Youku founder Victor Koo believes only China can help his company grow, make money and even beat piracy

It's been a topsy-turvy week for Victor Koo, the world's most recently-minted billionaire

Last Tuesday, his company Youku, China's answer to YouTube, had the best opening day on the New York Stock Exchange for five years, its shares zipping up 161pc from their opening price of $12.80 (£8.13).

By the middle of the week, shares were trading at $50, valuing Youku at close to $5bn. That's not much compared with Apple ($294bn), but it is almost twice the worth of the once-mighty AOL.

By Friday, however, the bears had sunk their teeth into the online video company and brought the shares back down to $37.50. At Tuesday lunchtime they were trading around $31.40.

That still leaves Mr Koo, who owns more than a third of the company, a paper billionaire, even if he had picked up a sore throat while pitching Youku to investors. "I did 87 presentations in 12 days [in the run-up to the initial public offering]," he said.

The slog also seems to have left him slightly grumpy about the perpetual comparisons between Youku and YouTube. It doesn't help that the two names sound similar in English, even if Youku has an entirely different meaning in Chinese (its two characters mean "Good" and "Cool").

On the surface, the two online video sites appear similar, although the US site is banned by the censors in China.

But, as Mr Koo said: "If Youku had adopted YouTube's business model we just would not be here. We would not exist." More than half of the videos on YouTube, he claims, were made by the site's users. "That means that most of it is people watching videos of cats. And you cannot build a serious business around cat videos."

The problem for YouTube, said Mr Koo, was that the six big media owners in the US were wary of licensing their films and television programmes to a company owned by Google, who they all regard as a major threat.

"The online video business started in both China and the US around 2005/6, when broadband penetration grew big enough," said Mr Koo. "But in the US, there is $300bn of assets tied up in the national cable network. That represents a lot of jobs and it makes people resistant to moving media online."

By contrast, the Chinese market is fragmented enough for Youku to play the field, snapping up television programmes from different provincial television networks. "China's most popular show is made by Jiangsu television, it's a dating programme called If You Are The One. But its ratings were only 3pc of viewers," he said. "China's Got Talent was huge in Shanghai, but got 2pc nationwide," he added. "This is a hugely fragmented market".

Unlike YouTube, Youku is aiming to provide an alternative television station for young, professional and urban Chinese. It licenses TV shows from China, Hong Kong and Taiwan and screens them a day after they have been broadcast. It pays its users up to £100 for videos that they make, and it produces its own hits. One show, called Hip Hop Office Quartet, generated more than 100m views.

Youku bought the rights to show World Cup matches this summer from CCTV, the state broadcaster, and has worked with CCTV to broadcast the online version of the annual Spring Festival Gala, perhaps the most-viewed television show in the history of the world, with 800m people tuning in.

Last weekend, the site began screening Inception, the Hollywood blockbuster, with customers paying five yuan (50p), through the internet or on their mobile phones, to watch. "We couldn't afford the Hollywood licensing fees to screen it for free, so when we do offer these films, it tends to be pay-per-view and a revenue split," said Mr Koo.

So far, Mr Koo's efforts have generated huge traffic. It gets more than 260m viewers a month and they spend an average of an hour on the site. Some of its movies have scored more highly on Chinese search engines, he said, than Harry Potter. Revenues are up 135pc in the first nine months of this year.

And he is confident that Chinese viewers will continue to prefer Youku to pirate DVDs. "Why pay even 30p for a pirate DVD when you can watch it for free?" he asked. But, like its Chinese counterpart Tudou, and perhaps like YouTube as well, Youku is not profitable. So far, the only major video-sharing website that is generating a profit is Hulu, a platform for television shows whose shareholders include News Corp, Disney and NBC Universal.

"We're not profitable," Mr Koo conceded. "Our investment is large. But our revenues are growing faster than our costs and we see a clear path to profitability," he insisted.

He pointed to the fact that three-quarters of China's 420m internet users are now watching video, compared with just 10pc three years ago.

And he said that Youku had plenty of space to expand its advertising revenues.

"In the US, search engines are king. That is because everyone already knows what they are looking for. Brands have been around for a long time. But in China that is not the case. This is the first generation of people buying cars and fridges. Video is much more important. You cannot transmit the branding through text banners and pictures," he said. "On our site, we show one minute of advertising per hour, compared with the 12 minutes shown on Chinese TV. Imagine how we can scale that up," he said.

However the shares perform in the near future, Mr Koo said the listing was not about raising money. "We did this for strategic reasons. We already had $50m to $60m in the bank. We did not need the money.

"In China, going public has a cachet from a branding standpoint. It will improve our image to ad agencies, government regulators. Look at what happened to Baidu when it went public. We are the same scale," he said.

The reference to Baidu is calculated. China's answer to Google was Youku's predecessor – the last company to shock the New York Stock Exchange by rising 354pc when it launched in 2005, and enjoying a clear run of success ever since.