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Daily Crunch: Roku buys Quibi’s content library
Quibi’s content will live on, Hyundai may partner with Apple and Donald Trump returns to Twitter. This is your Daily Crunch for January 8, 2021.
The big story: Roku buys Quibi’s content library
If you’re wondering what will happen to Quibi shows like “Most Dangerous Game” and “Chrissy Court,” wonder no longer: They’re going to Roku.
The streaming TV platform announced today that it has acquired the global rights to Quibi’s content library, which it plans to bring to The Roku Channel, free and ad-supported, some this year. This includes “more than a dozen” shows that never got a chance to stream on Quibi before the app shut down.
“The most creative and imaginative minds in Hollywood created groundbreaking content for Quibi that exceeded our expectations,” said Quibi founder Jeffrey Katzenberg in a statement. “We are thrilled that these stories, from the surreal to the sublime, have found a new home on The Roku Channel.”
The tech giants
Shares of Hyundai Motor Co. climb more than 20% on potential EV deal with Apple — Hyundai said discussions are still in the “early stage.”
Google’s plan to replace tracking cookies goes under UK antitrust probe — U.K.’s Competition and Markets Authority said it’s investigating “suspected breaches of competition law by Google.”
Trump returns to Twitter with what sounds like a concession speech — President Trump only had to wait 12 hours before returning to his social network of choice.
Startups, funding and venture capital
Jobandtalent tops up with $108M for its ‘workforce as a service’ platform — The startup operates a dual-sided platform that connects temp workers with employers.
Detroit’s Ludlow Ventures goes for fund four — The Detroit-based seed-stage firm is in the process of closing its fourth fund of $65 million.
Jumbotail raises $14.2M for its wholesale marketplace in India — Jumbotail said it serves more than 30,000 neighborhood stores, popularly known in India as kiranas.
Advice and analysis from Extra Crunch
VCs discuss gaming’s biggest infrastructure investment opportunities in 2021 — Investors highlighted numerous areas for new opportunity, including specialized engines, next-gen content creation platforms and tools to port desktop experiences to mobile.
What is up with Tesla’s value? — And a bunch of other stocks, for that matter.
The Roblox Gambit — So it turns out that Roblox is worth $29.5 billion.
(Extra Crunch is our membership program, which aims to democratize information about startups. You can sign up here.)
Everything else
Stolen computers are the least of the government’s security worries — The SolarWinds breach is likely to be a bigger cybersecurity threat than any computers stolen during the pro-Trump riot on Wednesday.
Five reforms necessary to create a truly cashless society — Convenience shouldn’t come at the cost of other aspects of commerce.
The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.
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Roku acquires Quibi’s content
Quibi is dead, but its shows will live on.
The Wall Street Journal reported last week that Roku was in talks to acquire the short-form video service’s content. And this morning, Roku announced that it has indeed reached a deal for the exclusive distribution rights to all of Quibi’s programs.
Financial terms of the acquisition were not disclosed.
Roku said it will make this content available for free with ads on The Roku Channel. That doesn’t just include the shows that were previously available on Quibi, but also “more than a dozen” programs making “their exclusive debut on The Roku Channel” — in other words, they were created for the service but unreleased due to the app’s shutdown.
“Today’s announcement marks a rare opportunity to acquire compelling original content that features some of the biggest names in entertainment,” said Roku’s vice president of programming Rob Holmes in a statement. “We’re excited to make this content available to our users in The Roku Channel through an ad-supported model. We are also thrilled to welcome the incredible studios and talented individuals who brought these stories to life and showcase them to our tens of millions of users.”
While Roku is best known for its streaming TV devices and software, advertising is a growing part of its business. And it says The Roku Channel (which offers both free content and subscription channels) reached 61.8 million U.S. viewers in the fourth quarter of last year.
Quibi, meanwhile, announced its shutdown in October, just six months after its splashy launch. The service was focused on creating video episodes that lasted 10 minutes or less and were designed for viewing on-the-go — a poor fit for a period of pandemic and lockdowns.
In their farewell note, executives Jeffrey Katzenberg and Meg Whitman suggested that the service failed due to a combination of bad timing and the fact that “the idea itself wasn’t strong enough to justify a standalone streaming service.”
“The most creative and imaginative minds in Hollywood created groundbreaking content for Quibi that exceeded our expectations,” Katzenberg said in today’s announcement. “We are thrilled that these stories, from the surreal to the sublime, have found a new home on The Roku Channel.”
