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tv   Studio 1.0  Bloomberg  December 13, 2015 11:00am-11:31am EST

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♪ emily: it has changed the way we watch video, redefined going viral, challenged governments, and even launched the career of justin bieber. today, youtube, now owned by google, has more than 1 billion users, uploading 300 hours of video every minute. it all started a decade ago with a trip to the zoo. and one of the founders says he is not quite done changing the way we are entertained. joining me today on "studio 1.0," youtube cofounder and former ceo, chad hurley. chad, thank you so much for being here. it is so great to have you. chad: thanks for having me. emily: in 2005, you activated
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the url, youtube.com, right? chad: on valentine's day. emily: on valentine's day. chad: so romantic. emily: describe the last 10 years. chad: for me, it has surpassed all of my expectations. we were really simply trying to solve a problem for ourselves and our friends. how do you share videos that were sitting on your desktop? and despite observing our own problems and coming up with a simple way to re-encode these videos and allow people to share these videos on the web, it kind of unlocked the potential for everybody else. emily: the very first video on youtube really was one of you guys going to the zoo. [video clip] >> the cool thing about these guys is that they have really, really, really long trunks. chad: it's not a cat video, but it's not bad. [laughter] emily: 18 million views. almost 19 million views. chad: really, that video and many others, we were uploading internally to test the system.
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yeah, shortly after that, we started receiving quite a few other uploads from around the world. emily: who is that? chad: that's jawed, one of the three of us that started the site. there is also steve chen. unfortunately, jawed decided to leave the company before we actually launched the service or had a chance to raise funding. he decided to go back to school, to stanford. it was really then me and steve's journey after that, after raising the funds, riding this wave of video and dealing with growth, eventually ending up at google. emily: you grew up in pennsylvania. indiana university of pennsylvania. you studied design there. chad: yeah. emily: what kind of kid were you growing up? chad: i would not say i was the most academic child growing up. but i was curious about things. i really enjoyed art. for me, growing up, dabbling, i guess, you do not need to be an engineer to have a startup. you just need to be someone with ideas. and you have to follow through with creating something that
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others can relate to. so, for me, you know, art and startups are not too different. emily: how did you end up in silicon valley? chad: i read about a small startup beaming money through palm pilots. at the time, the company was called confinity. and they had a palm pilot product called paypal. i had just recently graduated from college and was trying to decide what i wanted to do. i was sitting at home and simply wrote them an e-mail. because on their website, they said they were looking for a web designer. i had a design background. luckily enough for me, they responded. about a week later, i was here in silicon valley working for them. emily: and the rest is history. chad: the rest is history, but i needed to find a place to live. that was the first challenge for me. when i moved out here in the summer of 1999, you could not even find a place to live. i had to sleep on someone's floor. emily: because there were so many people coming here for silicon valley? chad: during the dotcom boom. emily: as i understand it, you designed the very first paypal logo that they still use to this
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day. is that correct? chad: i think they have changed it over the years, but yes, i was responsible for logo design, website design, the app. emily: do you see your design in the paypal logo today? i mean, it is an iteration of what you did, right? chad: yes, of course. emily: what determined how everyone in the paypal mafia ended up going their separate ways and how did you and steve end up together? chad: after i left paypal, i would meet up with steve and a few other engineers. we would meet for coffee on university avenue. and everyone had at that time a digital camera that had a video mode. this was right before cameras took off in cell phones. people had video files on their desktop that they could not share, including ourselves. how could we make it as easy as sending an e-mail? that was really what inspired us. emily: this is 2005, before smartphones, really, before high-speed internet was the norm. how difficult was it to get this off the ground? chad: i think because we knew nothing about video, we were not scared about getting into it.
