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Meg Whitman Interviewed by Mark Suster | Upfront Summit 2020

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Upfront Summit 2020
January 30, 2020, Pasadena, CA, United States
Upfront Summit 2020
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Meg Whitman Interviewed by Mark Suster | Upfront Summit 2020
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About speakers

Meg Whitman
CEO at Quibi
Mark Suster
Partner at Upfront Ventures

Meg Whitman is CEO of Quibi, which brings together the best of Silicon Valley and Hollywood to create the first entertainment platform built for easy, on-the-go mobile viewing. Quibi will allow today’s leading studios and creative talent to tell original stories in an entirely new way.Whitman served as CEO of Hewlett Packard Enterprise until Feb. 1, 2018 and she continues to serve on the board. From 2011 through 2015, she served as President and CEO for Hewlett-Packard Company, leading the company’s turnaround and subsequent separation into two Fortune 100 companies: Hewlett Packard Enterprise and HP Inc. From 1998 to 2008, Whitman served as President and CEO of eBay Inc., where she oversaw its growth from 30 employees and $4 million in annual revenue to more than 15,000 employees and $8 billion in annual revenue.Prior to joining HP, Whitman was the Republican Party’s nominee for the 2010 gubernatorial race in California.Whitman has also held executive-level positions at Procter and Gamble Company, Hasbro Inc., The Walt Disney Company, and Bain & Company. She currently serves as a director for Dropbox, The Procter & Gamble Company, Teach For America, and The Nature Conservancy, and previously served on the board of DreamWorks Animation SKG.

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2x entrepreneur. Sold both companies (last to salesforce.com). Turned VC looking to invest in passionate entrepreneurs.

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About the talk

Topic: Business

Meg Whitman (CEO, Quibi) chats with Upfront Ventures partner Mark Suster about the development and upcoming launch of Quibi:

- What will make the service stand out

- Why they're betting that consumers will pay for premium content

- How the platform is inspiring and incentivizing creators in unexpected ways

- How Quibi is a technology platform first

- The importance of 5G and why they feel Quibi is the perfect use case

- The dynamics of her long partnership with Jeffrey Katzenberg

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Quibi it stands for quick lights. Mobile video is the focus. Can you talk about the content? What's going to be unique about the content that you have? What's going to make it stand out in a world filled with option strategy. Everything is made for mobile and every episode or session length on could be as less than 10 minutes and we have three different kinds of content. We have what we call movies in chapter so it could be a hundred and fifty movie was told in 15 minutes chapters for you. There is The DaVinci Code The DaVinci Code

is 464 pages and a hundred and five chapters. Every chapter is just five pages long because Dan Brown said, I don't think my readers have 45 minutes anymore. So we were inspired by that but there's nothing lesser about The DaVinci Code than the length of its chapters and we would argue are movies are world-class movies just Different delivery mechanism designed entirely from Mobile to the platform and then finally daily essential. There's a whole category of

information on the internet that is not very well curated not organized until we're going to take movies anywhere to take News sports weather talk shows all kinds of things to create a daily consumption have it it just give us a flavor for some of the content that's been announced so people get it. So we have really a list and thank you to my partner Jeffrey katzenberg. We have a list Hollywood writers producers directors and stars. So for example, and tan poop while he was probably one of the most prominent directors in Hollywood today has been a show for us called hashtag Prix race

on it is Fruitvale Station Dog Day Afternoon. I'm throwing starring Laurence Fishburne and Stefan James and it is fifteen 10 minutes chapter. So fantastic show another great one Steven Spielberg. Our strategy should say is we think are used case is 7 in the morning till 7 at night. It's on-the-go viewing on your mobile and Stephen came to us and said I think I want to do is show that you can only watch at midnight and we said we're on the 7 a.m. To 7 p.m. Program. And he does he have that. I think it's going to be really scary. If you could watch my

native scary show. I'm at midnight and so he said to the engineers in the room and we said listen, you know, can we do that? And I said, of course cuz we know what time is it where you are exactly your phone knows exactly where you are what time the sunsets precisely what time the sun comes up and so that we can block the content until the sun sets. And then in the morning when the Sun goes down we can make the virtual films just follow in front of your very eyes my wife and I will do what we do at New Years will set our thing.

