With YouTube, Student Hits Jackpot Again

October 19, 2006 by  


Courtesy Miguel Helft

PALO ALTO, Calif., Oct. 11 — For Jawed Karim, the $100,000 or so he would have to spend on a master’s degree at Stanford was never daunting. He hit an Internet jackpot in 2002 when PayPal, the online payment company he had joined early on, was bought by eBay.

On Monday, still early in his studies for the fall term, he got lucky again. This time he may have hit the Internet equivalent of the multistate PowerBall.

Mr. Karim is the third of the three founders of the video site YouTube, which Google has agreed to buy for $1.65 billion. He was present at YouTube’s creation, contributing some crucial ideas about a Web site where users could share video. But academia had more allure than the details of turning that idea into a business.

So while his partners Chad Hurley and Steven Chen built the company and went on to become Internet and media celebrities, he quietly went back to class, working toward a degree in computer science.

Mr. Karim, who is 27, became visibly uncomfortable when the subject turned to money, and he would not say what he stands to make when Google’s purchase of YouTube is completed. He said only that he is one of the company’s largest individual shareholders, though he owns less of the company than his two partners, whose stakes in the company are likely to be worth hundreds of millions of dollars, according to some estimates. The deal was so enormous, he says, that his share was still plenty big.

“The sheer size of the acquisition almost makes the details irrelevant,” Mr. Karim said.

On Wednesday, during a walk across campus and a visit to his dorm room and the computer sciences building where he takes classes, Mr. Karim described himself as a nerd who gets excited about learning. Nothing in his understated demeanor suggests he is anything other than an ordinary graduate student, and he attracted little attention on campus in jeans, a blue polo shirt, a tan jacket and black Puma sneakers.

Mr. Karim said he might keep a hand in entrepreneurship, and he dreams of having an impact on the way people use the Internet — something he has already done. Philanthropy may have some appeal, down the road. But mostly he just wants to be a professor. He said he simply hopes to follow in the footsteps of other Stanford academics who struck it rich in Silicon Valley and went back to teaching.

“There’s a few billionaires in that building,” he said, standing in front of the William Gates Computer Science Building. But his chosen path will not preclude another stint at a start-up. “If I see another opportunity like YouTube, I can always do that,” he said.

David L. Dill, a professor of computer science at Stanford, said Mr. Karim’s choice was unusual.

“I’m impressed that given his success in business he decided to do the master’s program here,” Mr. Dill said. “The tradition here has been in the other direction,” he said, pointing to the founders of Google and Yahoo, who left Stanford for the business world.

Mr. Karim met Mr. Hurley and Mr. Chen when all three of them worked at PayPal. After the company was acquired by eBay for $1.5 billion, netting Mr. Karim a few million dollars, they often talked about starting another company.

By early 2005, all three had left PayPal. They would often meet late at night for brainstorming sessions at Max’s Opera Café, near Stanford, Mr. Karim said. Sometimes they met at Mr. Hurley’s place in Menlo Park or Mr. Karim’s apartment on Sand Hill Road, down the street from Sequoia Capital, the venture firm that would become YouTube’s financial backer.

Mr. Karim said he pitched the idea of a video-sharing Web site to the group. But he made it clear that contributions from Mr. Chen and Mr. Hurley were essential in turning his raw idea into what eventually became YouTube.

A YouTube spokeswoman said that the genesis of YouTube involved efforts by all three founders.

As early as February 2005, when the site was introduced, Mr. Karim said he and his partners had agreed that he would not become an employee, but rather an informal adviser to YouTube. He did not take a salary, benefits or even a formal title. “I was focused on school,” he said.

The decision meant that his stake in the company would be reduced, Mr. Karim said. “We negotiated something that we thought was fair.”

Roelof Botha, the Sequoia partner who led the investment in YouTube, said he would have preferred if Mr. Karim had stayed.

“I wish we could have kept him as part of the company,” Mr. Botha said. “He was very, very creative. We were doing everything we could to convince him to defer.”

Mr. Karim was born in East Germany in 1979. The family moved to West Germany a year later and to St. Paul, Minn., in 1992. His father, Naimul Karim, is a researcher at 3M and his mother, Christine Karim, is a research assistant professor of biochemistry at the University of Minnesota.

“To develop new things and be aware of new things, this is our life,” Ms. Karim said, explaining her son’s interest in technology and learning.

After graduating from high school, Jawed Karim chose to go to the University of Illinois at Urbana-Champaign, in part because it was the school that the co-founder of Netscape, Marc Andreessen, and others who gave birth to the first popular Web browser attended.

“It wasn’t like I wanted to be the next Marc Andreessen, but it would be cool to be in the same place,” Mr. Karim said. In 2000, during his junior year, he dropped out to head to Silicon Valley, where he joined PayPal. He later finished his undergraduate degree by taking some courses online and some at Santa Clara University.

Armed with a video camera, Mr. Karim documented much of YouTube’s early life, including the meetings when the three discussed financing strategies and the brainstorming sessions in Mr. Hurley’s garage, where the company was hatched.

In his studio apartment in a residence hall for graduate students, he showed one of them, which he said was filmed in April 2005. In it, Mr. Chen talked about “getting pretty depressed” because there were only 50 or 60 videos on the YouTube site. Also, he said, “there’s not that many videos I’d want to watch.” The camera then turns to Mr. Hurley, who grins and says “Videos like these,” referring to the one Mr. Karim is filming.

Mr. Karim, who has remained in frequent contact with the other co-founders, said he was first informed of the talks with Google last week. On Monday, he was called in to the Palo Alto law offices of Wilson Sonsini Goodrich & Rosati to sign acquisition papers, and he briefly got to congratulate Mr. Chen and Mr. Hurley, he said.

Asked what he thought of the acquisition price, Mr. Karim said: “It sounded good to me.” When a reporter looked puzzled, he raised his eyebrows and added: “I was amazed.”

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