking about now .

the i'm a little .

bit barrier h on youtube, primarily because it's not a destination site. They are reliant on traffic from other channels. And those other channels named facebook, where people go first to decide what they're going to be looking at are having their own platforms and actively pulling people .

onto those platforms .

and can drive da. So youtube is effectively, you know a superfan cy cdn. At this point, there are a place where the videos get hosted where people don't necessarily rely on going to youtube for discovery, youtube what they should watch or it's it's just uninteresting .

hosting the youtube and google pap.

Yes, it's free hosting. And I you know if there was a Better place, I think people would easily throw IT up on that .

Better place. Yeah and so will get into more this in detail. But back to another thing that's really interesting about this lawsuit is we have there's a bunch of testimony from eric smith, who was then the C E.

O of google and as part of the lawsuit, and he is interesting, he testified that he told googles board in the the days leading up to the acquisition and as they were working on IT, that he thought youtube was worth about six hundred to seven hundred million um and that as the deal progressed uh google decided that I had to pay more literally a billion dollars more um to keep IT from competitors um and that youtube had indicated to google uh the quote a had indicated to us that they would be sold is what eric says um which is super interesting because you know there's these content rights issues swing around the company. There's the massive hosting fees that they we're paying at the time and are still continuing to pay um and yet the growth was explosive. And it's interesting that they essentially put themselves up for sale um and that we have this this testimony here.

which is really cool. Well, do you think I mean one way that I would interpret that as we are going to be sold, as we are going to go out of business unless we have someone that is financing all these lawsuits .

like we have no buy. Cm.

yeah and .

ultimately lost, which said but but yes, super interesting. You've got this property, this product that is clearly an incredible product market fit growing like I don't know anything, I think nothing that the internet had ever seen until that point. And me maybe because facebook existed then, so was probably growing at a similar rate um and yet had the massive existential questions that even though IT was A A huge Price, um leads them to actively try and sell the company only eighteen months in yeah .

and the interesting thing about the sale too, it's almost entirely stock. There was only fifteen a million in cash and the rest in in stock. David, if you're google, why do you do such a stock heavy transaction there?

Well, I don't know at the time, I and I don't know how much cash google had on hand, presumably a lot, but this was ten years ago. Yeah and whether they could whether their treasury, you know how much cash they had on hand, how much cash of that was available and on u. il.

And yes, but to me, I mean, like looking at that, google was only going to go up, and it's easy to say that now looking at the sky rocketing, that is done. But if you're, you know, Larry page, so don't you gotta be optimistic there and you got ta be able to see that your companies want to get get more valuable? To be interesting to go back actually and look at all these shares now and and do the math. C, what's the current value that would .

also be interesting to look at? Um we've mentioned a koa lot in the shower both in the past in this episode, but in particular because of this investment memo. This is one of the largest shareholders in google, and I don't know if they were still shareholders at that time, but they were history of keeping their public shareholdings um which would be very interesting that the largest investor in youtube might also have been the largest or one of the largest shareholders in google .

at the time of this acquisition. Interesting indeed. Okay.

so so so just rap up. So what happened next two thousand and six time magazine names quote you person of the year, but the cover is youtube and the theme of you and user generated to content and and the growth just continues on the product team by may of two thousand. So four years later, less than four years later, um there are up to youtube is up to fourteen billion video use a month from one hundred million four years earlier by twenty thirteen youtube za one billion monthly unique viewers visitors um and and the growth has just continued since then.

Okay, cool. So i've heard you say a lot about views and viewers to feed my family. Yeah how do you feel .

about .

youtube as a business? Well, here's IT was .

really interesting in that happened since then, especially we've done our episode on witch. Netflix has also been built um well, netflix as a digital streaming service has been built during the same time and .

on stood up something from scratch in that time.

