WEBVTT - Quibi Quibble 0:00:04.440 --> 0:00:12.640 Welcome to Tech Stuff, a production from iHeartRadio. Hey there, 0:00:12.640 --> 0:00:16.280 and welcome to tech Stuff. I'm your host, Jonathan Strickland. 0:00:16.320 --> 0:00:19.480 I'm an executive producer with iHeartRadio and I love all 0:00:19.600 --> 0:00:23.720 Things tech and. On April sixth, twenty twenty, a video 0:00:23.800 --> 0:00:28.040 streaming service called Quibbi launched in the United States. Unlike 0:00:28.080 --> 0:00:33.720 streaming services like Netflix or Hulu, Quibi's content is short form, 0:00:34.000 --> 0:00:39.360 though extremely highly produced. They are episodes or movie chapters 0:00:39.640 --> 0:00:43.239 that time out at around ten minutes or less. The 0:00:43.280 --> 0:00:47.239 whole idea was to go after a relatively untapped market, 0:00:47.600 --> 0:00:49.840 people who have a little bit of time to kill, 0:00:50.080 --> 0:00:52.199 but who don't have the ability to sit down for 0:00:52.240 --> 0:00:56.720 a full half hour or longer and watch a movie 0:00:56.840 --> 0:00:59.680 or TV show. Quibi would go after folks who might 0:00:59.680 --> 0:01:03.080 be standing in line or otherwise doing next to nothing. 0:01:03.280 --> 0:01:06.280 It would really be the smartphone crowd. Quibi would help 0:01:06.280 --> 0:01:08.480 people fill in those short gaps of the day that 0:01:08.800 --> 0:01:13.240 aren't really dedicated to something else. When Jeffrey Katzenberg first 0:01:13.240 --> 0:01:16.880 started working on the concept a couple of years before launch, 0:01:17.200 --> 0:01:20.200 it seemed like it could be a really big thing, 0:01:20.480 --> 0:01:25.960 a potential hit. But Quibi didn't count on COVID nineteen. 0:01:26.520 --> 0:01:29.319 I mean, to be fair, none of us did, and 0:01:29.360 --> 0:01:32.360 in fact, even when it was becoming more apparent, a 0:01:32.400 --> 0:01:36.920 lot of us were not giving it enough attention, and 0:01:37.040 --> 0:01:41.360 COVID nineteen would change the landscape dramatically, taking the legs 0:01:41.400 --> 0:01:44.640 out from under Quibi before it could even launch. So 0:01:44.720 --> 0:01:47.880 today I'm going to talk about Quibi, how it went 0:01:47.960 --> 0:01:51.600 from idea to service, and how the era of COVID 0:01:51.680 --> 0:01:54.840 nineteen has really messed the business plan up for the company. 0:01:55.080 --> 0:01:58.800 But let's get into the history of Quibi. Our story 0:01:58.960 --> 0:02:03.600 starts with a famous media businessman, Jeffrey Katzenberg. He was 0:02:03.640 --> 0:02:06.840 born in New York City in nineteen fifty. He attended 0:02:06.880 --> 0:02:09.560 New York University for a year and then held a 0:02:09.600 --> 0:02:12.320 series of odd jobs before being hired on in the 0:02:12.360 --> 0:02:16.920 mail room of Paramount Pictures. The CEO of Paramount was 0:02:17.840 --> 0:02:23.320 another famous movie businessman at that time, Michael Eisner. Katzenberg 0:02:23.440 --> 0:02:26.120 worked up through the mail room all the way to 0:02:26.200 --> 0:02:30.320 the position of president of the Motion Pictures and Television 0:02:30.400 --> 0:02:35.400 Production Division. When it comes to American dream stories, this 0:02:35.440 --> 0:02:39.120 one really seems to fit the bill. In nineteen eighty four, 0:02:39.520 --> 0:02:43.880 Eisner shifted over to Disney and Katzenberg joined on as 0:02:43.919 --> 0:02:47.680 a junior partner. At the time, while the company had 0:02:47.760 --> 0:02:51.400 an enormous vault of beloved movies and animation, and the 0:02:51.400 --> 0:02:55.520 theme parks were still you know, real vacation destinations, the 0:02:55.600 --> 0:03:00.240 company itself was kind of in the doldrums. Creatively speeding, 0:03:00.680 --> 0:03:04.560 Eisner and his team helped transform that. Katzenberg oversaw the 0:03:04.600 --> 0:03:09.440 animation division as well as Touchstone Pictures, the movie studio 0:03:09.480 --> 0:03:12.840 that made stuff for you know, adult audiences, and he 0:03:12.919 --> 0:03:16.600 gained a reputation for being quick to cut anything he 0:03:16.720 --> 0:03:20.520 saw as dead weight, downsizing the division in the process 0:03:20.560 --> 0:03:25.600 in order to cut costs. But his ruthless aggression worked. 