Across-the-board and you launched it with a subscriber you're launching with a subscription model. It's $5 a month. If it's add three, it's $8 a month. If you have ads on it, can you talk a little bit about both the pricing a decision made how you said that and what you think it takes to get subscribers? So we looked at all the different streaming services. I thought I was saying don't think that we compete for time with the big streaming services of Netflix or Hulu or Disney or Apple TV plus cuz only 10% of those Services there. Be only 10% of their billing takes place on the

mobile phone and virtually none of it takes place during the day. This is mostly an evening and weekend experience. But we do think we obviously compete for entertainment dollar across a whole host of things that you can spend money on whether it was gaming or streaming services or whatever. So we looked at the streaming services. We said we wanted to be at a very affordable opening price point that it was the lowest of all the Major streaming service has so that's how we chose what is now for 99? We had an idea that $5 might be the right thing. And ultimately we thought of you

know, who I saw all the research that everyone else sees marketing works. So for 99 and then we said, you know, what would be a price for an ad-free version and done. So we think it's affordable and I can tell you about you know, all the marketing that we're doing but obviously we have to build a brand new ones her to put bait we have to explain to use case that it's mobile only I shouldn't mention all the content for the app is being made new for quitting because I think what's happened before is the phone what has happened for content on the phone is it was built for the movie screen or

the television screen? It has been stuffed onto the phone in a way and we're actually creating content unique way to be watched on the phone. And so it has to be shot different rendered differently and then obviously the tech platform that we have built makes viewing video on the phone a completely different experience. Let's talk a little bit about your expectation on demographics because so on the one hand you've got, you know people like me who pay for everything now and you know, the Netflix and Hulu and HBO and everything and your suggestion is were generally not watching those on her

mobile devices. My kids only watch on them. They're watching on Snapchat and YouTube on TV. Who are you going after how do you get them to pay? Cuz I'm one hand we all have so many things we pay for and on the other hand. I think the younger Generations he's not the one sure sure will the target audience is 18244. The content Bullseye is 25 to 35 years younger and younger and Millennial based on audience. And our thesis here is that every consumer product that has ever really come into existence. There's always a premium version of it and I'll give you a good analogy HBO. Do you

remember when HBO launch they said it's their tagline was it's not TV. It's HBO and they staked at a premium positioning relative to advertisers supported TV, by the way, which everyone loved I mean, it was the height of advertisers important whether it was ER or friends or whatever. And so what we like to say is is where I say not YouTube Facebook Instagram stories, excetra work living and it is a different level of content. I don't Better or Worse need to listen. We love you too. We wouldn't be sitting here if YouTube hadn't created the most incredible democratized entertainment

platform in the world, but we are doing a completely different budget level with a different level of stars and writers and directors and and storytelling talk publicly. Turn on YouTuber quite low on on broadcast TV are insanely $500 a minute the great tasty tastemade my personal favorite dude, perfect streaming video movies television 95% of that is about $100,000 a minute or six million dollars an hour. There's there's higher-cost shows, you know, the crown Game of Thrones but

