At first blush the news that YouTube, the remarkably successful video-sharing Web site, would be bought by Google for no less than $1.65 billion in stock, seemed like more back-to-the-future dot-com nonsense. The stock market is at a new record high, just like in early 2000. And a year-old start-up with no revenues and just 60 employees is selling for a billion-plus. How circa-1999!
But you can't chalk YouTube's success up to to bubblicious times. There are clear reasons why YouTube has commanded a super-sized valuations. And the reasons aren't rocket science. They are good business practice that any startup can seek to emulate.
Here are five lessons we can all learn from Google's success:
First, figure out what matters most to the success of your business and make that your top priority. For YouTube, it was building audience. Revenues didn't matter, profits even less. What mattered was that visitors were viewing 100 million video clips a day. YouTube founders now have to help Google figure out how to make money from all that traffic without alienating users, but that has turned out to be a Stage Two problem -- after the big pay day.
Don't let legal worries be too much of an impediment. Marc Cuban and other Web pundits have been fretting over YouTube's potential legal liability for copyright violations on its site. Now that's soon going to be Google's problem. But for YouTube's founders, who lacked deep pockets, the risk of major lawsuit was kept at bay simply by them being responsive and taking down content when copyright-holders objected. Maybe they got lucky. But it's clear, if they had spent too much time consulting lawyers, rather than building the site, YouTube would have never gotten off the ground.