"You need to work through and look for small insights. When you find them, run with it" | Outlook Business
Home  /  Specials  /  Masterspeak 2015  / "You need to work through and look for small insights. When you find them, run with it" | SEP 04 , 2015

Dawid Bilski

Masterspeak 2015

"You need to work through and look for small insights. When you find them, run with it"
The YouTube co-founder started off as a designer at PayPal

N Mahalakshmi & Rajesh Padmashali

Chad Hurley is not your typical designer — for one, not every designer ends up becoming one of the richest men in the world. Starting off as a designer at PayPal where he designed everything from visiting cards to the website, Chad along with Steve Chen and Jawed Karim co-founded YouTube, the video platform that revolutionised the way people watch videos around the world.

YouTube, which was eventually bought by Google, has just completed a decade the day we meet him at his office in San Mateo but Chad has no airs about what he has accomplished nor does he display any sense of anxiety over what is to come as he works on his current venture MixBit, a mobile video platform. By his admission, it does not take much to be happy in life… just some burritos.

That sense of contentment has not stopped him from buying a stake in NBA team, Golden State Warriors, the upcoming Los Angeles Football Club or live streaming app Meerkat among others. His most offbeat investment, however, is the Stephen Gordon founded Guideboat, which sells classic boats, clothing and other accessories. Again, that stems from Chad’s personal fascination for boats — he feels boats are an old piece of technology that people still use. So does he when he canoes around the lake house outside New York that he shares with Gordon.

Can you talk us through your stint at PayPal, from where it all began?

After graduation, I was at home for two months doing some freelance design work. Around that period, I came across an article in Wired magazine on how PayPal had just raised money and was looking for a designer. I thought the challenge of designing an interface for a product like that would be interesting. I sent my resume and, luckily, I got a call back. About a week later, I was working for PayPal. Actually, I was the first person that they hired with whom they had no personal connection.

PayPal took a chance on me and I ended up designing everything from the interface for the PalmPilot to T-shirts, credit cards, business cards and, eventually, the entire website. We were, however, running behind schedule releasing the PalmPilot app, and our CEO Peter Thiel was frustrated that we didn’t have the app ready. So, we went ahead and released the website. After a few months though, we realised that the website is going to be a lot more valuable than the PalmPilot. There were many more people online than PalmPilots at that time. It has changed with the iPhone today, but it wasn’t the case back then.

So, we quickly shifted our resources to developing the website and luckily found our niche with the auction community, specifically eBay, which was using PayPal as a way to power transactions. We created a payment button and other ways for people to manage transactions online. It was just a great experience working out of Silicon Valley, developing a product that all those involved didn’t know a thing about, be it finance or financial transactions. It was an eye-opener. 

Luckily, we were able to raise enough money before the dotcom bubble burst and everything collapsed. We didn’t know what was going to happen to us. When I first got there [PayPal], I was the only designer and there were only 10 of us. By the time we raised a significant amount of money there might have been 100 of us. But we merged with Elon Musk’s company X.com which had started next door to us and we moved down the street to 165, University Avenue.

When we were moving in, this company called Google was just moving out! We had a chance to eventually go public and would finally end up being acquired by eBay. A lot of the core team obviously went on to do other things. But that experience of three and a half years was a great learning journey.

Tell us about your journey with Steve Chen. When you started out, did you ever feel that you would end up working together for 15 years?

At PayPal, I was a designer and Steve was an engineer. And since it was a very small team, all of us were very close. We used to walk down University Avenue and have lunch together every day. We used to hang out together from time to time. He stayed at PayPal longer than I did, but during our free time we would meet up for coffee and talk about startup ideas. That is what we naturally do. When you grab a coffee, and when you are working at a startup, you just talk about the possibilities of everything else.

At that time, I was seriously kicking round different ideas (we all still do that). There were a lot of options on the table. Everybody thought video was an interesting opportunity because there was a lot of stuff happening in photography. Flickr and a few others were hosting photos. But there was nothing that seemed obvious. No one was doing anything very serious in the video space other than people hosting viral or funny videos. Just like we approached PayPal knowing nothing about financial transactions, we started YouTube knowing nothing about videos.

But how did the idea come about? Can you take us through the ideation process?

When we started working on YouTube, there were a lot of ideas floating around video profiles and video dating services. We knew early on, that wasn’t going to work. Initially, we launched what we had and quickly changed it to be more of a general video platform. We wanted to enable people with a video solution in the same way that we enable people with a payment solution — we allow people to upload videos and we do all the work for them. We re-encode the videos in Flash and people could share them everywhere and you wouldn’t have to worry about the video player.

That small insight allowed YouTube to grow much faster than all the competitors that would fill the space. Once we got that right, we would have the most number of videos which the audience would come and watch. People would want to go to the place that had the most number of videos. And if you had a video of your own, you would want to go to the place that had the largest audience. Those natural network effects took hold and allowed YouTube to grow. It is a process. You have a general idea of where you want to go but you need to work through it. It is just a lot of time on the white board.

Can you recall any interesting incidents around the building of YouTube?

Many a time we would be running out of space to store videos. Our IT department comprised two or three guys who would run around maintaining two or three data centres. It wasn’t as easy as Amazon these days where you could just spit up machines to support the growth in traffic. You literally had to go plug in the machine yourself to get it running. At times we felt YouTube was going to collapse, but we would always find a way to keep pushing on. We are really proud of the fact that at YouTube we stored every video that was uploaded. We never threw stuff away and which, I think, benefits YouTube today. It has created this beautiful archive of video footage from around the world and continues to do so.

