Why Quibi Burned $1.75 Billion in Six Months

quibi raised $1,750,000,000 and it shut down six months later last week we talked about pets.com burning through cash in the com bust but honestly this makes that look like a campfire this was a supernova of bad ideas and here's the thing everyone gets wrong they blame the pandemic jeffrey katzenberg the founder literally said i attribute everything that has gone wrong to coronavirus no just no that's the easy answer it's the excuse you give investors when you don't want to admit the truth the pandemic was the final nail in the coffin sure but the coffin was already built paid for and waiting the real problem was so much simpler and so much more embarrassing quibi was

and i'm quoting an entrepreneurship professor here a solution without a problem think about it you have jeffrey katzenberg the guy from dreamworks and meg whitman the former ceo of hp two absolute titans from their respective fields they raised nearly $2,000,000,000 from disney nbc universal all the big players and their grand idea premium short form video ten minute episodes of high budget shows made exclusively for your phone the bet was that you watch this stuff on your commute in line for coffee those in between moments they even built this fancy turnstile tech so the video would flip perfectly between portrait and landscape sounds slick right but they missed the most important question you can possibly ask

does anyone actually want this they never checked they just assumed they assumed you were tired of free viral user generated stuff on tiktok and youtube and were secretly desperate to pay $8 a month for a chopped up movie you could only watch on your phone they were wrong catastrophically wrong the problem they were solving didn't exist the people were perfectly happy with the free options so the core idea was flawed but what's truly stunning is how every single decision they made after that just made things worse it's like they were actively trying to fail first the product itself was a fortress you remember how you couldn't watch it on your tv no chromecast no airplay

no web browser just your phone so when the pandemic hit in april 2020 right at launch and everyone was stuck at home on their couches their entire use case evaporated overnight everyone was watching netflix on their 55 inch tvs and quibi was still screaming look at us on your tiny screen but here's the part that is just professional malpractice at launch they blocked screenshots they prevented you from sharing clips on social media in a world where virality is everything where tiktok and instagram run on shared moments quibi put up a wall they spent hundreds of millions on content and then made it impossible for anyone to talk about

it or show it to their friends it's like opening a restaurant and forbidding your customers from telling anyone if the food is good it's just baffling it shows a fundamental misunderstanding of how the internet actually works this wasn't a hollywood movie premiere it was a digital content platform the rules are different and the leadership oh the leadership you had a hollywood guy and a corporate hardware ceo trying to build a digital native media company reports of infighting were constant with whitman apparently threatening to quit at one point they were insiders in their old worlds but complete outsiders in the one they were trying to conquer they poured money into production value thinking that's what mattered

when their real competition was a teenager dancing in their bedroom on tiktok they were fighting the wrong war with the wrong weapons so what does it all add up to you have a product nobody asked for built in a way that prevented it from being discovered launched at the exact moment its only theoretical use case disappeared and run by people who didn't understand the market they were in the one and i mean one smart thing they did was shut it down fast six months most failed startups linger for years burning through the last of their cash pretending a pivot is just around the corner katzenberg and whitman saw the writing on the wall admitted defeat

and returned the remaining $350,000,000 to their investors failing fast is a virtue it's the least damaging way to be wrong but the real lesson here isn't about failing fast it's about the arrogance of assumptions they had $1,750,000,000 and two of the biggest names in business and all of it was built on a single unverified guess about human behavior they bet the entire farm on the idea that you wanted to pay for short form premium video on your phone and they lost so the next time you see a startup launch with a ton of celebrity hype massive funding and a slick presentation but no clear answer to the question who is this for and why would

they use it be skeptical because no amount of money or star power can create demand that isn't there quibi proved that in the most expensive spectacular way possible and that's a lesson worth way more than the $0 their platform is worth today