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i think the same thing with paypal and payments. i think if we realized how much fraud and how many other hoops we would have to jump through in the finance industry, we probably would never have started the project. same with video, dealing with bandwidth and hosting and streaming issues. so because of that, we were able to hit kind of the video market just at the right time. when people were getting broadband, when people were getting the devices in their hands. and we were, i guess, in the right place at the right time. emily: you sold to google the next year, right? so it was only, like, 18 months. chad: yes. emily: for $1.65 billion. chad: it was a rocket ship. and it continued to be, kind of, this journey where we were holding on for our lives. even after we became more of a part of google. if anything, things just accelerated from there. obviously, we had more resources. but at the time we sold, we only had 67 people in the company. we had probably two or three
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engineers, i.t. guys that would run around the country, maintaining our three data centers. at the time, you did not have the luxury of just plugging into amazon web services or something. you actually had to go out and build your own machines. and beyond that, we were threatening, basically, both sides of the industry. both the internet industry, the googles, the yahoo!s, and microsofts that it wanted to control, continue to retain their control. but you had the traditional media world, the studios and labels and others, wanting to retain control of distribution. they were attacking us, accusing us of not doing the right things around copyrights, when, in reality, we were building more tools than any of our competitors, and more policies from day one than anyone else to deal with all these problems and action -- actually eventually create solutions for them where they could monetize them.
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the music industry earns billions of dollars off of youtube on an annual basis now. but with all these people looking at us, and us just struggling to keep things up and running, we had no other choice, really, at the end of the day, to be acquired by someone. for us, we were lucky enough to be acquired by google, who, in my mind, kind of took a chance on us. and that, really, youtube would probably not be here today or what it is today without their support. so i am really thankful we ended up there. emily: you felt you had to sell? chad: oh, yeah. i have no doubt that if we had tried to go alone, we would have eventually been crushed by lawsuits or just not being able to scale. we would have loved to remain independent. and we wanted to see what we could do to go ipo and remain independent. but other forces did not allow us to do so. emily: what was it like transitioning over to google? chad: one of the things larry,
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sergey, and especially eric told us when they first met us, they said continue to run this yourself, continue your culture. we just care about growth. and really just let us know if anyone gets in your way. emily: there was always a question about how youtube was going to make money. what was so hard about it? ♪ ♪
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emily: now, until more recently, there was always a question about how youtube was going to make money. what was so hard about it? what was so hard about building it into a business? chad: i think people were, internally or even externally, looking for this big answer. "there has to be something other than just another video on top of a video." at the end of the day, i think it is just all about targeting, about providing choice to the viewer. there are going to be more than enough ways to monetize the site just looking at traditional means of advertising.
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but people are always looking for this bigger answer. i think they continue to this day. emily: you stepped down as ceo in 2010. why did you leave? chad: i just wanted new challenges. i mean, i just felt youtube was in great hands. we had really seen things through as a business. there were all these doubts when they first acquired us. but i felt by the time i left, a lot of those doubts were answered and it had really turned into a true business for google. emily: how much do you think youtube is handicapped by not having its founders there? chad: i think that, again, youtube has done the right thing, i think they will continue to do the right thing. i think what youtube is dealing with today is more competition. just because video is ubiquitous now. at the end of the day, i think it is just about youtube diversifying its business model. emily: what do you mean by that? chad: there are different ways people are paying and consuming video. right now, youtube has been sort of one-dimensional, for the most part, which is advertising. emily: what other business model should youtube be implementing?