You you youtube is really one of the few, if maybe only major video business. Well, youtube and facebook um that are ads supported now. Um and I wonder if it's kind of been proven that direct payments are are a Better model for video on the internet. Um no, I was twitch has advertising. But um as we talked to about, I think most of the most of the dollars flowing through twitter backrib tions.

you touch really interesting things there. One in thinking about um youtube as a profitable business. I think last year, there's not a lot of good starts on the sense. But in february twenty fourteen, um they were doing about four billion in revenue but were pretty flat, I M guess, not flat as much as they were break even business. Four billion .

in revenue growing fast. But after payments to content creators and hosting costs and add files costs and all associated, a break even business is zero profit.

And so in the last year, h estimates that are that they are a five billion dollar business, but again, still not a profitable one. Um the interesting thing to think about there is what is their average revenue per user and the information prety sparse on this. But I think the latest numbers around kind of facebook and twitter, like somewhere in the seven and nine dollar range for those social services that are that are are supported, it's probably in that seven, eight dollar range, maybe a little bit less because it's I probably .

less because if in thousand and thirteen, they had a billion unique visitors and if, say, they made five billion in revenue last year, imagine that number of unique has only gone up since twenty thirteen. So you're talking about less than five dollars per a per user.

Yeah yes. So you can see why uh, youtube red is a thing. So youtube red is a service announced last year that you can pay ten dollars and get add for youtube and it's their sort of answer for how do you get um youtube the music that is on youtube as sort of a streaming service for when you're not actively watching a video you don't want to add and options all that.

So that's a ten dollar month service on the one hand and I i'm going to call this short sited, but on the one hand, they need to do that to make IT a profitable business. I mean, it's been a ten year experiment here since the acquisition. There is a lot of other ancillary benefits that google can set of having youtube, but as the core business, not hugely profitable, are profitable now.

So you know maybe moving to the other model gives them you know more cash flows, they're able to be a profitable business. On the other hand, IT flies directly in the face of youtube as an ad platform, and they're getting their highest value users, which are the people that the advertisers actually want to reach to not see the ads. And to do brand advertising, you need enormous scale.

I mean, facebook and youtube or two, the of the the only properties in the world that can do IT. And if youtube starts to widdle the population of people, particularly on the, you know most fluent and that are actually seeing ads, they become a less valuable and platform. So what we're seeing here as google transitions are trying to make youtube a profitable business with youtube red is potentially a huge shift in the entire strategy of what youtube is a business is.

Yeah um. I think that's exactly right. And you know, video as incredibly compelling as IT is and as largest it's become on the internet, mostly thanks to youtube and all of these services, facebook, video and twitch and others that have sprang up in its week is IT. Fundamentally though, does have a different cost structure than other types of of content on the internet.

Yeah know if you just compare this to instagram alone, you know acquired for a billion dollars and then I think they projected um making three three this year.

Well the and the cost structure is different on on two fronts. You know, one, there's the hosting and then the delivery of the video, which costs a lot more than text to her or static photos.

But two is the content payments, you know and youtube has really been aggressively investing in this, and it's not just payments to the professional media or organizations of the world at its payments out content partners that are you know once what on instagram, those people just post their post their content or snapped at they're posting for free. Youtube paying them. The youtube .

split fifty five percent of the ad revenue out .

and paying IT out to and and you know we know on twitter, you know lots of the most popular streamers have talked about how youtube has approached them and offered them large payments, very large payments to stream on youtube and streaming for free on twitch yeah that's interesting.

I mean that the whole twitch lies dreaming thing is interesting in itself. But uh even the um kind of stored a archive video that that um youtube is, is that their bread bread butter mean facebook as a product that is pulling people away in huge numbers because that's everyone's first step. And I think that the start that I recently saw was seventy percent of facebook videos are uploaded natively that used to be people youtube videos s and it's just been this massive.

massive shift. Yeah yeah. Well, I feel like we should we should move on to acquisition category.

But before we do one more quick IDE that I want to throw in, this is a particularly fun episode because my very first job interview or interview for my very first job when I worked at ubs and investment banking after college, I was interviewing in january two thousand and seven. And this access acquisition has just been announced. And I did.

