Ok, so this is Startups for Employees 101. The warning signs to get out were here 1.5 years ago [1]. And they are:
1. Nut-bar egomaniac CEO bordering on the delusional; and
2. A business that probably should never take VC money. Producing content (which is what HQ Trivia does at the end of the day) is a notoriously hard business to scale. I can remember years ago when Rovio (remember when Angry Birds was a thing?) took VC money. Huge mistake. HUGE. It is seriously detrimental to your long term viability as a business that generates an income.
Minor nitpick, but Rovio seems to be doing ok. https://www.bloomberg.com/quote/ROVIO:FH. Their price went down pretty hard after the IPO, but lately they've been trending up. They currently have a market cap of $500M. Would they ever have gotten that far without VC? Their only big raise was $42M, if Wikipedia is to be believed.
I'm not a fan of today's VC model and have never taken it myself, but the best-case scenario for taking VC is when you're having trouble keeping up with demand.
In some cases, this is because you've tapped into a big market and sales are moving faster than you can scale your operations. You need to do the same thing you've been doing, but you need to do more of it quickly.
In other cases, you might have found a way to drastically increase sales, perhaps from building a new line of business that complements your old one.
HQ Trivia needs something that you can't get with more money, and that's a creative way to avoid being a fad. They needed a way to keep people on their app, and they didn't find one.
As you've seen from Instagram's wild success at this (before Facebook's acquisition) and Snapchat's decline, money isn't really a factor. It's mostly luck, honestly.
Of course it won't work out in the long run, but in the short term it might be fun and it'll employ some people for a few years. When the money runs out everybody can jump ship to other, equally nonviable, startups and do it over again.
There's a bit of a phenomenon in Sydney (possibly elsewhere, I wouldn't know) of companies doing this.
I call them VC-bait or grant-bait. There's a handful of grants you can get for startups here, so they'll get all of those, get some free hosting from Microsoft, put up a landing page etc. If they're lucky they'll get a few tens of thousands from private investors, then fall over a few months later.
I'm not sure if it's intentional or if people are just clueless, but in any case they make a bit of money, pad out the CV a bit and move on. I wouldn't got so far as to say they're defrauding investors
It depends what your goals are. If your goals are to create a source of income (profit) for the foreseeable future then VC money is antithetical to your long term viability. Taking VC money means you're locked into continually delivering on growth.
The reporter basically insinuates that Rus had been aggressively trying to undermine and get employees to turn on Colin for a year and leaves an open question on whether stress resulting from their toxic relationship contributed to him increasing his drug usage.
Basically, it was maybe not a complete accident unrelated to his work.
Media companies can most certainly be massive multi bil companies. There is a reason why telcos are buying up media companies (e.g. ATT buying Time Warner/HBO and Comcast buying NBC) and some of the richest billionaires are media tycoons.
I think HQ is on the right track but I don’t see the current team being the right team to turn it into the next big media play. The future of live TV should be heavily interactive.
The point wasn't that they can't be massive companies; the point was that they are hard to scale. What works to get to one audience, or to build up to one size, doesn't mean you can throw money at it and "just" grow bigger. In fact, you're saying that when you say it's the wrong team to turn HQ into the next big media play.
> There is a reason why telcos are buying up media companies
The other way to read that is that there's a reason telecoms are buying media companies and not the other way around. Media companies are cheap, and they give ~cable companies competitive advantages (or another gun in a Mexican standoff) through vertical integration.
I remember a previous post saying that the Host Scott Rogowsky would have an extreme pull in the company and would present a big risk if he ever left the company. I guess this company could try to pivot onto someone else but I'm not sure they have the ability to do so. (they cite themselves in the article)
I was thinking he could just get a few devs to copy where he worked at. He probably has enough domain expertise to do so and he could use the other app as a refence.
