Journey after YouTube w/ Steve Chen, Draco Evolution

Sarah Chen-Spellings (VO Intro):

Hey there. I'm super pumped yet again for this week's episode, which is brought to you by Tatler GenT, a community and media platform for tomorrow's leaders across Asia. In this part two of our exclusive, I'm still on site at the New York Stock Exchange with Jack Fu and Steve Chan, co-founders of Draco Evolution Corp., celebrating the groundbreaking launch of their AI driven ETF on the NYSE.

And if you haven't tuned into part one, you really should. Today's episode, however, dives deeper with Steve Chen, who was previously co-founder of YouTube, the world's largest video sharing platform. You may very well be watching this from an entertainment giant even bigger than Netflix.

Now, a little bit on Steve. Steve was born in Taipei, emigrated with his parents to the U.S. when he was eight. He was just a few weeks shy of graduating from university with a computer science degree when he was tapped to work at PayPal, where he would then meet the two other guys and form YouTube.

After selling YouTube to Google for a cool $1.65 billion and founding a few other tech companies, Chen decided to return to Taiwan in 2019 as a first employment gold card holder under the Foreign Talent Act, with the goal of raising the local startup scene in Taiwan.

Now this part two of this exclusive, we chat with Steve about his journey and why he thinks we should all take that leap in our lives. Stay tuned.

Steve Chen:

Like many decisions, including starting YouTube or moving from Chicago to the Bay Area on a one way ticket back in 1999 to join PayPal. Those are generally life changing decisions that people dwell over for a while, but for me, usually they're made within six hours or something, like, let's do it.

But that's kind of the disclaimer is that, they're made in six hours. But I do think about the caveat that if something were to happen poorly, if this doesn't end up going the way that I'm hoping it goes, then what the backup option? And there was always going back to Chicago, settling down there.

I remember when I was leaving PayPal, it was whether or not, I want to be doing, I think it's 27, 28 at the time, and I was just doing the calculations and I was thinking, wow, it's going to be a while before I retire at 65 years old.

And so if I have an idea, I'm just going to regret it if I don't take this opportunity now to actually try it out. And even now when I'm giving talks to potential entrepreneurs, especially ones that have ideas ready in their heads and they're attending some of these events. My assertion there is always to them, it's like, look, if you have an idea, just leave your job and try it, and it takes three to six months.

It doesn't take a long time. It's not a huge sacrifice, and the earlier the better. Before you have kids, before you get married, before you have family, try out that idea, and if it doesn't work, I think you can pivot, you can pivot, you can pivot again, three to six months. Even if nothing comes out of that, even if you're not closing series A, B, C rounds, even if you're not going through acquisitions, it's a bucket full of just great experiences and great stories to tell that you're going to be collecting during that time, right?

And so, I mean, I think that when we built out YouTube originally, the first week when we got zero users, zero videos uploaded, it was a dating video site.

Sarah Chen-Spellings:

I know there was like the PR version of the story, right? And then there was that hearing and then you had to tell the truth. You had to tell the truth. Guys, we were like, Zuckerberg, trying to get girls through videos this time, but it didn't manifest that way.

Steve Chen:

Maybe that's the real true story behind many Silicon Valley startups. Just dating, right?

Sarah Chen-Spellings:

But how did that happen? So the idea was you, Chad, Jawed, came together and decided, okay, let's put videos up, it may be good for dating.

Steve Chen:

There were three co-founders, right? And especially Chad, the other co-founder that stuck around for the entire period. We were together for already five, six years because I met him on the first day I moved to Silicon Valley working at PayPal. So we had worked together closely for five, six years working on multiple projects.

And so while YouTube alone, in terms of a legal institution. It was a new C Corp company, but prior to that, we had been working on many, many projects for five, six years prior to that. And so we had been sort of comfortable in building projects and products together.

But as we were thinking out, it was just as if we were building something new, and we just thought, like, there are all these dating services out there on the internet, but they're just all just boring photos. What if we made them a lot more interesting by putting, well, videos behind them?

So, I mean, much of the work that was started, this is going back to 2005, from February 2005 until the launch in May 2005. It was building out sort of YouTube 1.0, it had all the back end of what YouTube has now.

It has the ability to be able to upload any type of video that you want with different audio formats and video formats. And it can transform it so you can watch it inside the web browser without having to download and install any new apps. And at the time of 2005, that was brand new. That was just, that was only in 2004 was it even a possibility.

