Steve Chen remembered a regular dinner with friends Jawed Karim and Chad Hurley that, unknowingly at the time, would lead to business success.

Using his digital camera’s video feature, Karim recorded the dinner. Later, at home, Chen said he remembered his, and Karim’s, surprise that there was no easy way to share it over the Internet. They devised a plan.

“We took it upon ourselves and started expanding a service to let everyone do the same thing,” Chen said.

Chen, Karim and Hurley’s plan eventually led to the February 2005 creation of YouTube, a company that lets users post and share videos over the Internet for free. The San Mateo, Calif., based company is the solution to all the problems the three founders encountered in attempts to post the dinner video, Karim said. Hurley became the company’s CEO. Karim, who graduated in 2004 from computer science, acts as an adviser and Chen, who attended the University for 3.5 years before dropping out in 1999, became chief technology officer.

Chen said YouTube seeks to give users a simple and fast means to share their digital camera videos to wider audiences. And with a video capability becoming standard on many digital cameras, the phenomenon is gaining in popularity. USA Today reported that in 2005, 34 million gigabytes of video were shot versus 24 million in 2004, according to research firm IDC.

The YouTube concept is simple. Users register on the website (www.youtube.com) and they can begin uploading videos. The quantity is unlimited-the only restrictions are that single videos cannot exceed 100 megabytes in size and content cannot be copyrighted or offensive. When uploaded, all videos are converted to Flash video, a format that allows anyone to watch regardless of the media player they use.

Anyone is free to peruse the site and the videos of the nearly 200,000 registered users the site serves. Registered users can also leave comments for any video.

Currently, the site shows more than 12 million videos per day – a number that is “doubling on a month to month basis,” Chen said.

“It’s an extremely viral product. When you upload a video, you want to send it to your friends, your family,” Chen said. “When people come on, they spend time looking at other videos and then they sign up.”

It is the largest of all video sharing websites, even beating out video services from Google, Yahoo! and competitors Sharkle and ClipShack, Chen said.

Andi Lusha, junior in Aviation, uses YouTube to watch videos in between classes. He said one of his favorites involves “battles” between break-dancers. He is surprised with the company’s success.

“YouTube seems to be doing pretty well,” Lusha said.

Lusha said he isn’t registered on the site, but he said he plans to when he records more videos.

The founders and users are not the only ones who see potential in the company. Last November, Sequoia Capital invested in YouTube with $3.5 million in venture capital. Venture capital is money often given to promising start up companies in exchange for some form of ownership stake.

That money, Chen said, will go towards feeding a growing infrastructure, hiring new workers and other marketing efforts. With growth, he said, there are numerous “technical hurdles” that follow, especially with bandwidth, or storage space.

“When we’re talking about doubling in size every month, at each step along the way, we’re analyzing whether some of the current systems can handle that scale,” Chen said.

Chen added that another challenge is copyrighted and offensive material. The company cannot possibly review each video. Therefore, Chen said, the company relies on YouTube users to flag potentially problematic material.

On the other hand, to cope with problems of growth, YouTube is currently aggressively hiring, Chen said. The company has 28 to 30 employees working now. The company’s first employee, Yu Pan, graduated from the University in 1998.

Karim said finding talented employees was easy in the beginning. Most, including all three founders, were involved in developing PayPal, an Internet money transfer system currently owned by EBay. The PayPal project recruited from the University, because Max Levchin, PayPal co-founder, also graduated from the University in 1997. Karim said YouTube in turn recruited from PayPal.

He said the lessons learned from PayPal “were instrumental in developing YouTube.”

Despite these challenges, the company plans to continue to offer its services for free. Chen hinted at a future “core revenue project” that would be advertising-based, but could not comment further. Currently, the site has advertisements that are visible to unregistered users.

Chen said the company’s growth potential for 2006 is positive and expects the YouTube community to keep expanding.

“We’re already seeing a good response from the general community,” Chen said. “(YouTube) just works; once you make the technology easier for people, it becomes natural.”