Jeffrey Katzenberg and Sujay Jaswa: How Walt Disney’s protégé disrupted entertainment
Jeffrey Katzenberg and his business partner—former Dropbox CFO Sujay Jaswa—talk about the intersection of Hollywood and technology, business “homeruns,” and how to recover from the swings and misses.
Jeffrey is an entertainment industry executive and entrepreneur, who throughout his career has repeatedly reshaped the media landscape. He co-founded DreamWorks SKG, serving as CEO of DreamWorks Animation, which he grew into the world’s largest animation studio. He is a Founding Partner at WndrCo, which invests in, acquires, develops, and operates consumer technology businesses for the long term.
Sujay is one of Silicon Valley’s leading business innovators, and oversees WndrCo’s investment and operating activities. He was formally the CFO at Dropbox where he created and led the company’s global business and finance organizations.
Jeffrey Katzenberg has had an epic career with both astronomical highs and lows few others can match. “I’m a home run hitter,” he says. “It doesn’t mean I hit a home run every time, but I’m the guy they call in when you need someone who’s gonna swing for the fence. Somewhere between improbable and impossible, that’s my home address.”
And his resume backs it up. After getting his start as an assistant at Paramount in the early 90s, he joined Disney, where he eventually worked his way up to chairman and was widely credited with helping the company reach #1 at the box office with films like The Little Mermaid and Aladdin. From there, Jeffrey founded DreamWorks, which he sold for $3.8 billion in 2016. He then proceeded to set his sights on Silicon Valley—where he founded the notorious streaming platform Quibi.
Jeffrey’s business partner Sujay Jaswa, has also had a career that puts him among tech legends. Born and raised in Silicon Valley, Sujay is the son of Raj Jaswa, co-founder of “The Indus Entrepreneurs,” a non-profit built to help the first generation of Indian entrepreneurs make their mark in the nascent tech industry in the 1990s. Following in his father’s tech industry footsteps, Sujay was Dropbox’s first executive and spent five years as the CFO. From 2010 to 2015, he led the global business team from an ARR of $15 million to almost $600 million in four-and-a-half years—a historic ramp in the SaaS industry.
On Wish I Knew, Ethan Kurzweil sat down with Jeffrey and Sujay to talk about the power of partnerships, why you should think about failure like Silicon Valley (not Hollywood), and the value of uncommon perseverance. Together, they talk about the very public rise and fall of Quibi, as well as the ventures they’re currently pursuing.
After selling DreamWorks Animation to Comcast for $3.8 billion dollars in 2016, Jeffrey woke up the following morning wondering what was next for him. “In 1973, when I was 23 years old, if you wanted fame, fortune, and great career opportunities—it was obvious, go to Hollywood,” he says. “Six years ago when I woke up and thought about what I would do if I were 23 years old today, I’d go to Silicon Valley. Because that’s where the greatest opportunities are being made today.”
Meanwhile, Sujay had just come off a run at Dropbox and was trying to figure out what to do next. One day, out of the blue, he got a call from his friend, Diego Berdakin, an entrepreneur, who had just played poker with Jeffrey and thought the two should meet.
“Jeffrey and I got lunch and had a great time,” recalls Sujay. “And then, the way I remember it—and this is not a joke—Jeffrey called me every single day for the next two months saying, ‘Hey, why aren’t going into business together?’”
Sujay remembers thinking, “He’s obviously one of the great business people of our time. But I’m a software guy. And he isn’t. I’m not sure what we would do together. And my wife, who’s way smarter than me, kept saying, ‘You really should do this. I don’t know what’s wrong with you.’”
From Jeffrey’s perspective, “I met 300 people and Sujay impressed me like nobody else. His ambition and vision were aligned with things I wanted to do. Importantly, I sensed that he knew everything that I didn’t—which was and still is a lot by the way.”
Jeffrey’s persistence paid off because in 2017, Sujay and Jeffrey teamed up and launched their company WndrCo, which was set up as a holding company. Their goal was to acquire, incubate or invest in a portfolio, from consumer software companies to digital media companies.
Sujay still gets asked this question a lot: “Jeffrey’s a media guy. You’re a tech guy. Why does that make sense?” Sujay’s response is, “so much of what’s happened over the last 15 years has become basically applying technology to making old products much better. Uber took the taxi model and transformed it using tech. Airbnb took the timeshare business and made it way better using technology.” In that way, Sujay’s deep roots in tech and Jeffrey’s business acumen made a perfect pair.
“If you asked me, ‘What’s the key to your success?’” says Jeffrey, “I would say to you, I have consistently partnered with or had mentors that were infinitely better and smarter than me,” says Jeffrey. “And I always embarrass Sujay by saying that he’s half my age and twice as smart as me. But I mean it!”
One of the most prominent investments Jeffrey and Sujay made with WndrCo was in Quibi, a mobile streaming service for short-form video. And it happened to be co-founded by Jeffrey himself. The core idea—high quality short-form content designed to be viewed on mobile—was one Jeffrey had deep conviction in. “It seemed so obvious that this was going to happen at some point,” he says.
