Yesterday, Google bought video sharing community YouTube in an all stock transaction valued at $1.65B. Most of the conversation going on in the blogosphere now seems to be about things like copyrights and the possible extension of Google AdSense to include video content.
As an entrepreneur, that’s not really what I’m interested in. I’m interested in how YouTube did it. How they went from one million page views in September, 2005 to 16 million unique visitors in July, 2006. How they turned $11.5M in venture funding into $1.65B in Google stock.
Fred Wilson points to three factors behind their success; 1) Betting on Flash; 2) Providing immediate video playback; and 3) The YouTube widget.
While the first two on this list were clearly important decisions from an ease of use and community perspective, let’s make no mistake – it was the widget combined with the MySpace ecosystem that drove the growth.
On December 15, 2005, YouTube publicly announced the launch of its embeddable video player. If you look at a 12 month graph of YouTube’s Alexa traffic, it was in December that their meteoric traffic rise began.
Now that the cat is out of the bag and everybody and their brother is building widgets and badges for blogs and MySpace profiles, do widgets still matter? Or have they become simply a table stakes feature that Web services will need to have to be competitive, but not a difference maker?
David Beisel at GenuineVC thinks it’s the latter. He feels that features such as badges and widgets are ephemeral advantages at best, and do not represent a sustainable competitive advantage.
Based on what I’ve seen, I’d have to disagree. As we have seen on this blog, there are all sorts of widgets out there. Some that stress branding over substance, some that stress functionality over sharing, some that rely on proprietary content, some that are more fun than utilitarian, and some that seem to find the right mix between all aspects.
I believe that finding the right mix of functionality for your widget can have a massive impact on its uptake. And if you do find the right mix before your competitors do, your head start can pay off handsomely. Just ask YouTube.
Comments