Quibi: How a $1.75B Startup Died in 6 Months

0:00 Thea Ngo: Quibi raised $1.75 billion before it even launched from every major production company. Disney, Sony, NBCUniversal. Original shows from Steven Spielberg with stars like Jennifer Aniston, Reese Witherspoon. An ad in the Super Bowl before it had even launched. Run by the man who built DreamWorks and exited to NBCUniversal for $3.8 billion. And the woman who ran eBay and HP. In early 2020, on paper, this was the most star-studded, most funded, best connected, most hyped launch team in the history of streaming, and it had every marker of success. Then 6 months after launch, the company shut down. This is how you lose $1.75

1:03 Thea Ngo: Hi, my name is Thea. I work in venture capital during the week and I interrogate founders during the weekend. I've always found that you can learn so much about company building from looking at past failures and what happened. So this is the start of that. And to start, we're talking about Quibi, an American short-form streaming platform that promised TV-quality shows in mobile-friendly format, and probably one of the biggest failures in the 2020 COVID era. Okay, so going all the way back, the story really started in 2018. Jeffrey Katzenberg had just sold DreamWorks Animation and walked away personally with reportedly about half a billion dollars.

1:52 Thea Ngo: So he really truly never had to work again. But instead he had an idea. How do you take Hollywood quality television, so real budget, real stars, real plot lines, and cut it into pieces that are dedicated for short form that are short enough to watch while you wait for your coffee or for that person to open the door for you? So Quick Bites or Quibi. To run it, he brings in Meg Whitman, legendary CEO, CEO of eBay, former CEO of HBO. So you had this dealmaker in Hollywood, one of the most connected men, and a top Silicon Valley operator. So an odd but powerful pairing. So powerful that before there is a product, before a single frame of content was even made, Quibi raised $1 billion.

2:48 Thea Ngo: And this is pre-AI, guys. So that's pretty substantial. And the list of investors is everyone that has invaded way too many hours of my time that I probably should be touching grass. So every major studio, Disney, NBCUniversal, Sony, Viacom, Warner, Lionsgate, and the list continues. Then a month before launch in 2020, he goes back and raised another $750 million, bringing the total raised before launching to $1.75 billion. Unheard of. Okay. And the idea was genuinely convincing. So Netflix was the poster child of success for streaming, and it had won the living room, but the phone, the screen you and I spend an ungodly amount of hours on, nobody had really made premium television dedicated to it.

3:49 Thea Ngo: So Quibi's pitch was simple. Be the Netflix for your phone, but probably better production than Netflix had at the time, and own the small gaps in everyone's day. The money bought a star-studded production cast. So you had Steven Spielberg developing a horror show you can only watch after dark. Like seriously, the app checks the clock on your phone, which honestly sounds like a freaking nightmare to me. But like, I guess if you're a horror fan, if that's your thing. Christy Teigen runs a real small claims court. Jennifer Lopez, Reese Witherspoon, Bill Murray, like 175 shows in the first year. All-stars at it. And the promise was 3 hours of new content every single day.

4:36 Thea Ngo: So this is sounding a lot like a production company, but it has a piece of technology that is supposedly proprietary. Supposedly why? We'll get into that a bit later, but they call it Turnstile. So you can watch on a Vertical screen, and when you turn it into a horizontal screen, it's a seamless experience watching it. So it is clever, but also that means they have to shoot the same movie, TV show twice, once horizontal, one vertical. So you double the cost of production. So generally we're seeing a theme here. It's theoretically very smart, but also quite expensive. Okay, by early 2020, the hype around Quibi was enormous. They had a splashy Super Bowl ad.

5:21 Thea Ngo: By the way, a Super Bowl ad is like $8 to $10 million for a 30-second segment, which is like absurd, before they even launched. And they allegedly had a few hundred million dollars in advertising commitments from brands like PepsiCo, P&G, Google, every big name under the sun. But the word to take into account here is commitments, not cash. So, okay, the world takes notice. Every headline was a variation of, is TV even more dead now? April 6th, 2020, Quibi actually finally launches. 3.5 million downloads in the first week. Extraordinary. 2 years of promises finally being delivered. But here's where it gets a little bit tricky. Those 3.5 million downloads came with a 90-day free trial, and when the trial starts to expire that summer, people started leaving.

6:28 Thea Ngo: So by July, the number still paying was reportedly 72,000. Users, which is still quite a substantial amount for a new app, right? But at $5 a month, that's $360,000 a month, or roughly a $4 million run rate, which would be good for a new consumer app. But they also had to raise $1.75 million and spend a ton of money on talent, Super Bowl commercial, and promises to the moon. So, what the hell happened? A few things, but let's start with what the Quibi founders have to say. So naturally, they blame COVID. Quibi was built for the gaps in your day: the commute, the pickup line, the 10-minute on the treadmill. But in March 2020, the week before launch, lockdown removed all of those gaps.

