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I remember thinking Google paid an absurd and ridiculous sum of money when they acquired YouTube. I couldn’t have been more wrong, what an incredible acquisitio

I remember thinking Google paid an absurd and ridiculous sum of money when they acquired YouTube. I couldn’t have been more wrong, what an incredible acquisition.

CuriouslyC 8mo ago
To be fair, goog has been investing heavily in youtube for ~20 years, and executing pretty well overall, it wasn't a foregone conclusion.
- hsuduebc2 8mo ago
  If I remember correctly it wasn't even making any remarkable money in the past.
- bigstrat2003 8mo ago
  Which certainly raises the question: are they in fact making money overall on youtube? Considering not just the initial acquisition cost, but also the further investment they put in over the years. I'm not sure how one would find out, but it isn't the slam dunk obvious case that the OP was implying.
  - chii 8mo ago
    > are they in fact making money overall on youtube? if they weren't, won't it make sense to drop it? So by empirical observation of the outcome, it seems like youtube produces enough value to google that it is worth the investment! Now if you ask whether youtube is financially net-positive; ala, if youtube were to be spun off as an individual/separate entity without being owned by google, then that's another question altogether. I have doubts it is financially net-positive without the leverage that google provides in utilizing youtube's assets.
almosthere 8mo ago
Yeah don't worry you were in a crowd of 99% of people that thought the same thing.
Brajeshwar 8mo ago
I’m not sure how true it is but I remember reading the story where Google saw YouTube as the better choice because those guys are down the road, against their other competitors that they were trying to buy.
aurareturn 8mo ago
Another acquisition, arguably even better, is Instagram. Most people got that wrong too.
- saidinesh5 8mo ago
  Even WhatsApp.. that number was insane...
  - danpalmer 8mo ago
    I think that's an example of the opposite, the number was huge but how much revenue is being driven by WhatsApp? I think that would be a hard one to put a number on. I'm sure it's important for Meta overall, but it's not directly driving ad or subscription revenue.
    - catlikesshrimp 8mo ago
      Whatsapp claims to be E2E encryption, but it can still submit anonymous("") metadata("") At least they can identify you and your contacts by real phone number, real name and nicknames, and more often than not real pictures; the information can be crosschecked across all your contacts who in good faith provide good information. There are also bussiness accounts which are really important depending on the location. It is very hard to put a price to that, but its value is undisputable.
      - danpalmer 8mo ago
        This is exactly my point. I'm sure there's lots of intelligence that Meta can attribute value to, in a complex attribution process, but I doubt that it's as simple as a revenue stream or P&L.
    - saidinesh5 8mo ago
      That's the weird thing about WhatsApp though.. back when they bought WhatsApp it was still a paid service and a lot of people actually paid for it and it was on its way to get to a billion active users. After that acquisition, they made it free for all and started chasing the $$$ with WhatsApp for business. And ads. No idea which is more profitable anymore. I think they'd still be able to monetize it more with WhatsApp payments and those ads in status updates. I'd definitely like to know what the numbers are looking like these days..
kibibu 8mo ago
Yes, but how much of that success was driven by access to Google infra, adtech, and cash?
aamar 8mo ago
Post-acquisition, Google employees made a number of smart moves with good execution, including a viable comp model for the creators and music rights deals. Several moves I consider bad as well, but the good moves outweigh them. Looking back, I’m still pretty amazed they got so much of it right. Which is to say, a good chunk of the value wasn’t in the value of YouTube itself but in what Google brought to the table _or_ a synergy between the two.
- deleted 8mo ago
  [deleted]
Quarrel 8mo ago
For a lot of the early years, it lost a lot of money. Providing the bandwidth, getting distribution closer to the ISPs etc was a major investment. Lots of dark fiber. A bit like Google Maps though, a great visionary early investment that they then poured a lot of $ into to make them what they are today. No one else was just providing free satellite imagery for the entire world back then, not even Google Maps. The investments to support these two products at least, have been really important in helping Google maintain its hold in other places too. Lots of people still whinge about youtube, but standing up a solid competitor would take too many $ for anyone but other big tech now.
mrtksn 8mo ago
