Show pageOld revisionsBacklinksBack to top This page is read only. You can view the source, but not change it. Ask your administrator if you think this is wrong. ====== Quibi ====== Quibi (a portmanteau of "quick bites") was a short-lived American streaming platform founded by Hollywood mogul [[Jeffrey Katzenberg]] and led by CEO [[Meg Whitman]]. Launched in April 2020, its entire premise was built on delivering high-budget, professionally produced entertainment in episodes of ten minutes or less, specifically designed for mobile viewing. The company raised an astonishing $1.75 billion in [[venture capital]] from major entertainment studios and corporations, attracting A-list celebrities and creators to its ambitious project. Despite the immense hype and funding, Quibi was a catastrophic failure, shutting down just six months after its launch. It stands as one of the most spectacular flameouts in modern tech and entertainment history, offering a treasure trove of lessons for investors about the dangers of hype, the importance of [[product-market fit]], and the difference between a flashy idea and a sustainable business. For value investors, the story of Quibi is a masterclass in what to avoid. ===== The Rise and Spectacular Fall ===== Quibi was born from a simple, yet ultimately flawed, observation: people spend a lot of time on their phones, often in short bursts while commuting or waiting in line. Katzenberg’s vision was to fill these "in-between moments" with premium, Hollywood-quality content, essentially creating a new category of entertainment. ==== The Grand Vision ==== The pitch was compelling. With backing from giants like The Walt Disney Company, NBCUniversal, and [[Goldman Sachs]], Quibi was no ordinary startup. It promised a revolutionary viewing experience with its "Turnstyle" technology, which allowed video to seamlessly adapt to either horizontal or vertical viewing. The content budget was enormous, with reports of spending up to $100,000 per minute on its shows—a rate comparable to major network productions. The goal was to disrupt entertainment by creating a service as essential to your phone as [[Spotify]] or [[Instagram]]. The hype was immense, positioning Quibi as the definitive future of mobile video. ==== What Went So Wrong? ==== The collapse of Quibi can be attributed to a perfect storm of bad timing, a flawed strategy, and a fundamental misunderstanding of its target market. * **Catastrophic Timing:** Quibi launched in April 2020, at the very moment the [[COVID-19 pandemic]] forced the world into lockdown. Its core use case—watching content on the go—vanished overnight. Potential customers were at home, preferring to watch [[Netflix]] or [[YouTube]] on their large-screen TVs, a feature Quibi initially lacked. * **No Product-Market Fit:** The central question Quibi failed to answer was: //Do people actually want this?// The market for short-form video was already dominated by free, user-generated, and highly shareable content on platforms like [[TikTok]]. Quibi entered this crowded space with a premium, paywalled product that couldn't be easily shared or screenshotted, creating a closed ecosystem in an era of open, social media. They built a solution for a problem that didn't exist. * **Unsustainable [[Cash Burn]]:** The business model was built on an incredibly high [[cash burn]] rate. Spending lavishly on content before proving there was a paying audience is the opposite of a prudent financial strategy. The platform's [[unit economics]] were deeply flawed, as the high cost of content production was never going to be covered by its meager [[subscriber]] base. ===== Lessons for the Value Investor ===== The Quibi saga is more than just a dramatic business failure; it's a powerful cautionary tale that reinforces core principles of value investing. ==== Hype is Not a Strategy ==== Quibi had it all: famous founders, billions in funding, and glowing media coverage. It was a classic "story stock," fueled by narrative rather than substance. A value investor, trained to be skeptical and ignore the manic-depressive mood swings of //Mr. Market//, would have seen major red flags. The excitement surrounding Quibi was based on a compelling pitch, not a proven business model or a clear path to profitability. **Lesson:** Always look past the story and analyze the underlying business fundamentals. ==== The Search for a Durable Moat ==== A key tenet of value investing, popularized by [[Warren Buffett]], is to invest in businesses with a durable [[competitive advantage]], or "moat," that protects them from competitors. Quibi had no moat. * **No Network Effects:** Unlike social media platforms, its value didn't increase as more people used it. * **No [[Switching Costs]]:** Customers could cancel their subscriptions with a single click and lose nothing. * **Intense Competition:** It was competing against free, deeply entrenched giants. Quibi's content was its only potential advantage, but by locking it behind a paywall and making it difficult to share, it squandered any chance of it going viral and building a cultural footprint. **Lesson:** A business without a moat is a ship in a storm without an anchor. ==== Always Question the Business Model ==== A prudent investor must act like an investigative journalist. With Quibi, the critical questions would have been: - How will you acquire customers at a reasonable cost in such a competitive market? - Is the lifetime value of a subscriber greater than the cost to acquire them? - Is the consumer demand for this product validated? Quibi's failure to provide convincing answers to these questions was a clear signal of the immense risk involved. It serves as a stark reminder that no amount of star power or funding can save a business with a fundamentally broken model. The best investments are not just great ideas; they are great businesses.