0:03:26.000 --> 0:03:28.639 The division had been bringing in about three hundred and 0:03:28.639 --> 0:03:32.000 twenty million dollars in revenue before he was brought on, 0:03:32.560 --> 0:03:34.440 but by the end of his run it was close 0:03:34.520 --> 0:03:39.720 to four billion dollars. Katzenberg was good at his job. 0:03:40.160 --> 0:03:44.040 Along the way, Disney had its renaissance in animated films 0:03:44.080 --> 0:03:47.240 with releases like The Little Mermaid and Beauty and the Beast, 0:03:47.840 --> 0:03:50.400 and this seemed to be a return to the company's 0:03:50.520 --> 0:03:55.120 former animation glory. Honestly, a lot of the work Katzenberg 0:03:55.240 --> 0:03:58.560 did set the stage for the Disney that we see today, 0:03:58.960 --> 0:04:02.760 a true month of a media company that owns, you know, 0:04:03.440 --> 0:04:09.000 practically everything. Katzenberg had a massive falling out with Eisner 0:04:09.240 --> 0:04:12.640 in the mid nineties. However, the third piece of the 0:04:12.680 --> 0:04:17.520 Eisner Katzenberg puzzle was a guy named Franklin G. Wells, 0:04:17.800 --> 0:04:19.960 and he had served as the president of the Walt 0:04:20.040 --> 0:04:23.160 Disney Company since nineteen eighty four, and he was kind 0:04:23.160 --> 0:04:27.320 of a balancing force. He brought sort of a harmony 0:04:27.640 --> 0:04:31.680 with Eisner and Katzenberg, and together they made great things happen. 0:04:32.400 --> 0:04:35.680 And he also didn't report to Eisner. Eisner was the 0:04:35.680 --> 0:04:39.680 company's CEO, but you know, Wells as president, actually didn't 0:04:39.720 --> 0:04:43.000 report to him. Instead, he reported directly to the board. 0:04:43.520 --> 0:04:47.039 But in ninety four, Wells died in a helicopter accident, 0:04:47.200 --> 0:04:51.800 and things became unbalanced at the company pretty quickly. Katzenberg 0:04:51.960 --> 0:04:54.840 wanted a bigger role at the company, and he felt 0:04:54.839 --> 0:04:57.920 that Eisner was blogging him at every turn, and then 0:04:58.000 --> 0:05:01.520 he was either fired or he resigned in nineteen ninety four. 0:05:01.640 --> 0:05:05.000 The story changes depending on who's telling it, but he 0:05:05.120 --> 0:05:09.320 was definitely bitter about the whole thing, like super bitter. 0:05:09.960 --> 0:05:13.159 Not long after he resigned, in a huff or was 0:05:13.240 --> 0:05:16.320 fired again, depending on who you believe. He founded a 0:05:16.400 --> 0:05:24.400 new company with Steven Spielberg and David Geffen called DreamWorks SKG. Spielberg, Katzenberg, 0:05:24.680 --> 0:05:27.800 Geffen get it, and it would be a new animation 0:05:27.960 --> 0:05:31.880 and live action film studio. Katzenberg was determined to repeat 0:05:31.880 --> 0:05:34.600 the success he had at Disney and then beat them 0:05:34.600 --> 0:05:37.760 at their own game. If you've seen the film Shrek, 0:05:38.320 --> 0:05:41.880 you will have seen some of Katzenberg's bitterness built right 0:05:42.000 --> 0:05:44.560 into the movie. The movie has a sequence in which 0:05:44.800 --> 0:05:48.040 the villain's plans for an amusement park that lampoons the 0:05:48.080 --> 0:05:51.640 Disney theme parks plays a role, and it was definitely 0:05:51.680 --> 0:05:57.560 a jab at Disney. Very mature anyway. DreamWorks produced several 0:05:57.640 --> 0:06:02.120 hit films, though I would argue they aren't quite the 0:06:02.200 --> 0:06:06.039 classics of the Disney Renaissance animated films, but that's a 0:06:06.080 --> 0:06:10.400 discussion for a totally different podcast. A decade later, DreamWorks 0:06:10.440 --> 0:06:13.479 spun off the animation division as its own subsidiary called, 0:06:13.720 --> 0:06:18.800 fittingly enough, DreamWorks Animation. Katzenberg was at the helm. Katzenberg 0:06:18.920 --> 0:06:22.680 was also an executive at the live action DreamWorks company 0:06:22.839 --> 0:06:26.000 at least until Paramount Pictures you know, Katzenberg's old employer 0:06:26.480 --> 0:06:30.719 purchased it in twentyd and six. In twenty fourteen, twenty 0:06:30.920 --> 0:06:35.119 years after he founded the original DreamWorks company, Katzenberg sold 0:06:35.120 --> 0:06:38.680 the animation studio to NBC Universal for three point eight 0:06:38.839 --> 0:06:43.159 billion dollars. Now Katzenberg was already extremely wealthy, but he 0:06:43.240 --> 0:06:46.159 took home a few hundred million from that sale, and 0:06:46.200 --> 0:06:49.160 then he jumped into his next venture. To do that, 0:06:49.440 --> 0:06:54.040 he first established a holding company in twenty seventeen called Wonderco. 