Quibi: The Billion-dollar Startup Nobody Wanted
There are new startups every day, with investors pumping millions and billions of dollars for fat returns in the nearest future. And usually, when investors do this, they project more of a success than a failure. However, Quibi did not stand the test of time as it shut down after just six months. But before we begin to decipher how, let’s establish what it was all about.
What is (was) Quibi?
A little like Netflix or Showmax, Quibi was an American short-form streaming program that made movies, videos, and other related content available for viewers on mobile devices. Founded by Jeffery Katzenberg in 2018 (August) and with Meg Whitman as the CEO, the company had its headquarters in Los-Angeles, California.
It served a few states in the United States, Australia, Germany, Brazil, and the United Kingdom. The company was first named NewTV until it was changed to QUIBI in October of the same year. It had a website; www.quibi.com; that no longer works as of this day.
It was targeted to young demographics of the world to showing only short video contents that they termed as “quick bites”. This is where the name “QUIBI” was generated from. It had a total of about 8,500 short-form episodes that lasted for about 10 minutes or less.
On its launch day, April 2020, it had about 300,000 downloads from the google app store. Ten days after, the app was no longer found on the list of the 50 most downloaded free iPhone apps. The number continued to drop and the number of non-active users increased by the hour.
The board of directors thought that the declining returns were a result of the Corona Virus so they kept adding features they believed would make the app more fun. In July 2020, Quibi was nominated for 10 Emmy Awards and one of its series won two awards in September 2020.
The app had a lot of subscribers, about 2 million; however, it wasn’t close to the estimation they had made to keep the company going. After six months since its launch, Katzenberg announced that the company was going to shut down. “….keeping us going will just cause us to spend more money with no value to show for it…”, he said.
The company was later sold to Roku.Inc for less than a hundred million dollars. Compared to what was raised and what the company ran on, this was a major loss.
How much money was raised?
The business raised about 1 billion dollars during its planning and had another 750 million dollars in funding. In total, the company had about 1.75 billion dollars to make the app a reality. But who are the investors that put this amount into an app that wasn’t yet tested in the real world?
Quibi’s Investors and how much each invested.
The following were the businesses and people that invested in Quibi:
- Jeffrey Katzenberg – the founder (Past chairman of Disney’s animation and co-founder/CEO of Dreamworks) invested 5.5 million dollars of his money
- Meg Whitman – the CEO of Quibi (former CEO of Hewlett Packard and eBay) invested 10.5 million dollars of her money. Despite her loss though, she still has a net worth of about 5.2 billion dollars.
- Carlos Slim – Mexico’s richest man invested 8 million dollars.
- Madrone Capital Partners – Quibi’s biggest investor invested 200 million dollars.
- WndrCo – another company founded by Katzenberg invested a hundred million dollars
- Alibaba – Chinese biggest e-commerce store also invested a hundred million dollars
- Greenspring Associates invested 57 million dollars
- Goldman Sachs invested 50 million dollars. As of 2020, the bank was struggling to stay above water
- JP Morgan with a total of 3.213 trillion dollars worth of assets invested just 50 million dollars
- Future Fund also invested 50 million dollars
- Google – the final major investor for Quibi invested 50 million dollars also.
Other investors such as Disney, Viacom, ITV, Fox, Sony, Time Warner, MGM, Lionsgate, and NBCU invested a total of 145 million dollars. But if a lot of investors saw the potential in this vision, why then did it fail?
Why did it fail?
There were different views as to why Quibi failed in just 6 months after its launch in 2020. One of the reasons was that the pandemic limited the app’s ability to resonate with its users since the app was created for the outdoors. Other reasons were as a result of the app competing with Netflix or Amazon, or that the app lacked the screenshot feature to share contents with friends and other users.
One other thing Katzenberg said was that they asked people to pay for the app that no one had yet understood and therefore they didn’t get the support of customers in the way they had wanted.
Though the project faced skepticism from the beginning, Quibi was highly believed in because of Jeffery’s reputation in the line of Hollywood that “If anyone can make it work; it is Jeffery”. Quibi’s quick death made investors lose a lot of money (some still struggling to float). However, the company still had about 350 million dollars to give back to investors out of the 1.75 billion that was raised.