What's up guys and welcome back to wall street millennial on this channel, we cover everything related to stocks and investing in today's video we're going to talk about a startup that had the potential and financial firepower to challenge the juggernaut. That is youtube and other video streaming services. Its name was quibby. You may have heard of it before it's the short form, quickbite platform that launched in the first part of 2020..

It focused on short, 10 minute video clips to be viewed exclusively on mobile devices. It was supposed to be kind of like youtube or tick tock, except that was a paid service like netflix. It also had original content that could be commissioned. That was, of course, only available to the paying customers.

You might think that early 2020 would have been the perfect time for video streaming services with stay-at-home orders just starting. It seemed like perfect timing. Unfortunately, even after spending billions of dollars on marketing and original content, the service flopped epically in the same year that launched it was shut down. It was one of the most disappointing and money losing tech, startup failures of the past several years.

So what exactly was quirby's business model and what went wrong? Let's start at the very beginning, it was founded in 2018 with the ambition to take a chunk out of the consumer video streaming market. That means services like tick, tock and youtube on the free end and netflix, disney, plus peacock, etc. On the paid end, it was also mobile-based making. It also compete with instagram snapchat and the like.

Their big selling point was the idea that all the content on the app was supposed to be in 10 minutes or less. In reality, the majority of it was actually less than 8 minutes. This allowed it to focus on short videos and series that you would watch if you were in between doing things, for example, if you're just waiting in line at the bank or on the subway on your way to or from work, you might pull out your phone And watch an eight minute episode of something. The idea was that you might not want to start an entire 20-minute episode of a normal tv show.

It was a way to fill in the gaps in your day without being a huge time. Commitment, quibby was also supposed to target mobile consumption. The content on the app was designed to look good, whether being viewed vertically or horizontally, as if it were shot for both orientations, which was a pretty cool feature. Considering that, usually, when you turn your phone while watching something like youtube, the whole video just shrinks to the width of your screen.

It initially had no capacity to be viewed on a computer or tv. The two features of having the content be short form video and focusing the entire service on mobile, supported, quibby's, overarching goal of filling a new niche. That niche was to fill the times when people were waiting for things like waiting for the subway to arrive. They really pushed the on-the-go feel for the app.

This was their way of differentiating themselves from the competition. Unlike netflix, you could comfortably watch quibby without sitting down at your computer or tv, but the content was still supposed to be professional and high quality, surpassing instagram or youtube in terms of the professionality of the content. In all fairness, it was a very creative and intriguing business idea and it had the business acumen behind it to power its strategy. Their ceo was meg whitman whitman is extremely well known in the business community for holding high up executive positions in numerous powerful american companies.

She started her career after graduating college from princeton university and harvard business school for her mba. She worked as a brand manager at procter gamble. Back then procter gamble was a very prestigious company to work for in their marketing division. It's a marketing company at the core, and to this day it remains in the top three us companies by online advertising spending after procter gamble.

She briefly did business consulting work at one of the big three consulting firms. She then went to disney to work, as vice president of strategic planning throughout the 80s and 90s. She worked in marketing at many different, powerful companies and led many successful marketing campaigns in the late 90s. She left the world of big business to work for a tech startup that startup only had 30 employees and 4 million dollars of revenue when she joined it was an internet company with an unattractive website that frequently crashed, but over the next decade she built it up Into an internet ecommerce giant which you undoubtedly know as ebay for her success at ebay, she was widely applauded as one of america's most capable ceos.

So, ten years later, when she became ceo of quibby, it's no surprise that the expectations were high. Any startup would love to have someone with her track record. As ceo, she saw the opportunity to take market share with quibby's short form, video streaming, offering and leaned in together with the former disney chairman and co-founder of dreamworks jeffrey katzenberg. The talent and leadership at quibby was definitely there with their impressive executive.

Suite kubi was also able to attract pretty much any amount of capital that it wanted. Their investors included investment banking heavyweights, including goldman sachs and jp morgan, as well as entertainment industry giants like viacom and disney. In total, they raised nearly two billion dollars, an incredible amount of money for a two-year-old company. They immediately put that capital to work they advertise aggressively through online and tv commercials.

You might even remember their confusing super bowl commercial from 2020. where's, the car frank. Where are you i'll, be there and equip me? Oh what that could be less than 10 minutes? The ad was confusing and failed to convey what quibby actually was. It honestly seemed more like an ad for a food delivery service than for what it really was.

It was widely considered to be one of the worst ads of super bowl 54.. The app finally launched officially in april of that year, here's what meg whitman had to say about it. Meg, it's good to see you under these unusual circumstances, um. I thought of your company, of course, given it would have seemed that it was well positioned to capture people who are on the move, and we are an economy right now in which people are not on the move.

They're home uh did that hurt the launch at all, or were you still pleasantly surprised? Well, first of all great to see you again, as you said under these unusual circumstances, but it didn't hurt us at all. We had 1.7 million downloads in the first week, which exceeded our plans and our expectations and the app's very popular, and i have to say it's one of the most successful launches of a completely new brand and a completely new app and interestingly, we did see that People are watching quibby seven in the morning till seven at night. During their in-between moments, we thought the in-between moments before covet 19. We thought the in-between moments would of course be out and about commuting, etc.

