Big-screen hero

23 Dec 2010

After developing one of the world’s most disruptive websites – and the second-biggest search engine in the world – YouTube co-founder Chad Hurley believes we’re only scratching the surface of what the internet can do.

Legend has it that fine art graduate Chad Hurley and his pals Steve Chen and Jawed Karim established YouTube – officially planet Earth’s second-largest search engine – after being frustrated with trying to share videos from a dinner party. So the three colleagues from PayPal got to work and built YouTube. Within 18 months they were bought by Google for US$1.6bn in October 2006.

Hurley has since stepped down as CEO of YouTube but remains at the firm as an adviser. When I meet Hurley, who with his beard and slow drawl reminds me of a Wild Western gunslinger, I ask him if that’s how it really began.

“It was a combination of things: Steve had some videos of a dinner party, I had some family things I wanted to share – I was on the West Coast and my family was on the East Coast – and it really just came out of that. We had videos on our desktop and there were photo sites that allowed people to share their photos but there weren’t actually video sites, so out of that frustration, that’s how it was born.”

Behind YouTube’s success

I put it to Hurley that the growing availability of broadband was the reason YouTube succeeded when it did. “I think we were in the right place at the right time in terms of people having the devices to create the videos and the connections to upload them and view them as well, so that all just started coming together around the time we created the site.

“We were lucky enough to just make it simple to upload and make it a seamless viewing experience and solve the problem of a need for a universal video player.”

Hurley isn’t your typical Silicon Valley start-up honcho – most of these guys are engineers. He’s a fine art student – he designed the logo for PayPal where he met Chen and Karim – so I ask him how he got sucked into the Silicon Valley scene. The answer, he says, is that he sees a correlation between engineering and design.

“Well, you need an art degree to think outside the box, I just wasn’t focused on engineering. It’s not a formula to dream up these things but I think it was a great combination, not one person thinking an idea but someone actually building it. I’m not underestimating the value of engineering by any degree – you need to make it work – but I think it’s a play between engineering and design and you need a product people can relate to; not just from a user interface perspective, but a brand the community you want to serve understands.

Design is currently underrated as a need in the internet world.”

I ask Hurley how it felt to be acquired by Google for such a vast sum and after just 18 months.

“It felt pretty good I guess,” he deadpans. “We were hoping for more but …

“For us even just after 18 months we had multiple offers and we turned them down because we saw an opportunity to continue the first phase. Coming from PayPal, we were lucky enough to survive the dotcom crash, go public and be acquired by eBay, so we saw the potential of creating something people would use and hopefully that would be valuable and hopefully entertain and we would continue to run ourselves.

“Unfortunately we were too successful and growth surpassed our expectations and weren’t able to keep up on all fronts and we were short of infrastructure, people and cash – all of those things were in great need and were exponentially still continuing to grow.”

Enter Google

Combining with Google When Google knocked on the door the time was right. YouTube needed cash and resources while Google wanted to build up its video serving business.

“Looking at the reality of the situation and looking at Google – they were trying to grow a video service at the time and we were trying to ramp up our advertising solutions and operations and rally, so it was a great combination. They had the sales team, the solutions and we had the video expertise and it came together and we’ve created a product that continues to grow.”

He’s right about that growth – according to Google’s most recent quarterly results, YouTube is serving 2 billion videos a week accompanied by advertising. The social impact of YouTube has been equally enormous, enabling people who previously didn’t have a voice to have a voice and new stars to emerge. It was one of the ways reportage emerged during the heavily censored Iran election riots last year.

“Well, you can never plan for it but they say if a picture’s worth a thousand words, then a video is a million. Emotionally for people to react to situations like Iran where it was a trending topic, you’d read an article and then see it in person, it’s really emotional. We still have a long way to go in terms of people producing their own video content to a really high standard.