It’s also worth noting that the service was initially focused entirely on mobile viewing, with no way to watch the shows on smart TVs. That eventually changed, starting with the addition of AirPlay support. Now, with the Roku acquisition, it seems that shows designed to be watched on your smartphone will instead be viewed primarily on your TV.
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Remembering the startups we lost in 2020
Even in a non-hell year, running a successful startup is a tremendous lift. After the events of 2020, however, no doubt many already lean businesses are hanging on by the skin of their teeth. For every company that saw increased interest in their offerings during the pandemic, there were several that simply couldn’t make it through the finish line.
We’ve put this list together for several years now. It’s not a fun task, but it seems worthwhile to commemorate the startups that have closed up shop over the past 12 months. (Some of them were acquired by larger companies before shutting down, but all of them began their life as startups, and it still felt worthwhile to mark the end of their stories.) It also offers an opportunity to examine those issues from a bit of distance to see if there are any broader takeaways for the community at large.
This year’s list is among the most diverse we’ve done, ranging from standard smaller-name closures to big blockbuster crashes like Quibi and Essential . For some, the pandemic was the final nail in the coffin, but in many cases, cracks in business models were already starting to surface well before COVID-19 ground the global economy to a screeching halt.
Total Raised: $75 million
Atrium, a 100-person legal tech startup founded by Justin Kan, shut down in March after failing to find an efficient way to replace the arduous systems of law firms. The startup even returned some of its $75.5 million in funding to its investors, including Andreessen Horowitz.
The shutdown comes after the platform had pivoted just months earlier, laying off in-house lawyers and turning into a clearer SaaS play. Ultimately, Atrium’s failure shows how difficult and unprofitable it could be to disrupt a traditional and complicated system.
The closure came just three years after it launched with the goal to build software for startups to navigate fundraising, hiring, acquisition deals and collaboration with their legal team.
Total Raised: $330 million
Image Credits: Darrell Etherington
Big plans, big names and a boatload of money should have been enough to buy Essential a lengthy runway. Sure, Essential was entering a mature and oversaturated market, but the Playground-backed startup was doing so with $330 million in funding, a team of top industry executives and some genuinely innovative ideas.
When I spoke to the company at launch, an executive outlined a 10-year plan to become a major player in both the mobile and smart home categories. Ultimately, the company was able to eke out just under three years of life after coming out of stealth. And while it did give the world a promising handset, its connected home hub never arrived.
Timing, broader marketing issues and troubling allegations of sexual misconduct were all contributing factors that stopped Essential’s big plans dead in their tracks.
Total Raised: $11.4 million
Image Credits: HubHaus
HubHaus, founded by Shruti Merchant, was a long-term housing rental platform rooted in the belief that adult dormitories would take off. The startup targeted working professionals in cities, and raised only around $11 million in known venture capital. When it came to raising a Series B, Merchant says the company struggled to close and lost investor interest due to WeWork’s failed IPO.
After then pivoting to a self-funded company, HubHaus was just finding footing when the coronavirus pandemic arrived in the United States, drastically hurting the rental market (as shown by Airbnb’s public struggles, as well). The housing company eventually decided to close down in September, leaving landlords, members and vendors in limbo and bringing on a fresh sweep of critique and controversy.
Affordable housing continues to be an issue in the Bay Area, and HubHaus’s departure from the scene underscores this truth.
Total Raised: $55 million
Image Credits: Hipmunk
Hipmunk, founded by Adam J. Goldstein and Reddit co-founder Steve Huffman, was one of the first travel aggregation platforms on the market. The company put together information on flights, hotels and car rental all into one place so consumers could compare and contrast prices with ease.
The focus was enough for the platform to get acquired by Concur, but now after four years, the travel startup shut down. Notably, the travel startup’s closure wasn’t necessarily tied to the coronavirus pandemic. The site officially went dark on January 23, months before lockdowns came to the United States.
Total Raised: $51.4 million
Photo: Thomas Barwick/Getty Images
IfOnly had created a marketplaces of exclusive events — such as “goat yoga” — a business that faced obvious challenges during the pandemic. The startup was actually acquired by one of its investors, Mastercard, late last year, but the acquisition wasn’t announced until IfOnly revealed over the summer that it was shutting down.
