When encoding to MP3, the encoder is smart. This means that each time something is compressed with it, some information is lost. The MP3 format is a lossy compression format. Karim could not easily find video clips of either event online, which led to the idea of a video sharing site.

Karim said the inspiration for YouTube first came from Janet Jackson's role in the 2004 Super Bowl incident when her breast was exposed during her performance, and later from the 2004 Indian Ocean tsunami. Difficulty in finding enough dating videos led to a change of plans, with the site's founders deciding to accept uploads of any type of video. They created posts on Craigslist asking attractive females to upload videos of themselves to YouTube in exchange of an $100 reward. Hurley and Chen said that the original idea for YouTube was a video version of an online dating service, and had been influenced by the website Hot or Not. YouTube was founded by Chad Hurley, Steve Chen and Jawed Karim, who were all early employees of PayPal.

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