“It takes much more work and some amount of talent to produce what people think is valuable, but for YouTube it has been about that; people expressing ideas or capturing a moment in time, telling a story… it’s a chance to gain visibility. That’s one of the things I’ve been happiest about; just to hear what the community is doing with it for politics, what is newsworthy. People that otherwise have been part of the traditional system recognise they have chance to go directly to the top.”

The impact of YouTube and other services like Twitter and Google’s news aggregation service (which includes YouTube video) on media has been profound and it is an accepted fact that many of today’s teenagers and 20-somethings no longer watch linear TV in the living room, but consume their media on their own terms and in their own time. This has spawned a counter revolution among broadcasters to bring out their own catch-up TV products.

YouTube itself has added to the fire by introducing full-length shows as well as streaming events like U2’s concert in Las Vegas and experimenting with real-time television. From YouTube’s perspective, Hurley still believes there’s a serious amount of work to be done to improve the quality of experience for every user.

“It’s really early in terms of what we can do. We need to continue to focus on making the site easier to use. I still think it’s too hard to find what you’re looking for. I think we need to solve that, not just search, but how do you connect with individuals who want to share content with you from a social networking aspect? We’re also looking at building better and better recommendations and related content – that’s always been our strength over linear TV.

“It really is a combination of improving all of those things. That’s what we’re focused on today: delivering a consistent experience over multiple devices, so you can consume media from the site and interact with it on your PC or TV and then we can go about tackling more business opportunities such as subscriptions and pay per view services.

“It would be great if we became a seamless platform that supported all forms of media distribution.”

Future fortunes

Looking to the future of online advertising and monetisation of content, Hurley says this area is going to be enormous, judging by the progress of the last five years alone.

“First we needed the sales placement tools in place and integration with Google is something that’s taken time and also shortly after they acquired us they acquired Doubleclick, which we were on and they needed to create the integrated systems.

“We needed to prove the format and function – in our eyes creating a great ad experience is critical to creating great content for the community and we have some way to go in terms of integration with the TV world. TV is still a linear broadcast medium and they will eventually be pooling ads to serve the individual; that will take time. Once those integrated systems are in place you’ll see a dramatic increase in the number of web dollars.”

The advent of internet television clearly has Hurley excited but before he and his colleagues can enjoy the spoils, the traditional media giants have a bone to pick, especially Viacom, which has sued YouTube and lost.

“The big media guys want to ban copyright violators but really they’re as concerned about losing control of distribution. The [Viacom] summary judgement ruled in our favour and it shows we were doing the right thing and that we were really the most proactive in this space. We had the technology to deal with copyright problems.”

Other media companies are beginning to work with YouTube. For example, videos where copyrighted music has been included by users are emerging as an ad platform. “Some of the biggest fans are creating videos and put some music to them,” Hurley points out. “We could simply remove all these videos but instead of just removing videos, we are able to place ads in them and derive revenue for the copyright holder.

“We’re seeing these opportunities with other types of media companies and they are embracing it and it helps them create more of a fan base, build more revenue and not view it as a problem but an opportunity.”

Next big thing online

As social media becomes a catch-all for all web endeavours, entrepreneurs and nations around the world are seeking out the internet’s next big thing. Discovering the next Twitter, YouTube or Google or Facebook is a global pursuit. Smartphones will be in the hands of 50pc of all mobile users in the US by next year and the next billion internet users will be accessing the internet by mobile broadband. Hurley’s advice to anyone with a great idea is to surround themselves with great people and be prepared to adapt. “You may have initial thoughts or ideas of how something would work but you need to observe how your community is using it, how your staff personally are using and then make necessary changes. Do not be afraid of changes in direction mid-course.

“When we began we had this idea it would be a video profile concept that you would upload your own content sitting at your own desktop, but very quickly we knew that was too narrow, we knew we needed to become a video platform that accepted all kinds of video communication,” he concludes. “The biggest advice is just be flexible and be willing to adapt.”

This article orginally appeared in Marketing Age, Volume 4, Issue 4, 2010.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years