Extra Crunch Friday: What went wrong with Quibi?

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Friday, June 26, 2020 By Walter Thompson

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When Quibi launched a few months ago, many assumed the mobile-native entertainment platform was a slam dunk: consumers were sheltering in place, and the venture was led by Meg Whitman and Jeffrey Katzenberg, both heavyweights with successful track records.

The Wall Street Journal estimates that the service will have just 2 million subscribers at the end of 2021, a stark difference from the 7.2 million initially predicted. Add in the fact that many current subscribers have free trials, and it’s clear that the short-form TV app is not meeting expectations.

“Quibi set out with a compelling thesis, but it repeatedly failed to act with conviction,” writes media columnist Eric Peckham, who identified four strategic errors:

  • Miscalculating the risk of launching during the COVID-19 lockdown;
  • Failing to see the central role of interactivity in mobile-native entertainment;
  • Creating misaligned financial incentives with the wrong content partners;
  • Launching Quibi like a movie instead of like a startup.

To fulfill its promise, Eric recommends that Quibi partner with more innovative partners and experiment further “with all types of interactive stories.” Read the full post-mortem and share your comments here.

Thanks for reading, and have a wonderful weekend — let those emails go until Monday morning.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

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5 VCs agree: COVID-19 reshaped adtech and martech

5 VCs agree: COVID-19 reshaped adtech and martech image

Image Credits: Buena Vista Images / Getty Images

Over the last five years, adtech revenue has declined at a nearly 10% compounded annual growth rate.

In our last investor survey for this sector — conducted in January before the pandemic — there was widespread evidence of a rapid decline. We reached out to five VCs active in the space to gather their latest thinking.

  • Eric Franchi, operating partner, MathCapital
  • Christine Tsai, CEO and founding partner, 500 Startups
  • John Elton, partner, Greycroft
  • Pär-Jörgen (PJ) Pärson, general partner, Northzone
  • Michael Brown, founder and managing partner, Bowery Capital

Although our respondents acknowledged industry-wide difficulties, “we are still seeing great opportunities,” said MathCapital’s Eric Franchi.

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Join GGV's Hans Tung and Jeff Richards for a live Q&A: June 30 at 3:30 pm EDT/12:30 pm PDT

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Tung and Richards will answer questions from Extra Crunch members during the call; sign up today!

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Four perspectives: will Apple trim App Store fees?

Four perspectives: will Apple trim App Store fees? image

Image Credits: Peter Dazeley / Getty Images (Image has been modified)

By comparison, the federal government gave out around $529 billion in loans to businesses as part of the COVID-19 bailout program.

Apple takes a 30% cut of subscriptions purchased via the App Store, but after the developers of email app Hey raised a fuss, Cupertino’s platform fee is getting new attention.

Will Apple cut its fees to strengthen the developer community and avoid potential legislation? We asked four TechCrunch staffers to weigh in:

  • Devin Coldewey: The App Store fee structure "seems positively extortionate"
  • Lucas Matney: "Apple is teetering on the edge of a PR disaster"
  • Sarah Perez: "Most developers today would agree that the App Store is both a blessing and a curse"
  • Darrell Etherington: A walled garden helps "maintain a high level of quality and protection for consumers"

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Trump's worker visa ban will hit Silicon Valley hard

Trump's worker visa ban will hit Silicon Valley hard image

Image Credits: Bloomberg / Getty Images

After President Trump released an executive order on Tuesday extending a ban on new work visas, I interviewed Sophie Alcorn, a Silicon Valley-based immigration lawyer (and TechCrunch contributor) to get her take on how it will impact the tech community.

“This would be a blow to very early-stage tech companies trying to get off the ground,” she said.

“If they have only raised a couple hundred thousand dollars, it may be very difficult to sponsor a founder as an employee for an H-1B transfer.”

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Agora's above-range IPO pricing underscores a welcoming IPO market

Agora's above-range IPO pricing underscores a welcoming IPO market image

“What are the unicorns waiting for?” Alex Wilhelm asks in this morning’s edition of The Exchange.

API-powered company Agora priced its IPO at $20 per share, well ahead of the expected $16-18 range. We’ll see what happens after its debut today, but the IPO price values the company at about $2 billion.

