Quibi Lessons: Researching the Market and Each Other.

Who invested in Quibi? Investments came in from Alibaba, Walt Disney, Sony, Disney, NBCUniversal, Viacom, Warner Bros and others totalling $1.7b. Why was Quibi so exciting? It was a company developing short-form media content designed for smartphones. It was paraded as the next Netflix and in some cases the Netflix-killer. As a backdrop, I signed up for Quibi but never bothered to return to the app; there wasn’t any compelling reason to.

The Driver: Jeffery Katzenberg.

When three great minds agreed to work together few doubted that Jeffrey Katzenberg, David Geffen, and Steven Spielberg would achieve record-breaking feats. Together they achieved hit after hit. Their studio delivered Kung Fu Panda, Shrek, Madagascar and How to Train Your Dragon. These movies remain my sons’ best movies of all-time.  When they launched 26 years ago, the fears were the same. Could these heavyweights work together? Could these mega-minds put aside their differences to build a great company together?

Fast forward to 2018, Meg Whitman was approached by Jeffrey Katzenberg to lead the efforts to create mini-videos as CEO. Meg is corporate royalty. She is a former politician but way more famous for her successful leadership role at eBay and HP. Teeing-off Quibi, these were a power corporate-couple but achieved mega failure and this wasn’t because they lacked funding. While other streaming services saw sales acceleration during the lockdown, they didn’t.

One Sign too Many.

In June 2020, The Wall Street Journal published an article about the partnership titled “Jeffrey Katzenberg and Meg Whitman Struggle With Their Startup—and Each Other”. The subtitle was “Two veteran executives with contrasting styles are launching Quibi, an on-the-go streaming service, during a pandemic.” That article told the world what had been obvious for a while. These two couldn’t work together. The frostiness of their working relationship began on day one and never got better despite several interventions. The fights threatened the company at the beginning and proved to be a significant factor in the company’s failure.

Meg had moved to an iconic home in Los Angeles for this project. In August, She tried to sell that house privately. When the news of her house sale became public, everyone knew she was leaving Los Angeles and, by extension, the company. Everyone knew the company was over. Meg wasn’t ready to fight for this company’s survival; she was done.

A Flaw in their Competition Analysis.

Quibi branded itself as a mobile Netflix, providing custom videos for people on the go but they weren’t competing against Netflix. I never understood why they took this position. I believe their competition was very different. Their true competitors were the likes of TikTok and Youtube. They failed to see that the mini-movie market isn’t really about movies (with actors and directors) but more about entertainment. How can you invest millions to create one 10min movie to compete with those very entertaining Tiktok clips costing less than $20 to produce? They were in the bit-size entertainment video market which includes Facebook, Instagram and a host of other social media players who have more to offer in this category for a lot less (in cost per video).

For me, if I want to watch a movie then I expected to be long and engaging with a plot and all the thrills. If I want something short then all I want is a distraction, random and interesting. Are others like me? Do viewers want compressed movies? The answer can be seen in this $1.7b (that b is for billion) experiment. When you put the management issues aside, the core problem they faced was a wrongly assessed market.

Who is the Customer?

One of the struggles I have had in my role as a Business Analyst is how to ensure value is thoroughly assessed. This achieved through the hard work of understanding the customer. However, the Business Analyst is often not engaged with the clients on a day-to-day and has to rely on the sales team to provide context into the mind of the clients. Often time, the sales agents miss out on tell-signs which should have been picked up on. In this case, the sales team appeared to have a total disconnect with the audience they hoped to win over. Media campaigns by Quibi were lacklustre and impassionate. Maybe the sales and value issues were inherited from the top.

It’s a waiting game.

When the pandemic hit, businesses didn’t know how to respond. Many adopted a wait and see approach hoping it will blow over. Others started planning to downsize, expecting the worst. Yet others pivoted from their current business models to models that would support the change. Gyms and yoga classes created digital versions with Zoom calls for clients requiring some activity while at home.

In the crises, I would always share stories with friends about companies clearly benefiting from (or benefitting in) the crisis. There are always winners in every game even though some games technically end in a draw. In a draw, one side needed the win more and so technically they lost the match even though they achieved a draw. So while I will be discussing the winners of the pandemic season at a later date, I want to speak to a general thread linking many of these winners: waiting.  

It’s all about the ability to wait or the inability to.

How do we wait in business?

It begins with cash reserves. How deep are your pockets when a crisis hits? That depth will enable you to be dynamic in your response. Waiting is the ability to delay rushing any decision because you do not have to. Waiting is to remain calculative when others are despondent and frantic. Waiting is what allows some to wait for the right moment to pull the trigger while others would have had to react to immediate pressures.

Photo by Adeolu Eletu

An Example from Row Vigor.

Founded by Fola Awosika, Moses McCall and Kevin Allen in February 2016, Row Vigor had a lot of promise but for 4 years they struggled with securing investments from Venture Capitalists. Finally, their break came in 2020.

Just as the pandemic hit, their indoor fitness app was in demand and it was growing. However, there was a problem. Moses McCall, their developer, had moved on. He had struggled with family issues and needed to start a regular job to survive. Fola and Kevin had run out of funds and couldn’t hire another developer to continue from where Moses had left off. They also couldn’t sustain the company through this season of opportunity. They couldn’t wait! They just couldn’t. They watched the opportunity brought by the pandemic pass them by because they couldn’t innovate when they needed to.

There will always be some other recession triggers. This economic crisis was brought on by a pandemic, the next may be brought on by something else. Businesses and individuals will find themselves in similar situations in the future and their ability to wait will be called into question.

How long can you wait in the heat of a crisis while thinking straight and objectively?

To wait you will need some emotional stability but that won’t be enough if your pockets are dry. You need both.