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What Quibi got wrong

Image: Quibi / Protocol
Quibi RIP

Good morning! This Thursday, Quibi's dead, PayPal likes Bitcoin and Jony Ive is working for Airbnb.

(Was this email forwarded to you? Sign up here to get Source Code every day.)

The Big Story

RIP Quibi

The thing about Jeffrey Katzenberg's crazy Quibi vision, which came to an abrupt end yesterday? He was kind of right.

The future is short-form, mobile video, some of it of incredibly expensive and of high quality, in an app with a dumb name. Problem is, that name is probably TikTok or Snapchat, or maybe YouTube or Reels. It's definitely not Quibi.

  • After weeks of trying to find a buyer, and reportedly being rejected by everyone from Apple's Eddy Cue to WarnerMedia's Jason Kilar to Facebook's Fidji Simo, the company told investors last night that it's shutting down for good.
  • It raised $1.75 billion, had roughly a half-million subscribers and even had hundreds of millions left in the bank. But Katzenberg and CEO Meg Whitman said they didn't see a path forward — at least not one that didn't involve burning another billion or so — and decided to wind things down.
  • Speaking of all that money: Quibi wasn't funded like a tech company at all. Most of its money came from entertainment companies, also known as "the people who implicitly trusted Jeffrey Katzenberg."

What Quibi got wrong was all in the execution. It never had a hit show, something that leapt out of the app and into popular culture. Quibi didn't own its shows, either, meaning there was little possibility for licensing or ways to make other money from its content. After all his years at Disney, Katzenberg knew better than most the importance of owning IP, but he made a compromise to build the library, and that ultimately became a problem.

  • Even its Turnstyle tech, which was as close to a Thing as Quibi ever had, is the subject of a lawsuit alleging it's not really a Quibi creation. And, of course, it launched at precisely the worst possible time.
  • Katzenberg and Meg Whitman wrote in an open letter to staff that a lot of factors helped kill Quibi. "The circumstances of launching during a pandemic is something we could have never imagined but other businesses have faced these unprecedented challenges and have found their way through it," they wrote. "We were not able to do so."

But the biggest mistake Katzenberg and Whitman made was assuming that the future of entertainment was just about watching stuff. And it's not. It's about screenshots and memes; remixes and duets; deepfaking yourself into your favorite scenes; watching stuff with your friends; getting to know your favorite creators. Quibi was old-world TV dressed up like the future, while the actual future was happening elsewhere. It never had a chance.

Crypto

PayPal to the moon

It was like Christmas Day for crypto believers: PayPal announced that it's getting ready to allow users to buy, hold and sell cryptocurrency from within the PayPal app. And later, it'll extend that feature to Venmo. Bitcoin's value immediately hit a 2020 high and the Bitcoin subreddit became more popular than the sex subreddit. Big day for all the HODLers out there.

PayPal's vote of confidence in crypto here is huge, particularly its promise to let users pay with crypto at PayPal-accepting merchants around the world. That's a big step in taking crypto from "investment asset" to "thing that replaces dollars."

  • It's also going to make crypto a lot easier for people to get, particularly when it comes to platforms like Venmo. No more specific wallet apps, no complicated numbers to memorize, it'll just be another (slightly more confusing and much more volatile) currency in your wallet.

But there are some catches: You can't take your crypto out of PayPal once you've bought it, meaning the money lives in the app until you sell it or use it. You can't send it to other people. And you also have to make all purchases in USD. It's really more like Robinhood: a super easy way to buy and sell things, not so much a brand new way of moving money around.

  • In keeping with the somewhat cautious launch, PayPal's staying relatively mainstream with its first run of supported cryptocurrencies: It's supporting Bitcoin, Ethereum, Bitcoin Cash and Litecoin. (Sorry, Neo and Ripple evangelists.)

Now that PayPal, Square and others are starting to get into the crypto-holding game, this market's going to change fast. Can Coinbase, Binance and others keep up with the big players encroaching on their territory? Can someone else beat PayPal to being the most common way to buy and sell crypto? Are we two days from some huge Bitcoin collapse and a lot of people emailing me that crypto is dumb and who cares? The only thing I know for sure is everything could change a million more times in the next five minutes.

You Tell Us

Would you let your Tesla drive you?

One reason that software is great is because it doesn't have to be finished when you ship it. You can update, bugfix and improve things even after people buy it. SaaS all the things! Except sometimes that software is literally the stuff of life and death.

Tesla's starting to roll out a feature it calls "Full Self-Driving," giving Tesla owners even fewer reasons to touch their steering wheels or pedals. As The Washington Post reported, the update's coming even as many critics say the tech isn't ready.