“The vision was so crazy ambitious,” says Jeffrey. “We set out to see if we could invent the next major version of narrative, after movies and TV.” Quibi ended up raising $1.75 billion in funding, became a media hot topic, and secured many famous investors who backed the project. However, internally, problems abounded. The pandemic made designed-for-mobile content a lot more of a hard sell. “Sujay was whispering in my ear every moment ‘You don’t have product-market fit yet,’” recalls Jeffrey. Unfortunately, Quibi was shut down seven months after its launch.
“Living through it was really, really tough,” says Jeffrey. “But I learned something from the tech industry. In Hollywood, when you fail at something, it’s humiliating for everybody involved,” he explains. “The schadenfreude and the glee others take in your failure—whether you’re a movie star or a director or a producer or a studio head—is very public and painful.”
“Silicon Valley, interestingly, is the opposite,” he says. “Failure is humbling. It comes with the territory. It’s a very simple equation, which is, if you’re gonna do something unique and original, it is going to be risky by definition, and some degree of failure is expected.”
Jeffrey has learned to embrace Silicon Valley’s perspective. And he feels Hollywood would be wise to embrace it as well. “Since Hollywood doesn’t allow much room for failure, folks in Hollywood take less risk. But this leads to less innovation,” he says. “Why are we making so many sequels? Why are we making franchises? Why is every piece of IP known? It’s because they’ve tried to de-risk it as much as possible. But that’s had a profound impact on creativity.”
Because Quibi existed at the intersection of tech and entertainment, Sujay got his first taste of failure in Hollywood. “If you look at our investment in Quibi, it’s probably in the top 100 for ‘dollars lost investment’ in tech. It’s definitely not in the top 10, but I don’t even think it’s in the top 50. We lost a very small percentage of the fund on Quibi. And yet the phone calls I was getting, people thought our obituary was being written because of the publicity Hollywood gets.” Sujay found the experience eye-opening. “Unless you’re at a WeWork scale, you never have to deal with that in our world.”
When asked if he thinks someone will pick up on this idea of short form content that you consume on the go, Jeffrey says, “I would bet every single thing I had. Quality storytelling told in chapters that you can consume in bite sizes will happen.” Sujay adds, “It can often be iteration 10 or 20 of an idea where you end up with Google or Facebook.”
It’s one of the most overused cliches to say that your failures can make you stronger, but Jeffrey is in a unique position to tell you it’s true. Sujay once wondered aloud to Jeffrey, “You’ve made 450 movies. What percentage of those were hits?” Jeffrey estimated about 20. Sujay was awed to consider that, “That’s 400 plus where he had to deal with the criticism and the scrutiny.”
“Great things have happened to me out of my worst darkest horrible moments,” says Jeffrey. “My failures have been as valuable to me, if not more so than my successes.”
“I didn’t do much homework at business school,” jokes Sujay, “but the thing I did do was read a lot of biographies of people who’ve built businesses. And the only thing I’ve found in common between all of those people—and there’s literally only one thing—is perseverance. They all had moments when it looked like they were finished and probably should have thrown in the towel. But they never give up.”
This tenacity is something both Jeffrey and Sujay are embodying as they embark on their latest venture—cybersecurity. It’s a ripe opportunity that deeply excites both partners. “One of the situations that always fascinates us is when there’s a tremendous top of the funnel where consumers are using a product despite there being almost no marketing. And one of the markets, which I never would’ve expected us to get into, that had that characteristic was the VPN market,” says Sujay.
“In a hybrid working model and bring-your-device to work model, employers are gonna have to start caring about consumer cybersecurity and maybe even paying for it,” says Sujay. “We said, ‘the problem of personal security online is getting worse. The competitors are totally stodgy, they’re never gonna innovate. We thought, we can get involved, consolidate this emerging industry, build the new go to market channels, dramatically improve the products and hopefully build the next great company.” As of now, WndrCo has already invested in many cybersecurity companies, like Aura, which is a one-stop shop for antivirus, VPN, and password management services. It was valued at $2.5 billion in 2021 after raising a $200 million dollar Series F.
“I know it seems hard for people that solving cybersecurity for the consumer is more interesting than The Lion King or Shrek,” says Jeffrey. “But to me right now, it is!”
Jeffrey Katzenberg: I only know one mode, which is I'm a home run hitter. It doesn't mean I hit a home run every time, but I'm the guy they call in when you need someone who's literally going to just swing for the fence. If you can find something that is somewhere between improbable and impossible, that's my home address. That's where I live.
Talia Goldberg: Welcome to Wish I Knew, the show about the revelatory aha moments that founders, CEOs, and leaders discover along their own business journeys and why taking risks leads to growth. I'm your host, Talia Goldberg.
Each episode of Wish I Knew features a different guest, or in today's case, multiple guests in conversation with the Bessemer partner. And we've tried to pair guests and partners who have a long history together. Maybe they went to school together, they worked with each other, or maybe they just plain get along and we think they're fantastic.
And so on our first ever episode of Wish I Knew, we have an amazing entrepreneurial maven joining us for the show. He's taken some of the biggest swings in the entertainment industry, and if you don't know Jeffrey Katzenberg by name, rest assured you'll know the sound of some of his world-changing work.
