© The Financial Times Ltd 2014 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
Passing from the midday California sunshine into the gloomy cavern of the Dutch Goose burger bar in Menlo Park, it’s easy to miss Chad Hurley at first. It’s not just a question of getting used to the light. Tall and lank-haired, wearing jeans and an untucked grey shirt, the 34-year-old lurking by the pool table blends right in. Standing beneath a screen showing the latest World Cup game, he gives a small self-conscious wave to draw attention to himself – not the sort of gesture you might expect from one of the fathers of YouTube, and Silicon Valley’s version of a rock star.
But the Dutch Goose offers a touch of blue collar in the midst of almost unimaginable wealth. And, though Menlo Park, wedged into the peninsula below San Francisco, is home to the investment bankers and venture capitalists who supply the cash that keep the wheels of US technological innovation turning, ostentation is out in these parts.
So I am not that surprised when the man who last year offered single-handedly to bankroll a new US team for Formula One suggests meeting at a place which, from the outside, looks like a concrete bunker. Hurley, a cross-country runner at school, still has the all-American male taste for sports – football and fast cars in particular – with the difference that his personal wealth means that he can indulge these tastes in a way that others can only dream of. The Dutch Goose is also, he explains, a favourite with his seven-year-old son and five-year-old daughter.
We make our way to the counter to order: a cheeseburger and french fries for Hurley, a Polish sausage (no fries) and a couple of sodas – and then look round for somewhere to sit. For a moment it seems as though we’re going to have to share one of the long bare wood tables with other diners. Then we spot a cubicle in a back corner that is almost entirely closed off from the room, as if staged for the purpose. Names scratched into the brown paintwork make it feel like a well-worn bus shelter. A dark shade with a bare bulb is hanging low.
Lunch in Silicon Valley can follow a familiar formula, in which an entrepreneur will sketch out a version of the future in which his technology will have assumed some central significance. But when Hurley tries to express his vision, it’s almost as if he is trying on an unfamiliar set of clothes. Co-founder of the world’s third-most visited website (after Google and Facebook), he knows they should fit him but he’s not entirely comfortable in them.
Launched just five years ago, YouTube dominates internet video. Its dancing babies, amateur lip-synchs and other home-made videos and film clips have seeped into the consciousness of a generation. Yet when Hurley talks about this achievement, his language is curiously muted.
“We wanted to create a platform for everyone, a level playing field. We wanted to democratise the video experience,” he says. Or, more opaquely, “My vision for the future is, it’s all video, no matter where it’s consumed.” His voice sounds flat – certainly not un-genuine but lacking the messianic fervour exhibited by the likes of Mark Zuckerberg at Facebook or Sergey Brin and Larry Page, founders of Google, as they talk about their creations.
But as we wait for our order Hurley begins to warm up. He is most engaged, almost passionate, describing the technical and design choices that went into YouTube – a site he and his friends Steve Chan and Jawed Karim created for themselves, not for the world at large.
Web design is what has made Hurley’s fortune, and accounts for his somewhat unusual status in the Valley. Engineers, typically, hold sway here, along with a class of MBA-wielding business managers who are generally looked down on, though most are too polite to mention that in public. Designers, with the rule-proving exception of Jonathan Ive at Apple, and marketing experts cling to the fringes.
Hurley is familiar with walking the fine line between design and science. As a child growing up in the small town of Birdsboro in Pennsylvania, he explains, he developed an early feel for both. “As long as I can remember I was drawing, or trying to create something,” he says, describing how at high school he moved easily between design and electronics classes. “I was one of those kids who took apart their toys to see how they work, just to see what they were made up of.”
Given the numbers of equally sharp people who have not enjoyed similar big breaks in Silicon Valley, it’s tempting to see anyone who has made it as lucky. It is harder, though, to account for repeat success. Hurley was hired straight out of college – Indiana University of Pennsylvania, where he studied computer science before switching track to major in fine art – as the 10th employee of a California-based online payments start-up called PayPal. He was, he says, the first recruit not known personally to the founders. Recruiting a full-time designer to create a logo and work on its website was also a rare choice for an internet company at such an early stage. Barely three years later, PayPal had been sold to eBay for $1.5bn and Hurley was out, with money in the bank and time on his hands.
