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Was HQ a Tech Company or a Media Company?

Episode 4 of our documentary podcast series, ‘Boom/Bust: The Rise and Fall of HQ Trivia,’ examines the existential crises that plague so many startups

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The live trivia app HQ Trivia was once the obsession of the internet, garnering millions of players and an international spotlight. But then it all went wrong. Boom/Bust: The Rise and Fall of HQ Trivia tells the story of the once-viral trivia app and examines vagaries of the attention economy.

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There’s this really crucial moment in a startup’s trajectory where an idea takes off, the company is growing like crazy, and its founders are confronted with an existential question: What are we?

The answer usually reveals a startup’s underlying ambitions for world domination. No, we’re not a directory of college students, we’re a social network that wants to connect the world. No, we’re not a search engine, we are the framework for how you function and think. We’re not an online bookstore, we’re an online everything store.

Companies don’t just come up with lofty goals and poetic marketing language because it’s fun. They do it because their ability to get venture capital depends on it. Silicon Valley VCs aren’t usually interested in small businesses. They aim to fund companies that can grow big and fast, and double, triple, or quadruple their investments. Bonus points if that business has some sort of proprietary technology that gives them a leg up on competitors. Stuff that no one else is allowed to copy, like patented hardware or scientific discoveries.

In that sense, HQ was in a weird gray area. On one hand, it very much felt like a technology company. It was invented by two social media entrepreneurs who had secured buckets of money from investment firms in Silicon Valley. And its product—a live trivia show—very much depended on the technical capabilities of its interface.

On the other hand, it was easy to copy. There was nothing stopping any other tech companies—namely a giant like Facebook—from Xeroxing their format and launching their own interactive trivia shows. In fact, there were already lesser copycats. In late 2017, a shameless HQ replica called “The Q” had launched.

HQ’s main draw, and one of the reasons it became so popular in the first place, was its high-quality production. Its talent. Its brand recognition. Otherwise known as “elements” of a traditional media company. Elements that are much, much harder to scale. As Charles Hudson, a partner at Precursor Ventures told me, a lot of investors just avoid media companies altogether.

“There are many venture firms, and individual venture capitalists, who are uncomfortable with media businesses,” Hudson says. “They don’t have a lot of track record for seeing them be successful. They, in many cases, have never worked in the media business. And so I think there’s also a prevailing view that technology is what provides leverage. And so if you’re not a tech business, can you really get the kind of multiples and exit opportunities that we want to see in tech?”

This dual identity became an issue for HQ: Was it a tech company or was it a media company? In other words, were they the technical platform on which a whole genre of programming might grow? Or were they a content company that comes up with that programming, grooms talent, and develops an audience? Scott Rogowsky, the talent, was especially preoccupied with that question.

“They now all of a sudden have caught lightning in a bottle and have this massive hit show,” says Rogowsky. “But they didn’t have a business plan. They didn’t have even a strategy. They didn’t have anything other than ‘We want to create the future of television.’ Just this vague idea.”

After the company landed $15 million in funding from Founders Fund in early March 2018—which turned out to be one of their best viewership months—it aired its first sponsored game with Nike, where winners received special HQ-branded Air Maxes. Everyone in the office got them too.

They also secured a $3 million ad deal with Warner Bros. But that didn’t necessarily mean HQ was suddenly profitable. They were still very selective about whom they partnered with and how, to the point where they were turning away lucrative deals.

At the same time, they’d been slowly upping their jackpots. It was a way to keep users interested and entice newcomers. And it seemed sustainable given how much growth they were experiencing.

“We started at $50,” recalls Rogowsky. “Then it became $100, $150, $200, $250, and we try to keep it the same as much as possible so you don’t have to spend extra money but eventually, I guess the plan was ‘We’ll have our Sunday night jackpot be the bigger jackpot.’ So if it’s $250 regularly, then $500 for Sunday night. $250 regularly, then $1,000 Sunday night. Then we’ll make it $1,500 for Sunday. We just gradually increased that pot.”

By March, that daily prize money had climbed to $2,500. And in the middle of the month, it was upped to $5,000 per game. On top of that, the jackpots for the big Sunday games were usually something like $25,000.

March bled into April. And the novelty of the bigger prizes kept holding people’s attention. That, and all the celebrity appearances on sponsored games. The 9 p.m. show averaged about 1.27 million players for the month.

But then in May, around Memorial Day, there was a sudden shift in viewership.

“It’s that view count,” says Rusty Wyner, HQ’s animation director. “At a certain point, it stopped going up and then it started going down.”

First, the holiday-weekend Sunday show barely cracked a million.

Employees chalked it up to timing. It was spring, and people were suddenly spending more time outdoors, vacationing and what not. Maybe they just needed another big blowout game to get people’s attention.

At the end of May, HQ partnered with an app called ToonBlast to do a four-game promotion that coincided with the NBA Finals. Each game gave away more and more money. $100,000, $200,000, $300,000, and finally a record-breaking $400,000. But even though they were surpassing a million users for each game, the overall viewership was still declining. The fourth night, the one that was supposed to have this blockbuster jackpot, ended up having the lowest number of people playing in the whole series.

No one can say for sure why such a significant number of users started losing interest, but many employees shared their best theories with me. One of them was that HQ’s massive popularity was actually sabotaging it from within. Because so many people were playing, it was harder to win large sums of money. Even though HQ had started doing occasional winner-take-all games, the typical prize was now very measly. Not to mention, tons of Discord chats and bots had popped up to help people cheat the game, which made the whole thing feel like it was sort of rigged.

It’s possible that people also just got bored of playing the same game over and over again. It’s the internet. People have short attention spans. And I can personally attest to this. I had stopped playing by then, and not for any reason in particular. I just lost interest.

By the end of June, HQ was holding on to just a million viewers. And this downward fall kicked off a whole bunch of other problems.

“Once we started going under a million, I said, ‘Listen guys, we can’t let this go under a million,’” Rogowsky recalls. “We hit a million. A million’s that sexy number. A million is going to be the number that’s going to get us the sponsorship deals, get us the ad revenue. You could say we’ve got a million people playing. Like, that’s the number that gets people attention. Even 900,000, you know, 800,000.

“So we started going down and I just said, ‘We’re bleeding out. We’re a patient on the operating table and the doctors are fighting over how to cure this patient. ‘What’s the best way to proceed?’ Meanwhile, nothing’s being done and the blood loss continues.’”