Acquired by Google, in 2006, for $1.65 billion, YouTube is now worth many times over. In 2021, YouTube generated over $28.85 billion in revenues from advertising alone. YouTube is part of Google (now named Alphabet), and as such, it is owned by main Google’s Alphabet shareholders and is one of the fastest-growing segments for the company.
In a video dated October 10, 2006, Steve Chen and Chad Hurley officialized the news of the acquisition of YouTube, from Google, for $1.65 billion.
The third co-founder, Jawed Karim, was already out.
And yet the three co-founders all became multi-millionaires, making probably $300 million each for Chen and Hurley and around $66 million for Karim.
At the time, Google was trying to launch its video service called Google Video.
Yet, Google, while already a tech giant back then, could not figure out how to make Google Video as successful as YouTube.
YouTube was indeed a rocketship, and what concerned them most, the Google’s founders, Brin and Page, was that YouTube was also used as a search engine for video.
With video becoming a dominant format for the Internet by 2006, Google was quite concerned about being unable to keep up with YouTube’s growth quickly.
YouTube, on his side, was executed exceptionally well, backed by some of the prominent Silicon Valley VCs. Indeed, Sequoia backed YouTube through Roelof Botha.
Botha was CFO at PayPal before he joined Sequoia. He was a PayPal Mafia member.
The YouTube co-founders, looking for money to finance the operations that, since that point, had been running on Chen’s credit cards, turned to Botha, which they knew from PayPal.
Indeed, YouTube’s co-founders were former PayPal team members.
After PayPal had been acquired by eBay, Chen, Hurley and Karim left to start their own company, which would later become YouTube.
By November 2005, Google, through Larry Page, had already started to seriously look into acquiring YouTube:
Source: House Judiciary Antitrust Subcommittee (2020) – Formatted by Internal Tech Emails on Twitter
Thus, by February 7, 2006, the acquisition of YouTube by Google gets on the CEO’s desk as a priority.
Source: House Judiciary Antitrust Subcommittee (2020) – Formatted by Internal Tech Emails on Twitter
In an initial consideration Google takes into account an offer for YouTube of $50 million.
We were in February 2006, YouTube was burning cash, it wasn’t generating revenues, and yet Google would eventually offer much more to secure it.
However, by February 2006, Google kept looking into ways to partner up, without buying YouTube.
In fact, when Google first proposed the deal to YouTube, things didn’t move forward, as YouTube’s founding team was looking for “the myspace deal.”
In fact, at the time, back in July 2005, News Corp. the company – at the time – owned by the business shark, Rupert Murdoch, had acquired MySpace for $580 million in cash, setting an incredible precedent.
For Google’s executive team, that was way too expensive.
In fact, at the time, Google thought it could still figure out videos, with its Google Video.
Yet, as months went by and Google Video didn’t gain as much traction as the executive’s team thought.
And as Yahoo showed up, things got way more interesting.
Google’s executive team, driven by its co-founders Page and Brin, was an incredible deal-maker.
Meaning, they knew when the timing was right to close a deal before it would be stolen by a competitor like Yahoo.
Eventually, the deal was closed at $1.65 billion, and YouTube became part of Google.
YouTube, by 2021, generated over $28 billion in advertising revenues. In the first nine months of 2022, YouTube generated over $21 billion in advertising revenues.
YouTube was acquired for almost $1.7 billion in 2006 by Google. It makes money through advertising and subscription revenues. YouTube advertising network is part of Google Ads, generating more than $28B in revenue by 2021. YouTube also makes money with its paid memberships and premium content.
The most prominent institutional shareholders are mutual funds BlackRock and The Vanguard Group, with 2.7% and 3.1%, respectively. Larry Page and Sergey Brin together have 51% of the voting power. Other shareholders comprise John Doerr (1.5%), venture capitalist and early investor in Google, and CEO, Sundar Pichai. Former Google CEO Eric Schmidt has 4.2% voting power.
YouTube is the most popular online video platform, a hybrid between a video search engine and a social media platform with a continuous feed prompted by social interactions and engagement. The platform is so popular that YouTube.com is the second most visited website. After being acquired by Google in 2006 for $1.65 billion, the platform now boasts over 2 billion registered users. Collectively, these users upload 500 hours of video every minute. The platform competes with other video engines like Vimeo and Dailymotion and social platforms like IGTV, TikTok, and Twitch.
