Professor Elam

Accounting & Investing Info for San Antonio A & M

recent posts

about

They Paid How Much?

B/W sat down thei MSFT CEO Steve Ballmer and got his take on the Google purchase of You Tube.

He makes several good points among them that there is not business plan for You Tube, will this be a hot commodity ten years from now, and that there are only about four companies that can do billion dollar deals. 

Chad_hurleyHere is the story on the 29 years old fine arts major who
founded You Tube just 19 months ago.  Notice that he obtained $11.5 M in start up capital. Okay, what do you suppose he had to do to get that money?  He certainly did not borrow it from a bank, more likely he went to a hedge fund or venture capital fund.  What we are studying in intermed acct adn mangerial acct would be a lot of help. He needed a plan, a budget, proforma statements, and proof the market existed.  Would you be able to make such a presentation to a hedge fund and answer all their questions?  Well not without a thorough understanding of business, I suspect Hurley learned that on the job at E Bay.

DLE

Posted in

2 responses to “They Paid How Much?”

  1. Joseph Satterfield Avatar
    Joseph Satterfield

    Here’s what I do not quite understand. Why buy a company that is just supported by ads for that amount of money? Will they ever be able to fully say they made their money back? I think possibly that Google bought YouTube for the sake of their own advertising. Google decided that YouTube possibly could be the next big thing. I was reading though the article and was Hurley forced to sign a agreement as far as when he could sell his shares or could he unload them all tomorrow and make a fortune? Also one more thing does the original get any of their money back or have they already been paid from the advertising?

    Like

    Reply
  2. Dennis Elam Avatar
    Dennis Elam

    If I understand your first question, it is why don’t the people posting the videos become regular paying customers? Good question. I will read some more on this, your second question raises the issue of Howard Stern and Sirius, Howard was paid in stock, was not required to hit any membership targets, and had no limitation on selling, and promptly sold his shares causing Sirius to have to go into the market and buy some back to defend the stock price. I don’t understand the last question, does the origianl get any of their money back -this would be which party.

    Like

    Reply

Leave a comment