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Breaking down the specs of a successful video ad

Breaking down the specs of a successful video ad image

Image Credits: Sunti Phuangphila/EyeEm / Getty Images

Before you spend thousands on a video ad campaign, this post will give you a better sense of how to use retargeting and segmentation to create custom audiences.

A basic principle: familiarity is a marketer’s best friend.

Although roadside billboards are poorly targeted, “that doesn't mean brands should be ignoring the principles that made billboards work in the first place.”

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When will California's retail foot traffic return to normal?

When will California's retail foot traffic return to normal? image

Image Credits: Aaron P/Bauer-Griffin / Getty Images

If current trends hold, consumer foot traffic in the Golden State will return to “normal” levels on September 19, 2020, according to John Kelly, CEO of Zenreach.

Using data sourced from WiFi and digital marketing, he determined that retail walk-in traffic nationwide was declining before most shelter-in-place orders were issued, but “the rate of the rebound… varies widely by state and locality.”

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Even amid the pandemic, this newly funded travel startup is tackling the stodgy timeshare market

Even amid the pandemic, this newly funded travel startup is tackling the stodgy timeshare market image

Image Credits: Koala

Timeshares are an afterthought for most travelers: to browse, book and pay for a visit, customers must use proprietary exchanges that offer a subpar UX, especially when compared to platforms like Airbnb.

Connie Loizos interviewed Mike Kennedy, co-founder and CEO of Koala, to learn more about how he’s addressing the pain points in a $10.2 billion (and growing) industry. In March, Koala closed a $3.4 million seed round.

“Now, to see if it sinks or swims.”

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Lemonade targets down-round pricing in impending IPO

Lemonade targets down-round pricing in impending IPO image

Image Credits: Nanxi wei / Unsplash (Image has been modified)

Insurtech unicorn Lemonade’s S-1/A indicates that the company expects to price its IPO at $23 – $26 per share, a move that would value the company between $1.3 and $1.47 billion, writes Alex Wilhelm.

“Is that expected valuation interval strong, and, if not, what might it portend for other insurtech startups?” he asks.

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Plaid's Zach Perret: 'Every company is a fintech company'

Plaid's Zach Perret: 'Every company is a fintech company' image

Image Credits: Bloomberg / Getty Images

Plaid co-founder Zach Perret appeared on Extra Crunch Live last week to discuss his company’s $5.3 billion purchase by Visa, so we weren’t shocked when he suggested that “every financial services company should be a fintech company.”

Given the number of underbanked consumers in the U.S. and around the world and widespread new interest in investing and saving, fintech’s TAM is massive and largely untapped.

Listen/watch the entire chat via YouTube, or click through to read the highlights (and see Zach’s reading list compiled from the bookcase in the background of his Zoom call).

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How first-time fund managers are de-risking

How first-time fund managers are de-risking image

Image Credits: krisanapong detraphiphat / Getty Images

Although many investors say COVID-19 hasn’t broken their stride, Natasha Mascarenhas found that some less-experienced VCs “are looking for unique ways to de-risk themselves.”

She reached out to a few partners to find out how they’re adapting to the current environment and found that some are experimenting with liquidity strategies, while others are benefiting from a renewed interest in diversity and inclusion.

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Apple's first virtual WWDC keynote set a new standard for remote presentations

Apple's first virtual WWDC keynote set a new standard for remote presentations image

Image Credits: Bloomberg / Getty Images

“The show must go on” is an entertainment industry cliché, but when it comes to Apple’s WWDC keynote, it’s almost a law of nature.

Instead of awkwardly staging a virtual event, Apple “artfully embraced the uncanny experience” it staged for a global audience, writes Brian Heater.

Although “there were still some first-time issues,” it “turns out there are some fringe benefits to being one of the three most valuable companies in the world.”

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Hoxton Ventures' partners assess Europe's early-stage landscape

Hoxton Ventures' partners assess Europe's early-stage landscape image

Image Credits: Hoxton Ventures

London-based VC firm Hoxton Ventures recently announced its second round at $100 million, a substantial hike from its 2013 $40 million debut fund.

Even through the first fund fostered three unicorns (Babylon Health, Darktrace and Deliveroo), it took the team years to get its second over the line.

“Fundraising is our Achilles' heel,” acknowledged founding partner Hussein Kanji. “We're quirky, but we're good at what we do. But that doesn't mean it's always an easy sell.”

