Quibi Failed to Query

A solution to no one’s problem is no solution, even if well funded

Russell McGuire
Oct 22 · 4 min read
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Media mogul Jeffrey Katzenberg formed startup NewTV early in 2017, landed Meg Whitman as CEO in March 2018, announced $1 billion in funding in August of that year, and two months later renamed the business Quibi. The service officially launched in April of this year and now, two years after its naming and six months after its launch, the service is being shut down.

Katzenberg and Whitman have had many successes in their careers that they should be proud of. Quibi won’t be one of those. Many are pointing to the failures in those leaders’ pasts as indicators of what went wrong with Quibi, but I’m guessing the main problem is a simple, and unfortunately common one.

They simply forgot to ask if anyone needed a Quibi.

Supposedly, the service was aimed at digital natives, those that have grown up with the Internet and the iPhone. Katzenberg probably looked at major trends like media consumption on smartphones, the rise of short form videos on YouTube, Facebook, and Tik Tok, and the rapid success of streaming video services like Netflix, Amazon Prime, and Hulu and saw a “white space” opportunity to provide studio-quality content in “bite sized” (10 minutes or less) episodes that his envisioned audience could consume in the midst of their busy lives.

Perhaps the company hired a research firm to survey the target audience to gauge interest in such a service, but probably not. A New York Magazine article quotes Whitman: “I say, ‘Where’s your data?’ He says, ‘There is none. You just have to go with your gut.’”

But even traditional market research can often steer you wrong. Instead, startup founders need to sit down one by one with their target customers and learn about them. As Steve Blank always says “you need to get out of the building.” You need to understand what your customers want to do, what they hope to get out of it, and what problems keep them from getting those benefits.

But apparently Katzenberg and Whitman didn’t really want to hear any feedback. The New York Magazine article quotes a source as saying “Unless you agree with them, you’re a troublemaker. Meg believes she’s a marketing genius; Jeffrey believes he’s a content genius. So … you’re there to execute their vision, which no one else there believes in.”

Even the decision to name the company was made without asking what people thought. The article quotes a “former insider” as saying “They never asked staff to weigh in on it … People on staff thought it was cringey and would ask, ‘Is it too late to change it?’ Meg loved it.”

The really sad thing is that Katzenberg, Whitman, and their investors probably didn’t need to spend money on research or spend time in customer discovery. Their concept had already been disproven.

In January 2014 Verizon acquired a company called OnCue to kickstart their mobile video strategy. In September 2015 they launched go90, a mobile-centric streaming video service that focused on short-form studio-quality video content for digital natives. They brought in industry experts from NBCUniversal, YouTube, and Hulu to turn the service into a hit. The company spent over $1 billion trying to make the concept work. (Is any of this sounding familiar?) By 2017 go90 was clearly struggling and the service was finally shut down in July 2018. (Shockingly, August 2018 is when NewTV/Quibi announced $1 billion in funding.)

More than anything, Katzenberg and Whitman don’t understand how to launch a startup. They tried to run Quibi like a big corporate initiative. Verizon can afford to lose $1 billion on a bad big bet. Disney can afford to lose $1 billion. In it’s heyday, HP could afford to lose $1 billion. No startup can afford to lose $1 billion.

Smart startups realize that their concept is merely a collection of hypotheses. Those hypotheses need to be tested, proved, and improved. Smart startups spend as little money as possible until their experiments have shown that they provide a solution that the market really needs, wants, and is willing to pay for. And when they truly know that, they scale like crazy.

Quibi did everything backwards. They spent tons of money without testing any hypotheses. They had a fancy office and hired the best and brightest that money and Hollywood glitz could attract to fill it. They built a fancy mobile app, a huge portfolio of expensive content, and a rigid business model. And then they offered the world the opportunity to pay for yet another streaming service.

And when their hypotheses were wrong, it was too late. The money was spent. The goodwill with the industry, investors, and the public was gone. There was nothing left to do but close the doors.

If there’s anything of value we can take from this disaster, maybe it’s another catch phrase to go with “get out of the building”:

Don’t be a Quibi.

Russell McGuire

Written by

Strategist, Entrepreneur, Executive, Advisor, Mentor, Inventor, Innovator, Visionary, Author, Writer, Blogger, Husband, Father, Brother, Son, Christian

ClearPurpose

Through ClearPurpose, we share our experience, tools, and methodologies to approach strategy development with discipline and structure, making it easier to achieve clarity, gain consensus, and communicate coherently. Note: As an Amazon Associate we earn from qualifying purchases.

Russell McGuire

Written by

Strategist, Entrepreneur, Executive, Advisor, Mentor, Inventor, Innovator, Visionary, Author, Writer, Blogger, Husband, Father, Brother, Son, Christian

ClearPurpose

Through ClearPurpose, we share our experience, tools, and methodologies to approach strategy development with discipline and structure, making it easier to achieve clarity, gain consensus, and communicate coherently. Note: As an Amazon Associate we earn from qualifying purchases.

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