Winblad observed that the percentage of Google dollars spent on YouTube was not a lot. The transaction would likely expand Google’s advertising base, considering the benefit to direct marketers and the next wave of brand advertisers going on to web sites.
Google’s success in advertising demanded further success, a need to grow both the top line and bottom line. YouTube was apparently an experiment in improving Google’s growth rates. The transaction may not be a bad decision from the standpoint of Google, though it may be unreasonable for some of Google’s competitors who did not have a big dent on advertising and were involved in a variety of business lines.
Though Google could have spent the same amount of money it used to acquire YouTube to build its own technology, YouTube, as the incumbent already had the users which was what brought value to the transaction.
The transaction showed the entrepreneur that big companies were willing to pay for companies that had growth, and that in less than two years, a company could go from nothing to an asset.
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