Well, it turns out people have in-between moments at home in between zoom calls in between wrangling. The kids in between you know taking care of the house, and things like that. So we don't actually think it hurt us we're delighted by the launch, despite meg whitman's optimism, about the launch, the actual service quickly, flopped, it never made it higher than the top three most downloaded free apps on the apple app store, even after spending 5 million. On a super bowl ad after a week, it fell outside the top 50 apps on the app store.

The number of downloads was obviously much lower than expected, and the executives quickly started to defend the lackluster opening. Their last hope was the fact that they offered a 90-day free trial, which some people did take by june. They were reportedly on track to make about 2 million subscribers by the year's end. That probably would have been impossible without the free trial.

Even so, it was only about a quarter of their 7.4 million subscriber prediction. Reality was off to the worst start possible for quibby. When the 90 day free trial started ending for users, even more bad news came, they were unable to convert their free trial users into paying subscribers. Some reports had the number as high as 90 percent of users canceling their subscriptions at the end of their trials.

There. Just wasn't enough interest in the platform to sustain it. In late august, meg whitman returned to cnbc to talk about the business. You love a challenge.

It would appear you've set yourself up for quite a challenge here when it comes to quibby. We won't quibble over the numbers uh, but i think it's fair to say that perhaps the launch has been a little less than had been anticipated. What do you tell people right now in terms of the future of that company and what your hopes are for sort of getting it on track? Well, i always knew this would be a challenge whenever you do a startup. It's a challenge and what we are doing is creating a new category.

Remember our use case was mobile, on-the-go, viewing holiday, uh hollywood quality content for your mobile device, and we did get off to a bit of a rocky start. We launched in the middle of a pandemic by the way i wouldn't recommend that to anyone it can probably be debated whether or not quibby's lack of success can be blamed on launching during a pandemic. It is true that their on-the-go focus was upended by the pandemic. In that sense, it was just the worst possible timing for the startup, but in her earlier interview with david faber on cnbc, she said that in the first few days after launching they saw encouraging watch patterns in their viewers, she said that their viewers were still watching.

Quibby between 7am and 7pm, in between zoom calls and other things, even inside the house. On top of that, all streaming services should have had a boost from the stay at home economy overall viewership for on-demand video services, skyrocketed across the board during the pandemic netflix. For example, smashed estimates for subscriber growth in the fourth quarter, bringing their total subscriber growth for 2020 to an incredible 37 million disney plus was another huge winner from the pandemic and with 73 million paid subscribers by the end of the fourth quarter was cited by the Ceo as a key bright spot for the entire company, if quippy truly had a viable product, it would seem strange that they wouldn't be able to ride the same rising tide as netflix and disney plus, and it wasn't just the case that was just the more casual Viewing that was struggling either youtube became one of the stars of google's financial results, growing revenue by 50 during the pandemic even snapchat. Another mobile-only platform massively grew its revenue in users even after years of struggling to stay relevant.

In essence, all of the video streaming services saw the pandemic as a godsend for their user and revenue growth. So then, why did quibby fail, even though their whole thing was to target the on-the-go lifestyle? It's hard to believe that the pandemic alone caused its failure. It seems more plausible that the business model just wasn't viable people just aren't that interested in yet another streaming service, especially another subscription that they have to commit to and keep track of. The content on the app was fine, but not engaging enough to replace real tv shows and movies on services like netflix and the app didn't foster networking between users through things like youtube's comments, section or sharing like on social media.

Also, it didn't even have the option of letting users view on laptops and tvs. They tried to lean into the trend of mobile first and complement the fast pace of modern society with their quick bite content, but for one reason or another, it just didn't. Stick. Quippy's failure also suffered from fighting an uphill battle on three faces.

It's really hard to create a new category, and that is exactly what quibby was trying to do. Nothing like their product existed before, which both gave the potential to discover a gold mine of opportunity and the very high risk of striking out. Second, the industry they chose is an incredibly difficult business. Entertainment has produced more than its fair share of failed and struggling businesses and, for the most part, only the big names can make it and third, they are up against some of the most formidable competition in the world.

Netflix, google, amazon and even facebook, through their owning of instagram, all competed in the same space. Those companies have virtually unlimited resources and spend literally tens of billions of dollars every quarter tuning their algorithms and creating engagement among their users. Even if the industry wasn't inherently difficult enough, trying to find or create value where all the incumbent juggernauts have already been is probably a recipe for disaster in october of 2020, just six months after their highly anticipated launch, quivi finally threw in the towel they shut down And liquidated all their remaining assets. In early 2021, they sold their entire content library to roku for just 100 million dollars.

Nearly 2 billion of investor money, including more than a billion dollars spent on creating original content, was lost because of the well-known difficulties of starting a new company in an entirely new category. Meg whitman and jeffrey katzenberg probably will retain their top-tier reputations in the business and entertainment industries respectively, especially since they can blame the pandemic for quippy's failure. Also, they both had the foresight not to fund the startup with their own money and meg. Whitman is still one of the world's richest people, but for their investors and for viewers who witness quibby it will go down in history as one of the biggest and most costly flops in startup history.

Alright, guys that wraps it up for this video. Let us know about your experience with quivi in your reaction to their super bowl commercial. Also, if you have other opinions on factors that led to quibby's failure, let us know in the comments below if you enjoyed this content, make sure to smash the like button and subscribe. So you don't miss future uploads in the meantime.

Thank you. So much for watching and we'll see you in the next video wall street millennial, signing out.