This is a case study in my, I thought, man, this was going to be like the best job ever. Talk about like internet company strategy and media like this be awesome. And I learned investment banking was actually something .

very different thing. But now you get to do a podcast.

Now you get to do a podcast about IT.

I also great before I move on, I didn't fully I want to come around at that last point calling IT short sited. That's assuming that there are sticking with being an ad platform and particularly a brand advertising platform. If there is some grander plan, I think it's short excited.

That's that's the current business. If there is a grander plan to move to more of a spotify type subscription business, which will see if they can um you know whether that storm of the crazy margins you have to pay out to content producers at that point. But um you know it's short excited in that they maintain that same advertising platform strategy.

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yes. So um I think the obvious one here is product as a reminder, are our self identified major categories are people, technology, product line and other. Um but I think you know I think i'm actually going to go with other on this one. Um and I think it's a little bit what you were talking about just now then. But there is i'm not unique in coming up with this and I was inspired by a few articles that I read in preparing for the show. But people have been talking for years now about youtube beas google quote loss leader um and I think that's an interesting way to look at IT because if you think about google as an add sales machine, which IT is much of IT self serve, but a lot of IT know they have a huge add sales force um and you think of youtube as a part of um the the the overall portfolio of products that take google and sales team is selling, even if the business itself isn't profitable as as a business as a and the product has huge problems, but it's really enabled google to have multiple types. You know, if you think about their their course search, advertising and adwords and then display network that they built up following the double clique acquisition and they are now with video and youtube, um I think it's I think it's an interesting you know like I like quote loss leader product for google.

Yeah I I actually going to go with other also for a totally different reason, the they're able to bring data that they're getting from the videos that people are uploading and watching into the google search algorithm on all the oysters. And I think that sure they could do what they're doing with twitter now and in bed kind of a past along search to to youtube and return the first couple videos.

But what's the doing with with the content on youtube and the analytics and metrics of people watching these videos and understanding of the topical things that are going on into these videos is so much deeper than anything theyd be able to get with youtube as an extra nl company. So again, probably primarily the product. But I think, uh, other for for both of those two reasons.

and that also gets to something I want to talk about in a minute, which is in bed. Um yeah what will get there in a minute?

Uh one point I wants to make here. So google was had been playing with the product for a few years called google video search yeah before they acquired into and interestingly enough, they actually left IT running for like a year two after the acquisition in its exact same form where you could actually upload videos to google video and then left IT for and it's just sting.

Smidt actually talks about this in his testimony, saying one of the reasons that they were so compelled to pursue youtube was that I was clear that youtube was growing way faster and Better engaged in goole deo.

what do wrong? What do what? Video, where they failed there.

I don't know, this is a really interesting question. Um part of me wonders if IT is like you know kind related to the lonely island lazy sunday like IT kind of just got verity and I started taking off. And I mean, I remember I was in college when this was happening, and one day in, you know, two thousand six, all the sudden everybody on campus was watching youtube.

So do you think that's kind interesting to think about that? Youtube did Better than google video because youtube, by the nature of being a scrappy started up, was able to like basically acquire a bunch of debt in the form of lawsuits because they were doing things like, you know, letting people upload all these illegal videos, primarily because they didn't have great technology to filter IT out and and really no means to but also like that was the thing that some sort of get their fly we are going IT was in motion. They could do all sorts of things to um sort of pay down that dead later on but fundamentally they had the users and they had content .

flowing and yeah, I mean, I think it's IT would be I think that would be probably wrong and at least unclear to say that part of youtube strategy was to to illegally post content that they didn't have access to. I mean, this is what the whole law so was about and youtube won the lawsuit. So um you know legally the courts of yes, I yes, according to the courts, but you know I think it's unclear. Like we work start up, you know like things are you don't really have a good handle on what's going on in the early days and people use your platform for what they use IT for. But I think that does illustrate, you know, the scrapping is the the memorable lines of youtube know, and the idea that that could like planet in your brain as a concept of, I mean, so many of these things I want to talk about when we get to tech themes like streaming, that was not a concept that existed before youtube really just .

just can't no one want to to watch yeah I mean.

of the live streaming that we think of now. But even just streaming media, I mean, the real networks was the thing I obviously were here and see out, bit like most a before youtube know. And broadband penetration wasn't, you know basically one hundred percent that IT is now people downloaded content and watched videos that they had stored on their hard drives.