I wouldn't be surprised. The host would appear to be the likable face of the company, and with the current CEO being a prick, he would be the preferred choice for the cover page. Lorne doesn't appear on every episode of SNL, Kenan Thompson and Kate MacKinnon are. (I do NOT imply that Lorne Michaels a prick)(but a business needs to use the faces that will market the product service better more effectively)
I didn't know their old CEO died of drug overdose...wow! That's crazy to think... bad luck? I wonder if VCs have C levels take any drug tests or carry pretty thorough background check on founders who they invest into?!
Drug use is rampant in silicon valley. You wouldn't be a very successful investor is drug use was a disqualifying factor.
Of course it depends what kind of drugs. Potheads don't make very good CEOs and Cocaine is usually associated with destructive behavior. A lot of people in tech do the occasional hallucinogens or ecstasy without much issues.
Has there ever been a large scale, well controlled study evaluating CEO performance under the influence of THC/coke/anything else vs. sober? Absolutely not, because as you say, these are only baseless behavioral associations to character flaws.
If you are concerned about character flaws, evaluate that directly. Failing a drug test ruins peoples lives worse than smoking that joint ever did, and there are plenty of terrible people who've been sober all their life.
I think a mental health evaluation would be more prudent from the VC than a drug test. If they are struggling with addiction then that would come out in the mental health screen with the therapist, and instead of being denied opportunity during a fragile time of their life, they might actually get the help they need without ruining their life and finding themselves unemployed due to a failed drug test.
Huh? There's a political battle for CEO in a multi million dollar startup and then the very new CEO dies on a drug overdose and nobody talks about possible murder?
Lots of drama here, but the real problem was obvious from the start: no path to making money. They literally gave it away daily. Anyone with half a brain could see where this was headed.
The app typically shows 350k - 500k participants in their nightly shows. They're giving away usually $5000.
Jeopardy and Wheel of Fortune have around 10 million viewers each with over 30 years of history. Jeopardy gives away around $23k each day, I believe WoF rings in a little higher. They air 5 days a week and clock in around 200-230 episodes per season. Back of the napkin math puts that at $0.53 per viewer per year.
HQ is still at $4.29 per viewer per year. At their current rate they still need about 10x growth to match J! or WoF. But HQ is also only 2 years old on a somewhat new media format (live interactive entertainment).
Those numbers are just for the prize money. Pat Sajak and Alex Trebek each earn north of $10 million per year (and Vanna White somewhat less, but still in the millions), and the shows almost certainly have larger staffs. The actual value difference is probably closer to a 3-4x multiplier rather than 10x.
That said, since HQ is phone based there's a good chance the viewers are more valuable to advertisers since they can collect more information than on broadcast television.
I don't think HQ would/could have a path to profitability (setting aside internal business politics), but it's a matter of 1) convincing businesses that a new media format is worth their advertising dollars, 2) keeping players long-term, 3) finding effective ways to advertise in the more limited format that the game affords.
And as it relates to cost per viewer, HQ doesn't scale well. Doubling or tripling their viewership would result in winners getting paid significantly less, thus decreasing the appeal and losing viewers.
While scaling prizes with viewership will keep the same approximate cost per viewer. They'd need to scale advertising rates/sponsorships faster than both in order to beat this curve, but I don't think a doubling of the audience will result in more than a doubling of the ad prices.
The could do more ad spots per show, but again that risks alienating viewers.
They could make the trivia questions harder, thus keeping prizes larger and mitigating the problems with low prize amounts, but the difficulty increase also risks alienating viewers. It's much less fun to play when you get only 3 or 4 rights and feel you have no chance of actually winning.
> That said, since HQ is phone based there's a good chance the viewers are more valuable to advertisers since they can collect more information than on broadcast television.
The viewers are also the players. Cash cows are what makes mobile games so profitable and theses cash cows only care about being the best, not about how much they spent to be. You can buy 3 lives on HQ for 10$, so essentially, some cash cows can be worth 10$ a day easily (at least 3$ per game).
HQ also is made AROUND ads and not ads break. They do have ads before the shows, but I'm pretty sure their real money maker is the bigger ads made into the quiz themselves.