0:06:54.360 --> 0:07:00.479 It's a WndrCo. Through this company, he could establish other 0:07:00.600 --> 0:07:05.000 ventures that you know, actually do things. Holding companies typically 0:07:05.040 --> 0:07:08.280 only exist to own other companies, and it all has 0:07:08.320 --> 0:07:11.800 to do with money and taxes and leadership, hierarchies and stuff. 0:07:12.000 --> 0:07:14.680 I don't want to go into it. Quibi would become 0:07:14.880 --> 0:07:18.200 one of the earliest ventures of this holding company, though 0:07:18.200 --> 0:07:21.320 at the time it had a different name, New TV. 0:07:22.280 --> 0:07:24.920 That was always intended to be something of a placeholder, 0:07:25.240 --> 0:07:27.880 and the idea was to create a video streaming service 0:07:28.000 --> 0:07:31.840 aimed at young adults who were increasingly relying on smartphones 0:07:31.880 --> 0:07:37.240 to access everything. The opportunity seemed fairly obvious create a 0:07:37.360 --> 0:07:42.560 service designed for smartphone users with short form content. Katzenberg 0:07:42.600 --> 0:07:46.040 would make sure that the content was studio level quality, 0:07:46.200 --> 0:07:49.720 with big names attached both to starin and direct or 0:07:49.760 --> 0:07:52.760 produce the shows, but the stories would be designed to 0:07:52.760 --> 0:07:56.360 play out in the time it takes to say wait 0:07:56.400 --> 0:07:59.560 in a line to order at Starbucks, or write a 0:07:59.600 --> 0:08:02.920 subway train or whatever. They would fill a niche that 0:08:03.000 --> 0:08:07.880 other services didn't quite hit. Stuff on Amazon or Hulu 0:08:07.960 --> 0:08:11.360 or Netflix was long form for the most part, requiring 0:08:11.440 --> 0:08:15.000 longer viewing times, and the short form stuff on services 0:08:15.040 --> 0:08:18.920 like YouTube tends to be a few or sometimes several 0:08:19.080 --> 0:08:23.040 steps below studio quality productions, so it seemed like a 0:08:23.160 --> 0:08:26.400 pretty solid bid. There were a lot of things Katzenberg 0:08:26.520 --> 0:08:29.040 was going to need to do to make this idea 0:08:29.120 --> 0:08:31.760 into a real business. He was going to need investment 0:08:31.800 --> 0:08:33.840 money to get the ball rolling, he was going to 0:08:33.840 --> 0:08:36.199 need someone to serve as the leader of the business, 0:08:36.640 --> 0:08:39.000 a CEO for the company, and he was going to 0:08:39.040 --> 0:08:43.040 need to establish agreements with studios and filmmakers to produce 0:08:43.080 --> 0:08:45.760 content for the service and advertisers to support it. So 0:08:46.360 --> 0:08:49.080 while new TV would spring up as an idea in 0:08:49.160 --> 0:08:52.240 twenty seventeen, it would take a little bit longer to 0:08:52.280 --> 0:08:55.680 become a reality. Now. One of those three tasks finding 0:08:55.679 --> 0:08:59.200 a leader, Katzenberg would check off in early twenty eighteen. 0:08:59.800 --> 0:09:03.880 Lead would be Meg Whitman, another famous entrepreneur in tech, 0:09:04.320 --> 0:09:07.319 so we need to hear a bit about her story 0:09:07.360 --> 0:09:11.080 as well. Whitman was born in nineteen fifty six in 0:09:11.160 --> 0:09:13.400 Long Island, New York, so we got a couple of 0:09:13.400 --> 0:09:17.480 New Yorkers here. She attended Princeton and Harvard. She earned 0:09:17.520 --> 0:09:20.880 a master's degree in business administration, and then she went 0:09:20.920 --> 0:09:23.800 to work for Procter and Gamble in the brand management 0:09:23.800 --> 0:09:27.920 division in nineteen seventy nine. She got married and relocated 0:09:27.960 --> 0:09:31.520 to California in nineteen eighty one and joined the consulting 0:09:31.559 --> 0:09:36.680 firm Bain and Company, where presumably she fought Batman. Wait, 0:09:36.760 --> 0:09:40.200 I'm I'm sorry, I'm being told this is a different bane. 0:09:40.880 --> 0:09:44.880 It's spelled differently in everything. Okay, that's my bad. In 0:09:44.960 --> 0:09:48.280 nineteen eighty nine, she became the senior vice president of 0:09:48.400 --> 0:09:52.600 marketing of consumer products over at the Walt Disney Company. 