Business/Finance: CNBC Exclusive: CNBC’s David Faber Speaks with Quibi CEO Meg Whitman (Transcripts)

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CNBC’s “Squawk on the Street” and CNBC’s “Squawk Alley” are Live from the 2019 Milken Institute Global Conference in Los Angeles, CA. The following are the unofficial transcripts of CNBC Exclusive interviews conducted by CNBC’s David Faber.

DAVID FABER: Carl, thank you. And yes, we are, of course, as you pointed out, at the Milken Institution Global Conference in Los Angeles.  Joined now exclusively by the former CEO of HP. She also was the CEO of eBay. Viewers may remember her, she occasionally would come on and join us. Pretty much every single quarter during her time at HP. Meg Whitman, nice to see you.

MEG WHITMAN: Nice to see you. Thanks for having me, David.

DAVID FABER: Very different world for you now. You actually are based in Los Angeles.

MEG WHITMAN: Yes, we have moved to Los Angeles.

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DAVID FABER: And you are running a company that is getting set less than a year from now to produce short-form content at the highest end of production value, for essentially people’s wireless devices, more likely their phone than not.


DAVID FABER: Why will this be going to something that people – and it is called Quibi-- that people want?


MEG WHITMAN: Well first, I think you probably figured out, Quibi is a contraction of ‘Quick bites,’ which is what we call this short-form content. And what we know is people are increasingly watching video on their mobile—60 minutes a day up from just 6 minutes in 2012. And that’s because there’s better bandwidth and more content. And we’re going to go after white space, which is very high-quality content in this short-form bringing together the best of Hollywood and the best of Silicon Valley. And it’s an on the go use case. You know, every morning you leave your house with a little television in your pocket, and you have all these in between moments, like when you were waiting for me to show up, and a chance to watch six or eight minutes of something great. So, we’ve got incredible content coming. And we’re doing great innovation on the technological side.

DAVID FABER: You know, nobody doubts your ability to innovate, and Mr. Katzenberg, of course your partner in this, as well. But people do wonder, in terms of short-form, I mean, you describe the way people would consume the content – I take the subway every day in New York, people are watching their videos there. But it’s a half hour show or an hour show. Why do you believe that something in a shorter form will appeal to people who already seem to be happy watching, in shorter bursts, longer things?

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MEG WHITMAN: Yeah. Well, I think it’s real innovation. Do you remember when HBO launched? They said: we’re – it’s not TV, it’s HBO. And at the height of advertiser-supported TV, and they created an incredible premium viewing experience. People love YouTube. We love YouTube. It’s amazing what that company has done. You know, Snapchat, Facebook Watch, they’re all doing really interesting –

DAVID FABER: --Instagram is another potential competitor to watch.

MEG WHITMAN: Instagram.  Doing great things. But we’re doing it at a different quality level. And we will tell long-form stories but in ten-minute chapters. My best analogy for you is "The Da Vinci Code." 464 pages, 105 chapters, each chapter is five pages long. Because Dan Brown said, if you’ve got five minutes, I want you to read one chapter. If you’ve got ten minutes, I want you to read two chapters. And people don’t have these big blocks of time and to create story arcs around great stories that is for on the go viewing, we think there’s an audience. And it’s for millennials, 25-35 year-olds.


MEG WHITMAN: We’ll probably get seven years younger and seven years older, as well.

DAVID FABER: And you haven’t yet settled on a pricing metric.

MEG WHITMAN: Yes, we have.

DAVID FABER: Okay. What is it?

MEG WHITMAN: Yeah, it’s $5 a month, actually probably $4.99 a month ad-supported, and $7.99 a month ad-free.

DAVID FABER: The creators you’re going to for this content, I mean, it’s a good time, I would assume in this town and others, to be a creator of content.

MEG WHITMAN: It’s an amazing time here in Hollywood.

DAVID FABER: Is it ending up being more expensive than you’d anticipated? I know that many people are buying in and you have a lot of support of studios as well, but is the prospect of creating this content even more expensive than you might have anticipated, given the demand for these people creating?

MEG WHITMAN: It’s not. It’s not more expensive than we anticipated in the business case, because we knew there was a renaissance going on in Hollywood. And you know, every day there’s a new entrant in this very high end long-form OTT services. So, we’re competing. But content creators really like this because they know the cellphone, the smartphone, is the next big screen. If we’re right, movies, televisions, Quibi. And so, they want to develop for this device. And we’ve made it an attractive proposition for them. So, first, we started, and we had to pitch, and explain what we’re doing. And now much of Hollywood is coming to us with ideas, which is of course what you want.

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DAVID FABER: Right. And of course, you want a hit, is what I would think you want.


DAVID FABER:  Something that’s really going to get word of mouth going.


DAVID FABER: And create a sense that this is something people want.

MEG WHITMAN: Certainly, we need a hit, and that’s what we call our lighthouses. But you know, part of what we’re excited about at Quibi is we’re going to create a daily consumption habit and we’re going to launch something called "Daily Essentials" which will be, you know, in 6 1/2 to 8 minutes, a wrap-up of news, a wrap-up of sports, a wrap-up of music news, celebrity news, gaming news. And if we can get you to be interested in three of those a day that you really like, that you depend on, and that’s where you get a lot of your news, that creates the daily consumption habit and the other kinds of content built on top of that.