95% of his isn't is in that Arena. So for our movies in chapters, we will pay up to six million dollars an hour plus a 20% profit margin to the to the Creator and a big difference in our model which we've been very public about it the creators of the and the Studio's who they partner with own their own IP. So we license it to the platform for 7 years, and then it returns to the Creator which is a big difference in how What today one of the things you alluded to and we had a little bit of fun with it in our pre video is I think you're known for being able to watch the landscape and

portrait mode talk a little bit about what led to the decision and what you think I chose to the viewing X. So, we looked at all the different alternatives to our youth case and think about our use cats as I said, it's on the go. So let's say many of you make commute to work in the morning and you get on the bus and you're holding your phone in portrait. And then maybe you were going to watch something in landscape and we know that creators Hollywood grade is 4 years have really done landscape and not so much portrait. We said, you know what for that use case we've got to be able

to do full screen video landscape and portrait cuz today when you watched a some things in portrait, it's a little postage-stamp video and it at the top of your phone. It needs to be a completely immersive experience. So we set out to say how do we do landscape to portrait. Turn video at will so that you can decide which way you want to watch many many streaming services. You can only watch and horizontal and so we set out to do that and we've created a really interesting technology platform that has inspired creators to do things in a completely different way. And one of the

things that we try to do is a marriage between Hollywood and Silicon Valley. There's a long history in Los Angeles and Hollywood of Technology enabling new ways to tell stories. I mean go back to the motion picture invention of Motion Pictures. There were no movies leaders took that technology and created an industry that is unsurpassed. Television was a completely new technology and I bet some of you know that when the first content on TV or radio announcers reading the scripts because they haven't figured out how to use this new technology. You can think of CGI and

animation. So we think this new platform that makes viewing video on your mobile in Probably immersive very effective. We think could unleash a whole new way for creators to tell stories for the people who shoot the video because almost by definition. It seems like you can't take video that was made for any other purpose. You cannot we will be the first streaming service that launches without a library because everything has to be made unique play for queer bait. So if you're coming with one camera, which I think most of our creators well is they have to keep in my day looks the

cinematographer looks to their camera and says, what does it look like in portrait? What does it look like in landscape and they have to keep those two thoughts in their head because in the end they have to deliver us a portrait at it and a landscape at it and then the GPS in your phone knows which way you're holding it and we'd deliver the right at it to you. It's all synced, of course from The Sound perspective because it was all made at the same time. And so they have to admit it's been fascinating because Every new director who does this we have almost what I would call a Wiki which

is like a Playbook and they're all adding to it. The first one had ideas and then the second one had more ideas and now it is a remarkably creative and collaborative culture here in LA and tell ever it. So there's an extended body of work now about how to do this in a way that's remarkable you ran a very large important technology company. You have a storied career in the technology industry talk about Quivey's take on what technology is as a differentiator relative to the industry. What investments are you making importance to ascribe to it? So we thought

from the beginning that we were actually doing a media attack Media Company because remember I told you it was Jeffrey and I had this idea that for many many years technology-enabled a new way to tell story. So we said how could we build a technology platform first and then expose it to the creators who could just I had to use it and I'm so from the beginning. We been so many companies in this industry became tech companies are tech companies who then became content companies. We try to do this at the beginning with Enoteca as a primary. And so we either we have 70 or

80 engineers and product people. We have seventy or eighty content creators are content green lighters. We don't make any content ourselves. By the way, we commissioned content from our studio Partners, but we have a whole team that is designed to to decide what we should commission and totec has been at the Forefront and we've created an entirely new way to do this portrait and landscape that we have patents on that. We should get in the next few know five or ten days. Are there other parts of the text back that you talk publicly about that you're that you think become differentiated. So

think about it when you there's what kinds of different things personalization okay, so on average when you're trying to find some What you're looking for on some of the big streaming services, it can take 8 10 12 15 minutes to find what you're looking for. We have to get you content very fast because the viewing window is only 10 minutes. So I can't take 10 minutes to find what you're looking for. So we are meta tagging each denovo piece of content. Cuz remember it's all made for us down to the frame level which will allow our Ai and ml to kick in sooner so that we can get you what you

want that we've designed the app in such a way that you will have a feed every day of 25 things 10 minutes or less that we think you will like and then as soon as we understand what you're looking for, then we could actually let's say you're watching our sport streaming show which is done for us by ESPN, which will be a little bit of remember Sports Center used to have mostly highlights in a few Talking Heads and then have mostly went to a little highlights on a lot of talking had we're going back to Highlights narrated by a sports Enthusiast and let's say you've watched that three days