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Playbook PM: States scramble as Covid keeps spiking

Presented by PhRMA: POLITICO's must-read briefing on what's driving the afternoon in Washington
Jun 26, 2020 View in browser
 
POLITICO Playbook PM

By Anna Palmer, Jake Sherman, Eli Okun and Garrett Ross

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BREAKING: THE PRESIDENT has canceled his weekend trip to Bedminster, N.J. (NYT's MAGGIE HABERMAN was first on this.)

JUST LIKE THEY PLANNED IT …

-- TEXAS GOV. ABBOTT CHANGES COURSE … TEXAS TRIBUNE: "Gov. Greg Abbott orders Texas bars to close again and restaurants to reduce to 50% occupancy as coronavirus spreads," by Patrick Svitek: "Gov. Greg Abbott on Friday took his most drastic action yet to respond to the post-reopening coronavirus surge in Texas, shutting bars back down and capping restaurant capacity at 50%. He also shut down river-rafting trips and gave more freedom to local officials to restrict outdoor gatherings."

-- HOUSTON CHRONICLE: "Gov. Abbott gambled Texas' reopening on contact tracing. Here's how it went bust," by Jeremy Blackman

MORE FROM THE CHRONICLE … STAY AT HOME COMING?: "Harris County Judge Lina Hidalgo on Friday plans to move to the worst threat level, calling for a return to the stay-at-home conditions of March and April, as COVID-19 hospitalizations continue to spike, three county officials said. Hidalgo lacks the authority, however, to issue a mandatory stay-at-home order as she did in March, since Gov. Greg Abbott took control of the state's reopening in May. She has said the governor reopened the state too quickly, leaving Harris County at risk of an uncontrolled outbreak that has now unfolded."

-- FLORIDA reported 8,942 new Covid cases this morning, a single-day record. … TAMPA BAY TIMES: "Florida suspends drinking at bars"

-- NBC'S @mikememoli: "Florida has one-third the population of Italy. This single-day case number is higher than Italy's peak."

-- ARIZONA REPUBLIC: "The percentage of positive test results in Arizona has spiked since mid-May. During the past three weeks, 19 percent of COVID-19 tests in Arizona were positive."

THE DOW JONES INDUSTRIAL AVERAGE was down nearly 600 points as of publication time.

MEANWHILE … AMERICAN AIRLINES announced it will join UNITED next week in starting to book flights to 100% capacity again.

SPEAKER NANCY PELOSI on Rep. ELIOT ENGEL'S apparent loss in his New York primary: "I don't know that that's determined yet.

DID YA KNOW … UNDER THE HOUSE DEMS' D.C. statehood bill, Washington would be renamed "Washington, Douglass Commonwealth."

Happy Friday afternoon. DARRELL ISSA is still really rich. In a new financial disclosure form, he disclosed between $50 million and $100 million in Dow and S&P SPDR funds and more than $50 million in a UBS money market account. Check out Issa's disclosure, which pegs his net worth at between $171.5 million and $303.1 million, with $100 million in various lines of credit

 

A message from PhRMA:

America's biopharmaceutical companies are sharing their knowledge and resources more than ever before to speed up the development of new medicines to fight COVID-19. They're working with doctors and hospitals on over 1,100 clinical trials. Because science is how we get back to normal. More.

 

TESTING LATEST -- "The Trump administration is eyeing a new testing strategy for coronavirus, Anthony Fauci says," by WaPo's Paige Winfield Cunningham: "Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, told me in an interview last night that health officials are having 'intense discussions' about what's known as 'pool testing.' The idea is that by testing samples from many people all together, officials could test more people with fewer resources. And those who are infected could be more quickly found and isolated. …

"It would represent a dramatic shift from how coronavirus testing is currently being carried out in the United States … The approach works this way: Samples from, say, 20 people are combined into a single pool. One coronavirus test is used on the entire pool. If the test comes back negative, researchers know they can move on to another pool of samples. If it comes back positive, only then would each individual be tested." WaPo

-- STAT'S ANDREW JOSEPH: "'Pooling would give us the capacity to go from a half a million tests a day to potentially 5 million individuals tested per day,' Deborah Birx, who is helping lead the White House's coronavirus response, told an American Society for Microbiology virtual conference this week."