So they listen to music or podcast in. Podcast originally were downloaded into, right? The idea that you would stream something, what put on your ipod with U.

S. B, you can listen .

to IT exact, i'm sure that's what all is.

Twelve years later in the medium is just barely taking .

off off because yeah but you know I think like youtube was really able to popular as this. And then and then the other piece of that I think is in bed, which I want to talk about a minute. No, I mean youtube could benefit from this amazing service that had offered that that clearly millions and millions and now billions of people love, which is watching hosted video on the internet. Um bad enough to go to youtube dot com, you had to go to google dot com flash videos to discover and watch google videos.

Yeah remember of thinking like what videos, what I have that I even it's like a naming thing in the man, what video is what I have that I want to upload to google video I don't know, but I like require some weird .

creativity.

What is like, you know, it's videos of stuff that I do or or you have.

you know your own website about persons blog or or whatever. And you want to embed a video in there. Yeah, you do that.

And then you, for the user, double clicks on that. They go to youtube, and then they learned about youtube and I, oh no, maybe I want to host my videos. S there. Well, look at that lazy sunday.

Yeah, I have one more allegory that I want to make thinking about um sort of the debt you acquire in doing things there like shady because later on it's gonna an untouchable fly wheel that year. You know you've got so much cash that doesn't matter and you can deal with IT. There's actually two things that just going to mind.

One is linked in just lost that lawsuit where the thing that they were doing, that we all hate and that everybody notoriously rips on them for, is like, somehow they can never stop playing me. And they've been incredibly invasive in the inbox, and they took all my context, and they invited the model linked in for me. And that was user hostile and illegal. And the years and years and years later now finally got here with the penalty that was like, I don't know what they was in the neighbor d like one hundred million dollars and the value that they gained from that and the early days and all that lock in is way more. But you know, the horses weight of the barn.

like the race is over. Yeah, I mean, it's really interesting. I mean, i'm either of saying we enter either we endorse this or that I think a lot of these tech companies like explicitly are thinking this macbean way. But but think about you think about uber and airbnb, right? Like L B B, one of they helped bootstrap their supply side network with posting to craig list was that that was against craig list terms of service uh was that um you know evil in making valley of them like I don't know, they probably didn't think about that that much. They're probably just trying to grow and not die and stop selling cereal right?

Like yeah there there's one more insanely good one that I heard recently quite a bit older. Microsoft apparently had this practice where they would sell you the rights to use msdos. But IT didn't matter whether you actually put M S.

Off in that computer or not. You were charged as a microsoft customer for the number of CPU that you shipped, period, no matter if they had dogs on them or not. And that did an incredible thing because that, you know, the companies that are thinking like, well, IT doesn't matter if we put this on or not, we're gonna a get charged for IT.

So every PC leaving the door of the factory, he had M S. Dos on IT. And then once microsoft had allegedly monopoly on the entire competing industry, then the department of justice comes back. And as well that particular sales tactic is illegal. But again, years, years.

years and start up when you you're trying to survive and grow. You know people say this, but this is IT in practice. You unfair advantages if you don't have one, somebody else does. And you know youtube had an unfair advantage over google video.

yes. okay. Um I think we've .

kind of covered what would have happened otherwise like there was a massive problem coming for youtube.

Someone else would pick up or .

they want a gun background. T so yeah tech theme. So we've also covered a bunch of these. But um but no, I pull, I pull three. I have a couple others, but I pulled three out of the sequoia memo that I thought were that youtube really illustrated that they identified, you know, one user generated content. You had this kind of wave that started with blogging, with blogging in the sort of early two thousands.

