Entrepreneurial Talk

The first week of October 2006 was a great week for a couple of young entrepreneurs who started YouTube.com. These guys sold their business to Google for $1.65 billion dollars worth of Google stock. Here are two interesting facts: One, the company was started a mere one year ago and Two, it isn't making any money!

I don't know exactly how these entrepreneurs did it (otherwise I would have done it myself). But a couple of actions they took do show lessons for other entrepreneurs:

The YouTube guys had the guts to standup and ask a bunch of venture capitalists at Sequoia Capital for $11 million, based on nothing more than an idea cooked up one evening. I was not a part of the presentation, but it must have been persuasive--they got the $11 million.

Most entrepreneurs I come across like to talk about their business and they even like to talk about talking to venture capitalists about their businesses, but here's the thing: most entrepreneurs chicken out on giving a sales presentation to venture capitalists. The would-be entrepreneurs keep tinkering with their business plan, playing around with financial models, trying to prove their business concept, create market awareness and a whole lot of other things that do have some level of importance. But if you squander your time on side issues when you really need a big pile of money to get going, you aren't doing yourself or your business any favors.

YouTube figured out they needed a big pile of money to develop their technology and pay for server space and bandwidth if they were going to catapult themselves over the hundreds of other video file sharing websites. They got the money and they became number one.

Next, the YouTube guys had the guts to sit across a table and ask Google to hand over more than a billion dollars--for a company that wasn't making any money and faced an avalanche of lawsuits. Time will tell if this was a smart business decision for Google, but for right now it looks like a great move on the part of the YouTube founders.

Say what you will about the business model of internet video, but the sheer confidence and desire on the part of YouTube founders to speak up and ask for a billion dollars--and to get it--is a inspiration to anyone looking for one of the keys to success.

Good ideas matter, hard work is important, brilliant technology is a plus, but unless you are willing to actually stand up, move your mouth and ask for money and help, most entrepreneur's dreams die in their own garages.