CT'S SENATOR ON CT'S NETWORK … CHRIS MURPHY and DRAYMOND GREEN will be on "Outside the Lines" today.

THE ECONOMIC PICTURE -- "U.S. consumer spending up 8.2%, partly erasing record plunge," by AP's Martin Crutsinger: "Friday's Commerce Department report showed that Americans stepped up their spending in May despite a 4.2% decline in personal income, which had soared by 10.8% the previous month. Income had jumped in April on the strength of billions of dollars in support through government payments in the form of unemployment aid as well as one-time $1,200 stimulus checks. In May, those stimulus checks were no longer counted as income for most people." AP

SHOOTING HIMSELF IN THE FOOT? -- "Trump undercuts his own campaign's minority outreach," by Anita Kumar: "[J]ust four months after his trip to India, Trump this week blocked engineers, computer programmers and other high-skilled workers — overwhelmingly from India — from entering the United States. Trump's order — ostensibly to counter the soaring unemployment of American workers during the coronavirus pandemic — threatens to undermine the inroads his campaign hoped to make with Indian Americans …

"The incident is far from the only time the Trump campaign's outreach and White House's policies have clashed. Trump has advanced policies, gone off script in interviews or lashed out on Twitter in ways that contradict his own campaign's attempts to slice into the Democrats' advantages with African Americans, Asian Americans and Hispanics." POLITICO

WELP … WAPO: "'Don't be a sheep': Sheriffs rebel against new statewide mask requirements," by Teo Armus: "With coronavirus infections rapidly spreading across the American South and West and more states making masks a requirement, dozens of sheriffs … are staging a rebellion against state governments. An adherence to their interpretation of [the] Constitution, they say, comes before any kind of public health advice. …

"In Nevada and North Carolina on Thursday, multiple sheriffs said their Democratic governors' mask requirements were 'unconstitutional and unenforceable.' After five California counties ignored a similar directive, Gov. Gavin Newsom (D) threatened to withhold state funds. Another Washington state sheriff called Inslee an 'idiot.' As they battle through viral Facebook posts and appearances on local TV and radio, these mostly Republican sheriffs have effectively blocked their governors' orders. If they refuse to enforce their rules, it is unclear who else will." WaPo

 

GO BEYOND OUR BORDERS FROM YOUR HOME: The coronavirus pandemic continues to devastate parts of the world, and a vaccine remains out of reach. Our Global Translations newsletter, presented by Bank of America, focuses on impactful global news, trends and decisions layered with critical contextual analysis from the world's sharpest minds. From how the world is reckoning with systemic racism to how different countries are combating the latest Covid-19 spikes, Global Translations offers a unique perspective that you won't find anywhere else. SUBSCRIBE HERE.

 
 

EMERGING DISPARITIES -- "Many Latinos Couldn't Stay Home. Now Virus Cases Are Soaring," by NYT's Shawn Hubler, Thomas Fuller, Anjali Singhvi and Juliette Love with a Dinuba, Calif., dateline: "[T]here is no evidence yet that any ethnic group is inherently more vulnerable to the virus than others. But in the last two weeks, counties across the country where at least a quarter of the population is Latino have recorded an increase of 32 percent in new cases, compared to a 15 percent increase for all other counties, a Times analysis shows. …

"[T]he inexorable rise since Easter in infections among Latinos — both here and in Latin American countries — has alarmed health officials and Latino organizations, who are calling for more targeted testing, more comprehensive data collection and better workplace protections as the economy reopens. And it has become a political flash point in red states." NYT

BIG BROTHER WATCH -- "Coronavirus opens door to company surveillance of workers," by Mohana Ravindranath: "Employers are rushing to use digital tracking technology to reduce virus transmission in the workplace. But privacy experts worry that businesses will start using their newfound surveillance capabilities for purposes far beyond public health. The data could be used to evaluate workers' productivity, see which colleagues are holding meetings or even flag an employee who unexpectedly ducks out of the office during work hours. …

"The market for privately developed apps is being fueled partly by state and local governments' struggles to ramp up similar digital tools aimed at identifying potential trouble spots for the virus. Those government-sponsored apps have typically been slow to roll out and have had little buy-in from a public that's skeptical of having their movements tracked digitally. Unlike local health authorities, employers have wide latitude to mandate workers use apps or wear tracking devices." POLITICO

P-P-P-PROBLEMS -- "Small Businesses Raced to Spend PPP Funds but Covid-19 Pandemic Drags On," by WSJ's Ruth Simon and Peter Rudegeair: "Restaurants and retailers have applauded recent changes in the government's $670 billion small business rescue program that make it easier for companies battling the Covid-19 pandemic to qualify for loan forgiveness. But the increased flexibility has come late for scores of small businesses that followed the Paycheck Protection Program's original rules—and quickly used up most or all of their money."