Also a funny side note: Why do people who seemingly care about public opinion so much always screw up their public opinion? I'd argue torturing people is more in their interest than actual public opinion. With the latter they just try to stay above zero as long as possible to continue with their actual addiction, getting hard-ons from watching people suffer.
That's also why such people can under no circumstances really succeed with businesses. It's not the same kind of personality as Steve Jobs for instance. Jobs also hurt people, but the goal was always to increase public opinion and make money.
The differences between a sociopath (Jobs) and a parasite (this dude here).
And knowing that he's a parasite and not a sociopath, why keep him on as a CEO? The secretary or toilet cleaning person would have a lower chance to screw everything up.
> Also a funny side note: Why do people who seemingly care about public opinion so much always screw up their public opinion?
Its more common than you imagine.
Its incredibly clear that the CEO dude is super insecure person who feels some kind of inadequacy and a constant need to control everything. If you read the daily beast article showing the actual interaction, it shows. If he stopped thinking all about himself for a little while he could have done a much better job. But he has so far not faced consequences for his toxic behavior (his co-founder sounds shady af too and that person actually died of a drug overdose... what a mess).
And on top of that, he probably thinks that thing that what got him "here" will also get him "there".
Maybe being vocal made it to the first mile so if he continues his act (and get louder) he believed it would get him to the finish line (the one he has in his mind).
One f-bomb makes a comedy. A thousand make zero ratings and lawsuits. He didn't realize he crossed the line being a sociopath and making is increasingly difficult to receive the messaging.
Readit News
1. Nut-bar egomaniac CEO bordering on the delusional; and
2. A business that probably should never take VC money. Producing content (which is what HQ Trivia does at the end of the day) is a notoriously hard business to scale. I can remember years ago when Rovio (remember when Angry Birds was a thing?) took VC money. Huge mistake. HUGE. It is seriously detrimental to your long term viability as a business that generates an income.
So yeah, stay at your own peril.
[1] https://www.thedailybeast.com/ceo-of-hq-the-hottest-app-goin...
Making money off the stock isn't like, the only way to make money. HQ would kill to be anything close to as significant as Rovio.
In some cases, this is because you've tapped into a big market and sales are moving faster than you can scale your operations. You need to do the same thing you've been doing, but you need to do more of it quickly.
In other cases, you might have found a way to drastically increase sales, perhaps from building a new line of business that complements your old one.
HQ Trivia needs something that you can't get with more money, and that's a creative way to avoid being a fad. They needed a way to keep people on their app, and they didn't find one.
As you've seen from Instagram's wild success at this (before Facebook's acquisition) and Snapchat's decline, money isn't really a factor. It's mostly luck, honestly.
Of course it won't work out in the long run, but in the short term it might be fun and it'll employ some people for a few years. When the money runs out everybody can jump ship to other, equally nonviable, startups and do it over again.
I call them VC-bait or grant-bait. There's a handful of grants you can get for startups here, so they'll get all of those, get some free hosting from Microsoft, put up a landing page etc. If they're lucky they'll get a few tens of thousands from private investors, then fall over a few months later.
I'm not sure if it's intentional or if people are just clueless, but in any case they make a bit of money, pad out the CV a bit and move on. I wouldn't got so far as to say they're defrauding investors
The reporter basically insinuates that Rus had been aggressively trying to undermine and get employees to turn on Colin for a year and leaves an open question on whether stress resulting from their toxic relationship contributed to him increasing his drug usage.
Basically, it was maybe not a complete accident unrelated to his work.
I think HQ is on the right track but I don’t see the current team being the right team to turn it into the next big media play. The future of live TV should be heavily interactive.
The other way to read that is that there's a reason telecoms are buying media companies and not the other way around. Media companies are cheap, and they give ~cable companies competitive advantages (or another gun in a Mexican standoff) through vertical integration.
Rugowsky will end up leaving the company and be given his own Jeopardy-style trivia show by Amazon.
Edit: I see now that Scott is no longer hosting. That’s a shame IMO, he was a big reason why I personally liked the game. Oh well.
