The untold story of Google’s $1.65 billion acquisition of YouTube, from those who lived it (GOOG, GOOGL)

youtube 15th anniversary beginnings google acquisition 2x1

YouTube’s sale to Google for $1.65 billion in October 2006 altered the course of Silicon Valley history.
In honor of YouTube’s 15th anniversary, Business Insider spoke with early employees, investors, and founders about the whirlwind 18 months of YouTube’s life as an independent company. That story is impossible to tell completely without delving into the weeks and months leading up to YouTube’s landmark sale.
From the day YouTube decided to sell to the day the deal was announced was a matter of weeks. In the end, YouTube was hours away from inking a deal with Yahoo before deciding to give Google one last shot at acquiring the company.
The sale came at the perfect time for the fledgling startup: YouTube was burning through cash, running out of server space, and weathering litigation threats from record labels. Its staff was working around the clock and its founders were growing increasingly wary of how to sustain the company without some muscle in its corner.
This is the inside story of YouTube’s sale, including the quiet bidding war, the last-minute deals with some of the largest rights holders in the world, and a late-night meeting in a Denny’s parking lot.

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In the early hours of an October day in 2006, David Drummond, Google’s general counsel, and Gideon Yu, YouTube’s chief financial officer, huddled over the hood of Yu’s car, which was parked in a Denny’s parking lot in Redwood City, California.

As they used the light from their Blackberry phones to read through a sheaf of documents, a police officer pulled up. He briefly blared his siren, casting a bright light on the pair of executives. He demanded to know why they were having a clandestine meeting in a Denny’s parking lot at 3 a.m.

“We’re signing a merger agreement, sir,” Yu said with his hands in the air.

The officer called Yu over to his car. Yu, dressed casually in shorts, a t-shirt, and a backwards baseball cap, walked over and showed the officer the documents, which stated that Google would buy YouTube for $1.65 billion. The officer told them to carry on.

Drummond and Yu, still shaking from the experience, signed the papers and went home, their respective companies celebrating for different reasons. Google, for acquiring what would become one of the most valuable parts of its growing empire. YouTube, for gaining some muscle in its corner. The company, only 18 months old at that point, was fending off potentially costly copyright claims and scrambling to support a user base that was growing so quickly, the site’s infrastructure was cracking.

Though it had already become a global sensation, on the inside, YouTube was stretched nearly to a breaking point.

‘We didn’t have the resources to keep on fighting’

The months leading up to that day had been hectic for YouTube.

The small team — led by cofounders Steve Chen, YouTube’s chief technology officer, and Chad Hurley, the company’s CEO — was struggling to keep up …read more

Source:: Business Insider


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