Building a YouTube Competitor…

So… I guess I’m having a Skype meeting with a founder who wants to create a competitor to YouTube next week… yup… I feel like I’ve had this conversation before…

So now that I’ve publicly given YouTube the middle finger I’ve been receiving a lot of in bound messages about the thought of creating a competitor to YouTube.  The idea being that since YouTube is screwing up so badly, and keeps screwing up year after year that now is the time to wrest video dominance from the platform.  I fear that these thoughts are built on the misconception that YouTube CAN be viable.  Just because a platform has an insane amount of usage doesn’t mean it’s not burning money with no plan on how to stop.  You look at YouTube and see a Disney fairy tale for our age.  What I see looks far more like something from the Brothers Grimm. What happens when a startup has so much investment that “failure” is simply taken off the board?

I was at a Baltimore Tech Breakfast years ago where a founder explained why his startup had failed.  He had come up with an amazing idea, and wondered to himself “why hasn’t anyone else jumped on this.” He was counting his millions before the first line of code was written.  The problem was that A LOT of other people had thought about the same idea.  The difference was that they had enough industry expertise to be able to fill in all the variables in the calculation and realize that the numbers just didn’t work out.  The founder speaking to us had spent a year killing himself only to learn all of the things he wished he had known in the beginning.

When people look at YouTube they think, “anyone can do that”, but they don’t even know enough to go watch the slow motion train wreck that is Vid.me . $9 million in funding, in an environment where both creators and consumers want a new video platform option, using technology that is darn near as old as dirt in the tech field, and they’re still treading water like an epileptic 6 year old. (They recently implemented a 50GB storage cap on at least some creators because nothing shows the strength of your platform like storage caps!)

The problem is that video distribution is expensive. Viewers are more willing to pay for content, but this comes from years of not wanting to spend pennies for access. Content creators are realizing that platforms are not just not their friends, but may be their enemies.  And ad spends and sponsorships are skewing to larger and larger creators, with less left for the smaller up and comers. This may look like an opportunity, but it is a mirage. These are not problems that can be solved, rather the end results of a platform who’s foundations were never properly engineered.

I’ll take the call next week, and say the same things I’ve said a dozen times before.  The core problem in the startup world right now is that founders want everything to be a technology problem.  They know how to solve tech problems, but the issue with YouTube and their ilk is one of business.  How do you take a low cost resource, sell it for more than you bought it for, and make sure all parties involved earn enough to keep them interested?  On the scale of Failed Normal I know how to do that. On the scale of a YouTube competitor I can’t think of any more apt example of the failure of the core idea than Vid.me .