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chad: you have different forms of v.o.d. i think it is giving these tools directly to the creators, letting them determine how they want to monetize their content. if they want to charge their subscribers and how much. if they're going to charge their subscribers, what type of content? there are other models to monetize it to move after that point to advertising. so i think it is just about options for the creators and providing tools. helping people create better content. they have tried to do that with the studios, but i think there are more tools that can help the regular creator create content. emily: you think youtube should be charging consumers to watch certain videos. chad: i think that is an option that they have. emily: and should be paying creators more. because youtube has always been criticized for not paying creators enough. chad: i do think youtube should be more transparent with their
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terms and not make it a negotiation. i think everyone -- it should be a level playing ground. part of the reason i started youtube was to democratize video. to do that, traditional studios, labels, and networks shouldn't get better deals than the regular creator. emily: so what is a fair percentage? chad: who knows? it is up to them. emily: more than 50%? chad: potentially, yeah. emily: netflix, hbo, yahoo!, buzzfeed, and facebook are doing native video. twitter is getting into video. what is the future of youtube in this world where content, original content is king, but there are so many places to find it? chad: it is a good thing because it means more advertisers are going to move their money into online video. i think if all of these big players, twitter and facebook and others, started doing online video, it just means more money for everyone. emily: susan wojcicki is the ceo of youtube now. how often do you talk to her? do you ever pick up the phone and say, "hey, susan, i think you guys should be charging for v.o.d."? chad: we trade e-mails from time
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to time. again, she has done a great job at google and i think she will do a great job at youtube. we have had a chance to meet from time to time. i had not been back to the youtube offices in a while. went back to grab lunch. surprised that they are continuing to expand their offices. so it is always a treat to see that. but, no, just to speak with her in person, i think she is focused on the right things. and i have told her the same things i told you. i think you have to go back to your core. it is about providing tools to your creators. it is about supporting that community. some of the reasons why i left, i felt like i did not want to stick around to be the token founder. just going to trot me around and talk about how we started youtube. it was actually about creating tools and opportunities for people to create better content. emily: you recently sparred with mark cuban online, who claimed youtube could not get anything right. and so you you tweeted,
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"registering domain, $20. selling domain, $1.65 billion. knowing mark cuban is still bitter, priceless." chad: yes. emily: how do you respond to critics that say youtube had more potential? chad: well, i'm just giving mark a hard time. because he just likes to talk a lot. a little tweet i thought he could take. but, you know, there are a lot of people that have opinions. but for the most part, i feel like people should focus on their own businesses. and focus on them creating opportunities for themselves instead of complaining about someone else. at the end of the day, sometimes it does comes down to jealousy. it comes down to missing that opportunity that he had with broadcast.com. he had a lot of the right ideas, but he was just ahead of his time. in terms of the opportunities that youtube is going to provide or has provided, i think they will only continue to grow.
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the audience is larger than ever, which means the opportunity for google is bigger than ever. emily: do you have a favorite cat video? chad: well, there are too many. too many to pick one. emily: i do have a favorite cat video. it is called "surprise kitty." it's pretty awesome. chad: where he puts his paws up? emily: you know it! chad: i know them all. emily: it is estimated that you made more than $300 million in the deal. has money and success changed you? chad: i do not think so. i don't know. i still get up every day and go to work. i just feel like there are still a lot of opportunities to solve problems and create solutions for people. emily: you were at kim and kanye's engagement. chad: oh, yeah. emily: they were not happy with you afterwards. chad: i don't know why. emily: what happened? ♪ ♪
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emily: so let's talk about mixbit, what you're doing now. chad: yeah.
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emily: where is mixbit today? chad: we're still a work in progress. we are looking for our small insight that will make what we are focused on, collaborative video, work. it's an app where you can invite individuals into a project and everyone can contribute video clips or photos and pick a theme. then, we automate the editing process. so we will automatically push all of that content together and create something visually interesting that you could share with others that you otherwise would not have the time or knowledge to do yourself. this is coming off the heels of me and steve working together on an incubator, all these other projects and offices running at the same time. that kind of slowed things down. my advice for any startups out there is focus on one thing and do it well. emily: so no incubator. chad: yeah, the team did not necessarily know who to listen to, me or steve, when we were coming back in with opinions on things. kind of where we are now with mixbit, moving forward, we have a great chance to figure it out. emily: how hard is it to succeed as a video-related startup?