0:09:53.080 --> 0:09:55.760 So from eighty nine to ninety two she worked as 0:09:55.800 --> 0:09:59.360 an executive at the same company as Katzenberg, though they 0:09:59.360 --> 0:10:02.280 were in very diff diferent divisions of that company, Katzenberg 0:10:02.320 --> 0:10:05.320 over in the studio side and Whitman over on a 0:10:05.360 --> 0:10:08.960 strategic planning side. Whitman did say that part of her 0:10:09.000 --> 0:10:12.600 job was to keep people like Katzenberg contained inside a box, 0:10:12.880 --> 0:10:16.480 and Katzenberg hated that that was in an interview that 0:10:16.520 --> 0:10:19.439 they gave it south by Southwest in twenty nineteen. From 0:10:19.520 --> 0:10:21.960 ninety two to ninety eight, she worked as an executive 0:10:22.040 --> 0:10:25.000 or leader of a few different companies, including some that 0:10:25.080 --> 0:10:28.920 were difficult to manage. In nineteen ninety eight, a headhunter 0:10:29.040 --> 0:10:32.720 approached her about joining a new startup called eBay, and 0:10:32.800 --> 0:10:35.640 it took some convincing, but she eventually agreed to be 0:10:35.880 --> 0:10:38.800 the company's president and CEO. Now at that point when 0:10:38.840 --> 0:10:42.680 she joined, eBay had about thirty employees. By the time 0:10:42.720 --> 0:10:45.120 Whitman left the company in two thousand and eight, the 0:10:45.240 --> 0:10:48.520 number was closer to fifteen thousand. She had seen the 0:10:48.520 --> 0:10:52.560 company grow tremendously and kept it afloat even after the 0:10:52.600 --> 0:10:55.000 dot com bubble burst in two thousand and two thousand 0:10:55.040 --> 0:10:58.320 and one. Oh And also while at eBay, Whitman would 0:10:58.440 --> 0:11:02.520 join the board of directors of drum Roll Please dream Works, 0:11:02.960 --> 0:11:06.679 bringing her back along with Kabzenberg after retiring from eBay, 0:11:06.880 --> 0:11:09.840 Whitman turned her hand to politics. She ran for governor 0:11:09.880 --> 0:11:13.520 of California in two thousand and eight and spent millions 0:11:13.640 --> 0:11:16.680 of dollars, including an enormous amount of her own money, 0:11:16.920 --> 0:11:20.319 on her campaign. She actually broke the record for campaign 0:11:20.400 --> 0:11:23.320 spending in the United States. In the process. She got 0:11:23.360 --> 0:11:27.800 the Republican nomination for governor, but ultimately lost the election 0:11:27.960 --> 0:11:31.640 to Jerry Brown. In twenty eleven, she joined the Hewitt 0:11:31.679 --> 0:11:34.760 Packard board of directors and became the president and CEO 0:11:34.960 --> 0:11:38.040 of the company. Four years later, she was in charge 0:11:38.080 --> 0:11:41.680 when HP split into two separate companies. One of those 0:11:41.800 --> 0:11:46.480 was HP Incorporated, which encompassed the consumer products division like 0:11:46.559 --> 0:11:50.400 printers and computers, and the other was Hewitt Packard Enterprise, 0:11:50.480 --> 0:11:53.440 which is a business to business company offering products and 0:11:53.480 --> 0:11:57.640 services to corporate customers. Whitman made the move over to 0:11:57.840 --> 0:12:01.800 HP Enterprise and served as CEO until she announced her 0:12:01.840 --> 0:12:05.400 retirement in November twenty seventeen, although she wouldn't actually step 0:12:05.520 --> 0:12:09.880 down until the following February. In late January twenty eighteen, 0:12:10.280 --> 0:12:13.880 news broke that Meg Whitman would become the head of 0:12:14.000 --> 0:12:18.520 Katzenberg's new media company, then known as new TV, and 0:12:18.559 --> 0:12:21.640 she would also be the first official employee of that 0:12:21.720 --> 0:12:26.360 company and officially started work in March twenty eighteen. Katzenberg 0:12:26.360 --> 0:12:28.719 would serve as chairman of the board and a bit 0:12:28.720 --> 0:12:32.319 of a busy body. At that same time, news outlets 0:12:32.320 --> 0:12:35.600 were reporting that this fledgling startup had a pretty massive 0:12:35.679 --> 0:12:40.000 goal for raising investments to the tune of two billion 0:12:40.120 --> 0:12:44.760 with a b dollars a princely sum. We call startups 0:12:44.760 --> 0:12:49.319 that reach evaluation of a billion dollars unicorns. Katzenberg was 0:12:49.360 --> 0:12:52.280 looking to make new TV a unicorn right out of 0:12:52.280 --> 0:12:55.680 the gate, and this is probably something that I should 0:12:55.720 --> 0:13:00.160 cover for a second. Valuing a startup is a very 0:13:00.200 --> 0:13:04.680 tricky thing, largely because startups frequently can go months or 0:13:04.880 --> 0:13:08.760 years before having any real means of generating revenue, so 0:13:09.080 --> 0:13:12.880 they stay in business by raising investments over and over again. 