The Gurus of YouTube

(2 of 3)
CHAD MEREDITH HURLEY has the lanky and languorous carriage of a teenager who just rolled out of bed. He wears a stubble beard over a complexion that doesn't see enough sun, and he has a habit of pushing his chin-length hair back from his forehead so that by the end of the day it's a bit oily and Gordon Gekko-ish.

Raised in the southeastern Pennsylvania town of Birdsboro, Chad is the middle child of Donald, a financial consultant, and JoAnn, a schoolteacher. He was an arty kid, always watercoloring and sculpting, which is not to say he ran with the artsy crowd. There is nothing affected or capering about Chad—his temperature runs so low he comes off at first as a dullard—and it's easy to imagine him as a slightly introverted, earnest boy trying to sell artwork (not lemonade) from his front lawn, as he did in an unsuccessful venture that taught him the difference between art and commerce.

Chad was unusual in that his artistic proclivities coincided with an interest in business and technology. In ninth grade, he built an amplifier that won third place in a national electronics competition. By the time he was in college, he would hole up for hours online, doing those things boys do these days—studying Web design, playing games, experimenting with animation. He did not come equipped with a sense of entitlement or snobbery; his brother Brent, 27, told me that to earn money during one summer in college, Chad joined a pyramid-marketing scheme for knife sets. "He would come over to our friends' houses and cut through a soda can or something," says Brent. "One of our family friends, they joke now, 'Hey, you sold us these knives and look at you now.'"

If it's true that people make their own luck, Chad made a lot of it. In 1999, he was finishing up at Indiana University of Pennsylvania, where he had majored in computer science before switching to graphic design and printmaking. ("Computer science, that was too technical, too mechanical for Chad," says his father Don. "He wanted to be on the creative side." Chad spent much of his time running for the cross-country team, and he was in top shape at the time. The not insubstantial paunch he has added since then is a source of some consternation.) Around graduation, Chad read an article about a new company called PayPal, which back then was trying to enable PDA users to beam money to each other. Chad sent PayPal his resume, and on a Wednesday evening he came downstairs to announce he had a job interview on Friday. The company flew him to California and asked him to show his skills by designing a company logo (it's still the PayPal logo to this day). That Sunday, PayPal's CEO offered Chad a job as the company's first designer. He slept on a friend's floor for a few weeks, scrounging money for pizza before he got his first paycheck.

It was a propitious move; Chad had joined a firm that would soon abandon the handheld-payment concept in favor of something far more lucrative: securing online transactions. In 2002 eBay bought PayPal for $1.54 billion, and as an early employee, Chad walked away with enough to buy a few luxuries—including his Tag Heuer watch—and plenty of seed money for a future venture. "Either he was incredibly brilliant and he saw the opportunity, or he was really lucky—I don't know," says Ryan Donahue, who was PayPal's second designer and roomed with Chad for a time. "But to hit gold with your first job out of college is pretty rare. And then for his first company to be YouTube, he's gotta be a smart guy."

Chad was also lucky to meet his future wife, Kathy Clark, at a party in 2000. Clark shared his interest in technology and in starting a family. She also turned out to be the daughter of James Clark, the legendary Silicon Valley entrepreneur who founded or co-founded three billion-dollar-plus companies: Silicon Graphics, Netscape and Healtheon. His daughter, 36, is an intensely private person—she was reticent when I visited the Clark-Hurley home in Menlo Park, Calif., for a brief meal of takeout burritos in their trophy kitchen (Wolf range, lovely). She asked that I not reveal the names of the kids. Kathy and Chad have never before publicly discussed her father's identity. Their reluctance is understandable: Jim Clark is one of the valley's most revered figures, and because he runs a media-sharing website—Shutterfly, founded in 1999—it would be tempting to think he was the real force behind the video-sharing site his son-in-law was starting. But Chad says Clark has had only a tiny role in YouTube, merely offering the boys advice in 2005, when the start-up was seeking its initial round of funding. "Basically I have never wanted to mix money and family, so we haven't talked much about it," Chad told me.

Chad's greatest stroke of luck at PayPal was meeting Steve Chen and Jawed Karim, two PayPal engineers with whom he would occasionally bat around ideas for start-ups. Karim, 27, enrolled at Stanford last year to pursue a master's in computer science, and today there's some tension between him and the other founders, who have become famous while he toils in a small, modestly furnished dorm room. Although Karim is named on YouTube's site as a co-founder, Chad and Steve have promoted a highly simplified history of the company's founding that largely excludes him. In the stripped-down version—repeated in dozens of news accounts—Chad and Steve got the idea in the winter of 2005, after they had trouble sharing videos online that had been shot at a dinner party at Steve's San Francisco apartment. Karim says the dinner party never happened and that the seed idea of video sharing was his—although he is quick to say its realization in YouTube required "the equal efforts of all three of us."

Chad and Steve both say that the party did occur but that Karim wasn't there. "Chad and I are pretty modest, and Jawed has tried to seize every opportunity to take credit," Steve told me. But he also acknowledged that the notion that YouTube was founded after a dinner "was probably very strengthened by marketing ideas around creating a story that was very digestible."

No company, of course, is ever founded in a single moment, and YouTube evolved over several months. Chad and Steve agree that Karim deserves credit for the early idea that became, in Steve's words, "the original goal that we were working toward in the very beginning": a video version of HOTorNOT.com.

HOTorNOT is a dating site that encourages you to rate, on a scale of 1 to 10, the attractiveness of potential mates. It's a brutal, singles-bar version of MySpace, but Karim says it was a pioneer: "I was incredibly impressed with HOTorNOT, because it was the first time that someone had designed a website where anyone could upload content that everyone else could view. That was a new concept because up until that point, it was always the people who owned the website who would provide the content."

The idea of a video version of HOTorNOT lasted only a couple of months. "It was too narrow," says Chad. He notes that another early idea was to help people share videos for online auctions. But as the site went live in the spring of 2005, the founders realized that people were posting whatever videos they wanted. Many kids were linking to YouTube from their MySpace pages, and YouTube's growth piggybacked on MySpace's. (MySpace remains YouTube's largest single source of U.S. traffic, according to Hitwise.) "In the end, we just sat back," says Chad—and the free-for-all began. Within months—even before Lazy Sunday—investors such as Time Warner and Sequoia Capital, a Menlo Park investment firm, began to approach YouTube about buying in. Big advertisers started paying attention in October 2005, when a cool Nike ad-that-doesn't-look-like-an-ad of the Brazilian soccer player Ronaldinho went viral in a big way on YouTube. Sequoia—which has helped finance Apple, Google and other valley greats—ended up providing about $8.5 million in 2005—just in time for Steve to avoid having to increase his credit-card limit yet again to pay for various tech expenses.

1. McCain's Foreign Policy Frustration
2. Banksy: An Artist Unmasked
3. LeBron's Gold Guarantee
4. Berlin Awaits the 'Next JFK'
5. When Jellyfish Attack
6. A New Cold War in the Caribbean?
7. Woman Kills Self Before Foreclosure
8. Facebook: Movement or Business?
9. Goodbye to France's 35-Hour Week
10. Dr. Dre's Headphones: Chronically Good