The other interesting thing that happened was that a lot of people found us threatening. Not just the media world but traditional internet companies. MySpace, which was a popular network at the time, tried to block YouTube citing security vulnerabilities in the Flash player. It was actually because we were growing quickly and they wanted to stop our growth. Eventually after discussion with the founders of MySpace they turned it back on. It is eerily similar to what happened with PayPal as well with eBay.

There was a period of two weeks where eBay tried to block PayPal. Eventually they let PayPal stay on the site. It was by providing a service on top of a network that PayPal and YouTube grew. The original network probably should have come up with a service. They tried to, but it was already too late as by then both PayPal and YouTube started to take off.

What drove your decision to exit just a year and a half later? 

Yes, I mean things moved really quickly. Initially, we were funding the setup on our own. We wanted to get the right deal in place for Sequoia and finally ended up with Series A and Series B funding. That [funding] was thrown in together because we needed the cash. If we had more time, and if things would have grown more slowly, we would have been better prepared. We could have always got more money or better terms. But we just weren’t in a position to have that luxury.

Besides, we were in a catch-22 situation because people were threatening to sue us amid copyright issues. We could raise a lot of money but then we would have had to spend more money because we were dealing with more such issues. After 18 months we realised the need to find a home for YouTube. We needed to preserve what we had created with a relatively small team of 67 people. Now we needed more resources and more people.

Luckily, Google took that chance on us and was able to provide us both. Eric, Larry and Sergey sat down with us and said, “Tell us what you need? Let us know if anyone gets in your way. We just care about you guys continuing to innovate and grow.” So that was a great situation to be in. I didn’t need to stay a year, but ended up staying four years. If YouTube is at the scale at which it is today, it is because of Google’s support.

Was YouTube’s potential and ability to create an impact clear to you right at the start? 

No. Though we were quite optimistic, you can never predict stuff like that. We were coming from PayPal and were lucky enough to experience some success in Silicon Valley. PayPal was more about creating a solution for business and people transacting on eBay, but to do something in the consumer internet space is truly hard. You had to create a brand as well and that was one of the bigger things. I tried to position our success as becoming a part of popular culture. We were lucky to be in the right place at the right time. 

You believe that innovation doesn’t have to be revolutionary and that it can start with a small insight. Can you elaborate on that with examples?

Like I mentioned earlier, with PayPal it was basically a payment button. With YouTube it was re-encoding videos that allowed people to play them back without needing a media player. Facebook was creating a network based on email. Google was creating an algorithm based on how sites were linking to each other. These were all very simple ideas. But at the end of the day, it was about realising that you had that small insight and were actually doing something with it. It doesn’t need to be this huge revolutionary ground-breaking idea. It is just about seeing how something works together.

Tell us more about your current project, MixBit, how is it different from YouTube? 

While YouTube is a platform reaching a global audience and providing a way to distribute that content to the world’s largest audience, MixBit is much more a personal solution, a personal tool among friends. It is a way for people to connect with each other. Create content better, together and share that. YouTube is more about viral and music videos, while MixBit is focused on the personal aspects of sharing memories. As an owner of the project you might have gone on a trip and found that a lot of that content is interesting and you want to see the entire production. But as an end viewer, many of us would just want to get a sense of what it is without viewing the whole thing. So, just like we format videos for specific platforms, we can also create different lengths of video. If you have a five-minute video, we can make sense of that and consolidate that into something as short as 15 seconds. 

Just like the network effect kicked in for YouTube, in the case of MixBit how would you monitor its progress? 

At the end of the day it is all about quality — the quality of content that we are creating. If we have one user or one million we have to be happy with what we are creating. So we are going to solicit a lot more feedback from our community to see if they are satisfied and how we can improve things. There are a lot of products out there be it in the video space or otherwise that are sometimes intimidating for people, especially when you are approaching a problem that they feel is technical or challenging, for example, editing a video. I think it is trying to take this otherwise complicated idea, simplifying for people and making it approachable. We tried to do that with PayPal for payments, with YouTube for video distribution and now we are trying the same thing with video editing.

Like with YouTube or PayPal during its startup phase, is there anyone who is intimidated by MixBit these days?

I don’t think anyone is intimidated, and I hope we are flying under the radar. There are a lot of people in the video app space who are trying to figure this out. But no one has found a solution yet. The process of finding a solution isn’t very obvious at first. You need to work through it and look for the small insights. When you find them, run with it. 

I guess we are all intimidating each other. If anything, our biggest competitor would be Facebook or Apple with iMovie. They are going to be providing tools. The difference between Facebook and YouTube is that YouTube is a repository of video content that entertains and informs people. Facebook has some of that but it is more of a personal communication tool. At MixBit, I don’t even view them as competitors. If anything, they help and empower us because of the ways we can connect with them and help other people connect with each other. Essentially, make content they are already adding to the site. 

Talking about insights, what learnings gained at YouTube are you using at MixBit?

The biggest is you need to keep things simple for people. Your product should not be complicated. You need to make it approachable. That is why for me, design is a process of creation and expression. You want people to respond to what you have created. I look at design that I have created at least in the recent past as more functional. It is about making it as approachable as possible from a user’s perspective. Look and feel is a part of it too, but as I approach design from the internet or technology perspective, it is about how it flows. How you get people from point A to point B as effectively as possible. That is the bigger challenge and the process that I enjoy with design.

Has tasting major success with YouTube made you less hungry or hungrier?

I don’t know. There is a little bit of both, because you see the possibilities. You see what is possible and what you can do with a small group of people developing an idea that doesn’t necessarily exist yet and how you can touch the world. That is the more inspiring piece. How YouTube has affected people’s lives drives you. But in terms of monetary goals, you will go crazy if you think about that stuff on a daily basis. I am fine, I don’t need much to be happy, may be a burrito (laughs). But you have to enjoy what you do. Take it one day at a time. That is how I try to approach it. 

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