The first of a number of Google secrets has come out, as the lawsuit with Viacom and Google continues and court-ordered documents cast light on some of the specifics of the YouTube deal and other information.
First of all, and what most of us that followed the process already knew, was YouTube was acquired at a steep premium, with Google CEO Eric Schmidt saying he had the company valued at about $600 to $700 million, while paying $1.65 billion for a company. I would say paying $1 billion more than you think the company is worth is definitely a premium.
The justification for the extreme price paid for YouTube was the time factor, which the premium accounted for if Google was to end up with YouTube.
YouTube founders did great with the deal, as CEO Chad Hurley received a payday of $334 million, all in Google stock, and co-founder Steve Chen was awarded with $301 million in stock, while Jawed Karim landed $66 million. Not bad for a couple of years worth of work.
Sequoia Capital made out like bandits in the deal as well, getting over half a billion for their short-term involvement, receiving $516 million in Google stock. Taking into consideration they only invested $9 million in YouTube, that's a tremendous return on investment.
Artis Capital Management didn't do too shabby on the deal either, as their $3 million investment received $85 million when Google bought the video site.
The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com
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