It could also be ascribed to luck that his first personal attempt at a start-up turned out to be an even more dizzying – and speedy – success. YouTube was acquired for $1.65bn by Google just 18 months after its launch, with Hurley and Chen kept on to run it jointly as a semi-autonomous division of Google. (Karim went on to pursue a post-graduate degree in computer science.)
Chen has since moved on to other work within Google. Hurley, still officially at the helm of YouTube, which continues to operate semi-independently from its own offices in San Bruno, 25 miles from the Googleplex, has been joined by Salar Kamangar, a Google executive who has assumed much of the management responsibility for YouTube. Kamangar is “someone I had been recruiting for a long time to come on board”, Hurley says pointedly, adding: “He helps to deal with a lot of politics for me, he goes down to [Google HQ] and straightens things out.”
It is not, however, talk of his work at YouTube that prompts Hurley’s greatest animation. Before starting YouTube, he reveals, he worked on designs for wallets and other leather goods, and that interest has since expanded to clothing and taken the form of a company, Hlaska, with three stores and a website.
“There’s something very satisfying about creating a tactile product,” he enthuses as he shows off the Hlaska shirt he’s wearing, hinting that the company could one day take up more of his life: “It’s a little product that’s keeping me busy – maybe more in the future.”
He is similarly hopeful about other business ventures beyond the internet. Though football, in particular the Philadelphia Eagles, who he has supported since childhood, holds the strongest draw (“I’m an NFL guy”), Hurley says his hunt for personal involvement has taken him into fields where the commercial potential is still less developed.
Last year’s bid to create a US team for Formula One unravelled after sponsors failed to materialise; the car Hurley had dreamt of could not be built. However, says Hurley, part of F1’s appeal to him is the sport’s lack of a following in the US. The venture, the brainchild of Ken Anderson, a US motor sports engineer, and Peter Windsor, a former sports journalist, had something that grabbed Hurley by the gut: the risk – and potential rewards – of a start-up. “I love fast cars,” he adds slightly unnecessarily. When I ask if his own car – a Mercedes SL – goes fast, he smiles wryly: “It can do.”
“I was willing to bet on a horse, but they didn’t even have a horse,” he muses. When I ask about speculation that he is seeking a partnership with Ferrari to bring a Formula One team to the US he does nothing to dampen the speculation, instead going out of his way to praise Ferrari’s role in the history of motor sports. “They’d be great to work with but I don’t know when that would be, whether it will even be an option on the table,” he says.
Though we have been talking for almost an hour, we have not been served with our order and neither of us – whether through tact or absorption in the discussion – has mentioned the fact. When, finally, I hear my name being called out to collect our food, I suspect I may have missed the call several times already. And, on the way to the counter to pick up our order, I worry about whether it’s been sitting under a heat lamp all this time. But, if that’s the case, the experience doesn’t seem visibly to have harmed our burger and sausage – which I carry back to the table.
After the long wait, the food comes as a relief. My bun filled with sweet and spicy polish sausage with mustard quickly overwhelms the tastebuds. It’s the kind of food to down fast, even if you haven’t waited this long. Hurley’s cheeseburger disappears without comment.
The bar’s videogames – a short row of retro arcade-style machines in a back corner – are, continues Hurley, a particular attraction for his children. It is, I say, a relief in the home of the techno-elite to hear that kids are brought up much as they are anywhere. There is no overly sophisticated parental control in the Hurley household: it’s just a case of letting them get on with it. “We don’t try to lock them up – one day they’re going to have to grow up and act on their own.”
This generation of children, says Hurley, will not be like those who grew up with the internet and “kind of got caught out”, exposing too much of their personal lives online. And parents, too, have also learnt enough about the technology to keep half an eye on their children’s behaviour. It sounds like the same pragmatic, hope-for-the-best attitude of parents the world over.
Given the impact of YouTube on the world’s youth, I ask about what sort of use Hurley’s own children might make of the site – have they, for instance, posted any videos of their own? It’s a question that elicits an uncharacteristically immediate and visceral response.
“It’s the thing about privacy,” he says, recoiling. “There are public things and private things, there are things in life you need to choose to be private. It was a decision very early on for me.” Though he quickly moves on to what sounds like a company line about how he and his co-founders decided not to post personal videos “so the discussion could be about the community, and what the community’s sharing”, there is no disguising the strength of his reaction.
