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So now that Google bought YouTube for $1.65 billion in Google stock, which YouTube employees, managers and investors can cut and run, and who has to work another year before leaving a millionaire? An old-school dot-com journo explains the windfall to Valleywag.

So the big winner in YouTube is probably [venture capital firm] Sequoia. They've easily got 45-50% of the company.

It's interesting that they're selling to Google; Sequioa has always been a Yahoo company. Bunch of folks from Yahoo are limited partners in various funds and side-funds, most notably investor David Siminoff. (There are two kinds of partners. General parters — the guys you meet at parties and who have offices here — and limited partners, the folks who cough up the dough.)

Different firms have different rules for limiteds. And some have what they call "side funds" — pools of money into which CEOs, former CEOs, former partners, etc. can invest. So a firm will invest x and allocate some part of x to the side fund. This is how Kleiner Perkins got back into everyone's good graces: Google.

Is this a good sign for the Bubble?

So Sequoia's now got YouTube which, by the way, is the HotMail of Bubble 2.0. It's the deal that says we're a go. No one understands what it means, no one believes the "valuation," the founder'll be outta there in two years, yadda yadda.

The only difference is that all the big media firms took a sniff at YouTube and they all passed. More proof of cluelessness. VIacom shudda bought 'em. Keep all those MTV/VH1 oldies on line forever and ever...

So YouTube is still gonna blow. How soon can everyone jump off this flaming dirigible?

This is all hypothetical but here's how it would work: Sequoia, which probably has control of the company, probably led the negotiation. Their shares are as good as cash or close to it.

Now, if they were very good and very smart, they got the founders a short "work out." (The shortest one I've heard of - ever - was Peter Thiel's at PayPal. He didn't have one. Nor did Toby at Outpost. They go to work at/with the new co but they are free to leave at anytime taking their comp packages with them.

Others - no so lucky. Employees: Unless they've negotiated for a "change of control" clause in their contracts, they'll have the same vesting schedule [the rate at wich employees get promised company shares] under the new owner.

So, for instance, let's say you have a package of 5,000 YouTube shares with a two-year vest. Okay, you hang around for a year and you're getting 2,500 shares. Two years, you get the whole five. Only now that the deal's done, you may be getting GOOGLE shares — not shares in some company that's not public and may never be.

Google Agrees to Buy YouTube for $1.65 Billion [NY Times]