And then IT moved into photos and photo bucket shuter fly um and my space and then and then early facebook popping up of people starting to, you know get this concept of sharing photos and then you had podcasting taking off. You had audio and you know was kind of, you know so coil loves these wave analogies, but you can read the memo and it's just there in black and weight. You know video is the next and potentially biggest piece of this wave that's coming.

So that's one to continued broadband adoption. I mean, this would not have been possible without broadband. And three, the the quote is wide proliferation of inexpensive video capture devices. What was happening in two thousand and five, two thousand and six, was you had.

like flip cam.

yes, yeah. And you had digital cameras, still cameras shipping with video modes. And this was new. And and then shortly there, after cell phones happened.

smartphones happened yeah you think about when this acquisition happened was IT like october two thousand six yeah I mean, not even a year before the iphone.

You all of these things that all combined, you know, in this this info to create the opportunity for youtube yeah and and it's really interesting.

I am i've been kind of work in google the whole time here and will continue to but the they made a big bet the people would move from watching their televisions to watching video online. And we weren't calling IT chord cutting them, and we didn't know that we would have these netlist lice subscriptions and things like that. But they were definite making the bed that that video on the internet is the future of people's attention and they were absolutely write about that.

Yeah, I mean, I don't have cable, do you? Cable.

no, not my dot life.

You neither. Um I think I think it's time for conclusion.

yeah. It's interesting. The way that I sort of want to think about this is. What else could google have done if they wanted to capitalize on the trends we've been talking about, particularly the um one that I was taking of this is a video on the internet is the place where people's attention will be and as someone who um you know as a company that captures value from being somewhere in the value chain of people's attention, people's attention and where they spend their time primarily in the form of seeking out an information.

You know google was making a defensive move that in if that's how people are spending time in the future, then we need to be able to put advertising in front of them on that time, in that time to modernize IT. So what else could they have done? Netflix wasn't really a business yet that looked anything like this that would have been sort of a silly acquisition.

They were trying with goole video and clearly couldn't do IT internally. And IT feels like a rebooted effort. There wouldn't have necessarily been as fruitful as this acquisition. I don't know that they had a lot of other ways to capitalize on this wave.

Yeah, I like this. And think about both then and today, what percentage google searches and in youtube, I would imagine a pretty significant.

Yeah.

it's pretty interesting. And if and if google were sending, I don't know, i'm going to pick a number out of thin there, but ten percent, fifteen percent of google searches, I think that seem feels reasonable to me, end up in a youtube link. And if they were, if google were sending ten to fifteen percent of its traffic to a non google property, I mean, us IT kind of does that with, like amazon. Yeah.

yeah. That's interesting. Is that bad for google's business? If there, I guess it's bad as someone gets big enough so that they actually become a destination site where you go right to that home page instead of using google search for or facebook to discover IT through what your friends and facebook are surfacing to you, which are basically the two ways that people find things on the internet right now.

Are they search on izon?

yeah. Well, I mean, I even truly search products on google that I know will come up on amazon first. And I freak have an amazon smile button in my bookMarks bar so that I always know to go there so the code out or gets the the money. But I like always forget to do IT because I end up just searching for the product in google because anyway is i'm going to be the first thing anyway.

So google is my front door. When I know what I want to.

I try was that is going to make there. That is okay. If IT .

actually lets go work .

off the hypothesis that a huge chunk of the traffic passing through google goes to a single site instead of an aggregated unch of little sites, that should be a problem because then in sort of a like porters five forces way, that business gets power over google. And then people start going directly to that thing. And they don't need like the retailer of google anymore and they can just get their their material directly from direct from youtube. Youtube has been owned by google for ten years and they still can't manage to make youtube dot com s slash a destination site like I don't know that, that actually would have been threatening to their business.

