Quibi, the much hyped startup has failed to achieve its target of 7.2 million subscribers.
For starters, Quibi is started by high profile leaders – Jeffrey Katzenberg (DreamWorks Animation cofounder) and ex HP CEO, Meg Whitman; and raised close to $2Bn even before the launch.
The short mobile video product secured original content (licensed from Hollywood A-listers like Steven Spielberg) as part of its launch strategy.
In spite of all this, the company was able to grab only 2 million subscribers (expected: 7.2 million). And on top of that, very few of these are paid customers.
“The much smaller than anticipated subscriber base left the billion-dollar experiment cash-strapped; the Wall Street Journal reported that Quibi was on track to have spent $1bn by the end of the third quarter of 2020 and though it raised an additional $750m earlier this year, would require another $200m of new funding by the second half of 2021 to stay afloat. Meanwhile, tentpole advertising partners such as Pepsi, Taco Bell, Anheuser-Busch and WalMart were seeking to renegotiate their agreements with Quibi based on pandemic hits to their business and Quibi’s less-than-promised viewership” [via].
So what really happened with Quibi?
Quibi failed to read the market. Of course, the Covid-19 played its role in the growth, but they could have actually used the pandemic to fuel up the growth (after all, people are bored at home and needed something refreshing to latch onto).
But. Somewhere. Something. Did. Not. Click.
Here is my take:
The fact that the company is very well funded, gotten into its path of finding a meaningful product-market fit..gotten into its struggle to find product-market fit.
That struggle which transforms a caterpillar into a butterfly, a founder into a CEO, an idea into business.
No doubt, Quibi is a well defined product – but well defined for whom? Just because one ‘can’ spend million in acquiring content doesn’t mean that customers are going to love it.
Remember: there are three things money cannot buy:
- Happiness, and
- Product-Market Fit.
We have seen a similar story panning out with some very well funded companies: Color, MagicLeap and many such companies, while some very moderate funded companies have used funding $$ to build better moats.
Talking about MOAT, here is the thing:
Funding is a BIG MOAT..but..
Yes. Funding is a big big big moat (I mean the three bigs..).
In the middle of pandemic, i can definitely tell you that funding and a comfortable runway is a big moat. It gives you access to a lot of great talent, PR and execution confidence (minus the survival worries, which most entrepreneurs are going through in these times).
But the other side of the story is that funding often leads to over-confidence, which shows up in retention metrics – i.e. very very well funded (read: overly funded) companies often tend to skip the product-market fit phase and believe they are entitled to ‘win’ the market.
Entitlement is a bitch.
You had a successful startup. You think you are entitled to win again.
You had a successful fund raising closure. You think you are entitled to win customer’s love.
You have a huge social media follower. You think you are entitled to customer’s attention.
The truth is nobody cares.
The world doesn’t care how well funded a product is and how great you are or your past achievements were. People stick to a product only If they find it useful.
Entitlement is not a moat, and that reminds me that you should watch #WhatTheGoat, a YouTube series that ‘celebrates’ startups, entitlement and sarcasm!
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