Of course it depends what kind of drugs. Potheads don't make very good CEOs and Cocaine is usually associated with destructive behavior. A lot of people in tech do the occasional hallucinogens or ecstasy without much issues.
If you are concerned about character flaws, evaluate that directly. Failing a drug test ruins peoples lives worse than smoking that joint ever did, and there are plenty of terrible people who've been sober all their life.
Edit: couldn't find it on TC, but here's a link to the same think from HuffPo: https://www.huffpost.com/entry/microdosing-lsd-placebo-study...
A basic due dilligence on the company, yeah
But that seems like a very nice way of a VC getting shut out of multiple potential deals
Jeopardy and Wheel of Fortune have around 10 million viewers each with over 30 years of history. Jeopardy gives away around $23k each day, I believe WoF rings in a little higher. They air 5 days a week and clock in around 200-230 episodes per season. Back of the napkin math puts that at $0.53 per viewer per year.
HQ is still at $4.29 per viewer per year. At their current rate they still need about 10x growth to match J! or WoF. But HQ is also only 2 years old on a somewhat new media format (live interactive entertainment).
Those numbers are just for the prize money. Pat Sajak and Alex Trebek each earn north of $10 million per year (and Vanna White somewhat less, but still in the millions), and the shows almost certainly have larger staffs. The actual value difference is probably closer to a 3-4x multiplier rather than 10x.
That said, since HQ is phone based there's a good chance the viewers are more valuable to advertisers since they can collect more information than on broadcast television.
I don't think HQ would/could have a path to profitability (setting aside internal business politics), but it's a matter of 1) convincing businesses that a new media format is worth their advertising dollars, 2) keeping players long-term, 3) finding effective ways to advertise in the more limited format that the game affords.
While scaling prizes with viewership will keep the same approximate cost per viewer. They'd need to scale advertising rates/sponsorships faster than both in order to beat this curve, but I don't think a doubling of the audience will result in more than a doubling of the ad prices.
The could do more ad spots per show, but again that risks alienating viewers.
They could make the trivia questions harder, thus keeping prizes larger and mitigating the problems with low prize amounts, but the difficulty increase also risks alienating viewers. It's much less fun to play when you get only 3 or 4 rights and feel you have no chance of actually winning.
They are now closer to 1000$ per show.
> That said, since HQ is phone based there's a good chance the viewers are more valuable to advertisers since they can collect more information than on broadcast television.
The viewers are also the players. Cash cows are what makes mobile games so profitable and theses cash cows only care about being the best, not about how much they spent to be. You can buy 3 lives on HQ for 10$, so essentially, some cash cows can be worth 10$ a day easily (at least 3$ per game).
HQ also is made AROUND ads and not ads break. They do have ads before the shows, but I'm pretty sure their real money maker is the bigger ads made into the quiz themselves.
They can be easily profitable based on all that.
That's also why such people can under no circumstances really succeed with businesses. It's not the same kind of personality as Steve Jobs for instance. Jobs also hurt people, but the goal was always to increase public opinion and make money.
The differences between a sociopath (Jobs) and a parasite (this dude here).
And knowing that he's a parasite and not a sociopath, why keep him on as a CEO? The secretary or toilet cleaning person would have a lower chance to screw everything up.
Its more common than you imagine.
Its incredibly clear that the CEO dude is super insecure person who feels some kind of inadequacy and a constant need to control everything. If you read the daily beast article showing the actual interaction, it shows. If he stopped thinking all about himself for a little while he could have done a much better job. But he has so far not faced consequences for his toxic behavior (his co-founder sounds shady af too and that person actually died of a drug overdose... what a mess).
And on top of that, he probably thinks that thing that what got him "here" will also get him "there".
Maybe being vocal made it to the first mile so if he continues his act (and get louder) he believed it would get him to the finish line (the one he has in his mind).
One f-bomb makes a comedy. A thousand make zero ratings and lawsuits. He didn't realize he crossed the line being a sociopath and making is increasingly difficult to receive the messaging.
http://fortune.com/2017/12/20/hq-trivia-losing-investors-sex...
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