Mastercard also said IfOnly’s team and technology are still part of its Priceless experience marketplace: “The IfOnly platform will continue to help advance our Priceless strategy and our combined team will be even better positioned and equipped to deliver exclusive experiences for cardholders globally.”
Mixer/Beam Interactive (2014-2020)
Total Raised: $520,000
Image Credits: Microsoft
Microsoft shut down its Twitch competitor Mixer this year, handing off its partnerships to Facebook Gaming. The service had its roots in the software giant’s acquisition of Beam Interactive shortly after the startup won TechCrunch’s Startup Battlefield in 2016.
Before giving up, Microsoft made some big investments in Mixer’s success, most notably signing streaming superstars Ninja and Shroud to exclusive deals. (They became free agents after the shutdown.) However, Microsoft’s gaming chief Phil Spencer said the company suffered from starting out “pretty far behind” the biggest players in the streaming market.
Total Raised: $10.2 million
Image Credits: The Outline
Despite a busy year of innovation and venture for news media platforms, The Outline, which branded itself as “the next generation version of the New Yorker” was shut down. The media site was started by Josh Topolsky and had an explicit focus on serving millennials with a digital-first news media brand.
The shutdown was part of a broader layoffs at Bustle Digital Group, which acquired the publication in 2019. Pre-acquisition, The Outline had already scaled back its editorial staff and refocused on freelance articles. (Input — a tech site that Topolsky founded for BDG — continues to publish.)
Periscope went out with more of a whimper than a bang. The startup was acquired by Twitter before it had even launched a product. With Meerkat bursting on the scene that year at SXSW, Twitter went on the offensive, buying the startup to build out its own live video offering.
Periscope’s run was decent as far as these things go, and its technology will live on as part of Twitter’s video offerings, even after the app is officially discontinued next March. But in the end, Periscope was a shell of its former self. In fact, this is a rare instance where the pandemic may have actually delayed its shutdown.
The company notes, “We probably would have made this decision sooner if it weren’t for all of the projects we reprioritized due to the events of 2020.”
Total Raised: $15.1 million
Image Credits: PicoBrew
The company made beer-brewing machines that used coffee pod-style PicoPaks, then expanded into other categories like coffee and tea, but never quite attracted enough customers to make the business viable. It sold its assets earlier this year to PB Funding Group — a group of lenders recruited by then-CEO Bill Mitchell in 2018 to keep it afloat.
It’s possible that PicoBrew will live on in some form, as PB Funding Group says it’s seeking buyers for the company’s patents and other intellectual property, and that it will keep the website running in the short term so that the machines don’t stop working.
Total Raised: $1.75 billion
Quibi CEO Meg Whitman speaks about the short-form video streaming service for mobile Quibi during a keynote address January 8, 2020 at the 2020 Consumer Electronics Show (CES) in Las Vegas, Nevada. (Photo by ROBYN BECK/AFP via Getty Images)
More so than any tech company in recent memory (with the possible exception of Theranos), Quibi’s existence feels like a fever dream. $1.75 billion in funding later and what do we have to show for it? “Fierce Queens,” a nature documentary about female animals. The HGTV-style program, “Murder House Flip.” And, of course, “The Shape of Pasta.” A show about pasta.
Early reports of the service’s demise seemed premature — if only because there was seemingly no way a company could burn through that much capital that quickly. By late-October, however, it was over. “All that is left now is to offer a profound apology for disappointing you and, ultimately, for letting you down,” founders Jeffrey Katzenberg and Meg Whitman wrote in an open letter.
Sometimes startup failures are bad timing. Sometimes it’s just plain bad luck. With Quibi, the diagnoses of what went wrong can be summed up in one word: everything.
Total Raised: $15 million
Image Credits: Rubica
Rubica spun out of security company Concentric Advisors with the aim of offering tools that were more advanced than antivirus software, while still remaining accessible to individuals and small businesses. CEO and co-founder Frances Dewing said that when customers cut back on spending during the pandemic, the company tried to shift its focus to larger enterprise, but it failed to convince investors there was a business there.
“We were all really surprised given how relevant and needed this is right now,” she said. “Investors didn’t agree with that or see it in the same way.”
Total Raised: $104 million
Businessman’s hands with calculator and cost at the office and Financial data analyzing counting on wood desk. Image Credits: Sarinya Pinngam/EyeEm / Getty Images
ScaleFactor was a startup claiming to offer artificial intelligence tools that could replace accountants for small businesses; it blamed the pandemic for cutting its revenue in half and forcing the company to shut down. However, former employees and customers told Forbes a different story — that ScaleFactor actually relied on human accountants (including an outsourced team in the Philippines) to do the work.