Just like with FB’s purchase of Instagram. I remember people making fun of Zuckerberg for paying $1B for a “filter app than can be made in few hours”. I think the magic wasn’t in those apps or websites but the traction they got and how that was preserved. Both FB and Google were very careful to preserve the origins when evolving. I remember Google videos, it was very bad. If this wasn’t Google but Microsoft, they may have tried to integrate Youtube into their Video platform and destroy everything. Being good custodian is just as important.
- colordrops 8mo ago
  YouTube is close to losing that preservation. It's so slow and clunky to load in the desktop browser that I'm finding myself using it a lot less. It's absurd how heavy it is now. UX is getting worse too, e.g. the save to list dialog closing after adding to a single list instead of allowing multiple to be selected. It wouldn't be so bad if it didn't take forever to open.
  - rambojohnson 8mo ago
    glad it’s not just me. we used to have multi-playlist saves with a modal that showed more than three pixels of your library. now it’s slow, cramped, and forces you to hit SAVE over and over even though the backend supports it. feels like a regression dressed up as bad UX.
  - csomar 8mo ago
    I am using it less because I can't find any videos as the search is completely broken (no, I won't enable history tracking). Many days when I am in the mood to watch videos, I just give up. It doesn't help now that most searches return AI-generated video (that has millions of views). Who watches these things?
  - mrtksn 8mo ago
    A few things I can’t stand about Youtube’s desktop website: 1) Spacebar sometimes skips to the next video when playing a playlist. Just why? 2) You never know if the small buttons like play next on the thumbnails will work or just play that video right away. 2) when on the homepage, you open a few videos in new tabs and close the homepage only to find out that you just open bunch of “this video contains paid promotion” disclaimer pages. Re-open the homepage to actually open the videos and they are all gone, the page shows a grid of different videos. so yes, I agree that the web interface went downhill.
jmyeet 8mo ago
The story of this is actually pretty interesting. Everyone had been tryign to do video-on-demand and failing, basically. Including Google. Google had a product called Google Video that failed pretty spectacularly. Youtube came along and was basically spending money like there was no tomorrow. Well, for the time. It's nothing compared to the current crop of AI companies. So with Youtube, everybody was terrified of the bandwidth costs, with good reason. The cost to build a sufficient network was exorbitant using off-the-shelf hardware. Google runs their own networking hardware and servers at the efficiency level at the time that was unprecedented. They measure things in a unit called PUE (power unit effectiveness). That's basically how many Watts each Watt of computing power cost. Things like cooling would eat that up. Typical data centers at the time were at like 1.5-2. Google's own data centers were more like 1.1. Google was actually lying and saying it was 1.2 and people didn't believe it was that low. The best Google data centers are I believe more like 1.05-1.08 now. Passing cooling and that sort of thing contributes to this. So Google of anyone had the cost controls on computing power and and networking like nobody else. And Youtube was burning VC cash. That's why they got it so "cheap". This still created huge problems for Google and as Youtube continued to grow it was heavily impacting national ISPs, peering connections and the like. When Youtube was acquired they came up with a bandaid solution (called Bandaid) where they bought commercial server racks from Dell and elsewhere and loaded their own software on them. They would give them to big ISPs. The software would locally cache the most popular Youtube videos to cut on the ISP's bandwidth costs and the latency. I believe that this temporary solution became permanent and continues to this day. Nobody could monetize Youtube like Google either as in nobody else has a remotely comparable ad infrastructure and ecosystem. And lastly, nobody could encode video like Google could. Nobody else had access to that much computing power and could use it as efficiently. That was a huge deal because the encoding requirements are massive. So yes, it was an amazing acquisition but I think if anyone else at the time bought it, they would've failed.
dlcarrier 8mo ago
It's a bit of a white elephant— very valuable, but very expensive to own.
KellyCriterion 8mo ago
LOL!!! Absurd? YT was acquired for 1.5 billion USD back in 2005 / 2006. (Google was already a billioncompany back then) I tell you one thing: They are sitting in the basement each evening, counting the cash and laughing their ass off :-D :-D Guaranteed :-) This was by far one of the most strategic decissions they ever made.