0:13:13.120 --> 0:13:16.480 A brand new company may have nothing to sell, which 0:13:16.520 --> 0:13:19.640 means there's no way for money to come into the business, 0:13:19.880 --> 0:13:21.480 and the goal is to get to a point where 0:13:21.559 --> 0:13:25.280 you're either bringing in revenue, or more specifically, you're bringing 0:13:25.280 --> 0:13:28.360 in enough revenue to both cover all of your operating 0:13:28.400 --> 0:13:31.480 expenses and still have some leftover. You know what, we 0:13:31.520 --> 0:13:34.800 would call profits, But a lot of startups have no 0:13:35.000 --> 0:13:37.280 means of bringing in revenue right away. They may be 0:13:37.360 --> 0:13:41.240 based around an idea that is compelling and exciting and 0:13:41.360 --> 0:13:44.120 that could potentially bring in a lot of revenue down 0:13:44.160 --> 0:13:46.679 the line, but it will take time to execute upon that. 0:13:46.760 --> 0:13:50.080 In the meantime, the startups still have operating expenses. They 0:13:50.080 --> 0:13:53.240 have to pay employees and spend money on office space 0:13:53.320 --> 0:13:56.000 and stuff like that. So the challenge for a startup 0:13:56.080 --> 0:13:58.760 is to convince investors that the idea is solid and 0:13:58.800 --> 0:14:00.800 a money maker in the long run, and that the 0:14:00.840 --> 0:14:03.640 people in charge are capable of taking that idea and 0:14:03.679 --> 0:14:06.920 making it a reality. The investors can pour enough money 0:14:06.920 --> 0:14:09.720 into the startup to foot the bill for operating expenses, 0:14:10.160 --> 0:14:12.199 banking on the bet that this will pay off in 0:14:12.240 --> 0:14:14.200 the long run and that they will get a big 0:14:14.240 --> 0:14:18.240 return on their initial investment. Or they could just really 0:14:18.320 --> 0:14:21.160 hope that the company gets bought up by a larger 0:14:21.280 --> 0:14:23.760 entity and everyone gets a big payout just for coming 0:14:23.840 --> 0:14:26.760 up with a really cool idea. A media company in 0:14:26.800 --> 0:14:31.400 particular is a really expensive endeavor, especially one that's aimed 0:14:31.440 --> 0:14:36.560 at producing original and exclusive, highly produced content. So while 0:14:36.600 --> 0:14:40.680 two billion dollars is a truly enormous amount of money. 0:14:40.840 --> 0:14:45.000 It was also not exactly an unrealistic need. If New 0:14:45.040 --> 0:14:48.160 TV was going to launch a new streaming service with 0:14:48.240 --> 0:14:52.239 a broad variety of original programming, much of its studio 0:14:52.440 --> 0:14:57.240 quality production, and backed by known entities in the entertainment industry, 0:14:57.440 --> 0:14:59.960 it was going to cost a lot before the service 0:15:00.160 --> 0:15:03.800 ever became available for customers, and so Whitman and Katzenberg 0:15:04.240 --> 0:15:06.880 began to have a lot of meetings with potential investors, 0:15:07.280 --> 0:15:11.120 and those meetings paid off. I'll explain more after this 0:15:11.320 --> 0:15:23.560 short break. The temporary digs for new TV slash Quibi 0:15:24.160 --> 0:15:27.200 was in a shared working space in Los Angeles owned 0:15:27.200 --> 0:15:31.400 by Serendipity Labs. Coworking spaces are a topic that I 0:15:31.400 --> 0:15:34.600 should probably tackle at some point, though it's really only 0:15:34.680 --> 0:15:38.320 tangentially related to technology. It served as a base of 0:15:38.360 --> 0:15:41.360 operations for doing the legwork of getting investments and interviewing 0:15:41.360 --> 0:15:45.000 potential team members, and it was only temporary. Later on 0:15:45.040 --> 0:15:47.840 they would move into what has been described as lavishly 0:15:48.440 --> 0:15:54.160 decorated and expansive headquarters