in a row in the more Maybe on the fourth day if you open the app and we start streaming that to you cuz we know it's what you want. I sent to their personalization. There's also how do you optimize mobile viewing? Have you ever been watching your phone may be in the airport waiting line for a flight to take off and then they announce the flights and you can't hear anything so you can touch the AR app and become subtitles so you can watch while it gets loud to little things that optimize the viewing experience on mobile. And then we do think interactivity is a really important part of

our future we have a dating show which is very interactive and we think over time there's another there's a lot think about utilizing every aspect of the phone the camera the touchscreen the GPS the gyroscope all can be utilized to create new shows. I think there's such a mantra and particularly among species that the media industry is broken. And what I like to say is media is actually increasing working. Increasing our consumption not decreasing just how you monetize. It is changing so examples here in the audience. We have

fabfitfun that started in media has monetize it through providing subscription boxes with another company here called solve that took your last example of interactivity. They create mobile video that's interactive, but they're not building it into a video-game and monetizing did the video game. So I think that's really the next era. It's so interesting to watch how fast these into Emily see this obviously in Silicon Valley all the time, which is, you know, new ways to do things completely disrupting industry and your friend to see I think a whole new generation of entertainment that

is enabled by new forms of technology and interactivity that I think can change the entire landscape from your career and Technology. You probably know our Mantra is raised a small round. It's fine product Market fit iterated rated R. And then step on the gas. We kind of have a problem. I say in our industry in Silicon Valley of rounds getting a little too big now, 20 million 30 million 40 million to get started around or I guess your seed round was a billion dollars. billion dollar

seed round talk a little bit about the decision in the importance of that and and how you see that remember we are creating an entirely new type of content to be viewed on your mobile. And as I said, we will be the first streaming service that launches without a library because it can't take a 60-minute Game of Thrones and chop it up into 610 minute segments. The story arcs aren't right. It hasn't been shot for mobile. It hasn't been shot for what we called Turn Style which is our landscape

to to Portrait. And so we knew we had to make all the content knew. We also knew that you couldn't come to put a and C 2.3 pieces of content. It had to be completely an immersive experience with a unique content strategy of movies and chat you come from movies in chapters, you're delighted by are alternative and documentaries and the daily consumption have it is in fact our daily Essentials. So we knew that there were two big cost to this company one was content and the second was marketing because No, one had heard of that there was not a big brand behind it. So we decided to give

ourselves a real fighting chance to make this work. We had to raise enough money to be able to create at launch a completely immersive experience and dumb. So that's why we decided that that's what we needed to do. And as you probably know we've raised another 400 million for the first close in December and another close for another hundred million in January and Steven Spielberg takes a bit of money to get them to produce great content not all of them, but we will pay up to six million dollars an hour or so we'll launch with we will make him your

175 shows and 8500 episode and the business model. You may say that the business model is as you pointed out a subscription + advertising if you're only Mammoth monetization mechanism was advertising. I don't think this business model would work because I don't think you could afford to pay for the content that you needed in the marketing. So that's Play this mix of advertising Plus subscription is so important and listen, we've had so much support. We have it sold out our first year inventory of advertising for a hundred and fifty million dollars. We have a

great deal with T-Mobile who is going to bundle are movie subscription with all their magenta subscribers and you know, there are great brand fit for us cuz they're great marketers and and Millennials. So we've risked I think you're one by those two things but there's no question. It's a big bet when you think about content creator. So I think we have this dichotomy in La which is right. Now that the war's for subscribers means that if your JJ Abrams or your Reese Witherspoon, if you are super premium in an audience wants you they'll pay unlimited because they're trying to win

