In April 2020, Quibi launched. It was a short-form streaming app for premium video, backed by Jeffrey Katzenberg (DreamWorks founder) and run by Meg Whitman (former HP and eBay CEO). They raised about $1.75 billion[1] before they shipped a single feature.

Six months later, on October 30, 2020, Quibi shut down[2]. Almost all the money was gone. The product had hit roughly 500,000 paying subscribers[3] against a projection of about 7 million. Catastrophic failure.

This is what the risk of bringing a new product to market actually looks like.

What "risk" means in product launches

Launching a new product requires 3 kinds of resources: financial (cash to build, market, and operate), physical (offices, servers, raw materials), and human (the team's time, energy, and lost wages from other jobs). All 3 are scarce. All 3 cost something. None of them come back if the product flops.

Quibi spent its $1.75 billion on Hollywood-grade content, a custom app, a heavy ad campaign, and salaries for hundreds of employees. The cost was real. The revenue never showed up. Everyone who put money in lost most of it. Everyone who left a stable job to help build it, some more than a year before launch, watched it all vanish within 6 months of going live.

That's the worst case. Most failed startups are smaller versions of the same arc: real spending, no revenue.

Why anyone takes the risk anyway

3 motivations push founders forward:

  • Profit potential. Successful new products can return huge multiples on the original investment. Airbnb almost died in 2008 (the founders famously sold cereal boxes at $40 a box, netting about $30,000 after costs[4]). Airbnb's 2024 total revenue was roughly $11 billion[5]. The investors who took the early risk got paid for it.
  • Solving a real problem. Some founders are driven by the satisfaction of fixing something broken. Khan Academy started in 2004, when Salman Khan began tutoring his cousin Nadia in math remotely. Word spread to other relatives, the scheduling got unmanageable, so he posted the lessons on YouTube. The nonprofit came 4 years after the first tutoring session[6].
  • Pursuing a passion. Some founders just want to work on the thing they care about. The risk is acceptable because the alternative (working on something they don't care about) feels worse.

Quick recap

  • Launching a product costs financial, physical, and human resources, all scarce.
  • Revenue isn't guaranteed; most new products either lose money for years or fail outright.
  • Quibi spent ~$1.75B in roughly 6 months and got ~500K subscribers against a 7M target. Total loss.
  • Founders take the risk because of profit potential, the desire to solve a real problem, or passion for the work.

Try this week

Think of a product you'd want to build. List the 3 resource types you'd need: how much cash (rough estimate), what physical things (workspace, materials, software), and how much of your time over the next year. Then list what you'd lose if it failed. The list itself is the entire concept of "risk." Most people don't go further because the list is honest.

References

  1. Quibi raised approximately $1.75B across 2018-2020, including a $750M initial round (2018) and ~$1B follow-on (2020). Data as of October 21, 2020. Source: CNBC coverage of Quibi's shutdown. cnbc.com/2020/10/21/quibi-to-shut-down-after-just-6-months.html
  2. Quibi shut down October 30, 2020, six months after April 6, 2020 launch. Data as of October 21, 2020 shutdown announcement. Source: CNBC coverage of Quibi's shutdown. cnbc.com/2020/10/21/quibi-to-shut-down-after-just-6-months.html
  3. Quibi peak paid subscribers ~500,000 against 7M+ first-year target. Data as of October 2020. Source: CNBC coverage of Quibi's shutdown. cnbc.com/2020/10/21/quibi-to-shut-down-after-just-6-months.html
  4. Airbnb founders sold themed cereal boxes ("Obama O's" / "Cap'n McCain's") at $40 each during the 2008 Democratic and Republican National Conventions: 1,000 boxes sold = $40,000 gross, netting roughly $30,000 after materials, printing, and shipping costs. Data as of April 19, 2023. Source: Fortune, "How a cereal box changed the course of Airbnb history," Prarthana Prakash. fortune.com/2023/04/19/airbnb-ceo-cereal-box-investors-changed-everything-billion-dollar-company
  5. Airbnb 2024 revenue ~$11B ($11.102B exact). Data as of FY ending December 31, 2024. Source: Airbnb FY2024 Form 10-K Page 37. sec.gov/Archives/edgar/data/1559720/000155972025000010/abnb-20241231.htm
  6. Salman Khan began remotely tutoring his cousin Nadia in August 2004; the organization was incorporated as a 501(c)(3) nonprofit in 2008. Data as of Khan Academy's published history. Source: Khan Academy Help Center, "What is the history of Khan Academy?". support.khanacademy.org/hc/en-us/articles/202483180

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