When I listen to that sound, I imagine my 11-year-old self in a movie theater, the smell of butter popcorn, and the magical feeling of seeing Shrek for the first time. From Gladiator to A Beautiful Mind to Lion King, to How to Train Your Dragon, the studio at Dreamworks was the brainchild of Jeffrey Katzenberg. He co-founded the Creative Empire back in 1994 with Director Steven Spielberg and producer David Geffen. We're all standing on the shoulders of giants and almost every entrepreneur has great mentors. And Jeffrey, as we'll come to find later in today's episode, had many great mentors, including some he never even met, like the one and only Walt Disney.
Yes, audio animatronic figure. Well, it's sort of another door that's opened for us. See, our whole 40 some odd years here has been in the world of making things move, inanimate things move.
Arguably one of the greatest storytellers of all time, Walt Disney and his many creative works became a foundation for Jeffrey. A foundation to learn to tell amazing stories, and ultimately to dream big two of the main themes of today's episode.
Jeffrey became a master at storytelling from his time at Paramount to Disney to Dreamworks. But he knew there was room to dream even bigger. So on today's show, what happens when your limitless dreams don't go as planned? As in the biggest swing of your career fails miserably and comes to a crashing halt.
In Jeffrey's case, that's the story of Quibi, a platform for streaming short form content that he launched in April of 2020, and then shut down in December of 2020. Jeffrey, along with his business partner, Sujay Jaswa, who is the former CFO at Dropbox, sat down with one of our very own Partners at Bessemer, Ethan Kurzweil. They talk about their careers, the rise and fall of Quibi, and what they're up to now.
Ethan Kurzweil: Jeffrey, Sujay, welcome to the Wish I Knew podcast. Thanks for joining me. If you want to both say hi, introduce yourselves quickly. We'll jump into some questions.
Jeffrey Katzenberg: Thank you. Jeffrey Katzenberg, partner in crime with Sujay. Excited to be with you today.
Sujay Jaswa: And Sujay Jeffrey's partner and old friend of Mr. Ethan Kurzweil here.
Ethan Kurzweil: Yes, we'll get into some of those old stories in a minute. But first, let's start with Jeffrey's backstory. I've read a lot about one of your first jobs in Hollywood being as a gofer for Barry Diller when he was chairman of Paramount.
Talia Goldberg: I laughed when I first heard Ethan call Jeffrey a gofer. I imagined my friendly backyard rodent, but a gofer in the film world spelled with an F, is basically a production assistant. And that's how Jeffrey got his first big start.
Ethan Kurzweil: So I'm wondering if you can tell our guests a little bit about how you met Barry and how that experience impacted your career ultimately.
Jeffrey Katzenberg: Well, I was introduced to him by an independent producer that I had been working for, David Picker. He'd been the president of United Artist, and I was working for David, and one day called and said, "I think I might have a really, really great opportunity for you. I'd like to introduce you to Barry Diller," who at 33 years old had just become CEO of Paramount.
I flew out to Los Angeles, had arguably, maybe the worst interview I ever had with anybody in my entire professional career. I could not have handled myself worse. I was arrogant, insufferable, idiotic, and Barry hired me.
Ethan Kurzweil: Why do you think he still hired you after that?
Jeffrey Katzenberg: Beats me. Years later he said, "I saw you as a diamond in the rough." And I said, "You mean as an ugly piece of coal?" But I worked for him for 11 years. I consider him my greatest mentor for me in my career. He invested in me in a way that I look back on today and I still find just so extraordinary. And honestly, I don't know as successfully, but I've certainly tried to do onto others as he did onto me.
Barry just so impressed upon me and gave me as a gift, the right to fail. He didn't expect me, didn't ask me, wasn't interested in me failing, but I knew failing wasn't fatal. And so that gift of knowing that you're in a risk taking business and you need to take it. And as long as you're doing it smart and thoughtfully, there's room for it.
Ethan Kurzweil: Now, let's talk a little bit about Disney. You're credited as the one that helped get Disney to number one at the box office. I wonder if you could tell us a little bit about coming to Disney and then what ultimately attracted you to lead the animation division there too?
Jeffrey Katzenberg: I'd work with Michael Eisner at Paramount. He had been the president there for seven, eight years or so. We became almost kind of a Batman and Robin. And when Barry left Paramount to go to Fox, Michael and I decided we were going to partner up on whatever we would do next. And next ultimately ended up being going to Disney.
And I remember on my first day of work when I went to Michael's office to report to duty, if you will, sat with him and talked about what are the things that I needed to get done to get the studio fired up, and the movie side of the business and the television side of the business, and the Disney Channel, and all these pieces that frankly had been fairly leaderless in the run up to us arriving there. And he said, "Fantastic. You know what to do, go do it."
And I walked out and I got to the door of his office and he said, "Oh, Jeffrey, one last thing before you leave," and he took me to the corner window of his office and he said, "You see that building over there?" I went, "Yeah." He says, "Do you know what they do there?" I said, "No, I have no idea." He says, "Well, that's where they make the animated movies." I went, "Oh, that's nice." And he said, "And it's your problem."
Now, I never made an animated movie in my life. I went to a couple of them as a kid, but I was utterly clueless. And so that was the beginning of what became an incredible journey, and that journey turned into a passion for me and something that went on and rewarded me for decades after that.
