YouTube: Twenty-somethings become zillionaires (isn't America great?)

1. Sealing the Deal, From the Handshake to the Tee-Hee -- by ANDREW ROSS SORKIN

IT could have been any jerky, grainy clip on YouTube featuring two young guys with bloodshot eyes that made them appear either tired or stoned.

“Hi, YouTube, this is Chad and Steve,” said the taller one with the long hair, punctuating his sentences with “Um” and “You know,” standing in a parking lot outside of what appeared to be a TGI Friday’s.

But this clip wasn’t the typical amateur video diary. Those guys were YouTube’s founders, 29-year-old Chad Hurley and 28-year-old Steve Chen, giddily announcing they had just sold their company, a profitless but hugely popular video-sharing site, to Google for a staggering $1.65 billion.

The clip, a stark contrast to the traditional buttoned-down merger pronouncement, amounts to either the evolution of the corporate announcement — or possibly the devolution of these once ceremonious moments in business.

Recall some of the largest merger announcements in history and they usually occurred among suit-wearing men shaking hands on a podium at the St. Regis in Midtown Manhattan and spinning their deals in corporate-speak.

Sometime in the late 1990’s, announcing a big deal became a sort of theater for business people. When Exxon said it was merging with Mobil in 1998, Mobil’s chairman, Lucio A. Noto, taped an eight-minute video to employees. Instead of wearing his typically dapper suits, his costume was a sweater and slacks, as if to convey to his colleagues that he was like them and to try to ease worries about layoffs. (He soon left the company, like so many of those employees he was trying to comfort. Except, of course, that he had a golden parachute.)

When Steven P. Jobs announced Apple’s alliance with Microsoft in 1997 — what some Apple followers considered an act of treason — he did so without Microsoft’s founder, Bill Gates , on the stage. Mr. Gates was beamed in on a giant video screen from Microsoft’s headquarters in Redmond, Wash. Mr. Gates should be happy he wasn’t there; the audience of Apple faithful booed and jeered as Mr. Jobs tried to calm the crowd, saying, “We want to let go of this notion that for Apple to win, Microsoft has to lose.”

And then there was the announcement of Time Warner’s merger with America Online, the nadir of merger announcement drama, filled with symbolism and one-liners. The costumes were reversed: Stephen M. Case , America Online’s chief executive, ditched his khakis to wear a conservative suit and tie on stage, while Gerald M. Levin , Time Warner’s chief executive, went with a blazer and open-collar shirt — no tie.

The New York Post asked, “What in heaven’s name was Gerry Levin wearing at the press conference?” Ted Turner , veering from his script, ad libbed the most memorable line of the day. He said he supported the merger “with as much or more excitement and enthusiasm as I did on that night when I first made love some 42 years ago!”

Which brings us back to Mr. Hurley and Mr. Chen, who appeared to have no script and were cutting up throughout. At one point, after both men doubled over in laughter, a voice from offscreen was heard saying, “I don’t know, just keep going.”

Mr. Chen is also seen telling Mr. Hurley, who is trying to put his arm around him, “Get your hand off of me.” Mr. Hurley then reappeared on the screen. “The king of search, the king of video have gotten together. We’re going to have it our way. Salt and pepper,” he giggled again at his own joke, apparently making a reference to Burger King’s old slogan. The clip ends when he realizes that things have gotten way out of hand and he moves toward the camera and says: “We can’t do that. Cut.”

It is possible that the clip, which has been viewed 1.7 million times and counting, was a studied effort at appearing YouTube-ish. In some ways, it was refreshing to see two executives act a bit more like real people than stiff businessmen. But there was something slightly disconcerting about watching two men who just made hundreds of millions of dollars each act like teenagers.

Thousands of YouTube users posted comments next to the clip — some made their own videos — congratulating Mr. Hurley and Mr. Chen and mocking them, giving the newly minted millionaires instant reaction from a group of amateur critics who would typically not be allowed into a news conference, let alone comment or ask a question.

A user calling himself Skandmn seemed to sum up the YouTube community’s view on the deal, critiquing the video in the comments section: “Apparently when you become a billionaire, or close to anyway, you become a perpetually smirking idiot. God I hope that happens to me some day.”


2. With YouTube, Grad Student Hits Jackpot Again – by MIGUEL HELFT

PALO ALTO, Calif., Oct. 11 — For Jawed Karim, the $100,000 or so he would have to spend on a master’s degree at Stanford was never daunting. He hit an Internet jackpot in 2002 when PayPal, the online payment company he had joined early on, was bought by eBay .

On Monday, still early in his studies for the fall term, he got lucky again. This time he may have hit the Internet equivalent of the multistate PowerBall.

Mr. Karim is the third of the three founders of the video site YouTube, which Google has agreed to buy for $1.65 billion. He was present at YouTube’s creation, contributing some crucial ideas about a Web site where users could share video. But academia had more allure than the details of turning that idea into a business.

So while his partners Chad Hurley and Steven Chen built the company and went on to become Internet and media celebrities, he quietly went back to class, working toward a degree in computer science.