While it’s hardly unprecedented for a startup to fudge the truth about their level of automation versus human labor, this reportedly resulted in error-filled accounting for ScaleFactor clients. (Responding to a fact-checking email, former CEO Kurt Rathmann said the email was “filled with numerous factual inaccuracies and misrepresentation” and declined to comment further.)
Total Raised: $20 million
Self-driving trucks startup Starksy Robotics began with this first, and problematic truck. Image Credits: Starsky Robotics
“In 2019, our truck became the first fully-unmanned truck to drive on a live highway,” Starsky Robotics co-founder and CEO Stefan Seltz-Axmacher wrote in a Medium post in March. “And in 2020, we’re shutting down.” After five years and $20 million in funding, the autonomous trucking company shut its doors that month. It wasn’t for lack of ambition or demand — it seems safe to assume there’s still a bright future for self-driving trucks.
Ultimately, however, Starsky won’t be along for that ride — a fact Seltz-Axmacher blames largely on timing. A crowded market is certainly at play, as well, with countless companies currently pushing to bring autonomous technology to the road.
Total Raised: $10 million
Image Credits: Bryce Durbin
Founded in 2018 by ex-Googlers, Stockwell AI shut down after being unable to find business for its in-building smart vending machines that stocked everything from condoms to La Croix. The company blamed the “current landscape” (also known as the global pandemic we are experiencing) for its closure.
Stockwell AI, formerly known as Bodega, was well-funded and well-known, with more than $45 million in funding from investors that included NEA, GV, DCM Ventures, Forerunner, First Round and Homebrew. Still, even venture capital couldn’t make vending machines work well enough.
Total Raised: $2.5 million
Image Credits: Trover
Another travel-focused startup bites the dust as the coronavirus limits the chance to safely explore the world (let alone your neighborhood). Trover, a photo-sharing hub for travelers acquired by Expedia, shut down in August. The startup was founded by Rich Barton and Jason Karas and was meant to connect people travelling to the same places. The startup had quite the life: it began out of the remains of TravelPost, a travel review site, and got scooped up by its parent company when it only had $2.5 million in funding. Unfortunately, its nine-year journey is over for now.
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Silicon Valley should reward zebras, not unicorns
Silicon Valley has a unicorn problem.
While no one is calling for startups with high valuations to go extinct, there ought to be a lot fewer of them. At least that’s what many young founders have concluded after looking at the trials and travails of billion-plus-dollar private companies.
A unicorn is a mythical animal, so investors expect magical results: Lightning growth, near-monopolies and a record-setter IPO yielding 100x or 1,000x returns. A “zebra” company is different. Zebras are real animals that have evolved to fill and thrive in a particular niche. Unlike unicorn companies, zebras are lean, efficient and consistent.
Exponential growth is neither the best nor the only way for businesses to operate.
Too often, a company’s name or perceived cachet — rather than its actual product or realistic business prospects — becomes the thing it is selling. For the most recent, and maybe most damning, example of this trend, look at WeWork .
The company’s 2019 failed IPO was the corporate debacle of the decade; few businesses since Enron have fallen so far so quickly. When the market got a chance to examine the unicorn, they discovered it was really a one-trick pony with a cardboard horn. Adam Neumann built his company for net worth, not actual value, and his employees and supporters paid the price. Then again, imagine if the IPO had been a success: How much of the company’s worth would have evaporated when COVID-19 rolled around in March?
Although most tech innovation requires venture capital in today’s economy, unicorns sometimes become case studies in taking too much of a good thing. Round after round of funding can, as in the case of WeWork, disguise rickety foundations and unsound business plans.
Earlier this month, the mobile video unicorn Quibi folded less than a year after its launch. Film and TV critics weren’t surprised, and neither were those few consumers who’d heard of the company.
Well before its ill-timed launch in early April, most observers knew it was a bad idea. So why did Quibi receive so much funding? The big names attached to the company, including Dreamworks co-founder Jeffrey Katzenberg and one-time HP CEO Meg Whitman, attracted investors who somehow didn’t realize that everything about the product, from its name to its pricing, was wrong.
What a unicorn offers isn’t as important as the fact that it’s a unicorn. The opposite of a unicorn company, to my mind, is a zebra company. They may be a little odd, they may not get the front-page headlines or breathless news coverage, but they’re built to last and built to do something.