The last little piece I'll tell you is Walt Disney ended up being my mentor in animation. And you say, "Well, how is that possible?" Because he had passed away 20 years before we arrived at the company. But when he was there, one of the things that he did is that he recorded both in audio recordings, stenography, memos, and photography, every part of his work process.
Ethan Kurzweil: Wow.
Jeffrey Katzenberg: And so I literally dove into these archives and became a student of Walt Disney. To this day, the greatest lessons that I learned, I learned from him.
Talia Goldberg: This is a valuable lesson. You don't necessarily need to personally know your mentors to have them as mentors and learn from them. As incredible as having a mentor like Walt Disney was, Jeffrey's start at Disney was tough. As his colleague Michael told him, the animation studio was his problem now, and there were many problems.
On his first day, Jeffrey had to lay off 1,200 people. 1,200! That was understandably difficult. But he eventually turned the ship around and did so beautifully because, well, who doesn't know Disney animation movies like The Little Mermaid, Aladdin, or The Lion King? Those are probably three of my top 10 movies of all time.
But behind the scenes, it wasn't all roses and sunshine. There was a lot of internal conflict too. And it led to Jeffrey getting the boot.
Jeffrey Katzenberg: I was fired in the summer of 1994, and when I say fired, I mean thrown out the door, kicked, beat, squashed in every respect. It was nasty. It was ugly, it was mean, it was humiliating. It was bad.
Talia Goldberg: But Jeffrey dusted himself off and used his ousting as an opportunity. He decided to reach out to two of the most successful people in the entertainment industry, oh you know, just Steven Spielberg and David Geffen, to see if they'd be interested in collaborating with him.
Jeffrey Katzenberg: If you'd gone to Vegas and tried to place a bet on this, it'd be a billion to one if you could find anybody to take it. Steven Spielberg had just won the Oscar for Schindler's List and the Bank of America Award, if there were one, for the first Jurassic Park. He was at the height of his career. He could not have been doing better.
David Geffin had just sold his record company for the fourth time for another billion dollars. He was on fire.
I go to these two guys, I go, "Hey, how would you like to start a studio together?" And they go, "Oh yeah, that's a really good idea." I went, "Okay." Honestly, the fact that that partnership happened, as I said, you couldn't place that bet anywhere. And it turned out to be a great partnership for 20 years and each of us had our lane. And I look back, and I would say to you, in the past and in the moment that we're here, the thing that has been courageous for me is exactly that.
Talia Goldberg: Jeffrey sold Dreamworks animation in 2016 to Comcast for $3.8 billion dollars.
Jeffrey Katzenberg: When I sold Dreamworks and I woke up the next morning, I thought if you were 23 years old today, which is when Barry hired me, what would you be doing? In 1973, it was obvious. Go to Hollywood. If you want fame, fortune, just great career opportunity, THE place was Hollywood. Six years ago when I woke up and said if I were 23 years old today, I'd go to Silicon Valley because that is where the greatest opportunities, entrepreneurs, fame, fortune, That's where it's being made today if you're starting out in a new career. I wanted to start out in a new career.
If you said to me, "What's the key to your success?" I would say to you, "I have consistently in my career partnered with or had mentors that were infinitely better and smarter than me." And I always embarrass Sujay, who has been quiet here for the first 15 minutes of this, that he's half my age and twice as smart as me. But I mean it.
Ethan Kurzweil: That's a good segue. So I want to bring you in, Sujay. You're not getting off the hook that easy, especially with that lead in, Sujay. Let's talk about your partnership with Jeffrey. You had just come off a run at Dropbox, as I recall, trying to figure out what to do next. I want to hear from both of your perspectives, but maybe Sujay you start. How did you two come together? When was the magic moment when the sparks formed?
Sujay Jaswa: After Dropbox, I had been doing research on what to do next, and I didn't have a brilliant idea and ability to execute it that I thought hundreds of millions of people would use, but there's actually another way to build great software companies which, at least at the time, wasn't well known in Silicon Valley, but was a model set up by a company called Constellation Software, which was very much a combination of executing a strategy through a combination of product innovation, but also through M&A. Where M&A is kind of a core part of the development of the product strategy and the go-to-market strategy.
And at that time, there were only, I believe, three public enterprise software companies that had been founded since the dot com bubble that were over 10 billion in market cap, hard to believe now. The three were Workday, Salesforce, and Constellation Software. So I said, "Oh, that would be kind of an interesting thing to go pursue," is go buy Dropbox-like Freemium or prosumer or kind of consumer software companies and execute a playbook and go build the next Constellation Software that way.
Talia Goldberg: We'll get to Sujay meeting Jeffrey in a moment, but I want to pause on Sujay briefly. Sujay most notably helped transform Dropbox during his nearly five year tenure at the company. Sujay's no stranger to Silicon Valley. In fact, he and his brother, who actually was an analyst at Bessemer back in the day, were both born and raised in Silicon Valley. Their parents were computer scientists and Sujay's dad, Raj Jaswa, was one of the first successful Indian entrepreneurs in Silicon Valley. But that success didn't come easy to Raj and his business partners when they co-founded Opti back in 1988.
