How Quibi imploded less than six months after launch

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What attracted Sophie* to Quibi was the money. Coming from the world of TV production, where she’d made minimum wage and had little hope of a promotion, the salary offered by the streaming app felt ludicrously high, nearly double what she’d previously been making. She didn’t think the idea would work — why pay for short TV episodes when you could watch YouTube for free? — but that didn’t matter. She’d find another job when it all went up in flames, and in the meantime, she’d get paid.

The feeling was confirmed over her first few months at Quibi HQ in Los Angeles. The office was impressive, all sleek glass walls and Apple products, and combined Silicon Valley aesthetics with A-list celebrity appearances.

There was the time Pitbull dropped by, dressed in a white linen suit, and employees craned their necks to get a peak. The time her boss hadn’t been notified that Emily Blunt and Reese Witherspoon were in the office — an omission she called “the ultimate betrayal.” The times she’d swiped Goldfish and Snapple for her commute, taking advantage of the heaps of free snacks, which also featured nitro cold brew and flavored seltzer.

But mere months later Sophie was sitting in her bedroom, staring at a blank computer screen, having just been told she no longer had a job. It wasn’t personal — all her colleagues were getting laid off, too. Quibi was folding, less than six months after launch. Sophie asked to remain anonymous for fear of professional retaliation.

(Disclosure: Vox Media partnered with Quibi on two shows and there were once discussions for a Verge series.)

For many employees, Quibi’s demise came as a shock. Sure, the company had been struggling to attract and retain customers since it first launched in April. The streaming app was designed to be watched on phones, with episodes that were 10 minutes or less. It wasn’t built for a world where people had time to binge-watch The Sopranos. Quibi’s Barkitecture, a show about architecture for dogs, or Dishmantled, a cooking competition where chefs were blasted in the face with full meals and asked to recreate them from scratch, were no match for an endless quarantine. Co-founder Jeffrey Katzenberg told The New York Times in May that everything that had gone wrong was because of the pandemic. Everything!

Yet Katzenberg remained optimistic. In May, he told employees “he was confident life would return to normal and people would be back standing in line at the dry cleaners, where they could watch Quibi,” according to a report in The Wall Street Journal.

But nothing went back to normal. Heading to the LA office had once felt like “going to Chateau Marmont for drinks,” as one former executive put it. Now the building was closed, and production schedules screeched to a halt.

Quibi existed in the space between two different but booming industries: short-form video content meant to be watched on a phone, like TikTok and Snapchat, and streaming similar to Netflix and Hulu — platforms that would provide subscribers with a sea of content to watch.

The fact that it didn’t fully belong in either category came with its own issues: people weren’t likely to spend $5 a month to watch a series about Anna Kendrick talking to a sex doll or news-focused Daily Essentials that even Katzenberg publicly acknowledged were not that essential — with ads — when TikTok and YouTube were free. And Chrissy Teigen knocking off Judge Judy wasn’t enough to justify customers adding another monthly subscription to their bills, especially in the middle of a pandemic and a looming depression.

The company considered switching to a freemium model, testing a version in Australia, but Aussies couldn’t muster enthusiasm for Quibi even when it was being given away. Rumors began circulating about a sale. Then, on October 21st, The Wall Street Journal announced the company was shutting down. It was news to nearly every employee. “I think this is the last thing many of us expected,” the former executive says.

In retrospect, the decision seemed inevitable. “I want to be a team player, but honestly we were reverse-engineering a more high-end YouTube, but one you had to pay for and couldn’t comment on,” Sophie says. “We were really scrounging for anything to entice subscribers and viewers to watch our shows, but unfortunately, it just never worked.”

The Verge tried to reach out to Quibi for comment on the story — three individuals and the general press line — but all emails to Quibi’s communications team bounced back with one single message: address not found.

While employees were trying to figure out how to get people to sign up and actually watch a series, creatives working on the shows were wondering why anyone would voluntarily spend $5 a month to watch anything on Quibi at all.

Andrea* told The Verge that during the 90-minute pitch meeting, when Quibi executives sold their vision, they spoke at length about all the advantages that Quibi supposedly had to offer: strong studio partners, a sizable content budget, and a patented technology called Turnstyle that was supposed to offer a unique way of watching series and films when switched from landscape mode to portrait. All of it was bullshit, Andrea says. They asked to remain anonymous out of concerns for professional repercussions.

“That first meeting we had with Quibi, seeing the product, seeing the shows, I just remember thinking, This isn’t going to work,” says Andrea, who joined the show anyway because of the “amazing production team.” “It just seemed like there was a lot of confidence about this thing, but I never understood why they were so confident about it. I just don’t think I trusted the leadership team at Quibi.”

That doubt existed in the back of their mind for months as they worked on the show. Separated from the team in Los Angeles, and working partially in isolation due to the pandemic, it was hard to determine just how much trouble they were really in. This was typical for Quibi. Executives were hands-off, Andrea says, until everything started going up in flames.

“A few months after the app launched, we heard that the subscriber numbers were way lower than expected,” Andrea says. “But we learned all of this from the news. We didn’t hear anything from Quibi until it was too late. I still don’t even know how many people watched our show.”

Even as reports of missed subscriber goals started to float around employee group chats, no one thought anything of it. This was a company that raised nearly $2 billion, after all. People on creative teams were mostly in good spirits, Andrea said. About six weeks before Quibi shut down, their series had been renewed for a second season, set to go through 2021. The team was “expecting to make at least another six months worth of shows,” Andrea adds.