eyeballs. If you're a newer Creator trying to get discovered on some of these platforms. I won't name any of them. What I'm told is it's really hard to build a business because they control so much of the rights and so you put this gray Piece of content out you make 20% margin and you have no other way to monetize talk about that tension and how you see being Creator friendly. I know you said after 7 years, they get their content back button seven years their dad if they don't have like a profitable business what other room do you have to have for building businesses and how will couldn't

help them? So we thought about this as you think of that we think there's really two profit pools if you will NVC language one is the creator Prophet pool. What it What is the value of the content? And the other is a platform about her sizing and subscriptions. So we said we thought it was the right thing to do to move a hundred percent of the profitability of the creative to the creating community. And so remember it's we pay the cost of production plus 20% So there's a 20% profit margin at least isn't that makes you feel like that was worth doing and then you own your own IP,

and this is Very different it actually Harkins back to on before they were the Pinson roles in Hollywood where you know, the network didn't used to own their own IP. And it was a golden your for Hollywood. So we decided to go back to that and that is why we have not only existing very well-known creators Reese Witherspoon is making content for a Steven Spielberg making contest all those folks that you mentioned are because they find it to be a very attractive Financial deal in Hollywood. And then we also have many young you creators who are making content for us Tye Tye Sheridan and

Zach Wagner have created something completely different with Turn Style than what I described. They have in horizontal is one view of the scene and in vertical it's the other view another view of the scene. We did not create this. We actually sort of said, okay. Listen, here's how you do it with one camera and they came to us and said we have a whole nother idea and that's exactly what we had hoped. And now we have an avalanche of Greater is coming to us with really innovative ways of doing this. So we Super financially attractive for them and on the movie side back to

about these movies in chapters and Antoine Fuqua till after two years. He can reassemble those 15 chapters that I told you about each were 10 minutes in length reassemble it into a shorter form but singular movie and sell it into another window after 2 years. Okay. So it's it's another way for them to make money if you have Global lights on and so as a result we had it whenever we commissioned content we have to get Global rights for that content. So we made sure that was in a part of the original deal hard to process our brains of the

importance of that. You must be thinking about is 5G. How do you see 5G changing experiences like those for quibi when is Humming, what should we know about the importance of a long time coming as you know, and we will see how it works when it is out in the wild but each of the telcos that we talked to about bundling quibi. Thought we were the perfect youth for 5G because we are on the go you're out and about your in a on a bus here waiting in line for a cup of coffee at a at a coffee store. You are at a doctor's office. You're

walking from point A to point B, you're waiting for friends to meet and so they thought we were the perfect use of her 5G and because it will accelerate speed dramatically. And so if you have a slightly more complicated technology that 5G actually will be super helpful to us and I think we are a great use case for Something Completely new. I think the airpod culture is also going to benefit is it is Week we showed 11 shows and 15 episodes for people just to get a sense of what it was like to watch three or four episodes of a movie on your phone

until course. We had, you know are airpods and and others and it is a remarkably immersive experience. There's something magical about the about your phone because it is it is just you and that phone when you're watching television, you know, you'll see this weekend to the Super Bowl people are coming in and out and you're getting up and getting food and there's lots of people around when you're watching your phone, even on a bus or in a doctor's office. It's you and that phone and it is a surprisingly immersive experience and the portrait view of this is remarkable and I'm

in some ways. We think some of the movies are as powerful if not more so in portrait than they are in landscape, which was unexpected by the Hollywood creative Community because they're very used to shooting in Paradise landscape prove that coz Snapchat has had so much it has but this is a whole nother. This will appeal to even an older audience because it's so immersive. So we're excited about that. It's a it's a whole different experience know if I'm not mistaken your roll out is kind of eminent. Yes. Can you talk a little bit

about the launch? When is it coming? What are your plans and also in the same answer? Could you talk about what you've learned from the recent Disney launch? Yeah. Where are you Incorporated? So we have you'll love this. We have a countdown clock in our kitchen that has how many days to launch how many hours and minutes and yesterday at 1067 days Dykes, but I think we'll be ready. So it's April 6th is when we launched and we we passed out of a very thoughtful approach to this cuz when we first started the funding the first one thing that you talked about