Sujay Jaswa: His first company, they didn't raise a dime in venture capital money. They couldn't get a single person to invest in them. Ultimately, they found some angel investor who gave him $250,000. Five years later it was the largest chip set maker in the world. It was him and three Taiwanese co-founders. At that time, the feeling among Indian and Asian entrepreneurs was that if you were not a white guy, you couldn't raise venture money and so my dad, along with the handful of his friends, started this organization called TIE, which was The Indus Entrepreneurs, which fundamentally transformed how Indians were perceived in Silicon Valley. Now if you're an Indian guy and successful in Silicon Valley, you're treated like ... It's expected almost.
When I was in high school, my dad lived in Taiwan, Hong Kong, Korea, and Japan two weeks out of every month. Every month. He was very successful. He would fly coach, no matter how far. I saw him grind and I was really proud. I mean, you're a kid, but I loved it. I loved everything about tech.
Talia Goldberg: Sujay continued in tech throughout his professional career, which brings us back to Sujay and Jeffrey meeting. So Sujay's out looking for software companies to buy, and one day he gets a call out of the blue from his friend, Diego Berdakin, an entrepreneur and the co-founder of a virtual restaurant kitchen company called Cloud Kitchens.
Sujay Jaswa: He's like, "Hey, I was playing poker with Jeffrey Katzenberg last night and he just sold Dreamworks to Comcast." I'm like, "No, I read the newspaper. I know that that happens." He's like, "Do you want to meet him?" I'm like, "Yeah, of course I'll meet Jeffrey Katzenberg. But why?" He's like, "I don't know. Just talk to him."
Talia Goldberg: Sujay calls Jeffrey Katzenberg a few nights later and they hit it off. They decide to meet up for lunch the next time Sujay's in LA.
Sujay Jaswa: And we got lunch and had a great time. Then, the way I remember it, and this is not a joke, Jeffrey called me every single day for the next two months being like, "Hey, why aren't we doing this thing together?" I was like, "You're obviously one of the great business people of our time, but I don't really ... I'm a software guy. I don't ... You're not a software guy. I'm not sure what we would do in this whole thing."
In mid-August of 2016, I flew down to tell Jeffrey no. I figured I had to do it in person because we had been talking every day for a couple of months, and my wife, who is way smarter than me, as you know, the whole time was like, "You really should do this. I don't know what's wrong with you." I go down to tell him no. He sets up dinner at Craig's in Hollywood, which especially at that time was a super power scene. Of course, he has the best table on standby every night. And halfway through dinner, he looks at me and says, "I don't get you at all." And he's like, "If we do this together," he starts rattling off all the reasons why doing it together would be better. He's like, "So, what's your problem?" And I was like, "Oh God, you're totally right. Let's do this thing." He flipped me on the spot.
That should tell you how great a salesman is, by the way, because it was fixed in my head that this was not going to make any sense and an hour in, we were planning the incorporation of the company. It's kind of a crazy thing.
Talia Goldberg: In 2017, Sujay and Jeffrey launched their company, WndrCo. That's W-N-D-R C-O. WndrCo was set up as a holding company. Their goal was to acquire, incubate, or invest in a portfolio ranging from consumer software companies to digital media companies.
Ethan Kurzweil: All right, so before showing up at that dinner, Jeffrey, along comes Sujay. You've talked to him every day. What spark flew for you that you were like, "Okay, we got to do this together?"
Jeffrey Katzenberg: I felt like there was nobody that I met ... I met 300 people just to be clear about this, and I just felt he was the one that impressed me the most. His ambition and vision were aligned with things I wanted to do. I felt that he actually knew everything that I didn't, which is a lot and still is by the way.
Sujay Jaswa: One of the things that I get asked a lot was, "Hey, Jeffrey's a media guy. You're a tech guy. Why does that make sense?" What I always thought from the beginning was that so much of what's happened over the last 15 years has become basically applying technology to making old products much better. Whether it's Uber that took the taxi model and transformed it using tech or Airbnb, which took the timeshare business, and it just did it way better using technology. Taking technology and revolutionizing the animation industry was a massive example of those things. It had been classified as media, but I think in today's world, it would actually be classified as a tech company. I always thought of Jeffrey as someone who understood how to use technology to make consumer products better than people understood them to be. And so I thought he always had an intuition for it.
Talia Goldberg: One of the most prominent investments Sujay and Jeffrey made via WndrCo was Quibi, a mobile streaming service for short form video. But it was more than an investment. It was actually more of an incubation. Jeffrey founded it himself, and Quibi raised $1.75 billion in funding pre-launch only to shut down a short seven months after launch.
Coming up, Jeffrey and Sujay look back on the crazy ambitious vision of Quibi and it's humbling crash.
In 2020, other than, of course, COVID, it seemed there was no hotter topic then ...
Speaker 2: What do you think of the Quibi? This is the short form streaming video service.
Speaker 3: You are launching Quibi, which means quick bites. What is a quick bite?
Speaker 4: Quibi is a streaming service specifically for mobiles.
Speaker 5: Fascinated by the concept, I'm not crazy about any of the first shows. None of those make me think like, "Oh yeah, I've got to see that."
Speaker 6: In today's Tech bites, Quibi calls it quits. The streaming service built on short videos meant for your phone has shut down after six months in business.