I remember thinking Google paid an absurd and ridiculous sum of money when they acquired YouTube. I couldn’t have been more wrong, what an incredible acquisition.

CuriouslyC 8mo ago

To be fair, goog has been investing heavily in youtube for ~20 years, and executing pretty well overall, it wasn't a foregone conclusion.

hsuduebc2 8mo ago
If I remember correctly it wasn't even making any remarkable money in the past.
bigstrat2003 8mo ago
Which certainly raises the question: are they in fact making money overall on youtube? Considering not just the initial acquisition cost, but also the further investment they put in over the years. I'm not sure how one would find out, but it isn't the slam dunk obvious case that the OP was implying.
- chii 8mo ago
  > are they in fact making money overall on youtube? if they weren't, won't it make sense to drop it? So by empirical observation of the outcome, it seems like youtube produces enough value to google that it is worth the investment! Now if you ask whether youtube is financially net-positive; ala, if youtube were to be spun off as an individual/separate entity without being owned by google, then that's another question altogether. I have doubts it is financially net-positive without the leverage that google provides in utilizing youtube's assets.

almosthere 8mo ago

Yeah don't worry you were in a crowd of 99% of people that thought the same thing.

Brajeshwar 8mo ago

I’m not sure how true it is but I remember reading the story where Google saw YouTube as the better choice because those guys are down the road, against their other competitors that they were trying to buy.

aurareturn 8mo ago

Another acquisition, arguably even better, is Instagram. Most people got that wrong too.

saidinesh5 8mo ago
Even WhatsApp.. that number was insane...
- danpalmer 8mo ago
  I think that's an example of the opposite, the number was huge but how much revenue is being driven by WhatsApp? I think that would be a hard one to put a number on. I'm sure it's important for Meta overall, but it's not directly driving ad or subscription revenue.
  - catlikesshrimp 8mo ago
    Whatsapp claims to be E2E encryption, but it can still submit anonymous("") metadata("") At least they can identify you and your contacts by real phone number, real name and nicknames, and more often than not real pictures; the information can be crosschecked across all your contacts who in good faith provide good information. There are also bussiness accounts which are really important depending on the location. It is very hard to put a price to that, but its value is undisputable.
    - danpalmer 8mo ago
      This is exactly my point. I'm sure there's lots of intelligence that Meta can attribute value to, in a complex attribution process, but I doubt that it's as simple as a revenue stream or P&L.
  - saidinesh5 8mo ago
    That's the weird thing about WhatsApp though.. back when they bought WhatsApp it was still a paid service and a lot of people actually paid for it and it was on its way to get to a billion active users. After that acquisition, they made it free for all and started chasing the $$$ with WhatsApp for business. And ads. No idea which is more profitable anymore. I think they'd still be able to monetize it more with WhatsApp payments and those ads in status updates. I'd definitely like to know what the numbers are looking like these days..

kibibu 8mo ago

Yes, but how much of that success was driven by access to Google infra, adtech, and cash?

aamar 8mo ago

Post-acquisition, Google employees made a number of smart moves with good execution, including a viable comp model for the creators and music rights deals. Several moves I consider bad as well, but the good moves outweigh them. Looking back, I’m still pretty amazed they got so much of it right. Which is to say, a good chunk of the value wasn’t in the value of YouTube itself but in what Google brought to the table _or_ a synergy between the two.

deleted 8mo ago
[deleted]

Quarrel 8mo ago

For a lot of the early years, it lost a lot of money. Providing the bandwidth, getting distribution closer to the ISPs etc was a major investment. Lots of dark fiber. A bit like Google Maps though, a great visionary early investment that they then poured a lot of $ into to make them what they are today. No one else was just providing free satellite imagery for the entire world back then, not even Google Maps. The investments to support these two products at least, have been really important in helping Google maintain its hold in other places too. Lots of people still whinge about youtube, but standing up a solid competitor would take too many $ for anyone but other big tech now.