Sensing from Hurley’s body language that the lunch is coming to an end, I ask him whether he thinks YouTube was sold too soon. Given everything that has happened since the sale to Google – including the emergence of Facebook, and the seemingly inexorable rise of internet valuations – isn’t it possible that he could have been owner of a company worth $20bn or more?
He takes the question without missing a beat: it’s clearly an answer he’s rehearsed many times. Taking the money that was on the table at the time and ensuring YouTube’s future under Google’s protective wing was the right thing both for investors and “the community”, he says. With both traditional media and internet companies wary of its rise, YouTube was vulnerable. “No one was really our friend – both sides were trash-talking us, what we are, what we were doing,” he says. “We knew if we’d gone out there and raised a large amount of money [to stay independent] it would have just put a bigger target on our back.”
Hurley’s praise for and admiration of Google seem genuine but it’s hard not to see his position within the company as something of an uncomfortable compromise. I remind him of a conversation we had four years ago, shortly before Google came knocking, when he and Chen argued that “pre-rolls” – advertisements shown before video clips can play – turn users away and were the last thing they would resort to. Pre-rolls are, however, now a key part of Google’s strategy for YouTube as it attempts to bring to an end its years of losses. “It’s a necessary evil,” Hurley concedes, adding that there are plans for other ways of making money from the site that will eventually give more control back to users again.
So is he at Google for the long haul? “It depends,” is the decidedly non-committal answer. “I’ve definitely stayed a lot longer than I would ever have expected, and probably a lot longer than anyone else would have expected.”
The young internet veteran says he carries a sketchbook around with him to jot down ideas, and talks wistfully of creating something new again. “I have ideas in my head I’d love to work on in the future,” he says. “It’s about creating, and having fun, and helping people.” As an ambition it might sound rather Miss-Worldish but the motivation is clearly from the heart.
Richard Waters is west coast editor of the FT
3567 Alameda, Menlo Park, California, US
Polish sausage $5.54
Soda x 2 $3.66
Total (including service) $21
Why Lady Gaga has become YouTube’s loss leader
Lady Gaga stretches across a white throne. Her gold dress is pulled up revealingly, exposing the top of an inner thigh. And, as the camera zooms slowly in on her chopped bleached hair and freaky sunglasses, a message flashes up across the bottom of the video: “Apply today for £100 credit and start trading on thousands of markets.”
The appearance of an advertisement at the foot of “Bad Romance”, the music video that, with 200m plays, tops YouTube’s all-time “most watched” list, speaks volumes about how the site has been changing – and how hard Google is trying to make it pay its way.
YouTube first wormed into the public consciousness thanks to a combination of cute home movies and viral clips from TV shows. Images that bubbled up into the popular consciousness, they became the instant memes of a restless online generation.
Making money from the filtered dross of the web, however, has not been easy. Last year the Wall Street analyst Spencer Wang of Credit Suisse turned heads with a note estimating that Google could lose nearly $500m in 2009 due to the heavy cost of streaming video over the web and a paucity of advertising.
Professionally made videos that advertisers are willing to place their messages next to have been hard to come by compared to user-generated content. One of YouTube’s responses to this problem has become the talk of the music industry. While the company itself won’t comment on business relationships, it is widely rumoured to be paying record companies per thousand views for the right to post videos such as those by Lady Gaga, as part of a massive loss leader intended to woo viewers and media companies alike.
And, this week, the company won an important legal judgment that could help it draw in more professional content and pull it out of the red. In 2007 the media giant Viacom filed suit against YouTube for $1bn, claiming the website turned a blind eye to the uploading of unauthorised clips of Viacom shows.
But the complaint was thrown out by Judge Louis Stanton who noted in passing that YouTube was free to place advertising against these clips. “A good day for YouTube ... a good day for the internet!” a jubilant Hurley told his followers on Twitter.
Chad Hurley is guest speaker at the Royal College of Art’s Innovation Night Lecture, sponsored by the Rumi Foundation on Tuesday June 29 in London. For the chance to win a pair of tickets, send an e-mail with your full name, address and telephone number to email@example.com before June 28.
Copyright The Financial Times Limited 2014. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.