Sequoia Capital's $100 million investment in MUBI at a $1 billion valuation isn't just another streaming deal - it's a bet on the complete inversion of how we think about mainstream entertainment. The numbers tell one story: MUBI's 20 million users, profitability, and the runaway success of "The Substance" justify the investment. The real story is, well, far more interesting.
With a $1 billion valuation on $73 million in revenue - a 13-14x multiple that would make most SaaS companies blush - Sequoia isn't paying for what MUBI is today. They're paying for what MUBI represents: the first streaming platform to fully embrace the death of the monoculture. While Netflix still chases the mythical "water cooler show" that everyone watches (I know y’all will still watch the last Stranger Things season despite the fact that the last one was so bad), MUBI has built its entire business on a different premise: in a post-mainstream world, the niche is the mass market.
This is what I described as the Spotify Paradox. Just as we constantly discover artists with millions of streams we've somehow never heard of, MUBI has proven that "art house" cinema isn't actually niche - it's just one of countless parallel mainstreams that coexist in our fractured cultural landscape. Take "The Substance" - a body horror film about aging starring Demi Moore that's equal parts Cronenberg nightmare and feminist commentary. It's the kind of film that would have been relegated to midnight screenings a decade ago. Instead, MUBI acquired distribution rights, gave it a theatrical release, and watched it gross $83 million worldwide and won Demi Moore a Golden Globe as well as an Oscar nomination. The film didn't succeed because it appealed to everyone; it succeeded because it found its everyone.
But here's where my skepticism kicks in. Those multiples are extreme - we're talking 13-14x revenue and potentially 86-274x profit, depending on how you squirm at those excel sheets. The pressure to perform at these valuations could strain the very qualities that made MUBI special. When you're valued like a hypergrowth tech company, the temptation to chase scale over curation becomes overwhelming.
And lets not mince words. The badly dressed people from Sequoia Capital, wearing their All Birds sneakers, are not in this because they secretly want to make sure that they will always be able to watch Kim Ki-duk “The Isle” (I’m still traumatized by this movie).
I'll admit, though, I've been wrong about streaming economics before. For years, I hedged against Netflix when their debt-to-revenue ratio hit 74% and they were burning through $3.3 billion in cash annually. With $18.5 billion in debt and junk bond ratings, I was convinced they'd eventually default. Instead, they made a brutal but successful pivot - layoffs, ad tiers, password-sharing crackdowns - and emerged stronger than ever. Maybe MUBI has a similar resilience.
What's particularly clever about MUBI's position is that they own the entire stack - production, distribution, and most crucially, the direct relationship with viewers. This is where the A24 comparison becomes illuminating. A24 has arguably created more cultural moments than MUBI, but they're still beholden to other people's distribution channels (“Content is king, but distribution pays for the king's mortgage” – I thank Aaron Sorkin for introducing me to this line in the short lived “Studio 60”). MUBI is betting that in a world without mainstream, owning the audience relationship matters more than owning the IP.
This infrastructure play reveals MUBI's long game. While CDN ownership typically reduces delivery costs by just 10-20% compared to using third-party providers, and infrastructure is only one slice of total expenses (dwarfed by content and salaries), it signals something deeper. Building your own CDN requires patient capital and technical sophistication - qualities that suggest MUBI isn't just another content aggregator but a company building defensible technological moats alongside its curatorial ones.
The premium valuation makes perfect sense when you realize Sequoia isn't investing in a streaming service - they're investing in a new model for how culture gets made and distributed. In our metamodern moment, where multiple realities coexist and every niche contains multitudes, MUBI has cracked something fundamental: you don't need to be everything to everyone when you can be everything to someone.
If this logic holds, we should prepare for the next move: A24 buying AMC for $2 billion to create a chain of curated theatrical experiences (A24-MC, you have read it here first). After all, if owning the audience relationship is worth $1 billion, imagine owning the actual seats they sit in. In a post-pandemic world where everyone craves physical experiences, the real disruption might be making people leave their houses again. Though at that point, we'd have come full circle - from killing theaters to resurrecting them as temples to niche culture.
Finally got round to reading this - @Igor Schwarzmann did not disappoint!
Btw do you think it’s worth following VC partners on Substack, as a futurist?