mrtksn 8mo ago

Just like with FB’s purchase of Instagram. I remember people making fun of Zuckerberg for paying $1B for a “filter app than can be made in few hours”. I think the magic wasn’t in those apps or websites but the traction they got and how that was preserved. Both FB and Google were very careful to preserve the origins when evolving. I remember Google videos, it was very bad. If this wasn’t Google but Microsoft, they may have tried to integrate Youtube into their Video platform and destroy everything. Being good custodian is just as important.

colordrops 8mo ago
YouTube is close to losing that preservation. It's so slow and clunky to load in the desktop browser that I'm finding myself using it a lot less. It's absurd how heavy it is now. UX is getting worse too, e.g. the save to list dialog closing after adding to a single list instead of allowing multiple to be selected. It wouldn't be so bad if it didn't take forever to open.
- rambojohnson 8mo ago
  glad it’s not just me. we used to have multi-playlist saves with a modal that showed more than three pixels of your library. now it’s slow, cramped, and forces you to hit SAVE over and over even though the backend supports it. feels like a regression dressed up as bad UX.
- csomar 8mo ago
  I am using it less because I can't find any videos as the search is completely broken (no, I won't enable history tracking). Many days when I am in the mood to watch videos, I just give up. It doesn't help now that most searches return AI-generated video (that has millions of views). Who watches these things?
- mrtksn 8mo ago
  A few things I can’t stand about Youtube’s desktop website: 1) Spacebar sometimes skips to the next video when playing a playlist. Just why? 2) You never know if the small buttons like play next on the thumbnails will work or just play that video right away. 2) when on the homepage, you open a few videos in new tabs and close the homepage only to find out that you just open bunch of “this video contains paid promotion” disclaimer pages. Re-open the homepage to actually open the videos and they are all gone, the page shows a grid of different videos. so yes, I agree that the web interface went downhill.

jmyeet 8mo ago

The story of this is actually pretty interesting. Everyone had been tryign to do video-on-demand and failing, basically. Including Google. Google had a product called Google Video that failed pretty spectacularly. Youtube came along and was basically spending money like there was no tomorrow. Well, for the time. It's nothing compared to the current crop of AI companies. So with Youtube, everybody was terrified of the bandwidth costs, with good reason. The cost to build a sufficient network was exorbitant using off-the-shelf hardware. Google runs their own networking hardware and servers at the efficiency level at the time that was unprecedented. They measure things in a unit called PUE (power unit effectiveness). That's basically how many Watts each Watt of computing power cost. Things like cooling would eat that up. Typical data centers at the time were at like 1.5-2. Google's own data centers were more like 1.1. Google was actually lying and saying it was 1.2 and people didn't believe it was that low. The best Google data centers are I believe more like 1.05-1.08 now. Passing cooling and that sort of thing contributes to this. So Google of anyone had the cost controls on computing power and and networking like nobody else. And Youtube was burning VC cash. That's why they got it so "cheap". This still created huge problems for Google and as Youtube continued to grow it was heavily impacting national ISPs, peering connections and the like. When Youtube was acquired they came up with a bandaid solution (called Bandaid) where they bought commercial server racks from Dell and elsewhere and loaded their own software on them. They would give them to big ISPs. The software would locally cache the most popular Youtube videos to cut on the ISP's bandwidth costs and the latency. I believe that this temporary solution became permanent and continues to this day. Nobody could monetize Youtube like Google either as in nobody else has a remotely comparable ad infrastructure and ecosystem. And lastly, nobody could encode video like Google could. Nobody else had access to that much computing power and could use it as efficiently. That was a huge deal because the encoding requirements are massive. So yes, it was an amazing acquisition but I think if anyone else at the time bought it, they would've failed.

dlcarrier 8mo ago

It's a bit of a white elephant— very valuable, but very expensive to own.

KellyCriterion 8mo ago

LOL!!! Absurd? YT was acquired for 1.5 billion USD back in 2005 / 2006. (Google was already a billioncompany back then) I tell you one thing: They are sitting in the basement each evening, counting the cash and laughing their ass off :-D :-D Guaranteed :-) This was by far one of the most strategic decissions they ever made.