Unicorns thrive so long as they remain in the enchanted forest of endless venture rounds; zebras tough it out in the savannas of the free market. A zebra company won’t become the next behemoth like Facebook or Amazon, but neither will it become the next Quibi or WeWork.
The emergence of zebra companies like Handshake and Turo, and to some extent corporations like Ben and Jerry’s and Patagonia, speaks to a broader change in our business and economic understanding. Even before the coronavirus shut down much of the world, endless growth was looking less and less attractive.
Instead of extracting ever more value from the economy, companies like Patreon realize that the same dollar can be earned multiple times as it circulates through the economy. One-way extraction of value is replaced with a circular flow of value. Exponential growth is neither the best nor the only way for businesses to operate.
For most of us, the new year will be a relief: 2020, over at last. But we shouldn’t neglect the opportunity to reflect on the past and plan for the future that a new year offers. The mistakes of WeWork and Quibi are all too easy to repeat; chances are that somewhere in Silicon Valley, a venture capitalist is giving too much money to a doomed business. We’ve been too focused on the unicorns. It’s time to give the zebras the attention they deserve.
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How startups can shake up their first idea and still crush the market
When Quibi announced it was shutting its doors recently after raising $1.75 billion, it begged an obvious question: If the original idea didn’t work, why not adjust its model or do something completely different while it still had capital? It wouldn’t have been the first company to decide to shift gears. Perhaps because of the unusually large amount of money it burned through in just six months of public operation, pivoting wasn’t an option for Quibi, but it has been for countless other successful companies over the years. Sometimes an original idea simply doesn’t pan out, a market gets too crowded or a company’s founders stumble onto something they have built that is actually a better business than the original idea.
There are many such examples:
- Perhaps the most famous is Slack, which originally was a multiplayer online game before pivoting to be a communications company.
- Box launched in 2005 as a consumer storage product before deciding to take on content management in the enterprise in 2008.
- YouTube started life as a video dating service and when they didn’t get much traction they began letting people upload whatever videos they liked. Google saw enough potential to buy the company for $1.6 billion just a year after launching.
These examples — and many more — show that when your first approach doesn’t work, pivoting may be the the only logical course, but it takes courage from founders and patience from investors.
We spoke to several founders and VCs who have been through this to find out how pivots happen, and how all the parties involved adjust to shifting priorities.
Sometimes it’s a long and twisting road
A big part of founding a company is having vision. You need to believe in your idea of course, but that doesn’t mean it’s the right way to go. Sometimes it pays to move on. The king of pivots might be the aptly named Pivotal, which changed direction several times and even swapped owners before it went public and got acquired, all in the span of about 20 years. Ed Sim, co-founder at boldstart ventures was part of Dawntreader Ventures in the late 90s when his firm invested in an early version of the company called Metapa. Sim had a front row seat to every twist and turn in the company’s long and intricate history.
“Greenplum, which was sold to EMC and eventually became Pivotal Software, was initially called Metapa. Metapa was in the Akamai space and as the markets cratered in 2001 for funding infrastructure projects, Scott Yara (the company’s founder) and team bought a small company called Didera and turned it into Greenplum, the first petabyte scale data warehouse built on top of open-source technology,” Sim told TechCrunch. It didn’t end there though as Sim continued, “Once again, years later, Scott recruited his replacement CEO, Bill Cook, and they paired together to sell Greenplum to EMC and eventually spin back out and take the company public as Pivotal Software.”
It’s worth noting that Pivotal eventually ran into financial problems when its stock tanked last year, but fellow Dell/EMC family member VMware saved the day by acquiring it for $2.7 billion.
Sometimes you stumble onto an idea
Segment, the customer-data platform company that was recently sold to Twilio for $3.2 billion was originally a college lecture sentiment platform, according to CEO and co-founder Peter Reinhardt. “Our first idea was a classroom lecture tool, ClassMetric, which gave students a button they could press in class to let professors know, in real-time, that they were confused. I like to think of it like a pulse monitor for class confusion,” Reinhardt told TechCrunch
That idea quickly failed when professors testing it found that inviting students to open their laptops to test their sentiment just led them to start playing Solitaire or checking Facebook. Professors weren’t thrilled and they moved on. The founders, who were MIT students at the time, decided they wanted to build an analytics tool instead, but it turned out that competition from Google Analytics and Mixpanel at the time proved too steep.
