Oct. 27th, 2020 - Death by Quibi
Quibi Killed Its Best Marketing Strategy
Seven months and $2 billion dollars later, Quibi has pulled the plugged.
Quibi achieved unbelievable growth — to the tune of 1.5M paying customers and on pace to hit $250M in revenue in their first 1.5 years — but the growth was artificially manufactured with too much capital. Quibi did not understand their customer well and thus missed out on the network effects required to support their acceleration. The Quibi experience was lonely.
Because Quibi's content was restricted to mobile and virtually unsharable (thanks to DRM), they destroyed the main option for growth in a crowded streaming space — word of mouth. Watching shows is a social experience, whether synchronously or not. Friends want to discuss shows and recommend content, but Quibi's setup was meant to isolate. With a mobile-only approach, content could only be viewed on small devices designed for one. That can be perfect for a commute, but it keeps the content limited to just that scenario.
As a result, they needed an enormous advertising budget to reach customers individually.
"We tend to operate as though we are usually right, and we interpret neutral or ambiguous evidence as supporting our beliefs rather than challenging them. This is called confirmation bias, and it’s responsible for a huge percentage of product failures."
Avoid Becoming Quibi
- Talk to your customer.
Great product fit happens when companies fill a need for the customers. Quibi aimed to fix the lack of quick, high quality media to consume on the go, but they should have spent more time asking customers how they decide what streaming media to view or purchase. Had they asked, they would have discovered that successful streaming platforms are extremely dependent on word of mouth and social sharing for content to catch on. By effectively shutting down those growth channels, the product experience was even more isolating to the customer.
- Test your hypotheses.
Once you've gotten ideas and feedback from your customer development conversations, rigorously test your assumptions. It's easy to give in to confirmation bias and to craft feedback into the story we already wanted to tell. Set up tests and prove that your story is accurate. Quibi assumed that customers needed content for their commute but missed that viewers were also wanting a social experience
- Understand your flywheels.
Quibi pumped a ton of marketing dollars into advertising, which did result in growth, but at a high cost. Had they focused more on organic growth channels versus paid, their acceleration may have been more sustainable. Despite a large base of paying subscribers, the process didn't scale because their marketing ROI remained flat. Testing a free trial or other growth mechanisms may have lessened this load.
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