Google, Internet, Video

Delayed Reaction to Google-YouTube

I’ve been mulling the Goog-YouTube acquisition the past week and wanted to share some thoughts.

First off, it’s impressive to see GOOG effectively admit their own video product wasn’t going to succeed. That’s a hard and difficult thing for companies to do.

Second, the “Google is an engineering-driven company” meme is now dead. If it were such a company, GOOG would have done what Microsoft has done — sit on the sidelines, and proclaim building it is cheaper than buying it. Instead, Google saw a big, fat inventory-rich service, swallowed its collective pride, and snapped it up (conveniently blocking Yahoo and MSN from encroaching on their dominance of the Internet advertising space at the same time).

But what’s really struck me about the acquisition is that it so perfectly captures this moment and time in our business, and that this particular moment is so full of ironies. We’ve come full circle to a point we last reached in, say, 1998 or 1999, where acquisitions are not driven and dictated by quaint notions of math and value, but are instead about showing you have momentum and are a dynamic player.

To dicker over price (as Yahoo! appears to have done) proves you lack momentum and dynamism. To question the value and actual worth of YouTube, as Mark Cuban has done repeatedly, is to stand up and declare yourself a heretic and and an idiot and irrelevant all at once.

Of course, maybe those two parties know something we’ve all forgotten (or perhaps that some younger folks never knew). The last multi-billion dollar acquisition of a video-focused service was, of course, when Yahoo! snatched up Mark Cuban’s And we all know what happened there.

I have no idea if this is a repeat or not. I have been damned impressed with how quickly YouTube built a strong brand name and loyalty from its users, and it’s clear to me it is far more valuable than was in 1999. But I just spent the morning reading through the archived articles about the acquisition, and the parallels are amazing; both deals resonate with analysis from the so-called experts trumpeting the (abstract) notions of “consolidation” and “momentum” and “rich new advertising opportunities.”

It’s our reaction to this that scares me. Our call for big players to do something big (which will probably drive Yahoo! to buy Facebook at a premium) just to prove they’re not sclerotic . Won’t it end up leading to tulip mania, again?

Why don’t we, instead, call this a “one off.” Face(book) it, the YouTube acquisition was a very risky play. And Google is pretty much the only party that could afford to take the risk. Whether it’ll end up as their or Geocities, well we’ll just have to wait and see.


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