“We spent a year on development, but it was a crowded market and we struggled to carve out our own niche. We were rapidly running out of capital and the pressure was on to find something new,” he said. They were actually considering simply packing it in, but they had developed a tiny open-source tool called analytics.js, which they used to get data into their failed analytics product. At that point, desperate for an idea, one of the founders suggested posting the open-source tool on Hacker News.
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Quibi’s shortform life
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.
Myself, along with Danny and Natasha had a lot to get through, and more to say than expected. A big thanks to Chris for cutting the show down to size.
Now, what did we get to? Aside from a little of everything, we ran through:
- The fall of Quibi, and who lost money in the mix. TechCrunch has a bit more on the video service’s downfall here.
- The Netflix quarter, and why its shares lost ground after its report. The Quibi-Netflix stories show that it’s not smooth sailing in the market for online video.
- If Netflix stumbled, Snap soared with stronger-than-expected growth. The company still loses lots of money, but it’s getting closer to reasonable results, and has lots of cash.
- Then we turned to a few media startups that raised, including $4 million for Stir and $2.5 million for Quake. Quake the podcasting company, mind, not the excellent FPS.
- Next was a handful of housing rounds, including the very neat Abodu and the somewhat controversial RVshare, which split the three of us about whether or not it was going to work out.
- Then we had some great reporting from Natasha to parse through, including her piece on startup hacker houses, and her report on a new women-focused accelerator class.
Whew! It was a lot, but also very good fun. Look for clips on YouTube if you’d like, and we’ll chat you all next Monday.
Equity drops every Monday at 7:00 a.m. PDT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.
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Respect the hustle, not the stupidity
Yes, the media f’ing gorged on the Quibi story yesterday. We did, they did, everyone did. And really, truly, how could anyone not? Nearly $2 billion came in (with $350 million heading back), a star-studded lineup of executives and production teams, an absolutely massive advertising campaign, and a PR strategy that all but begged the sun to melt Icarus’ wings.
Our collective exhalation on the complete clusterfuck that was Quibi though leads to a legitimate and interesting question: Are we obnoxiously attacking a good-faith failure? Wasn’t Quibi a bet just like every other startup, a bet that just happened to fail? A16Z’s general partner Andrew Chen put it vividly on Twitter, saying “It’s gross” and lauding the entrepreneurial challenge of building a startup:
all the people rushing to their keyboards to type in their “i told you so” hot takes on Quibi:
It’s gross. Building a company is hard, why celebrate a fail?
Go build something instead of using your energy to let twitter know how smart you are the say the consensus thing.
— Andrew Chen
(@andrewchen) October 22, 2020
I understand this view, deeply. In fact, all of us at TechCrunch understand this. One of the things that we pride ourselves on here is respecting the hustle. We know how hard it is to launch a startup. As a team, we collectively talk to thousands of founders every year, and we hear the heartbreaking stories and the downright trauma at times that comes with building a company. Occasionally (and yes, we focus most of our reporting here), we hear about the wins and successes too.
Let’s be honest: Most startups fail. Most ideas turn out wrong. Most entrepreneurs are never going to make it. That doesn’t mean no one should build a startup, or pursue their passions and dreams. When success happens, we like to talk about it, report on it and try to explain why it happens — because ultimately, more entrepreneurial success is good for all of us and helps to drive progress in our world.
But let’s also be clear that there are bad ideas, and then there are flagrantly bad ideas with billions in funding from smart people who otherwise should know better. Quibi wasn’t the spark of the proverbial college dropout with a passion for entertainment trying to invent a new format for mobile phones with ramen money from friends and family. Quibi was run by two of the most powerful and influential executives in the United States today, who raised more money for their project than other female founders have raised collectively this year.
Chen makes an important point that many obvious ideas in tech started as dumb ideas. That’s true! In fact, the history of technology is littered with examples of ideas that investors and the press thought were either dumb or impossible to build (which is a more polite way to say “dumb”).
for everyone who “obviously” knows when they see a bad idea in tech – everyone citing Quibi today – here’s a thread for you. https://t.co/QpXXKG16Vm
— Andrew Chen
Why do supposedly dumb ideas turn out to be smart? Part of the reason is that what starts out as dumb slowly iterates into something that is very smart. Facebook was just a “facebook” for checking out your classmates on college campuses. If it had ended there and withered away like many other social networks before it, we might well have put it in the waste bin of history. But Zuckerberg and his crew iterated — adding features like photos, a feed, messaging and more with an extreme focus on growth that made the product so much more than when it started.
