YouTube Investment Memo

In 2005, YouTube was a tiny startup with almost no revenue model, uploading videos that mostly weren't theirs to license. Roelof Botha, a Sequoia partner, wrote an internal memo arguing the firm should invest anyway, because the sheer volume and growth rate of user-generated video uploads was a leading indicator that YouTube was becoming the default place people went to watch and share video online — a position worth being early to regardless of how monetization would eventually work. Sequoia invested $1 million, followed by a $4 million Series A. Google acquired YouTube about eighteen months later for $1.65 billion, returning roughly 57x to Sequoia.