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chad: there are just more people using video, more people with devices, more ways that people are interacting with video than ever. it still remains to be seen how it all plays out, but i think they captured people's imagination. that is the biggest challenge, is rising above the noise. finding a solution that people kind of have this emotional connection with and actually want to use. so it is always a journey to find that. and if you do not put pressure on yourself -- people ask about replicating the success of youtube, that is not what i'm out to do. it is just enjoying the process and hopefully stumbling across that small insight. emily: why not retire? you certainly could. chad: i certainly could. a lot of people can retire. but again, life is not about sitting around. it is about hopefully about making a difference. so that's what continues to drive me. emily: what do you think of
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facebook and twitter's efforts in video? chad: with facebook, they have a feed. people are coming there to consume stuff. i do not know if it is very directed yet. they have not really nailed search. i do not know if people go there to search for anything in particular other than look at their feed. so i think they will have to build a more dedicated hub towards video or push people into searching, making that more of a habit. but auto playing videos in the feed, i don't really -- they talk about the numbers, but i do not really think it counts as much yet. emily: you were at kim and kanye's engagement. chad: yes. emily: they were not happy with you afterwards. chad: i don't know why. emily: what happened? chad: well, my friend was in town, and he said let's go to this thing kanye was having in the city. we did not really know what it was. on the way up, we were searching and we said oh, it's kim's birthday. must be a birthday party. it turned out it wasn't. i took some video and did not post it until the next day after i saw quite a few other people
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had posted photos and videos on instagram. so i did not think it was a big deal. i asked my friend, and he did not seem to mind. but after it got out there and got a little attention, kim and kanye wrote me an e-mail. so the rest is history. emily: they sued you. chad: yes. emily: so what happened, what was the result of that? chad: they are still suing me. we will have to wait and see what happens when this actually airs. it has been an ongoing process. emily: you believe you are in the right. chad: yes. of course. emily: did you sign something when you walked in that said you would not share? chad: i do not know if i'm supposed to talk about it with the legal proceedings going on. but i did sign something eventually at the end of the night. emily: ok. but not at the beginning. chad: interesting. emily: interesting. chad: we'll see what they have to say about that. emily: you are an investor in sports franchises, bought into the golden state warriors, a soccer team. chad: well, it was just an interest in a great group of people to work with. originally when joe lacob took over the team with peter guber, i knew those guys and knew that
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they were going to build a great organization. and just being a sports fan and also just understanding the world of media. sports are going to retain their value over time because advertisers value live audiences. and you cannot replicate a live event. so those are some of the reasons why i got involved. plus, it doesn't hurt when they're doing so well now. emily: give me a "pinch me" moment. like, a moment where, you know, over the last decade where you are like, "oh, my god. that was amazing." chad: we had a chance to do a few debates on youtube. presidential debates. there were some surreal moments where you are backstage, meeting all of the democratic nominees or other republican nominees before a debate. just standing in line, shaking their hands as they got on stage. definitely a surreal moment. emily: what is next for chad hurley? chad: continue to focus on mixbit.
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we have a great team, and i just think there is a tremendous opportunity in the world of video, if you are talking about live, or what we are providing is automated collaboration. emily: what is the myth of chad hurley and what is the reality? chad: the myth and reality? [laughs] the myth is that every startup has a grand plan. that we knew what paypal was going to become from day one. or we knew that youtube was going to be huge. but the reality is that no one knows. not even me. all you have to do is take a chance and put yourself out there. and hopefully what you create resonates with others. emily: chad hurley, thank you so much for joining us on "studio 1.0." it's been great to have you. chad: thank you. ♪ ♪
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francine: welcome to "leaders" with me, francine lacqua. pearson is an international publishing company with its biggest businesses in education and books. earlier this year, it sold two of its most well known brands, the "ft" and "the economist." in an exclusive interview, i speak with the group's ceo, john fallon, about his vision of the company and the impact of selling those established brands. thank you for speaking to bloomberg. we have been talking about the "ft" sale for as long as i can remember. when did you decide it was for sale? johnth

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