The digital advertising industry has become a multi-billion industry dominated by a few key tech players. The industry’s advertising dollars are also fragmented across several small players and publishers across the web. Most of it is consolidated within brands like Google, YouTube, Facebook, Instagram, Amazon, Bing, Twitter, TikTok, which is growing very quickly, and Pinterest.
Google (now Alphabet) primarily makes money through advertising. The Google search engine, while free, is monetized with paid advertising. In 2021 Google’s advertising generated over $209 billion (beyond Google Search, which comprises YouTube Ads and the Network Members Sites) compared to $257 billion in net sales. Advertising represented over 81% of net sales, followed by Google Cloud ($19 billion) and Google’s other revenue streams (Google Play, Pixel phones, and YouTube Premium).
The most prominent institutional shareholders are mutual funds BlackRock and The Vanguard Group, with 2.7% and 3.1%, respectively. Larry Page and Sergey Brin together have 51% of the voting power. Other individual shareholders comprise John Doerr (1.5%), venture capitalist and early investor in Google, and CEO, Sundar Pichai. Former Google CEO Eric Schmidt has 4.2% voting power.
Mark Zuckerberg is the largest shareholder of the company. Zuckerberg retains ownership and control of the company. Like Google, Facebook has issued two common stocks, Class A and Class B. The holders of Class B common stocks are entitled to ten votes per share, and holders of our Class A common stocks are entitled to one vote per share. Mark Zuckerberg has a voting power of 56.9%; he’s the main decision-maker.
As of 2021, major Apple shareholders comprised Warren Buffet’s Berkshire Hathaway with 5.56% of the company’s stock. Followed by other individual shareholders like Tim Cook, CEO of Apple with over 3.3 million shares, Artur Levinson, chairman of Apple, with over 4.5 million shares, and others.
With 64,588,418 shares, Jeff Bezos is the major individual investor. Owning 12.7% of the company. Other top individual investors comprise Amazon’s CEO Andy Jessy, with 94,729 shares. Top institutional investors comprise mutual funds like The Vanguard Group (6.6% ownership) and BlackRock (5.7% ownership).
Major shareholders comprise co-founder Bill Gates, who stepped down from the company’s board in 2020, which is why these shares are no longer publicly reported. In 2019, Gates still owned a stake of 103 million stocks, which accounted for 1.34% of the company’s ownership (worth over $23 billion in September 2022). Other individual shareholders comprise Satya Nadella, the company’s CEO, Brad Smith (former president), Jean-Philippe Courtois (EVP), and Amy Hood (former CFO).
By 2022, most of Tesla’s shares are still owned by Elon Musk, among the company’s co-founders and the CEO. Elon Musk is the top individual investor, with a 23.5% stake in the company, equivalent to over 244 million shares. Musk is followed by Lawrence Ellison (founder of Oracle), with a 1.5% company stake. Ellison also sits on Tesla’s board. And Antonio Gracias, among the company’s first investors, has over 1.6 million shares. Other institutional investors and mutual funds like The Vanguard Group (6%), Blackrock (5.1%), and Capital Ventures International also have a good chunk of the company’s stocks.
PayPal was first founded in 1998; it was called Confinity (among its founders was Peter Thiel); later, it merged with X.com, its major competitor, founded by Elon Musk (which would become known for other companies like Tesla and SpaceX). From this merger, PayPal was born. In 2002, PayPal was bought by eBay for $1.5 billion. eBay spun off PayPal in 2015, which would be listed as an independent entity. Today PayPal owns brands like Braintree, Venmo, Xoom, and iZettle.
Netflix’s largest individual shareholder is Reed Hastings, co-founder, and CEO of the company, with a 1.7% stake, valued at over $1.8 billion in 2022. Netflix runs a subscription-based business model that generated $29.6 billion in revenues, and it had over 221 million global members in 2021. Netflix’s business model runs only premium content on its platform, driven by its Netflix Originals shows. Netflix is also building an ad-supported version.
TikTok is owned by ByteDance, a Chinese internet technology company owning several content platforms worldwide (Douyin, Toutiao, Xigua Video, Helo, Lark, Babe). Bytedance passed the $300 billion private market valuation by 2022, making around $58 billion in revenue in 2022, over $4 billion from TikTok.
Gennaro is the creator of FourWeekMBA, which reached about three million business students, executives, and aspiring entrepreneurs in 2021 alone | He is also Head of Enterprise Sales for a high-tech startup, which he helped grow at a double-digit rate since the onset | In 2012 Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
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