We’ve seen this pattern again and again throughout time. Founders get feedback from users, they iterate, they pivot, they try new things and slowly but surely they start to migrate from what might have been a very raw concept to something much more ready to compete in the ferocious marketplace of business and consumer attention today.
This was never the story with Quibi. There was never an iteration of the product, or a long-range plan to assiduously cultivate users and talent as the company found traction while carefully husbanding its capital for the inevitable tough moments in the growth of any company.
Yes, we in the commentariat do make mistakes, but analysts weren’t dumb in pointing out all of Quibi’s glaring, red-alert flaws. Those analysts were smart. They were right. They might not be right next time, of course — no analyst should get too overconfident in their predictions. But at the same time, we shouldn’t just collectively throw up our hands and declare every idea that comes our way a brilliant gift from the heavens. Most ideas are dumb, and we and everyone else have every right to point that out.
So respect the hustle. Don’t kick a hardworking entrepreneur down who is just trying to get their project out there and show it the world. But that doesn’t mean you can’t call out stupid when you see it. The best entrepreneurs know that — even at its most vituperative — critical feedback is the necessary ingredient to startup success. Lauding everyone lauds no one.
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Daily Crunch: Quibi is shutting down
The end is in sight for Quibi, PayPal adds cryptocurrency support and Netflix tests a new promotional strategy. This is your Daily Crunch for October 21, 2020.
The big story: Quibi is shutting down
The much-hyped streaming video app led by Jeffrey Katzenberg and Meg Whitman, which raised nearly $2 billion in funding, is shutting down, according to reports in The Information and The Wall Street Journal.
Katzenberg, a longtime Hollywood executive, had blamed the coronavirus pandemic for a lackluster launch in May — an app designed for on-the-go viewing didn’t have much appeal when people were largely stuck at home. And whatever the reason, none of Quibi’s shows ever became a breakout hit.
Quibi executives confirmed the news in a post on Medium.
The tech giants
PayPal to let you buy and sell cryptocurrencies in the US — In partnership with Paxos, PayPal plans to support Bitcoin, Ethereum, Bitcoin Cash and Litecoin at first.
Facebook is working on Neighborhoods, a Nextdoor clone based on local groups — Facebook said that Neighborhoods currently is live only in Calgary, Canada.
Netflix to test free weekend-long access in India — The streaming service recently stopped offering a month of complimentary access to new users in the United States.
Startups, funding and venture capital
Syte, an e-commerce visual search platform, gets $30M Series C to expand in the US and Asia — Launched in 2015 to focus on visual search for clothing, Syte’s technology now covers other verticals, like jewelry and home decor.
June’s third-gen smart oven goes up for pre-order, starting at $599 — It’s been two years since the smart oven’s last major update.
Mine raises $9.5M to help people take control of their personal data — Mine scans users’ inboxes to help them understand who has access to their personal data.
Advice and analysis from Extra Crunch
Founders don’t need to be full-time to start raising venture capital — John Vrionis and Sarah Leary of Unusual Ventures told us that lightweight investing matters in the early days of a company.
Dear Sophie: What visa options exist for a grad co-founding a startup? — The latest edition of immigration lawyer Sophie Alcorn’s column answering immigration-related questions about working at tech companies.
Lessons from Datto’s IPO pricing and revenue multiple — How do you value slower, more profitable software growth?
(Reminder: Extra Crunch is our membership program, which aims to democratize information about startups. You can sign up here.)
Everything else
Sam’s Club will deploy autonomous floor-scrubbing robots in all of its US locations — Sam’s Club parent company Walmart is already using robotics to perform inventory in its own stores.
AOC’s Among Us stream topped 435,000 concurrent viewers — The purpose of the stream, which drew a massive crowd, was to get out the vote as we head into the general election.
Coalition for App Fairness, a group fighting for app store reforms, adds 20 new partners — The coalition claims that both Apple and Google engage in anti-competitive behavior.
The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.
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4 quick bites and obituaries on Quibi (RIP 2020-2020)
In memory of the death of Quibi, here’s a quick sendoff from four of our writers who came together to discuss what we can learn from Quibi’s amazing, instantaneous, billions-of-dollars failure.
