Tag Archives: YouTUbe

The Original YouTube Investment Memo

Launched June 11. Has already overtaken all previously existing competitors and is now the dominant player in the space.

Roelof Botha, Sequoia Capital, 9/2/05

Today, YouTube dominates the internet.

People watch 1 billion hours of YouTube. Every day.

But as summer turned to fall in 2005, YouTube was just a three person company run by talented but obscure engineers. But someone saw their potential.

Roelof Botha of Sequoia Capital led seed and series A investments in the company, one of the great bets of all time. It sold for $1.65 billion to Google just a year later.

The original deal memo Roelof wrote in September 2005 was made public in its entirety via a lawsuit. As an angel investor, I was fascinated to read it this morning.

So how did Roelof and Sequoia know that this tiny company would be a huge success? Actually, given the data they had, it was surprisingly obvious.

YouTube’s traffic was exploding. In about 2.5 months, it had gone from 0 to far larger than its biggest competitors, Vimeo and Dailymotion.

Over the prior 3 months, page views had grown at a compounded monthly rate (CMGR) of about 140%. To put that in perspective, I’m quite impressed when I see anything over 20% for an early stage company.

With those metrics, almost anyone who had access to the deal would’ve invested. You don’t have to double every month that many times until you have something huge.

Just as clear as its traction was YouTube’s value proposition:

To become the primary outlet of user-generated video content on the internet, and to allow anyone to upload, share and browse this content.

If you can’t summarize your startup’s mission as cleanly as this, keep trying!

Roelof also could see where the market was going, as opposed to where it was. In 2005, broadband adoption was exploding and cameras were popping up on every device.

The only thing missing was a way to share all those new videos. YouTube completed the puzzle.

Interestingly, Roelof had worked with one of the co-founders at Paypal before joining Sequoia. It may be his network, rather than ability to read the tea leaves, that gave him the inside track to investing in YouTube.

I think the biggest risk for an investor reading this deal memo would be to not put enough money in. You don’t see companies more than doubling every month very often.

When you do, it’s time to go big or go home.

More on tech:

The Top 3 Startup Pitch Mistakes

An Investor’s Dream Cold E-mail

Why I Just Invested in Capbase, The Startup in a Box

Photo: “Chad Hurley” by jdlasica is licensed under CC BY 2.0

If you found this post interesting, please share it on Twitter/Facebook/etc. using the buttons at the bottom of the page. This helps more people find the blog! 

Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

NBA Top Shot: An Overnight Succcess 8 Years in the Making

NBA Top Shot’s popularity is exploding. Users pay to own an iconic basketball image or video clip, such as Lebron James dunking on someone (plenty of those choose from!). Their ownership is recorded on the blockchain in what’s called a Non-Fungible Token (NFT).

NBA Top Shot is a creation of Dapper Labs, a Canadian blockchain company. It started selling NFTs of cats called CryptoKitties. From these humble beginnings, Dapper Labs has grown to a million users on NBA Top Shot alone and recently raised $300 million in venture capital at a $2.4 billion valuation.

In an interview with CEO Roham Gharegozlou, angel investor Jason Calacanis marveled at how far this company has come:

Another 8 year overnight success in the making. It’s so funny how, as a founder, you can go from being like a punchline of a joke to the absolute belle of the ball.

Calacanis noted that video games have already sold digital items for real money for years, so the NFT business model is really not that much of a stretch. What’s more, for the young, owning a digital asset feels much more natural than owning a baseball card.

Dapper Labs plans to branch out to other sports leagues, and ultimately to recording ownership of items beyond video clips and images. If Dapper controlled the ownership records of, for example, cargo, this could be a truly massive company.

I was impressed with Gharegozlou’s perseverance over nearly a decade, going from obscurity to a partnership with a top sports league and a unicorn valuation. I was also impressed by how forward thinking the NBA is. If the creator of CryptoKitties came up to most major businesses with a proposition, they wouldn’t even get a reply. In its work in the crypto industry, as well as its highly successful COVID protocols, the NBA is clearly doing something right.

Give this intriguing interview a listen!

For more on NFTs and crypto, check out these posts:

If you found this post interesting, please share it on Twitter/Reddit/Facebook/etc. using the buttons below. This helps more people find the blog! And please leave a comment at the bottom of the page letting me know what you think and what other information you’re interested in!

Check out the Stuff I Use page for some great deals on products and services I use to improve my health and productivity. They just might help you too!

Photo: “LeBron James New York City More Than a Game 3 by David Shankbone” by david_shankbone is licensed under CC BY 2.0

Will A Massive Uprising in North Korea Mean the End of Kim Jong-un?

North Korean defector and Youtuber Yeonmi Park is reporting a massive uprising in Musan, North Korea. The uprising began when police cracked down on a market selling Chinese products, which is illegal in North Korea despite them being the only goods available.

Farmers took their farm implements and attacked the police. The backdrop for this is an increasingly hungry population with little to lose. Indeed, the situation is so dire that even Russian diplomats are fleeing the country by railroad handcart, appalled at the lack of basic food and goods.

I haven’t been able to find independent corroboration of this uprising, and Park is unclear on what her sources are, but I assume she is still in contact with people inside North Korea.

Her discussion of the uprising begins here.

For more on breaking news, check out these posts:

If you found this post interesting, please share it on Twitter/LinkedIn/email using the buttons below. This helps more people find the blog! And please leave a comment at the bottom of the page letting me know what you think and what other information you’re interested in!

Check out the Stuff I Use page for some great deals on products and services I use to improve my health and productivity. They just might help you too! 

Photo: “Kim Jong-un visiting Berlin.” by driver Photographer is licensed under CC BY-SA 2.0

The Awesome Video Series That’s Sweeping Japan Now

This weekend, my wife introduced me to an adorable little video series ]that’s become all the rage lately in her home country of Japan. The stop-motion animations feature little guinea pig cars that have adventures, and the sounds are recorded from actual guinea pigs! We’ve enjoyed relaxing in the evenings with these cute videos. Each takes countless hours to make and a new one is uploaded to this YouTube channel every week.

Pui pui is a onomatopoeia for the sound guinea pigs make. You needn’t speak Japanese or be familiar with Japan to enjoy the series, but those who do/are will notice a few funny tidbits. The restaurant in this video is based on Jonathan’s, a popular (and excellent) family restaurant chain in Japan. But the video renders it Molsan’s, based on “morumotto”, the Japanese word for guinea pig, and “san,” which is like Mr.

Have fun! 🙂