$2B gone in 6 months must be something of a record for burn rate.
A starting investment of that size probably qualifies it for a record in the fat (as distinct from lean) startup size category as well.
A starting investment of that size probably qualifies it for a record in the fat (as distinct from lean) startup size category as well.
It could work if your product met or was at least close to the minimum quality standard of your competitors. From what I've seen and read, Quibi was horribly substandard.
Katzenberg comes from an industry (film studios) for which that is largely the model. They are willing to have some expensive failures ($100MM-scale) if the successes will launch a "franchise" which is subsequently mined.
A failure more than an order of magnitude off what's tolerable in his old industry may be hard to survive, who knows. But industrial filmmaking is a lot like industrial food production: a blend of fear (customers won't adopt the new) and dictating the product to the customer.
that makes sense, and definitely feels like they were building a rocket-sized dart to throw.
it'd be interesting to see the breakdown on how much of that capital went towards engineering the app vs content/other.
The Hollywood model spends most of that money on ppl and marketing, little on tech. K has no tech experience and W only a smidgeon despite her exec jobs (eBay & HP). So I would be shocked if they spent more than $25MM on their stack which is mostly conventional. I’m sure the rest was blown on marketing, high salaries, consultants, offices, and deals with actors.
> I’m sure the rest was blown on marketing, high salaries, consultants, offices, and deals with actors
It sounds like the antithesis of "lean startup". Of course it could have worked out the other way if they had nailed market-fit. It does make me wonder if they could try to salvage the tech and try a slight pivot.
I mean, I'm not sure exactly how much credit to give him, but DreamWorks Animation had a lot of tech and he oversaw it for 20+ years. He stood up a brand new animation studio while the industry was digitizing, which means everyone used in-house tools because off-the-shelf stuff wasn't available. They purchased PDI, had been doing CG since 1980. They maintained a proprietary CG pipeline for decades and integrated multiple locations. This was during a time when the industry went from NURBS to sub-d, from basic direct lighting to global illumination to path-tracing--mostly using software written in-house. Not to mention the larger issues of asset management, data center scaling (power, water, and city requirements) and the staff and budgets to support all of that. At scales only a handful of other facilities were doing CG at, while competing for innovation, scale, and quality.
I'm pretty sure Katzenberg and Whitman courted when she was at HP and they were DreamWorks' "technology partner." They worked together on things like a price-friendly color-accurate LCD monitor and the Halo video conferencing stuff.
I know in the years before DreamWorks was sold to Universal there were Skunk Works projects working on phone apps. I imagine all of that was practice for this. I'm sure most of the money was on content and advertising.
I'm not exactly sure what you mean by not having tech experience, but he definitely oversaw a lot and worked with people who had.
or alternatively twenty thousand 100k research grants in the sciences. Would be pretty great if we could produce some knowledge instead of more mediocre TV shows.
> "Among the backers were most of the major Hollywood studios, Google, Alibaba and the Madrone Capital Partners."
I wonder how much of that $2B was eaten up with "Hollywood Accounting"
Trust me -- this was a bonanza for them. There's never been a greater demand for content than the past couple years, with platforms exploding.
No need to worry about actors or crew being exploited. Happily, the union makes sure of that! (E.g. in contrast to the tech world.)
They are getting minimums, but maybe only minimums.
> "Original, live action dramatic new media productions which are less than 20 minutes in length and made for initial exhibition on a subscription video-on-demand consumer pay platform are not subject to” the tiered breakdowns that help set wage scales “regardless of their budgets."
Another interesting point:
> "While Quibi owns the licensing for its shows for seven years, those terms only apply to the short format. A feature-length edit of each show is also made, and after two years, producers/showrunners/other creative intellectual property holders have the right to sell it to distributors."
Given how much tech pays versus how easy it's to get into tech (ie: compared to becoming a well paying lawyer or doctor) I doubt too many people mind.
[1]: https://mobile.twitter.com/LukeXCunningham/status/1318982719...
2 billion is chump change for the market they're in. Netflix is spending 15 billion a year on content, Amazon and Apple like 6 billion a piece, and Hulu is around 3.
Cash burn is similar. Netflix is 10s of billions in the hole since they were founded and continues to burn a few billon a year.
With that kind of funding, and given who the founders are, maybe “startup” shouldn’t be used at all? The linked article didn’t use that term, and I mean, a startup that becomes worth $1B is called a “unicorn”, and this venture was launched with more funding than that.