And so we were one of the first, first services out there to be able to make that happen. And because it's inside the browser, you can embed that video onto any other site. Before YouTube became sort of a household brand, at the time there was MySpace before Facebook, but there was the ability to be able to share photos and share text messages, share links, but there was no way to be able to share videos.

Partially because videos require downloading something. Well, when YouTube came out, it allowed you to be able to embed a video that was uploaded to YouTube, but then it gave you that little share URL at the bottom and you can embed that video player anywhere else.

And so, those two functionalities in addition to, and this is kind of what we were addressing earlier, was that instead of charging a subscription fee from the day one, we just made it a free service out there, right?

Sarah Chen-Spellings:

Get as many users as possible.

Steve Chen:

And really targeting out there, the key metrics of just number of videos viewed, number of videos uploaded, and number of new users that are coming on and registering for the service. But all that was, that's more on the, which is sort of the architecture software backend. Then there's the consumer side of, okay, so after we've built all this, how do we put this into a product?

And we thought, let's target after these dating services, dating sites. And yeah, as I've said before, a week went by, zero videos were uploaded and we said, do we give up now or? And if we did, YouTube wouldn't exist today. But we said let's just give it another try. Let's just change.

Instead of who are you looking for, why don't you just search for the video type that you want to search for search topics? And as soon as we made those changes, then we started seeing, it was still a trickle at first, but even a trickle was better than nothing after a week was that we started seeing people that were willing to experiment around with sharing videos.

And at the time it was people were starting to go from just blogging to more podcasting and then to video blogging and to actually trying to do more things with video. And so it all kind of came together in 2005, but I still think that lesson learned there was that, people think about the snapshot of what YouTube is in 2024. And they think about how did you know it was going to be this in 2005?

And often I have to tell them the truth, is that, no, like, what really happened was that it was a dating service, it was a dating site that had received zero views, and it was close to being a failure, even with all the technology that we built, but it was through these changes as you're starting to pave, you're kind of pivoting around and figuring out exactly where this path is going to take you.

And I think that's one of the biggest differences I've seen with entrepreneurs that are based in Silicon Valley, where they're a lot more open to taking risks and just trying something out before figuring out the entire monetization strategy, let's just get it out there and see because some of those problems may never ever surface because the product is not going to go in the way that you think it's going to go.

Sarah Chen-Spellings:

Yeah, so I have two questions there. One is decision making framework for these pivots. And you also left PayPal and became essentially one of the early, like, sort of PayPal mafias, right? and then you left YouTube as well after Google, literally what, 2005, 2006, a couple of years in Google after that, but it wasn't exactly a long period of time.

This all happened, was it your 20s, 30s, by that time?

Steve Chen:

Yeah. It was one of like, what, so we launched 2005 in YouTube, right? And I acquired in 2006, like something about 18 months in and then stayed there for about three to four. But it was amazing. I think that, it was an amazing acquisition of what Google did with YouTube.

And just again, like kind of dating that period, we were looking at two potential acquirers. It was actually Yahoo or Google at the time. And again, like Yahoo. Flashback in 2005 was a much larger company in terms of valuation, in terms of what they've accomplished before. Google was still just a search engine with ads at that time, right? And so it was still relatively new, but I remember sitting down with Eric Schmidt, who was the CEO at the time at Google, and he came in and to me and Chad, who were the sort of the two co-founders, CTO, CEO of YouTube.

Importantly, in our late 20s, he was saying that we're making the largest acquisition ever made by Google. But I want to reassure you that after this acquisition, we are always going to keep YouTube separate from Google. And that's not always how acquisitions work.

For example, eBay, PayPal, the reason that that acquisition didn't work out was that as soon as the PayPal acquisition happened, they tried to integrate everything. And that's why I think the start of the PayPal mafia was that, it's not that they wanted to be let go, they had to go, right. And so the way that Google handled that acquisition, the reason why many of the employees stayed on board as Google employees is that even today, YouTube and Google are separate.

Many people that are sometimes surprised to hear that, oh, I didn't know that YouTube was a wholly owned company by Google. And so a lot of the important key decisions that we're making in terms of the priorities, in terms of what teams inside Google we wanted to work with, whether it's like, you know, on the Google map side and the Google infrastructure side, Google search side recommendations, they allow us to make and prioritize those decisions about how we wanted to build a product for it.

And for them, it was really simple. It was just these are the key metrics we're buying you because we tried to do as much as we can using Google video. We weren't able to, so whatever secret sauce that you guys have, we want to keep that intact. Please keep making those decisions and then let us know how we can best assist.

