YouTube Co-Founders Sell to Google in 2006 for $1.65B, Miss $550B Valuation Opportunity

In October 2006, Google acquired YouTube for $1.65 billion, marking a pivotal moment in the evolution of digital media. The platform’s co-founders—Chad Hurley, Steven Chen, and Jawed Karim—received shares worth $345 million, $326 million, and $64 million, respectively, according to SEC filings and media reports [1]. At the time, the sale was celebrated as a massive success for the fledgling video-sharing service, which had struggled with monetization and technical challenges. Hurley, then CEO, hailed the deal as a union of “the king of search and the king of video,” signaling confidence in the partnership’s potential [1].

However, the transaction’s long-term implications reveal a stark opportunity cost. By 2025, YouTube’s estimated valuation had surged to $550 billion, a 333x increase from the 2006 sale price [1]. This growth, driven by Google’s integration of advertising, user data analytics, and streaming capabilities, transformed YouTube into a global entertainment and commerce hub. Analysts note that if Hurley and Chen had retained their original equity stakes, their personal holdings could have been valued at over $100 billion each [1]. The platform now generates annual revenues exceeding $54.2 billion and is projected to surpass Disney as the world’s largest media company by revenue [1].

The founders’ decision to sell reflects a common dilemma in startup exits: balancing immediate liquidity against the uncertainty of long-term equity retention. While the $650 million payout provided financial security, it paled in comparison to the potential wealth tied to YouTube’s exponential growth. The case underscores the strategic trade-offs inherent in early-stage entrepreneurship, where timing and ownership structure heavily influence outcomes.

The 2006 acquisition also highlights Google’s role in scaling YouTube into a dominant force. By leveraging its infrastructure and resources, Google addressed the platform’s early challenges, including content moderation and monetization, enabling YouTube to dominate the online video market. The founders’ post-sale paths diverged: Hurley co-founded Jaunt VR, while Chen pursued venture investments, both seeking new ventures after their initial windfalls [1].

This scenario serves as a cautionary tale for entrepreneurs considering exit strategies. While selling early offers certainty and liquidity, it risks sacrificing compounding gains that could follow. The YouTube case illustrates how corporate backing can accelerate a platform’s trajectory, but it also raises questions about whether the founders could have secured a better balance between immediate rewards and long-term value.

Sources:

[1] [YouTube's founders split over $650 million when they sold to Google in 2006—had they held out, they could have taken a slice of $550 billion](https://fortune.com/2025/07/25/youtube-cofounders-chad-hurley-steven-chen-sold-google-net-millions-but-now-worth-over-500-billion/)

[2] [YouTube's founders split over $650 million when they sold to Google in 2006—had they held out, they could have taken a slice of $550 billion](https://news.futunn.com/post/59655509/jack-in-the-box-brings-back-coca-cola-starlight-beverage)

[3] [YouTube Founders' 2006 650M Sale vs. 550B Valuation](https://finance.yahoo.com/news/youtube-founders-split-over-650-153952977.html)