Too Early to Dub YouTube a Failure

 |  Includes: GOOG, MSFT, PALM, SIRI, VG
by: Ashkan Karbasfrooshan

Time looks at some of the biggest failures in tech. It includes YouTube (NASDAQ:GOOG). Now this struck me as odd because a mere two years ago, Time dubbed You the Person of the Year, and by You it meant You on YouTube.

In fact, the list is actually compiled by Douglas A. McIntyre 24/7 Wall Street, a site I don’t read enough but which always impresses me when I do.

The list includes:

1) Microsoft (NASDAQ:MSFT) Vista

2) Gateway


4) Vonage (NYSE:VG)

5) YouTube

6) Sirius XM (NASDAQ:SIRI)

7) Microsoft’s (MSFT) Zune

8) Palm (PALM)

9) Iridium

10) The Segway.

Some of these products and companies have come and gone (ie. bankrupt or acquired): Iridium, Gateway. A few are on their death bed: Sirius XM. Others technically remain to be determined (Palm, Vista).

But while overall this list is pretty accurate, I think lumping YouTube into the list is premature.

Back in November 2006 (so less than a couple of months after Google bought YouTube), I wrote a list on the Top 10 best Web acquisitions of all-time. I did not include YouTube’s sale to Google, not because it was good or bad, but because it was premature. I think that two years after that deal, putting it on a list of failures is akin to saying search is dead in 2000. After all, in 2000: Excite, Lycos, AltaVista, Microsoft and Yahoo! had all written off search as a viable stand-alone business and embraced portaldom. The one company that didn’t and stuck to their guns was Google.

I don’t think Google is the best company to be running YouTube (the entertainment destination) because Google isn’t as well versed in media as it should be to manage the world’s largest repository of video content (though Google is perfectly positioned to run YouTube, the world’s number 2 search destination).

However, it is premature to call YouTube a failure. In fact, I consider monetizing YouTube to be the greatest opportunity in business right now (any business, any region, any platform). Wireless? Speculative. China? Who says you can monetize anything there. YouTube: simple proposition and framework to make money.

But the company that has the best odds of doing that is the one who owns and controls it: Google.

Google paid $1.65B in stock to acquire YouTube, or 1% of its market cap. By doing so, it tucked away the number 2 search destination in its back pocket. How is that a failure?

Sure, it might be losing money now, but my gut says the company’s top line is growing at a healthy clip… and judging by its $20B cash hoard, while Google is willing to can irrelevant and unprofitable businesses, thinking long on YouTube will no doubt prove to be a smashing success (if only they just listened to me more, of course).

Note: YouTube is one of our distribution partners, and I have been known to tell them off in public or private channels on the odd occasion.