Subscribe How Much Would Founders and VCs Make on A YouTube Sale? Plus News Corporation Passed on YouTube
posted by MR WAVETHEORY at 10/07/2006 12:47:00 AMFinancialTimes says that News Corporation (NYSE NWS) looked at YouTube but passed when the valuation went to $1.6 billion.
It looks like alot of posturing. Alot of times, potential buyers just use it as an excuse to look under the hood of a company and open up the kimono of a competitor. News Corporation probably wanted to figure out how YouTube was doing and gather some competitie statistics.
YouTube may be wanting to sell because there are so many questions about its future.
How much would everyone make if YouTube sold today?
If the company sold at $1.5 billion, assuming the rule of 3, i.e. VCs own 1/3 and Founders own 1/3 and employees own 1/3, then here is what everyone would make:
Sequoia Capital - $500 million. They invested about $30 million So, that would be 16x their money. Not bad. Not a Google homerun, but great for less than two years worth of work.
Founders (Chad Hurley, Steve Chen, Jawed Karim) - $500 million. Assume the split is equal (probably not). But just to simplify, they would each carry home $166 million. You can read more about the founders here.
Employees - $500 million. There are 60 employees. Assume equal split, that means the janitor would make $8.3 million. Of course, equity is not divided equally among employees. You get the picture though! Even the secretary would make a couple of million. If you're a gigolo, then go marry that YouTube admin that's been hanging out at the office!
OK. That was a fun exercise. I think the founders should sell. But hey, who am I to tell them what to do? In 12 months, if MySpace kicks YouTube off their site, then YouTube would be worth how much? How much? Ummmm. Let me guess. $0. YouTube founders, it's better to end up like the founders of Skype - rich rather than in jail for copyright infringement.
So, yes, Google should buy YouTube. Make everyone in the valley rich and happy. Google, you know you want to.
However, they said the media group decided not to make an offer for YouTube because of a $1.5bn minimum price tag being demanded by YouTube’s backers, and because News Corp had decided it could develop YouTube’s features on MySpace. News Corp declined to comment.
It looks like alot of posturing. Alot of times, potential buyers just use it as an excuse to look under the hood of a company and open up the kimono of a competitor. News Corporation probably wanted to figure out how YouTube was doing and gather some competitie statistics.
YouTube may be wanting to sell because there are so many questions about its future.
How much would everyone make if YouTube sold today?
If the company sold at $1.5 billion, assuming the rule of 3, i.e. VCs own 1/3 and Founders own 1/3 and employees own 1/3, then here is what everyone would make:
Sequoia Capital - $500 million. They invested about $30 million So, that would be 16x their money. Not bad. Not a Google homerun, but great for less than two years worth of work.
Founders (Chad Hurley, Steve Chen, Jawed Karim) - $500 million. Assume the split is equal (probably not). But just to simplify, they would each carry home $166 million. You can read more about the founders here.
Employees - $500 million. There are 60 employees. Assume equal split, that means the janitor would make $8.3 million. Of course, equity is not divided equally among employees. You get the picture though! Even the secretary would make a couple of million. If you're a gigolo, then go marry that YouTube admin that's been hanging out at the office!
OK. That was a fun exercise. I think the founders should sell. But hey, who am I to tell them what to do? In 12 months, if MySpace kicks YouTube off their site, then YouTube would be worth how much? How much? Ummmm. Let me guess. $0. YouTube founders, it's better to end up like the founders of Skype - rich rather than in jail for copyright infringement.
So, yes, Google should buy YouTube. Make everyone in the valley rich and happy. Google, you know you want to.
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