Diverse group makes millions from YouTube deal
www.chinaview.cn 2007-02-09 14:39:37

    BEIJING, Feb. 9 (Xinhuanet) -- The recent 1.76 billion U.S. dollar purchase of YouTube by Google Inc. has made millions of dollars for a diverse group ranging from the company's founders, to its office manager, to TV celebrities, to Silicon Valley executives and two of America's most prestigious universities.

    YouTube's co-founders, Chad Hurley, Steve Chen and Jawed Karim are the biggest winners, collectively receiving nearly 700 million dollars worth of Google stock -- the prized currency used to finance the acquisition.

    The meteoric rise of YouTube had its beginnings in a Menlo Park, Calif., garage two years ago when Hurley, Chen and Karim -- all of whom are in their 20s -- sketched out an idea for a video sharing site that was initially funded by credit card debt.

    The Google deal also made instant millionaires out of at least 18 other YouTube employees, including Hurley's younger brother, Brent, and the office manager, according to a Securities and Exchange Commission filing Wednesday. Hurley's parents also are getting nearly 5 million dollars in Google stock.

    Some who profited from the megadeal, such as TV talk show host Maury Povich, didn't even realize they had invested in YouTube.

    Povich has not always been a big fan of YouTube Inc. because the online video sharing pioneer frequently displays unauthorized clips from his copyrighted program. But he changed his mind when he found out that he would receive a windfall profit of more than 80,000 dollars.

    "It's like I caught lightning in a jar," Povich said in a Thursday interview. "I had no idea I even owned a part of YouTube."

    Povich's piece of the pie came through a small investment he made a few years ago to a venture capital fund managed by Sequoia Capital, a Menlo Park firm that parlayed an 11.5 million dollar investment in San Bruno, California-based YouTube into one of Silicon Valley's biggest paydays since the dot-com boom.

    The eye-popping numbers revealed in the SEC documents will probably lead to even more dealmaking, predicted Keith Rabois, who agreed to invest in YouTube during a June 2005 barbecue.

    "You can sort of look at Silicon Valley as a giant casino where you need the slot machines to pay off at certain intervals," said Rabois, now an executive at LinkedIn, a professional networking site. "It's payoffs like this that makes people want to keep taking risks."

    Rabois on Thursday sold about 25 percent of the roughly 4 million dollars in Google stock he received in the sale.

    While clearing the way for YouTube's employees and investors to begin selling their Google shares, Wednesday's SEC filing also provided a rare glimpse at the institutions and people given a chance to participate in the venture capital funds that make risky bets on unproven startups like YouTube.

    Venture capitalists usually don't disclose the names of their limited partners, but the YouTube sale forced Sequoia Capital to make an exception.

    The breakdown included many of the universities and foundations that regularly pour money into venture capital funds as part of their investment strategies.

    The list also revealed that Sequoia Capital raised money from a cross-section of Silicon Valley executives and TV personalities like Povich and Forrest Sawyer, who currently works for NBC and MSNBC.

    The prominent executives increasing their net worths in the YouTube deal include Electronic Arts Inc. Chairman Lawrence Probst III (5,048 Google shares worth 2.4 million dollars, Yahoo Inc. co-founder Jerry Yang (340 shares worth 160,000 dollars and Netscape Communications co-founder Marc Andreessen (256 shares worth 120,000 dollars.

    The schools profiting from YouTube's fortune include the University of Notre Dame (39,848 Google shares worth 18.8 million dollars) and the University of Southern California (30,901 shares worth 14.6 million dollars).

    Povich and Sawyer each got 170 Google shares in exchange for their investments in the venture capital fund.

    This isn't the first time that a Silicon Valley success story has enriched well-known individuals with no direct ties to the high-tech industry.

    For instance, the eclectic list of early investors in Google included golfer Tiger Woods, former Secretary of State Henry Kissinger, movie-star-turned-politician Arnold Schwarzenegger and basketball star Shaquille O' Neal.

    Google also shared another common denominator with YouTube -- Sequoia Capital invested in both of them before they became household names.

    (Agencies)

Editor: Gareth Dodd
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