REFORM REALITY -- "U.S. police registry would fail without changes in states," by AP's Nomaan Merchant in Houston: "Without major changes in almost every state, a national police misconduct database like what the White House and Congress have proposed after George Floyd's death would fail to account for thousands of problem officers. …

"Any eventual registry that emerges would depend on states reporting into it. But states and police departments track misconduct very differently, and some states currently don't track it at all. The result is a lack of reliable official data and a patchwork system in which officers can stay employed even after being arrested or convicted of a crime." AP

JOHN BRESNAHAN, HEATHER CAYGLE and SARAH FERRIS: "Rep. Steve Cohen launches push for Barr impeachment probe"

 

FOR CRITICAL NEWS AND CONTEXT YOU NEED IN 15 MINUTES OR LESS, LISTEN TO POLITICO DISPATCH: Coronavirus cases continue to spike as states take steps to reopen. Americans are demanding action from lawmakers to address racial injustice and police reform. How do you keep up with the never-ending news cycle? For quick analysis on the essential news of the day, listen to POLITICO Dispatch, our short daily podcast that keeps you up to date on the most important news affecting your life. Subscribe and listen today.

 
 

HOT ON THE LEFT -- "These Top Democrats Go Further Than Biden on Diverting Police Funds," by NYT's Reid Epstein: "Interviews with 54 Democratic National Committee members, convention superdelegates and members of a criminal justice task force convened by Mr. Biden and Senator Bernie Sanders found a near-unanimous sentiment that local governments should redirect more money toward social services, education and mental health agencies.

"Very few advocate fully defunding or abolishing the police, as some activists have called for. But they are aligning themselves, as have city councils in Milwaukee, Minneapolis, Denver, Portland, Ore., and other cities, with an increasingly popular movement to drastically rethink the priorities surrounding law enforcement." NYT

KNOWING JILL BIDEN -- "Running Mates: As Biden considers VP pick, Jill Biden is at his side," by NBC's Mike Memoli, Marianna Sotomayor and Deepa Shivaram: "[H]er role has been magnified in recent months in part for one simple fact: The coronavirus pandemic has meant even Biden's most senior campaign officials have spent far less time with him in person, while his wife has been a near-constant presence as they both campaign in earnest from their Delaware home. …

"And now, few close to Biden doubt that what you might call 'the Jill Test' is its own vetting of sorts for some of those on his vice presidential short list." NBC

DANIEL LIPPMAN: "FEC losing quorum again after Caroline Hunter resigns": "Hunter is joining the legal team of the Koch-funded group Stand Together, a nonprofit that works on criminal justice reform, education and poverty and addiction issues."

BEYOND THE BELTWAY -- "Governments eye new taxes on cigarettes, homes and tech giants to pay for big budget shortfalls related to the coronavirus," by WaPo's Tony Romm: "The increases that have been proposed — and in some cases adopted — reflect growing desperation on the part of government leaders nationwide. Many have found that recent spending cuts, furloughs and layoffs have not been enough to shore up their sagging finances, forcing them to consider more politically noxious and economically risky moves in the middle of an economic crisis." WaPo

THE NEW COLD WAR -- "China's Military Provokes Its Neighbors, but the Message Is for the United States," by NYT's Steven Lee Myers: "With the world distracted by the coronavirus pandemic, China's military has encroached upon its neighbors' territories on several fronts throughout the spring and now into summer, flexing its military might in ways that have raised alarms across Asia and in Washington. …

"China claims all of its recent operations are defensive, but each increases the risk of a military clash, whether intended or not. … China's military is widely thought to remain far behind American armed forces, but it has caught up in some areas, including the expansion of its naval power and the deployment of anti-ship and antiaircraft missiles."

 

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