It seems that almost no one learned from the dot com crash of the early 2000s which saw numerous internet companies valued at clinically insane valuations and overfunded fail causing widespread layoffs and market turmoil. Quibi is the latest high-profile casualty that has announced it is shutting down.
The shutdown was honestly, all but inevitable, Quibi was never going to work. Which is why it might surprise some to learn they raised almost $2 billion US dollars, securing $1.75 billion in funding. Who in their right mind thought this was a good idea?
I can’t help but wonder, if instead of throwing this kind of money at a singular company, that $1.75 billion was instead given to a handful of startups (maybe a few million each)? At that amount, investors could have given 500 startups $3.5 million each in funding or 250 startups $7 million each.
Think about it. Investors threw away money by pumping it into one company with an idea that was going to compete with other short-form video services like TikTok, YouTube and even Instagram (which do not charge for access).
And think about this entire situation even more. Quibi managed to fail in six months, after securing $1.75 billion in funding, which is burning approximately $7000 per minute.
The issue here is that the investors thought it was a safe bet investing in big business names over common sense. While Jeffrey Katzenberg and Meg Whitman might have amassed decent fortunes elsewhere and made a name for themselves in business.
This is hot on the heels of the disaster that was WeWork, it seems we have returned to the early days of stupid investments and I would not be surprised if we eventually see a dot com boom fuelled by the pandemic in 2021/2022.
One thing is for sure, Katzenberg and Whitman are going to be fine. They were billionaires before Quibi and will be billionaires after Quibi. The investors who stupidly parted with their money deserve no sympathy for failing to see that this was never going to work, pandemic or not.