now according to Variety, by August 0:15:54.280 --> 0:15:58.920 twenty eighteen, the company had fewer than ten employees, and 0:15:59.000 --> 0:16:02.520 Meg Whitman said that she and Jeffrey Katzenberg spent half 0:16:02.560 --> 0:16:06.000 to three fourths of their time interviewing potential executives to 0:16:06.080 --> 0:16:10.280 join the group. While the streaming media landscape wasn't as 0:16:10.480 --> 0:16:14.760 ludicrously crowded in twenty eighteen as it is today, launching 0:16:14.800 --> 0:16:18.160 a brand new competitor at that time with original programming 0:16:18.280 --> 0:16:22.040 and no major established brand behind it like Disney or 0:16:22.160 --> 0:16:26.720 HBO was a pretty gutsy move. When Katzenberg and Whitman 0:16:26.800 --> 0:16:30.240 started looking for investors, I'm sure they frequently had to 0:16:30.240 --> 0:16:33.040 dismiss the argument that their service would have to compete 0:16:33.040 --> 0:16:39.040 against Netflix, Amazon Prime, Hulu, CBS All Access, YouTube, Premium, 0:16:39.280 --> 0:16:43.400 HBO Now, not to mention numerous other services. But their 0:16:43.440 --> 0:16:47.320 sales pitch was that this new service would really focus 0:16:47.360 --> 0:16:49.800 on the mobile market. The content would be made with 0:16:50.000 --> 0:16:53.400 smartphone users in mind from the beginning, not just in 0:16:53.480 --> 0:16:56.200 the length of content, but in the actual way it 0:16:56.240 --> 0:16:59.000 shows up on screen. It was going to be optimized 0:16:59.160 --> 0:17:02.680 for the mobile experience. As long as the content was 0:17:02.760 --> 0:17:06.520 good and the experience was compelling, they argued, it would work. 0:17:06.960 --> 0:17:09.480 It would scratch an itch that people had, even if 0:17:09.520 --> 0:17:12.000 they didn't know they had it, and it wouldn't require 0:17:12.119 --> 0:17:15.479 viewers to break up a movie or show into smaller chunks, 0:17:16.040 --> 0:17:18.439 because that had already been done for them. The content 0:17:18.480 --> 0:17:22.160 on the service would already be in those small chunks. Still, 0:17:22.480 --> 0:17:24.760 it had to be a tough sell. And heck, it's 0:17:24.800 --> 0:17:28.439 not like no one had ever tried something like this. Already, 0:17:28.800 --> 0:17:32.359 Verizon had spent more than a billion dollars launching a 0:17:32.400 --> 0:17:36.880 service called Go ninety. This service included original short form 0:17:36.960 --> 0:17:41.439 videos as well as licensed content from network television. The 0:17:41.520 --> 0:17:44.399 service was free to Verizon users, with the idea that 0:17:44.480 --> 0:17:47.080 advertisers would leap to be part of a service that 0:17:47.200 --> 0:17:49.480 was marketed to twenty five to thirty five year olds, 0:17:49.880 --> 0:17:52.640 and that's what would bring in revenue since these folks 0:17:52.720 --> 0:17:55.280 were spending more and more time on their phones. The 0:17:55.320 --> 0:17:59.240 only problem was it flopped. Verizon pulled the plug in 0:17:59.280 --> 0:18:02.320 the summer of twenty eighteen, and that I'm sure made 0:18:02.440 --> 0:18:05.840 Quibi's business case even harder to sell now if it 0:18:05.880 --> 0:18:08.520 weren't for the fact that you had the pairing of Katzenberg, 0:18:08.560 --> 0:18:11.600 who had spent his entire professional career in media and 0:18:11.720 --> 0:18:15.119 much of it in leadership positions, and Whitman, who had 0:18:15.160 --> 0:18:18.760 gained notoriety for taking a small internet startup into a 0:18:18.800 --> 0:18:23.560 publicly traded, enormous company. I don't think new TV would 0:18:23.600 --> 0:18:27.479 have received an enthusiastic reception among investors, but the pair's 0:18:27.560 --> 0:18:31.240 expertise and business acumen were undeniable, and the list of 0:18:31.280 --> 0:18:35.320 investors grew relatively quickly. That list included a lot of 0:18:35.440 --> 0:18:39.320 established media companies. In fact, all the major studios would 0:18:39.320 --> 0:18:46.560 become investors, so that included companies like Sony, Viacom, WarnerMedia, MGM, Lionsgate, 0:18:46.640 --> 0:18:51.840 and even Katzenberg's old target, Disney. In addition, there were 0:18:51.880 --> 0:18:55.480 other companies investing as well, such as Liberty