DAVID FABER: Right. We are in a world where there was a proliferation of services that stream. Disney Plus, I was out here a few weeks ago interviewing Mr. Iger as they introduced their service at $6.99. What do you think the willingness of the consumers is to have all these different services including your own at $4.99?

MEG WHITMAN: Yeah. Well, I think in the end there won’t be quite as many as there are today. I think in every industry – you know, think of the car industry at the turn of the last century, I mean, at one point -- there was like a hundred car companies at one point. Now there’s three or four. But I think there’s a lot of different business models. I mean, I think Disney was remarkable in its announcement.

DAVID FABER: Why did you think it’s remarkable?

MEG WHITMAN: Well, I mean, they have such a library of content. It was beautiful produced. Look at what "End Game" did this weekend, it was historic. But we’re a different use case. A lot of these services are at night. You know, you come home from work, you want to invest an hour, an hour and a half, on the weekends. We think our use case is Monday through Friday, 7:00 a.m. to 7:00 p.m.

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DAVID FABER: And so, you believe there will be a willingness among -- how are you going to know when it’s working? How are you going to you define success, or at least know you’re on the road to it?

MEG WHITMAN: Yep. So, really the key metric for us at the end of the day is paid net subscribers. How many people try, how many people actually subscribe and then how many people stay. It’s a classic subscription business. So, I think we’ll know at the end of the first quarter, are we on track for our base case, or our goal case? What are people saying about the service? By the way, it’s so wonderful, for the first time in 20 years, and you will appreciate this, I do not have a legacy platform. I get to build the technology platform from scratch. So, we can instrument it and develop it in a way that we would never have been able to do. And so, the technology innovation, and making video look great on your phone, is very much part of what we’re doing. But in the end, paid net subscribers.

DAVID FABER: Right. So, we’ve got a little while yet and ask you if it’s working or not—


DAVID FABER: --given that it’s not going to launch until April of next year. You know, it’s funny. When you sat down, we were talking very briefly and you said your work now is more akin to what you did at eBay than it certainly is to HP. Why is that?

MEG WHITMAN: Yeah, yeah. Well, it’s a startup; eBay I joined, remember, when there were 30 people and 4 million in revenue. This is a pre-revenue company. I was employee number one in March a year ago. But we now have a hundred people. And it’s – you know, we’re building something and that’s much more akin to eBay. I loved my time at HP but that was, you know, really reinventing an American icon. And you might recall, I mean, when I joined, it was $129 billion in revenue.

DAVID FABER: I remember – and how many employees?

MEG WHITMAN: 325,000 plus 80,000 contractors. It’s actually so much easier in many ways. I can manage by walking around. I know every person who works at Quibi. It won’t be like that forever. But—

DAVID FABER: So, you enjoy that. You’re enjoying that as well.

MEG WHITMAN: It’s great.

DAVID FABER: You know, it’s funny. Devin Wenig was sitting here not long ago, talking about eBay, and we were having the same kind of conversation that you and I may have had 15-18 years ago.

MEG WHITMAN: Yes. Yeah, Devin’s a good friend.

DAVID FABER: When you look at the platform eBay is today, is it what you expected it might be? Are you surprised there are still sort of debates about re-energizing it, and the difference between large sellers and medium and small businesses?

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MEG WHITMAN: You have to remember, I’ve been gone from eBay for ten years.


MEG WHITMAN: It’s hard to imagine. So, in the life of that company, that’s, you know, a third of it, basically, more than that. And, so—but think about how e-commerce has changed. When I was at eBay in the early days, we were explaining to people what the Internet was. Do you remember, our first ad was, ‘, it’s on the Internet.’ And so, e-commerce has changed. And the world is changing at a breakneck speed. I’ve never seen anything like this. It is – what happens--

DAVID FABER: You talk about it all the time. And you talked about it during our many interviews when you were running HP in terms of the rate of change increasing and therefore the need to do certain things.

MEG WHITMAN: It’s just amazing.

DAVID FABER: Do you worry about it when it comes to Quibi? That there will be something that outruns you?

MEG WHITMAN: Sure. Absolutely.

DAVID FABER: Given the proliferation. I mean, every day there’s a new announcement.

MEG WHITMAN: Every day there’s a new announcement, there’s new technology. But I think startups in some ways have an advantage. Because we can move fast, we can pivot. We see what needs to be done and we have a singular mission. And so, we just have to stay on our path, which is this, you know, on the go use case, very high quality, short phone content that fits into people’s lives with a unique technology platform. And I’m pretty optimistic. As you know, I could have done a lot of different things.

DAVID FABER: Yes, you could have.

MEG WHITMAN: And I decided that this would be – I thought it was a fantastic idea and thought it would, you know, be very successful.

DAVID FABER: Well, I’m glad that we got a chance to catch up. Thank you.

MEG WHITMAN: Nice to see you. Thanks, David.

DAVID FABER: Nice to see you, too. Meg Whitman, CEO of Quibi. Back to you, Contessa.

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