came in April, I mean in August of 2018 and we had to actually explain to Hollywood what this was we went to all the agencies and all the lawyers. We have a lot of Pressing in the local Hollywood press cuz we had to build enthusiasm for this new way to tell stories and then we began to tell a little bit more in the business press and now starting really right about now. We now start our consumer what I would call Rolling Thunder which will include obviously growth digital brand Digital television out of home. And obviously, we're making our website work hard between now and April 6th. So if you

will have a chance to go to put it out, you can sign up to be a plebeian cider and will give you all sorts of inside information about the launch. So we have a rolling thunder right through April 6th. And then here in LA on April 5th. We should have the red carpet to end all red carpets cuz we launched with 50 shows. So I think we'll have a fantastic red carpet and we'll do the normal impressed that surrounds that you still have my email address or I do yes, you're invited if you'd like. So we

hope that our objective is that we have a very high degree of awareness among Our Charlie at target audience in the US and Canada. We're launching in the US and Canada first and as I said our partner, you know, what is T-Mobile when they will be activating all their stores and their marketing and so we think we'll we'll have a Big Lots. We need to have a big lunch because we want to make sure that we end up with a lot of people doing their two week free trial cuz when you start no matter when you sign up, there's two week free trial. What do we learn from Disney? I think he just needs an

entirely different thing. I mean, they have a hundred-year-old brand with some of the most recognizable content in the world, but we did learn is streaming has become mainstream. I mean every you think about when Netflix launched their streaming service has had to explain to people what streaming was and now you look at everyone understands this everyone understands the subscription model until I think what you saw by their phenomenal success, which you have to say, they had they did a remarkable job. I think it's also that this is a behavior a well-established customer behavior

that people understand and feel really comfortable sitting business partner in this journey, Jeffrey katzenberg. What's it like to work with Jeffrey and does he require you to leave your mobile phone on past midnight and I have been friends for 30 years. I was in strategic planning at the Walt Disney Company when he was running the studios and I think I might have been the only strap planner that he talked to and we stayed in touch and I was on his board at 3 Morse animation when he took that company public I was at

eBay at the time and then like Winston one of my predecessors at HP had struck a technology marketing deal with DreamWorks where we HP technology ran the entire Dreamworks Studios. And so we've known each other for many years and have been good friends. And when I said, I was stepping down from HP after six and a half years. I told the board I stay five. And that he said would you ever come do this with me? And we had a long conversation at the end. I said, this is a really good idea. He's pretty persuasive is very persuasive. But it's also a really good idea. So listen, we are completely

different Jeffrey is a right-brain Storyteller IMA left brain analytical thinker. I like to plan and be thoughtful and Jeffrey is creative and it is our superpower. Honestly, I think one plus one on a good day equals 5 or 6 on a bad day equals two and it but it has taken a lot of maturity to figure out how to work together. I often say, you know, if we've done this 20 years ago and might have been a little more contentious but were you know, we've had success were would like to say we're old dogs, you know doing something new and so there's a great deal of trust and a great deal of

respect between us. So it's great fun and I will say is you said, you know, does he does he require me to get my phone on? No, but I'm a pretty hard work or two. I think he's a harder worker than I am but To each other six or seven days. In fact, he called me right as I was coming is off and it's all based on trust and I also tell you I think I have done a lot of work with Founders and dumb. He's the founder on the CEO and there is a special gift that Founders have many of you are founders and you know hat my job is to figure out exactly how to get the very best out of

Jack and Diane dinner. He's just a remarkable talent. I have the privilege of having a few breakfast meetings with him in a row and I sort of felt I felt proud and I was telling somebody in the meaning when you first what do you mean what he does to breakfast meetings everyday downgraded? I still don't know if first is better or second is better than he's completely indifferent. You were good.

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