Mr. Karim, who is 27, became visibly uncomfortable when the subject turned to money, and he would not say what he stands to make when Google’s purchase of YouTube is completed. He said only that he is one of the company’s largest individual shareholders, though he owns less of the company than his two partners, whose stakes in the company are likely to be worth hundreds of millions of dollars, according to some estimates. The deal was so enormous, he says, that his share was still plenty big.

“The sheer size of the acquisition almost makes the details irrelevant,” Mr. Karim said.

On Wednesday, during a walk across campus and a visit to his dorm room and the computer sciences building where he takes classes, Mr. Karim described himself as a nerd who gets excited about learning. Nothing in his understated demeanor suggests he is anything other than an ordinary graduate student, and he attracted little attention on campus in jeans, a blue polo shirt, a tan jacket and black Puma sneakers.

Mr. Karim said he might keep a hand in entrepreneurship, and he dreams of having an impact on the way people use the Internet — something he has already done. Philanthropy may have some appeal, down the road. But mostly he just wants to be a professor. He said he simply hopes to follow in the footsteps of other Stanford academics who struck it rich in Silicon Valley and went back to teaching.

“There’s a few billionaires in that building,” he said, standing in front of the William Gates Computer Science Building. But his chosen path will not preclude another stint at a start-up. “If I see another opportunity like YouTube, I can always do that,” he said.

David L. Dill, a professor of computer science at Stanford, said Mr. Karim’s choice was unusual.

“I’m impressed that given his success in business he decided to do the master’s program here,” Mr. Dill said. “The tradition here has been in the other direction,” he said, pointing to the founders of Google and Yahoo , who left Stanford for the business world.

Mr. Karim met Mr. Hurley and Mr. Chen when all three of them worked at PayPal. After the company was acquired by eBay for $1.5 billion, netting Mr. Karim a few million dollars, they often talked about starting another company.

By early 2005, all three had left PayPal. They would often meet late at night for brainstorming sessions at Max’s Opera Café, near Stanford, Mr. Karim said. Sometimes they met at Mr. Hurley’s place in Menlo Park or Mr. Karim’s apartment on Sand Hill Road, down the street from Sequoia Capital, the venture firm that would become YouTube’s financial backer.

Mr. Karim said he pitched the idea of a video-sharing Web site to the group. But he made it clear that contributions from Mr. Chen and Mr. Hurley were essential in turning his raw idea into what eventually became YouTube.

A YouTube spokeswoman said that the genesis of YouTube involved efforts by all three founders.

As early as February 2005, when the site was introduced, Mr. Karim said he and his partners had agreed that he would not become an employee, but rather an informal adviser to YouTube. He did not take a salary, benefits or even a formal title. “I was focused on school,” he said.

The decision meant that his stake in the company would be reduced, Mr. Karim said. “We negotiated something that we thought was fair.”

Roelof Botha, the Sequoia partner who led the investment in YouTube, said he would have preferred if Mr. Karim had stayed.

“I wish we could have kept him as part of the company,” Mr. Botha said. “He was very, very creative. We were doing everything we could to convince him to defer.”

Mr. Karim was born in East Germany in 1972. The family moved to West Germany a year later and to St. Paul, Minn., in 1992. His father, Naimul Karim, is a researcher at 3M and his mother, Christine Karim, is a research assistant professor of biochemistry at the University of Minnesota .

“To develop new things and be aware of new things, this is our life,” Ms. Karim said, explaining her son’s interest in technology and learning.

After graduating from high school, Jawed Karim chose to go to the University of Illinois at Urbana-Champaign, in part because it was the school that the co-founder of Netscape, Marc Andreessen, and others who gave birth to the first popular Web browser attended.

“It wasn’t like I wanted to be the next Marc Andreessen, but it would be cool to be in the same place,” Mr. Karim said. In 2000, during his junior year, he dropped out to head to Silicon Valley, where he joined PayPal. He later finished his undergraduate degree by taking some courses online and some at Santa Clara University.

Armed with a video camera, Mr. Karim documented much of YouTube’s early life, including the meetings when the three discussed financing strategies and the brainstorming sessions in Mr. Hurley’s garage, where the company was hatched.

In his studio apartment in a residence hall for graduate students, he showed one of them, which he said was filmed in April 2005. In it, Mr. Chen talked about “getting pretty depressed” because there were only 50 or 60 videos on the YouTube site. Also, he said, “there’s not that many videos I’d want to watch.” The camera then turns to Mr. Hurley, who grins and says “Videos like these,” referring to the one Mr. Karim is filming.

Mr. Karim, who has remained in frequent contact with the other co-founders, said he was first informed of the talks with Google last week. On Monday, he was called in to the Palo Alto law offices of Wilson Sonsini Goodrich & Rosati to sign acquisition papers, and he briefly got to congratulate Mr. Chen and Mr. Hurley, he said.

Asked what he thought of the acquisition price, Mr. Karim said: “It sounded good to me.” When a reporter looked puzzled, he raised his eyebrows and added: “I was amazed.”