Speaker 7: It's highly unusual for a company to raise as much money as Quibi did, get as many Hollywood stars as Quibi did, and shut down as fast as Quibi did.
Ethan Kurzweil: A lot's been said about the end of Quibi. Actually, I want to talk about the beginning of Quibi. Do you remember a moment in the journey early on when you said, "I want to take this risk?" Was there something that made you think this is the first shot to take together?
Jeffrey Katzenberg: The ambition of it and the logic of it, to me. It seemed so obvious that this was going to happen at some point and I only know one mode, which is I'm a home run hitter. It doesn't mean I hit a home run every time, but I'm the guy they call in when you need someone who's literally going to just swing for the fence. I'm always looking for what's something that's really transformative?
If you can find something that is somewhere between improbable and impossible, that's my home address. That's where I live. That's the thing that's always most fun for me. Starting a studio, first studio in 65 years. Trust me, everything that was said about Quibi was said 10 times over about that. When Michael and I went to Disney, everybody said, "Company's finished. Dead. It's a corpse." And I could go on and repeat that, but it's literally been pretty consistent every time out where people said, "Hmmm, idiot, dummy. Not going to work." Well, they were right about that one.
Ethan Kurzweil: Can't listen to the naysayers, that's for sure. So in hindsight now, I wonder how do you think about that approach to entrepreneurship versus something that was more of a lean startup type approach?
Jeffrey Katzenberg: Almost a killer lesson almost, but it falls into the columns of many wonderful things about it and not so wonderful things about it. But if you just said to me, what's the greatest lesson out of it? And Sujay was whispering in my ear every moment, "You don't have product market fit yet." And we could talk about why. Doesn't matter. We didn't have it. And so it was for a lot of essential reasons an everything or nothing proposition because of the volume of content that we needed to have because we were producing mass amounts of content that were to be consumed daily and actually had a shelf life of 24 hours. But it was so crazy ambitious in terms of what the vision was for it, which is basically to see if we could invent the next version of narrative, of movie, film, TV, narrative. So it was a crazy ambition.
And by the way, that part we got right. Hollywood got right, they actually made really, really good content. So we couldn't find anybody to pay for it, at least on the go, on the phone when no one was on the go and you could sit home and watch Netflix and TikTok was just on the rise and killing it. So how much of it was timing, how much of it was product issues, how much of it was COVID? I don't know. But here's a fascinating thing. In Hollywood, when you fail at something, it's humiliating for everybody involved. When things just crash and burn, the schadenfreude, the celebration of failure that is heaped upon, whether it's a movie star or a director or producer or a studio head, very, very public and very painful. That's the culture of Hollywood where failure is humiliating. The culture of Silicon Valley, interestingly is the opposite.
Failure is humbling. It comes with the risk. And it's a very simple equation, which is if you're going to do something unique and original, it is going to by definition be risky. If it is by definition risky, it means from time to time ain't going to work. You will have some failure. And so if you take out of the equation the ability to fail, which is what Hollywood has done, you will take less risk. You will have less innovation. And it is where we arrive right now today in Hollywood. And you ask the question, why are we making sequels? Why are we making franchises? Why is every piece of IP knowing? It's a different type of content today and it's expensive and they've tried to de-risk it as much as they can. So that's had a profound impact.
Sujay Jaswa: The thing that is amazing is how public all the folks in Hollywood, their successes and failures are. Because if you look at, by way of example, you look at our investment in Quibi in the last five years, it's probably a top 100 of the dollars lost to investment in tech. It's definitely not top 10, but I don't even think it's top 50 in terms of the dollars we lost. We lost a very small percentage of the fund on Quibi, and yet the phone calls I was getting, people thought our obituary was being written and it was because of how much publicity Hollywood gets.
And I just thought about that for Jeffrey. I'm like, God, the guys made 450 movies. I asked him once, I said, "What percentage of those were hits?" He's like, "I don't know, 20?" Which means if that's right, that's 300 plus ones where he had to deal with the criticism and the scrutiny and I told you sos and all that stuff. And we, honest to God, unless you're like at a WeWork scale, you never have to deal with that in our world. And so that was definitely an eye opening thing for me.
Jeffrey Katzenberg: And living through it was really, really, really, really tough. The thing for me is that the moment it was clear to me it wasn't going to work, I just wanted to shut it down and I wanted to get people's much money back. It's the first time ever in my lifetime I lost money for people. And that was humiliating. Even though everybody was excited and enthusiastic and they all understood the risk-reward part of it, when it wasn't working, that's when you're in the foxhole and that's when you see true colors in it. And that foxhole wasn't a pretty place, but for me, I just wanted to get as much money back to people as quickly as I could. And the fact that we put $600 million back into people's pocket was the silver lining.
Sujay Jaswa: For the last seven years, I've taught a course at Stanford Business School, it’s this entrepreneurship class. So they're all interested in starting companies. I just remind them how hard it is to succeed and how lucky you have to be to succeed. And the way I think about that then is the only reason you should start a company is because you're so passionate about it that even if it has an unfortunate outcome and there's that significant opportunity cost for your life, it was worth it because you believed so much in it. You had that much passion and belief in it. Otherwise, it's completely irrational to start a company. There are so many better ways to build a career, in my opinion.
