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Interview

YouTube co-founder Steve Chen bets on Taiwan for next startup

Entrepreneur expects US video platform will cope with threat from rivals like TikTok

YouTube co-founder Steve Chen has returned to his native Taiwan, from where he is launching a new startup. (Source photos by Wataru Ito and AP) 

SINGAPORE -- YouTube's Taiwan-born co-founder is betting on the island for his next venture, lauding its abundance of tech talent to rival the U.S.

Steve Chen said in an interview that he planned to launch a global internet startup from Taiwan, where he has now moved. He said the island had plenty of "very high-quality engineers and product managers" even compared to Silicon Valley in the U.S., where he lived for 20 years.

Chen also said he believed YouTube would see off any threat from Asian rivals such as China's TikTok, telling Nikkei Asia that only an "unforeseen technological leap" might end its dominance in the video sharing space.

Chen launched YouTube in early 2005 with former colleagues from online payments company PayPal. Their venture enjoyed instant success and the company was sold to Google in October 2006 in a deal worth $1.65 billion. Chen left Google in 2011 and since has been primarily investing in and advising startups.

Speaking to Nikkei about aspects of Asia's tech scene, Chen said platforms such as TikTok, the short-video app owned by Chinese internet technology company ByteDance, were "definitely serving a need for content creators and viewers."

There is "value for any destination that attracts new content and rising content-creating stars, so YouTube should recognize that content creators are using an alternative platform," Chen said.

However, Chen argues that "people only tend to view the most recently uploaded videos on TikTok. On the other hand, YouTube is more expansive as it tends to be a destination where you go to search and find any content, new and old."

YouTube has more than 2 billion monthly logged-in users worldwide and has become a massive platform for various individual video creators as well as a hub for movie studios, broadcasting companies, record labels and more. TikTok revealed in August 2020 that it had 689 million monthly active users globally.

"The only thing that would take down YouTube at this point [would be an] unforeseen technological leap" that would see fast adoption by global internet users, Chen said, drawing a parallel with YouTube's initial success. The revolutionary aspect that the platform offered at the time was that "you didn't have to download [videos, they played] in the browser, and you could embed the video onto [platforms such as] Myspace, Facebook and eBay."

Chen is now embarking on a new endeavor to recreate that success. He moved back to Taiwan two years ago and said that he was about to introduce a new internet service that would be related to "wellness and support for one another". He said the idea arose during the coronavirus pandemic but did not elaborate further.

Chen said that he held a series of discussions with government officials, incubators, venture capital firms and educational institutions after his return and got a sense that people in Taiwan think there are disadvantages to starting a company on the island compared with other locations such as Silicon Valley.

"So I ended up starting [something] myself rather than advising [other entrepreneurs]; I just put myself into the battlefield," to build a global internet startup in Taiwan, Chen said.

He said that "it's very easy to get high-quality engineers, and product managers," in Taiwan but says that "what makes Silicon Valley more special is that the fundraising is a lot easier."

Therefore, he said that the new startup was based in Taiwan but was seeking funding from U.S. venture capital providers.

Chen said it was an attractive time to start a company. Even big tech groups such as Google and Facebook needed to pay well for talent so their employees did not leave to start their own companies, he said.

Looking back to decisions Chen and his YouTube co-founders made almost 15 years ago, he said he did not think the business would have survived without the help of Google.

While the video sharing site was growing quickly, users were also starting to post content made by professionals, generating massive copyright issues.

"It was so early; we didn't have the monetization strategy and revenue-sharing [system] that is now in place," he recalls.

At the time of the Google acquisition, about 49% of the content on YouTube was coming from outside the U.S., including many episodes of Japanese anime, and "whenever any lawsuits would come in [from abroad], we would just say we're an American company," Chen recalled. He added that if that content threshold ever crossed 50%, they assumed that they would no longer be able to deflect such lawsuits by calling themselves a U.S. company.

So, Chen said, the question they had at the time was would they raise another round of venture capital, remain independent and deal with the problems themselves, or sell the company?

The co-founders also approached U.S. web services provider Yahoo to see if they were interested in acquiring YouTube. "But Google was able to move quickly," said Chen.

US media group Viacom sued Google and YouTube over copyright infringements in 2007 and it took the two sides seven years to settle the case. In the meantime, YouTube, with the help of Google, partnered with other media companies by creating revenue-sharing models and developing technologies to detect video uploads that violate copyright.

Now YouTube is a fast-growing revenue source for the internet search group, with advertising revenues that topped $6 billion in first quarter earnings this year.

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