  • "FSD beta rollout happening tonight," Elon Musk tweeted on Tuesday night. "Will be extremely slow and cautious, as it should."
  • Tesla can do this because, well, there's no laws saying it can't. Such is the craziness of the self-driving world, as long as there's still a person paying attention in the driver's seat.

But here's what I want to know: Would you trust the update? Are you going to download it for your own Tesla? And if you were Elon Musk, how would you approach developing and releasing a technology like this with such huge potential but such scary downsides?

I want to hear all your thoughts: Reply to this email or send me a note at david@protocol.com.

A MESSAGE FROM PHILIPS

Philips

Strengthening healthcare interoperability and cybersecurity in the COVID era

A stronger healthcare system means connecting people, data and technology for a frictionless experience across care settings. At Philips, we're developing interoperable solutions that seamlessly transfer data so clinicians can stay focused on what matters most: the patient.

Learn more.

People Are Talking

The remote-work world seems perfect for Slack, but Morgan Stanley's Keith Weiss thinks it's going to lose:

  • "With Microsoft Teams a component of Office 365, Teams was and is easy and affordable to roll out more broadly within the existing customer base … and in our view, the customers that have standardized on Microsoft Teams aren't looking back"

Jewel Burks Solomon, head of Google for Startups in the U.S., said one way to improve diversity is simply writing checks:

  • "When you fund Black founders, you help create systemic, generational change."

Think Bezos is rich? You ain't seen nothing yet, Chamath Palihapitiya said:

  • "The world's first trillionaire will be made in climate change."

Eric Schmidt said Google shouldn't be hit for monopoly behavior, but thinks social networks need to be regulated:

  • "The concept of social networks, broadly speaking, as amplifiers for idiots and crazy people is not what we intended."

Making Moves

Jony Ive is now working with Airbnb. The two are in a "special collaboration" to design new products and services, and to build Airbnb's internal design team. I'm excited for every Airbnb to feature much more aluminium and be suddenly very slippery.

Ant Financial got approval for its historically huge IPO. It plans to list both in Shanghai and Hong Kong, and to raise upwards of $30 billion.

Bob Iger is the newest board member of Perfect Day, an alternative protein company. (So far its product is dairy-free ice cream, but it claims to have bigger aspirations). Iger's also investing in the company.

In Other News

  • On Protocol: Alloy promised Democrats a data edge over Trump. The DNC didn't buy what the Reid Hoffman-backed non-profit eventually offered it — and Democrats are still at war over what value it adds to the party.
  • Google ramped up lobbying last quarter, spending $1.9 million, 14.2% more than the previous quarter. Facebook and Amazon spent much more — $4.9 million and $4.4 million respectively — but those figures were barely up from three months earlier. Of the Big Tech companies, Microsoft was the only one to decrease spending: Its $1.9 million was down 35.4%.
  • Don't miss this story on how Google is running its antitrust defence, from The New York Times. The strategy looks like it's "be boring." Sundar Pichai will reportedly take charge, with a calm, caretaker approach, and he'll be helped by Kent Walker and Halimah DeLaine Prado. Law firms Wilson Sonsini Goodrich & Rosati and Williams & Connolly are also expected to be involved.
  • The Coalition for App Fairness is growing. It added 20 new partners yesterday, from a range of categories — though none are nearly as influential as the founding members.
  • JPMorgan Chase is going up against Square. Its new QuickAccept product lets businesses take card payments through a smartphone app or contactless reader, with same-day deposits for free. Square, meanwhile, charges 1.5% for instant deposits.
  • On Protocol: Business travel to China has changed — a lot. WeChat, already a part of daily life, has become even more essential: Your customs declaration is now filled out in the app.
  • James Dyson sold his Singapore penthouse for a 13% loss. SHI International co-founder Leo Koguan bought the three-storey apartment for $47 million, well below the $54 million Dyson paid last year.

One More Thing

The art of the retweet

Twitter rolled out that retweet change we mentioned the other week: Now, if you want to retweet something, you're prompted to do a quote-tweet instead. The goal, Twitter said, is to add some friction to the process. But for some artists, it's taking away their chance to reach people, and giving all the likes and RTs to the quote-tweeters instead. Nothing's ever simple in social. (Fun fact: If you don't type anything and just send the tweet, it still does a regular RT. You're welcome.)

A MESSAGE FROM PHILIPS

Philips

Strengthening healthcare interoperability and cybersecurity in the COVID era

A stronger healthcare system means connecting people, data and technology for a frictionless experience across care settings. At Philips, we're developing interoperable solutions that seamlessly transfer data so clinicians can stay focused on what matters most: the patient.

Learn more.

Today's Source Code was written by David Pierce, with help from Shakeel Hashim. Thoughts, questions, tips? Send them to david@protocol.com, or our tips line, tips@protocol.com. Enjoy your day, see you tomorrow.

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