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Business Ideas – 3 Business Lessons from the YouTube Founders

Business Ideas – 3 Business Lessons from the YouTube Founders by Evan Carmichael


chad hurley and steve chen


Today we are going to look at two men, one from a middle-class family, the other an immigrant from Taiwan. After befriending each other on the job, these two men would join forces to build an online business that would eventually sell for $1.65 billion. This is the story of YouTube founders Chad Hurley and Steve Chen and the top 3 lessons you can learn from their success.


“It’s about creating new market opportunities. Giving users new ways to be creative…We see our technology as a platform for other things.” – Chad Hurley and Steve Chen


Steve Shih Chen (born August 1978) and Chad Meredith Hurley (born January 1, 1977) joined forces to build YouTube.com, a social video site that sold to Google for a reported $1.65 billion. These two friends met while working together at PayPal.com. They hit it off and would begin spending a lot of time together discussing their business ideas. However, it was not until eBay purchased PayPal for $1.54 billion that they both would decide to follow their dreams.


Upon the sale of PayPal to eBay, both Chen and Hurley would receive large bonuses. They decided to use their money to create their own venture. With Chen’s engineering skills and Hurley’s creativity, they thought they had the right mix to form a company together. They really had no idea about what type of business to create, but felt that together they could create something monumental.


In January 2005, Hurley and Chen attended a friend’s diner party in San Francisco. They had taken a few digital videos of the event and wanted to share them with each other the next day, but could not find a good way to do it. The files were too big to email and posting them online would take hours. With that, Hurley and Chen had their first idea for a sustainable business. Using the money they had received from the PayPal buyout, Chen and Hurley decided to create YouTube, to make uploading and sharing videos online as easy as anyone could want.


Action Item #1: Build an Experience 


Action Item #2: Make the Business Unique


Action Item #3: Focus on the Customer 


If you focus on your customer they’ll take care of your business success. Get close to them, understand what they really need, and get their feedback on what you can do to be better. Businesses that form around customer problems are more likely to succeed and are more likely to adapt to changes when the economy dips.


From day one of YouTube, Hurley and Chen have reaffirmed their commitment to creating the best possible service for their customers, even where that came at the expense of their revenues. They are not simply compassionate businessmen, out to make people happy instead of making a dollar. Instead, they see user satisfaction as necessary for long-term success. They believe that every successful business must listen to their customers and focus on what the customer’s wants.


According to Chen and Hurley, “If we wanted to, we could instantly turn this into $10 million in revenue per month by running pre-rolls [short video ads] on the videos. But at the same time, we’re going to make sure that whatever revenue model we’ve built is going to be something that’s accepted by the users… We’re not in a hurry. We’re interested in building our community. We’re trying to improve discovery. We’re trying to improve the experience for people on our site.”


True Story 


After the dinner party that gave Chen and Hurley the business idea for YouTube, they wanted a simpler way to share their videos of the night, so they immediately went to work creating the answer. They witnessed the massive growth of such sites as MySpace and wondered how they could leverage that growth to their advantage. Instead of building their own social networking site, Hurley and Chen wanted to take advantage of those that were already out there.


To that end, they made it easy for members of those sites to embed YouTube videos on their pages. They worked with those companies that were already out there, instead of trying to go against them. By following this strategy, Chen and Hurley found it easier to build upon their idea and their company began to take off.


It does not matter where you start. Spread your wings and fly – Sue Krebs

It does not matter where you start. Spread your wings and fly – Sue Krebs