Given that momentum, they were “blindsided” by the news the company was going under. As “breaking news” tweets from The Wall Street Journal started to appear on Twitter, Andrea’s team started shooting off rapid-fire texts to each other. Had anyone heard anything from Quibi? The answer was always no — all the news about their future was coming from journalists on Twitter. Andrea’s team was “fucking stunned.” Should they even keep working on the show? No one had any answers to that either.

Finally, the team got a message from the show’s executive leadership. A meeting was scheduled for the following day. The waiting period was tense, Andrea said, made more difficult by the fact they couldn’t be in the same room with one another. People didn’t know if they were going to have jobs, whether the show would continue at another studio, or if it was time to start looking elsewhere for work.

“They were just like, ‘So this is our last day of production,’” Andrea says. “That was it. It was over. That’s how it all happened.”

Rumors had started trickling down that Quibi was looking to sell off its series, which Katzenberg and co-founder Meg Whitman later confirmed in an interview with CNBC. Andrea wasn’t sure what to expect, but after the last 24 hours, they weren’t ready to believe much of what Quibi leadership had to say.

“It was so abrupt to the point where I just finished prepping an interview for the next day, and then our team was like, ‘Hey, we’re going to have to cancel that.’ It was pure chaos,” Andrea said. “Even friends who are veterans in the TV industry, they said they’ve never seen anything like this.”

As an investor, Anis Uzzaman, founder of Pegasus Tech Ventures, says his understanding was that Quibi was “making progress gradually in terms of user acquisitions.” There was no “red flag until very recently that the company was not doing as well as they were supposed to,” he told The Verge. Like Quibi’s own employees, investors like Uzzaman also didn’t get much notice.

Within the last couple of weeks at Quibi, investors were told by executives that they were “looking at all possible options for the investors, because the investors’ interest is first for them,” Uzzaman says. “Funnily enough, it wasn’t that dramatic — just very, very fast.”

On one of the last calls Whitman had with investors, she apologized for the company not doing as well as expected. Whitman explained that as the company was set to wind down, they were going to distribute the remaining cash they had — about $350 million — back to investors based on their contracts with the company and the proportion of their investment.

Despite trying not to worry until Whitman and Katzenberg gave him a reason to be concerned, Uzzaman says he became aware of trouble when the numbers weren’t lining up with other pandemic trends. Streaming was up. Disney Plus and Netflix were way up. Quibi, which existed in a similar media and entertainment space, wasn’t. He was looking at the same data that industry analysts were. “I was obviously getting nervous that this company is not doing as well as they’re supposed to and all I have are these third-party numbers,” he says.

Some investors, Uzzaman says, including himself, were more patient with Katzenberg and Whitman because of the pandemic. When Uzzaman invested $35 million, COVID-19 hadn’t yet touched down on US soil. They didn’t realize just how big of a deal it was going to become; as he told The Verge, “the company did not consider the pandemic because this pandemic happens once in a hundred years.” Katzenberg and Whitman were able to get one last major round of funding in before chaos erupted, but if it had been even one month later, “the company would have not raised the money, because look — no one has invested since the pandemic began.”

“We thought that Jeffrey and Meg could pull a rabbit out of the hat and figure out a way to make the company survive, but we never saw the rabbit,” Uzzaman says.

As the ship was going down, the only thing on Uzzaman’s mind was “how much capital is left and how much money am I going to get back?” As someone who manages other people’s money and makes investments for them, they rely on him to get their investment back. Based on his own personal experience in the industry, he believes that most investors will likely get back “between 20 to 40 percent of the original cash they invested.” Uzzaman seemed pretty calm about the entire ordeal — he explained that he couldn’t particularly fault Quibi for not seeing a pandemic coming. In perhaps typical venture capitalist way, he took a bet, and it didn’t pan out — but this time, he believes, as Katzenberg once did, it’s mostly because of the pandemic. Even if Uzzaman doesn’t get back as much as he would like, it’s better than nothing, he explains.

Before the end of our call, we asked if he thought Quibi would have worked in a non-COVID-19 world. If people could commute and wait in line at coffee shops (that’s how Quibi was designed to be experienced), would Katzenberg and Whitman have been successful? He “strongly believes the company would have done well.” Why? Jeffrey Katzenberg. He still puts his faith in Katzenberg — “he was very capable, and knew the industry very well,” Uzzaman says.

Not everyone agrees, though.

On October 21st, Katzenberg assembled an all-hands meeting to confirm what most employees already knew, thanks to The Wall Street Journal article — the company was officially shutting down. After reading a quote from Teddy Roosevelt, he told his staff to take a few minutes and listen to an Anna Kendrick song from Trolls titled “Get Back Up Again.”

While employees were touched that he’d taken the time to research the quote, the song suggestion felt like classic Katzenberg.

“There’s this sort of narrative around Jeffrey Katzenberg. Everything I heard was, ‘Jeffrey Katzenberg! Jeffrey Katzenberg!’” Andrea said. “Because I didn’t have a notion of him prior to Quibi, and because that first presentation pitching Quibi was so mind-boggling, I was just left thinking, Does he really know?

In the end, Quibi’s legacy will rest with Katzenberg — not for the shows he greenlit or the technology he conceived, but for the amount of cash he raised. Investments legitimized Quibi, and when the money ran out, what was left?

Sophie, having recently relocated to the East Coast to wait out the pandemic, didn’t feel that worried. “I know I’ll land on my feet,” she says. The Trolls song didn’t even faze her.

“Jeffrey Katzenberg loves to put his foot in his mouth,” she says. “I don’t know why he thought an elderly white man knew what millennials and Gen Z wanted in a streaming service in the first place.”

*Names have been changed to protect the identity of those involved.

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