7:27 Thea Ngo: Everyone was at home on the couch in front of the biggest screen that they own. For a phone-only on-the-go product, that's generally pretty bad timing. Fair. But I don't know about you, but even during COVID I think I was scrolling probably more than 5 hours a day. And if you really think about it, there was another short-form video app That completely exploded. Yes, TikTok. Contrast to Kwibi, in the first three months of 2020, the exact window that they launched, TikTok did not struggle at all. It actually had the biggest quarter any app has ever had: 300 million downloads in three months. Most downloaded app in the world that year. So what happened?

8:24 Thea Ngo: Why did these 2 apps have such different fates? Here's what I think went wrong. You could not share Quibi. If you took a screenshot, the screen would actually go black. There's no way to clip a moment, screenshot a scene, or send a video to a friend. And I think that is the whole difference between Quibi and TikTok. TikTok grows itself, so every video you share brings someone onto the app. In fact, I think that's how I got into the app in the first place. That's distribution built into the product, and Quibi had none of that. So the only way to really get a new viewer or user was to pay for one. So they had to put a fortune into splashy celebrity names, ads, and hype.

9:11 Thea Ngo: And there was even more issues. So during the time, like Disney+ had just launched, HBO Max, Peacock arrived that spring and summer. So Quibi was asking you to pay for another subscription for short videos at the exact moment that every studio was fighting over your subscription dollars and your attention was already freely being given on TikTok, YouTube, Instagram. And on top of that, they asked you to pay before you even see anything. And also they were phone only. With Netflix, you can Kind of work around and watch on your phone if you really wanted to, but you can't even watch Quibi on your TV until 2 days before they finally announced that they were going to close Quibi.

9:57 Thea Ngo: And turns out their proprietary seamless viewing technology was kind of gimmicky and also doubled the cost of production on their side because you had to shot the video twice. And before anyone says no one wants to watch premium TV on your phone, look at now. Premium made-for-your-phone shows are an $11 billion business. Reel Shorts, DramaBox are billion-dollar companies literally built on exactly the same premise. And at the end of 2025, more people were downloading short drama apps than the traditional streaming services. By that, 2020 summer, there were also a lot of internal issues. Advertisers who pre-committed, remember the word committed, asked to defer their payments.

10:48 Thea Ngo: A startup called Eko sued them claiming that the turnstile proprietary technology was actually theirs. And inside, again, reportedly, the 2 leaders were at odds With Whitman nearly quitting months before launch. So October 2020, a little over six months after launch, they post an open letter. Quibi is not succeeding, talking about the idea, the timing, and potentially both at the same time. Then December, the app finally shuts down, and they return about three hundred and fifty million dollars. To investors. Weeks later, Roku comes in to buy the entire library. So Spielberg, Lopez shows for under $100 million, far less than it costs to actually make it.

11:42 Thea Ngo: So what does all of this mean? So I think here is a real, real lesson from this. Quibi spent $1.75 billion to rent attention, to manufacture hype with no innate mechanism for organic distribution. The companies that win now do the opposite. The product itself brings the next customer. So in the consumer space, Graza makes an olive oil bottle so cool people post it without being asked. Superhuman puts sent via Superhuman at the bottom of every email. So every user literally advertises by every single email they send out. TikTok makes every video shareable. So every video brings in a new user. Then Figma makes you invite your teammates to even have it be useful.

12:32 Thea Ngo: They all partake in some form of paid media, don't get me wrong, but they also build a growth engine into the product where it costs almost nothing and really never stops. And it's so incredibly important because at the end of the day, a viable business is one with healthy user growth, Unit economics. And the most common thing people look at is lifetime value over cost of acquisition, or LTV over CAC, with lifetime value being how much does this customer bring you in their whole time staying with you over how much did it cost you to get them. And the other also important thing to point out here is they raised $1.75 billion with the majority of it 2 years before launching.

13:23 Thea Ngo: So in order to be a big winner for their investors, they would need to return a huge outcome. And that's the trap people don't think about when they're initially raising. The more you raise, the bigger the outcome you're on the hook for. And there's very little room to truly like goof around and like figure out your fit. I love the story of Quibi because I think it's an incredibly important history lesson for the modern era of AI startups of like huge valuations expectations and spend. And if you like these breakdowns, let me know and I can make more of them. And subscribe so you don't miss out on any further Founders in Motion episode. Okay, till next time. Bye.