Since that acquisition in 2006, I stayed on for another three and a half to four years, but even past that, I think to the date that YouTube is now where, you know, my kids are using it. It's their most used app, like, multi generationally used app.

Sarah Chen-Spellings:

You have to tell your kids, stop using my app, right? Past 9pm, I've heard you say that.

So pivoting, quitting, how do you make this decision? I mean, you left PayPal, and I heard you say this, I wanted to leave because at that point in time, if I didn't leave then, I would have never left. Almost within that framing.

Is that sort of the mantra, the way you think about making decisions in life?

Steve Chen:

To be honest, I actually think that our initial first decision that we make, it usually comes within minutes of hearing whatever that question is that needs a decision. The answer usually is in our heads already.

But it's there. I think the hurdles that we face is actually executing on that decision, because those are sometimes, especially ones where you're changing careers, whether or not you should move forward with buying a house, or just completely moving across the country on a one way ticket.

You know that that's the right path to go down, but you keep thinking over it and thinking over it and thinking over it. Especially during those years in Silicon Valley, on the more tech side and the more business side, I saw that those are not just applicable to life, but they're applicable to how you run a company as well, and how you actually determine the biggest decisions in your own careers.

And I think of course it's the safest route to go for a 401k strategy where you're working until you're 59 and a half years old and you're collecting your 401k. But I always thought that, look, if I had this idea and I didn't execute on it, and if somebody else did execute on it, I would just regret not having made that decision to at least try it out.

And so, for me, like the decision to leave PayPal, and starting something on YouTube. On paper, it doesn't look like the right decision to make. From phone calls with your parents about making that decision, it was more of a notification rather than asking for permission. I think, for me, if this doesn't work out, there is the backup option of always returning to it.

But I would just forever regret if I didn't do this and we had this idea and we had the ability, the brain power, the capacity, the experience, the know-how on how to execute on this. And so, to me, it's not always that way.

Like you mentioned, like after YouTube, Chad and I started another company. We ended up buying Delicious from Yahoo, from Jerry Yang, and we started trying to do some of the bookmarking. We started to actually do some of social bookmarking services out there. We tried to do a lot of things, but, you know, they don't always turn out the way that, of course, YouTube turns out.

But, none of those decisions or none of those stories, I regret telling because I think I still learned something along the ways. Especially folks from Silicon Valley, when you look on their LinkedIn profile pages, it's every one year, every six months, a year, two years, they're changing jobs.

And many of them are failed startups, but it doesn't matter. There's a lot that goes into that experience of a failed startup. You learn to do things in a way that you wouldn't do again, right? You learn lessons every time along the way, and those are valuable experiences.

Sarah Chen-Spellings:

Hardest lesson that you had to learn, that you wish you learned quicker?

Steve Chen:

This is only in hindsight, right? If you have an idea, like, take that step and then figure out what next steps to take.

Don't figure out the next 20 steps that you're going to have to take before you take that first step forward.

Sarah Chen-Spellings:

And final words as a Taiwanese American that is now choosing to really build up Taiwan in some way as a hub, right? That's literally what you are doing in this chapter.

What is your message to leaders that are now tuning in trying to do the same thing that you are and building their legacy and building impact?

Steve Chen:

Look like I want to say this is just the personal experiences that after you build something like YouTube and the expectation is to try to replicate it.

One, you kind of think like, there's no way you're going to build something that's going to be bigger. To be quite, I'm not trying to be humble, I'm more just realistic. It's easier not to build something bigger than YouTube. But I, through those years, it was trying to see, what really is the sort of the variables of satisfaction.

What brings you happiness, right? And I think that, to me, it was this move back to Taiwan and being able to see it doesn't have to be a service that's being used by three billion people or whatever on a monthly basis. But just to be able to make something of a dramatic change, especially when you see that it's visibly possible to be able to impact the country and almost like a group of entrepreneurs that are so excited over there that something's willing to happen.

If you can just help them craft the very early bricks of building that bridge to help them go abroad, I think that's the best. I would attain the same level of happiness and satisfaction that I would as what I experienced through building YouTube.

Sarah Chen-Spellings:

Great. Well, Steve Chen, congratulations on yet another milestone in your life today in New York Stock Exchange.

We're excited to be joining you shortly, but I must let you go now, but thank you so much. Let's give a high five to your billion dollar moves you have.