Jeffrey Katzenberg: By the way, everything you just said is how I felt about Quibi. Like I had to do it. I didn't care how risky it was and how improbable or how impossible it was. I had the buck and no one could talk me out of it. And we built a good product, we built a good platform, but we could never get lift off.
Ethan Kurzweil: It strikes me that the idea for Quibi may work. As you said, that company didn't have product market fit. But what do you think in the aftermath of it, do you think somebody will pick up this idea of short form content that you consume on the go? Or are our minds sort of groomed by social media?
Jeffrey Katzenberg: Ethan, I would bet every single thing I had. So if I could go place a bet in Vegas of my lifetime, so that's not forever. In my lifetime, quality storytelling told in chapters that you can consume in bite sizes will happen.
Sujay Jaswa: But when he does place that bet, then he's going to do it with his own money this time.
Ethan Kurzweil: I was going to ask whether effort too is going to happen with the two of you, but you answered it.
Jeffrey Katzenberg: We have run so far from digital media. It's like you touch a stove as a child, if you make that mistake or you put your finger near a flame, you'll get a lot of things wrong in life. It will not be that. We have touched the flame, we're done. We're on to better, bigger, happier times.
Sujay Jaswa: So certainly we have hives when we think about digital media overall. But we're also very well aware that it can often be iteration 10 or 20 of an idea where you end up with Google or Facebook or whatever. And so as much as we like to joke about it, we still meet basically every company in this space. The beauty of having Jeffrey is my partner, is that everybody in that arena wants to meet us because of everything he's accomplished. And so we have an open mind, but we're also very cognizant of the distribution challenges that are out there.
Ethan Kurzweil: Maybe that's a good point now to talk about what you guys are working on now. How did your interest in cybersecurity and personal security, where did that come from? Was that always there along the way or was that more of a conscious effort you two have made together over the last couple of years to invest in those areas?
Sujay Jaswa: One of the things that we're always interested in is when there's a tremendous sort of top of the funnel where a lot of consumers are using a product despite there being almost no marketing to acquire those consumers. And one of the markets which I never would've expected us to get into that had that characteristic was the VPN market. And we started meeting a lot of consumer companies in the security space. Our biggest observation was that all of them had an early adopter audience that was a really loyal addicted audience. But most of the time that audience didn't grow too big. And once they started having to deal with paid acquisition, partnership driven acquisition, basically all of them hit walls. And so it was a broad consumer audience with an economic cap, which gets me excited because a big part of what we do is we basically look for consumer ideas where bundling can expand the market. It can be like a one plus one plus one equals 20 situation.
The second was that in a hybrid working model and a bring your device to work model, employers were going to have to start caring about consumer cybersecurity and maybe even paying for it. So that whole Dropbox for business play where we could take a consumer cybersecurity product into the enterprise and get corporations to pay for their employees, that became something that we thought was possible. And so that was sort of the business concept. But from the big idea concept, the thing that was crazy to us was the world in the last 15 years, basically all of us have come to accept, we're like boiled frogs. All of us have come to accept that our credit cards are going to be stolen and someone's going to be using them. Our kids' social media stuff is being tracked on the dark web.
Our parents are going to get a robo call one day and give away their bank account information and then we're going to have to deal with that and on and on and on. And we've all just sort of said, this is the price of being on the internet. And you're like, "Okay, why is that?" You can't think of an innovative cybersecurity product, consumer product out of any of the big antivirus companies in maybe 15 years, which is crazy because these are all five to $20 billion market cap companies. And so we looked at that and we said, "Okay, the problem is getting worse. The competitors are totally stodgy, they're never going to innovate. There should be something that can happen here." So it's kind of like, okay, maybe we can get involved. We can consolidate this emerging industry, build the new go to market channels, dramatically improve the products, and hopefully build the next great company.
Jeffrey Katzenberg: The way I'm related to it is that in the last decade, every one of us have invested incredible amounts of money and digital assets to protect our physical stuff, Ring doorbells, mass cameras, all of us. The stuff around our homes, our apartments, our cars. We've really done amazing in the last call it 10 years, that's become almost ubiquitous. But as Sujay said, we moved our lives onto these devices. And even if I came and I broke into your home, what would I get? Some computers, some TV sets, a little bit of jewelry, no cash. I broke into your phone, you'd get Master Card. And it's happening more and more and more. But two years ago, digital theft, for the first time ever in America, has now surpassed burglary. And so, I see a world, five years from now, in which you cannot have a digital device that does not have some holistic protection around it.
Talia Goldberg: Wonder Co has invested in many cybersecurity companies like Aura, which is a one-stop shop for antivirus, VPN, and password management services. It was valued at 2.5 billion in 2021 after raising a $200 million Series F.
Jeffrey Katzenberg: I know it sounds crazy, but I think we could be Netflix for what I think is a bundle that people have to have. Do I need antivirus? Do I need credit card masking? Do I need a VPN? We should bring them together and for $15 to $20 a month, get it all.
Ethan Kurzweil: Do you wish you'd gotten into digital tech sooner? Or how do you think about it? And again, sorry to take you back because I know you like to look forward.
