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The Origin of YouTube 

In the mid 1990s, 27-year-old Jawed Karim was a student at St. Paul’s Central High School who had a knack for computers. He constructed an email system for the school’s faculty and was later an employee of PayPal, which was acquired by eBay in 2002. Today Karim is a graduate student at Stanford University, personally worth $65 million. This wealth is due to the fact that he was one of the creators of YouTube which was sold to Google for $1.65 billion in late 2006.

Karim participated in a discussion of entrepreneurship at the University of St. Thomas in downtown Minneapolis on March 26, 2007. He became rich on the strength of better ideas but his message at the forum was “ideas are cheap”. In other words, there’s much more to launching a successful product than having a good idea. “In some cases,” said Karim, “you just have to let the users tell you how to use your product.”

YouTube turned out to be something quite different than what its creators earlier imagined. Karim explained to a newspaper reporter: “Basically I suggested a dating website based on videos ... We launched in April 2005 and it didn’t take off. People didn’t use it (YouTube) very much. We looked at our product and realized we should open it to any contact. Also, we opened up the interface so you could choose what you wanted to watch, search for videos, link to related videos and give people the ability to ‘tag’ videos so other people could find your video with a keyword. It grew explosively.”

So adaptability to user demand is one key to success in launching a new computer-based system such as YouTube. The computer-dating concept was too limiting. You Tube’s founders tinkered with the product to allow activity that the users wanted. They made it easier to post and locate videos, regardless of use or intent. The product took off.

At the public discussion, Karim stressed the importance of timing. Conditions must be right for a new product to be successful. If YouTube had been launched in 2003, it would not have been successful because not all the required conditions were then in place. MySpace.com was the consumer platform which launched YouTube, Karim said. Young people wanted to express themselves on the Internet but they did not have a good way to post videos.

There was a video-sharing craze in 2004, spurred by the greater availability of video cameras and cell phones. The tsunami in the Indian Ocean showed the importance of videos taken on cell phones when video-equipped media could not be on the scene. All this amateur-made video created a backlog of materials waiting to be used in personally expressive ways on the Internet.

Before 2004, said Karim, you couldn’t send videos by email because they required too much bandwidth. Broadband capability greater increased for home users in the period between 2004 and 2006. Also the hosting costs for dedicated servers came down. More people were able to send and post videos, fueling a demand for YouTube.

The site also benefited greatly from “viral communication”, which means users telling their friends about the product. (Karim’s example: PayPal tells a new person that he has received $100 from a PayPal transaction; but to collect this money, the person has to establish a PayPal account.)

Karim pointed out that innovative products on the Internet are mostly new combinations of existing products. Macromedia flash was one such product, utilized by YouTube, that had been around for some time. Such sites as Broadcast.com and Yvonnesworld.com existed in 1999. For YouTube to succeed, there had to be the right technology, greater bandwidth, and increased storage capacity. The decision to allow users to tag their videos for better identification and retrieval was also an important factor in the site’s success.

In other words, Jawed Karim and his two associates became rich by being flexible and by “being in the right place at the right time” with the right combination of features to supply what the mass of consumers wanted. Besides features in his own product, the inventor needed to know about subsidiary products and features that would support a market for this.

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