Lucas Matney looks at what the potential was for Quibi and how it missed the mark in media. Danny Crichton discusses why billions of dollars in VC funding isn’t enough in competitive markets like video. Anthony Ha discusses the crazy context of Quibi and our interview with the company earlier this year. And Brian Heater looks at why constraints are not benefits in new products.
Lucas Matney: A deadpool company before it was even launched
There will be dozens of post-mortems on Quibi, but the fact is there were dozens of post-mortems written about Quibi before it even launched. The whole idea was, to be kind, audacious, though it was also clear to most people that weren’t personal friends with founder Jeffrey Katzenberg that it was doomed from the start.
Quibi’s death is an important moment for streaming, largely because it’s a pretty strong rebuke of services trying to one-up the Netflix model by solely focusing on high-dollar original content. I think Quibi made several mistakes, but its most pertinent ones can be tied to a lack of flexibility in vision.
The startup insisted that all of its titles were mobile-only, high-production value and relying on Hollywood star power when they probably could have succeeded by keeping a closer eye on what kind of quick-bite content was succeeding elsewhere. Snap has seen success with Discover after years of attempts, and there is space for a dedicated player here, but Katzenberg tried to level-up by throwing checks at his friends and not doing the hard work of scouting out rising trendsetters in the creator world.
There are other lessons here that apply to other streaming new-comers like Apple. Namely that creating a hit TV show is hard and buying a hit TV series is easier if you already have the money. Quibi and Apple TV+ both launched with plenty of new series and no back libraries of beloved legacy content for users to spend time digging into. There’s just so much good stuff out there already. Apple has shifted strategy here, but Quibi boxed itself in and probably couldn’t afford to play here once its error was made clear.
Quibi showcases how the streaming wars’ upending of Hollywood has probably eclipsed reason at this point. Players like Apple don’t belong here, and there’s just too much money pouring into original content that loosely fits the Hollywood mold.
Netflix stock is down 7% today after earnings yesterday showcased slowing growth. With HBO Max, Disney+, Peacock and Apple TV+ all launching in the last 12 months, the streaming market’s cup runneth over. And while I don’t think a Quibi death spells the end for innovation here, I think that the market is ready for some 2021 consolidation.
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Quibi is dead, reports say
Plagued with growth issues, Quibi, a short-form mobile-native video platform, is shutting down, according to multiple reports. The startup, co-founded by Jeffrey Katzenberg and Meg Whitman, had raised nearly $2 billion in its lifetime as a private company. Quibi did not respond to requests for comment from TechCrunch.
The company’s prolific fundraising efforts spanned prominent institutions in private equity, venture capital and Hollywood, all betting on Katzenberg’s ability to deliver another hit. The startup’s backers included Alibaba, Madrone Capital Partners, Goldman Sachs and JPMorgan, as well as Disney, Sony Pictures, Viacom, WarnerMedia and MGM, among others. The Information reports that Quibi will have $350 million left to return to shareholders.
Their pitch was highly produced bite-sized content, packed with Hollywood star power, and designed to be “mobile-first” entertainment. For the YouTubes and Snaps of the world, producing mainstream content on a shoestring budget, Quibi wanted to be an HBO for smartphones. Investors and pundits questioned the firm’s ability to monetize this vision, and it became clear soon after launch that the company had miscalculated.
Rumors that Quibi was shutting down began early this week. The Information wrote that Katzenberg has told people within the industry that the company might need to shut down, after unsuccessfully pitching itself as an acquisition to Apple, Facebook and Warner Media.
In its first few months, Quibi was downloaded 3.5 million times and had 1.5 million active users. While those figures aren’t too shabby, the company had to adjust its original projections, which put the service on a trajectory to reach 7 million users and $250 million in subscriber revenue in its first year. Admitting that the launch hadn’t gone as planned, Katzenberg blamed the coronavirus for the streaming app’s challenges.
The company expanded in Australia in August with a free ad-supported tier for users. It is unclear if the tweak in the business model brought Quibi success, or if the problems for the app had to do with the business model in the first place.
Netflix earnings from earlier this week suggest that the pandemic entertainment boom is slowing. The consumer video service disappointed on new paying customer numbers, and shares were down sharply yesterday after it released its earnings report. Those numbers also potentially showcase just how crowded the market for subscription video content has gotten in the past 12 months, with players like Apple, Disney, HBO and NBC each launching new services and collectively spending billions to acquire rights to past television hits.
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