On the other hand, you could argue that google really had no motivation to invest in doing so. And had youtube remained independent, which as we kind of established, was impossible, but let's imagine they could have a would product oriented bounders have LED that company to, you know, something that looks like twitched and what's gonna en to twitch in the next ten years?

Yeah, interesting too. So I want to render my conclusion .

is to see, wow, that our lowest .

grade yet certain ly mind.

What do we give? Siri.

I don't remember.

Um okay. So for me gosh, I kind part of me really wants to split this into two pieces. And so I think i'm going to do that and give a grade for each. But but we have to have just one grade. Do you know i'm going to ultimately .

render .

a final grade? Thanks, then. I really appreciate the trust here. So I think as a i'm going to take first as a business.

Youtube, unfortunately, I don't think has been a particularly good business as we've established. Tina were ten plus years into the company and revenues are grouped of profit basically zero. Um and maybe the things that you know they can invest to change that every time or google could have been differently. But you know a five billion dollar revenue business with a zero dollar margin is not a great business, in my view.

Find you start one.

Yes, right? I'm A B C. My job is is to judge people's businesses, you know, do the hard work of actually building them.

It's great. So you know, on the business side, I think this is goss. H I don't know, see minus maybe.

I mean, yeah, you're right. Like I can build a five billion nine business like it's it's broken hard. But in that one point.

six five billion is just the beginning. I mean, think about the Operational cost of growing more money into this .

business and people and content investments and all, but I just don't think it's not a great business by great business standards. Then I think the other lens I want to look at this through is the product lands. And this one super interesting because like youtube is not a great product either, like it's really crappy in a lot like as we been discussing, I mean, maybe focus out there do.

But like ben and I don't go to youtube dot com very often. I don't really do ocasio ally, but only if i'm looking a very, very specific thing and you know and it's still kind of ugly. The site and theyve totally missed out on innovations like chat and and I don't .

think i've ever opened the APP directly. I ve only ever been kicked and do IT.

We can talk about mobile, but god took them forever to figure that out. And there's kindly like, okay now. But just on the like pure innovation side, and i've talked about this already, the concept of streaming media. And yes, IT existed with real networks and others before, before youtube, but really is working and working with video and working at scale.

IT changed the world, right? And then the second one, being in beds and in beds is a double as sort because as we're talking know, as we've talking about, like when you can embed your content on somebody else, other people's proper, like why do they go to your property. But um as a concept, like it's pretty amazing.

Like a site owner, I don't have to like host and do figure the codec and the delivery mechanism for all my own videos. You I mean .

basically IT IT upgraded the internet. Youtube upgraded the internet and I don't think that's .

an exaggeration. Yeah it's an inflecting layer that that didn't previously exist and then was just totally off the shelf. Oh yeah, I just I just put my youtube video .

yeah so and do these not to mention .

to your first point when like you changed the world, and there is a whole category of people that are youtube ers that are making a living doing that, and a whole generation of people that know those people as their celebrities yeah, in IT at this beauty pie cheese st thing. But a totally, totally democratized video creation and you're coming a star.

yeah. And and for that reason, I think this product side is like really hard, like it's been really disappointing and a big failure on several product fronts. However, unlike the core things that like IT is just not that out the park.

So I give you A A minus on the product side. Overall, i'm onna match this up into a bee for google because I think, you know I could be wrong. But I think if you asked Larry and sergey and eric if they could go back to two thousand six and what they spend one point six five billion dollars for youtube, I think they would do that all day.

every day yeah I mean, also like just on their personality is right like that's i'm not going to call IT a moonshot, but it's sort of falls in the vain of like, what if anybody could make movies and then anybody in the world could watch them? And like, this idea was not as fast able in two thousand and two, and obvious says, that is today, right? Like the world a couple of years before youtube compared to the world now, IT sort of does look like a crazy. And if they can do that, and IT doesn't .

at least cost money to .

run there.

we cool. Thank you.

See the next time.

Easy you, easy you, busy you who got the true.

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