Jeffrey Katzenberg: No, no, that's life. David Geffen has said to me a thousand times, he said, "Jeffrey, there's your plan and there's God's plan, and your plan doesn't count." And I think he's probably right. What's amazing is, and this is what I always say to people, which is, great things have happened to me out of my worst, darkest, horriblest moments, and great things have happened to me out of my greatest moments. It's that thing. One door closes, another one opens. My failures have been as valuable to me, if not more so, than my successes. That's that old thing. If it didn't kill me, it made me stronger. And so far, they haven't killed me, so far. Soon they may, but they haven't yet.
Ethan Kurzweil: I'm waiting for that one. Is there anything you miss about the old days, about the Disney Dreamwork days of having huge teams and operating in a different kind of way than you are now?
Jeffrey Katzenberg: I sort of looked at my life in chapters. This is chapter either six or seven. But honestly, I think maybe one of the greatest blessings for me has been, every chapter that I have had has been better than the ones before it. What I would say to you is, for my career, I'm in a Tesla plaid, with the pedal to the metal, and I have no rear view mirror. It's all about what's in front of me. And so, this chapter is just more interesting to me today, in terms of what we're trying to do and what we're trying to build, and the people that we're in business with, and the businesses that we have. I know it seems hard for people, that solving cybersecurity for the consumer is more interesting than the Lion King or Shrek, but to me, right now, it is.
Ethan Kurzweil: Well, I think one of the lessons from you that I'm taking away is your timing has been very good in terms of where you've timed various entrepreneurial ventures and things you've done generally. I'm going to transition now to some rapid fire questions. Sujay, you look very concerned. Don't be.
Sujay Jaswa: No, no, no.
Ethan Kurzweil: Are you guys ready?
Jeffrey Katzenberg: Yeah.
Ethan Kurzweil: Okay. Where can we find you on a Sunday night as you're preparing for Monday morning?
Jeffrey Katzenberg: Are you kidding? House of Dragons. Where are you?
Ethan Kurzweil: Somewhere else.
Jeffrey Katzenberg: It's bananas. I'm deep in.
Ethan Kurzweil: You're hooked. Sujay?
Sujay Jaswa: I'm just hanging with my kids these days.
Ethan Kurzweil: That's where I am, trying to wrangle them to bed. What's your go-to pick me up to reinvigorate yourself when you hit a wall?
Jeffrey Katzenberg: Two more hours in the gym.
Ethan Kurzweil: Sujay?
Sujay Jaswa: I mean, this is going to sound like I planned this for something. I call Jeffrey because Jeffrey is the hardest worker, the most optimistic, the most tenacious. And so anytime something's frustrating me, he has to be my psychotherapist, and he is amazing at it.
Ethan Kurzweil: Do you have a favorite quote or personal mantra that you carry with you into your work?
Jeffrey Katzenberg: I do. It's something I practiced my whole life, but I wasn't conscious about it until much later in my career. And it's very simple, exceed expectations, and I try and wrap those two words around every single thing. Exceed the expectation of your customer, exceed the expectation of your friends, exceed the expectation of your family, of your partners. If you can actually weave that into who you are, and what you are, and how you go about things, I just think the rewards are spectacular.
Ethan Kurzweil: So my last question, which I think you almost already answered, was going to be, if you could go back to the beginning of both of your careers and tell yourself something that you wish you knew, what would that be?
Jeffrey Katzenberg: The other lesson was actually around generosity and giving. And just the incredible value of trying to be a giver more than a taker, just in life. And to be selfless in that. Again, many, many of the most rewarding personal growth things that have happened for me have been about just being there for others.
Ethan Kurzweil: Sujay, anything to add to that?
Sujay Jaswa: Ethan, as you know, I didn't really do much homework at business school, but the thing I did do was read a lot of biographies, especially of people who've built businesses, whether it was Tom Watson at IBM or whatever. And the only thing I found in common between all of those people, and there's literally only one thing, is perseverance. They all had moments when it looked like they were finished. They all had moments when they probably should have been finished, and they just gut it out. They never give up. And you just have to know that you got to stick it out because everyone has failures. But it's about where you end, not where you begin, or in the middle.
Ethan Kurzweil: Well, Sujay, Jeffrey, thank you very much. I learned a lot on this. Not that Sujay didn't do work in business school. That I knew. But I learned a lot of other tips and lessons and awesome stuff about your career and both of your journeys to get to this point. So thank you very much for joining us on this show.
Sujay Jaswa: Thanks for having us, Ethan.
Jeffrey Katzenberg: I'm happy to be with you.
Talia Goldberg: That's it for today's episode of Wish I Knew. You can find and follow the show anywhere you listen to podcasts or at bvp.com/wishIknew. Special thanks to this week's guests, Jeffrey Katzenberg and Sujay Jaswa for sharing more about their stories, and to Ethan Kurzweil for facilitating the conversation.
Wish I Knew is a podcast by Bessemer Venture Partners. The show was created by our very own Karen Lee and Christine Deakers. I'm your host, Talia Goldberg. Our show is produced by the team at Filia Media. Our lead producer is Molly Getman. Our executive producer is Kaie Walsh. We're engineered by Evan Viola. Our theme music is by Terry Divine King at Audio Network. Additional music by Blue Dot Sessions.
And remember, Disney like magic can be made even from failures. We'll see you on our next episode.See Less