Global and 0:18:55.640 --> 0:18:59.879 Ali Baba. All told, the first round of venture capital funding, 0:19:00.040 --> 0:19:03.920 which closed on July thirty first, twenty eighteen, raised around 0:19:04.080 --> 0:19:08.560 one billion dollars, pretty impressive for a business that had 0:19:08.600 --> 0:19:12.240 no product yet. In addition to that money, the holding 0:19:12.320 --> 0:19:16.560 company Wanderco, had secured seven hundred and fifty million dollars 0:19:16.560 --> 0:19:20.080 of its own Now, that was not just for new TV, 0:19:20.320 --> 0:19:23.960 though Variety reported that quote a good portion end quote 0:19:24.040 --> 0:19:27.480 of it was going into the venture. It wasn't quite 0:19:27.520 --> 0:19:30.000 two billion dollars, but my goodness, it was a lot 0:19:30.040 --> 0:19:35.440 of money. Wonderco would be quote a significant shareholder end quote, 0:19:35.480 --> 0:19:39.920 but not a majority shareholder in this company. Katzenberg was 0:19:39.960 --> 0:19:43.520 playing KOI with evaluation of New TV. He declined to 0:19:43.560 --> 0:19:48.080 disclose how the company was being valued, at least publicly. 0:19:48.680 --> 0:19:51.160 The biggest investor of the group was actually a firm 0:19:51.240 --> 0:19:54.439 called Madrone Capital, which was headed by the chairman of 0:19:54.520 --> 0:19:58.840 the Walmart chain of stores, Greg Penner. One decision the 0:19:58.920 --> 0:20:01.320 leaders made early on was that new TV was not 0:20:01.359 --> 0:20:05.119 going to produce content itself. Instead, it was going to 0:20:05.200 --> 0:20:10.160 partner with established entertainment producers and license programming from them. 0:20:10.400 --> 0:20:13.800 Through these licensing agreements, new TV would cover the costs 0:20:13.880 --> 0:20:16.959 of production plus some and it also meant that new 0:20:17.000 --> 0:20:19.719 TV would have a lot of different entities producing content 0:20:19.800 --> 0:20:22.560 for the platform that would help the company avoid having 0:20:22.640 --> 0:20:26.600 a production bottleneck. Katzenberg said in interviews that to have 0:20:26.640 --> 0:20:31.040 a successful launch, the service would need a lot of content, 0:20:31.119 --> 0:20:33.560 and not just a big quantity of it, but a 0:20:33.640 --> 0:20:36.639 variety of content as well. To appeal to a broad 0:20:36.680 --> 0:20:40.600 spectrum of audiences. Some folks might be big fans of action, 0:20:40.840 --> 0:20:44.840 while others prefer horror or comedy or and I hate 0:20:44.920 --> 0:20:49.119 to use this phrase, reality television. I'm something of a 0:20:49.160 --> 0:20:52.080 snob in that regard, not to mention, you know, I 0:20:52.160 --> 0:20:55.359 worked for a company that made reality television stuff, so 0:20:55.480 --> 0:20:58.040 I had a chance to see, you know how totally 0:20:58.080 --> 0:21:03.600 not real. It can get enough editorializing. Katzenberg also stated 0:21:03.760 --> 0:21:06.600 that the licensing deal they had in place was quote 0:21:06.800 --> 0:21:11.080 highly highly appealing into quote to entertainment studios. Now, I 0:21:11.119 --> 0:21:13.879 don't know any of the details of those deals, like 0:21:14.080 --> 0:21:17.000 whether or not there's an expiration on the license, meaning, 0:21:17.200 --> 0:21:20.480 you know, some content might eventually disappear off the platform. 0:21:20.880 --> 0:21:24.119 If you've got a Netflix subscription, you're probably familiar with 0:21:24.160 --> 0:21:27.359 this trend. Honestly, I'm still upset that the sketch show 0:21:27.480 --> 0:21:32.320 that Mitchell and weblook disappeared from US Netflix streaming. But anyway, 0:21:32.560 --> 0:21:36.280 Vulture reported that the deals typically included the cost of 0:21:36.320 --> 0:21:41.520 production plus another twenty percent, so that's not bad. Now. 0:21:41.560 --> 0:21:44.399 At this point, the venture was still called new TV, 0:21:44.560 --> 0:21:46.199 and the plan was to launch by the end of 0:21:46.200 --> 0:21:50.320 twenty nineteen. That would mean building out the infrastructure, building 0:21:50.400 --> 0:21:54.320 the app itself, securing the cloud services, or building them. 0:21:54.359 --> 0:21:56.920 But my guess is that Quibi relies on a major 0:21:57.040 --> 0:22:00.719 vendor to host the actual service, licensing all the content 0:22:00.800 --> 0:22:03.840 for launch, figuring out the marketing strategy, and getting those 0:22:03.920 --> 0:22:08.080 advertising deals in place. As for revenue, that was really 0:22:08.119 --> 0:22:11.679 something that Whitman and Katzenberg actually had concrete plans for, 0:22:11.840 --> 0:22:14.800 which is a nice change of pace with startups. Typically, 0:22:14.800 --> 0:22:17.160 when I do talk about startups, the details around how 0:22:17.200 --> 0:22:19.720 the company is actually going to make money get a 0:22:19.720 --> 0:22:22.280 little fuzzy. In fact, I suspect a lot of startup 0:22:22.320 --> 0:22:24.400 founders are just hoping that a bigger fish is going 0:22:24.440 --> 0:22:27.800 to come along and scoop up their company, buying it 0:22:27.840 --> 0:22:30.760 for a ridiculous amount of money, and then some bigger 0:22:30.800 --> 0:22:33.520 companies then saddled with a service that might not ever 0:22:33.600 --> 0:22:37.080 even generate revenue. But this was not one of those cases. 0:22:37.359 --> 0:22:40.000 From the start, the plan was to offer two tiers 0:22:40.119 --> 0:22:43.800 of subscription service. One would be an advertising light option, 0:22:44.400 --> 0:22:47.879 kind of similar to how Hulu operates, where the subscription 0:22:47.960 --> 0:22:51.680 fees would be subsidized by in app advertising. It would 0:22:51.680 --> 0:22:56.639 happen in between those short videos. The second option was 0:22:56.680 --> 0:22:59.840 to be an advertising free plan, in which subscribers would 0:22:59.840 --> 0:23:02.840 pay a little bit more but would be spared ads. 0:23:03.560 --> 0:23:07.360 Generally speaking, Whitman said her job was to focus on 0:23:07.560 --> 0:23:12.280 business strategy, well, Katzenberg would spend his efforts on securing content, 0:23:12.960 --> 0:23:16.760 and they must have been working pretty darn hard. Whitman 0:23:16.880 --> 0:23:20.159 told the press that new TV was merely a placeholder 0:23:20.240 --> 0:23:22.760 name and that they would soon announce a new official 0:23:22.840 --> 0:23:26.560 name for the service, and sure enough, in October twenty eighteen, 0:23:26.840 --> 0:23:31.280 the new name was launched. New TV officially became Quibi. 0:23:31.840 --> 0:23:36.159 Now the word quibi Quibi is a combination of the 0:23:36.240 --> 0:23:39.840 words quick and bite, because that's what the content on 0:23:39.880 --> 0:23:43.040 the service is all about, quick bites of content, whether 0:23:43.119 --> 0:23:46.840 it's drama or comedy or whatever. Around that same time, 0:23:47.240 --> 0:23:50.840 Katzenberg announced that filmmaker Guillema del Toro, who has made 0:23:50.840 --> 0:23:55.159 some truly phenomenal films that I adore, would be making 0:23:55.200 --> 0:24:00.000 some sort of zombie story. Sam Raimi, another filmmaker who's 0:24:00.119 --> 0:24:03.360 work I love, would be producing a horror anthology called 0:24:03.440 --> 0:24:07.560 Fifty States of Fright, about folklore and urban legends in 0:24:07.680 --> 0:24:11.040 the States of the United States. Jason Blum also had 0:24:11.080 --> 0:24:14.159 a project announced, so at least when it came to horror, 0:24:14.240 --> 0:24:18.160 Quibi was shaping up nicely. But while various productions may 0:24:18.200 --> 0:24:22.439 have begun, there wasn't anything to show off yet just 0:24:22.680 --> 0:24:27.640 the idea, which admittedly sounded pretty interesting. I mean, whenever 0:24:27.720 --> 0:24:31.440 anyone has more than a moment of nothing that's going on, 0:24:31.840 --> 0:24:35.320 they tend to whip out their phone. Creating content specifically 0:24:35.320 --> 0:24:38.639 to entertain people who do that sort of thing makes sense, 0:24:39.160 --> 0:24:42.920 and grabbing big names in entertainment would help raise Quibi's 0:24:42.960 --> 0:24:45.480 profile as well as act as a great draw for 0:24:45.600 --> 0:24:49.400 curious fans. At least that was the idea. In twenty nineteen, 0:24:49.640 --> 0:24:53.359 Whitman and Katzenberg were still making the rounds at various conferences, 0:24:53.480 --> 0:24:57.359 talking up the service and announcing new content partners and projects. 0:24:57.800 --> 0:25:01.760 At south By Southwest in twenty nineteen, Hey, you guys 0:25:01.800 --> 0:25:05.199