This post is by Om Malik from On my Om
Quibi, a mobile-first video startup primarily known for being an extremely well-funded pet project of woefully out-of-touch co-founders Jeffrey Katzenberg and Meg Whitman, is shutting down. Born in February 2020 in the middle of a pandemic, Quibi didn’t even last a whole year. The only reasonable response to the company’s ultimate failure is to ask: Is anyone surprised?
In case you missed Quibi (which, frankly, is quite possible), here is a quick refresher: It was a service that signed up many famous people and content creators to make shows lasting between 5 and 10 minutes. It wanted to compete with YouTube, Facebook, and Instagram. It tried to be the next Netflix.
Katzenberg, a former Walt Disney executive and co-founder of Dreamworks, and Whitman, the former CEO of eBay and HP, raised almost $2 billion from many show business and telecom investors. As someone who has been around the technology industry as long as I have been, those two specific sets of investors in the same cap table, my initial instinct is to run for the exits. Many venture firms in Silicon Valley didn’t think much about the company and its prospects, as one can see from its cap table.
(Here is a small side note: No top Silicon Valley venture investors were involved in Theranos or Nikola, another recent hot mess. There is a lesson somewhere in here, and something to pay attention to when it comes to sifting through the blivet of SPACS currently hitting the market.)
Back to Quibi. In a letter sent to the company and its investors, the co-founders wrote: “Quibi is not succeeding. Likely for one of two reasons: because the idea itself wasn’t strong enough to justify a standalone streaming service or because of our timing.” Let me put this in the kindest terms: Quibi was trying to solve a problem that no one had — and certainly weren’t going to pay $5-a-month to address. The company got somewhere between 400,000 to 500,000 subscribers, which is not bad. However, that initial target was over 7 million subscribers, so clearly, they fell short of their own goals.
Quibi’s failure reminds me of another hotshot startup that launched with much fanfare: Color. It also gained infamy for the amount of venture capital raised. Despite $41 million from Sequoia Capital, it flopped and vanished into the mists of time. It prompted me to write a piece that I called “Money can’t buy you love: why some apps work and some don’t.”
In March 2011, I wrote, “The Color app faces the same challenge as many of today’s mobile apps: How can it earn a user’s attention in a world that is increasingly crowded with options? In fact, you can extend that argument to any consumer service: new appliances, new devices, and media entities new and old.”
You could replace “Color” with “Quibi,” and leave the rest unchanged. Eight years later, the market is even more crowded. Incumbents are more entrenched, and they control our attention with the ruthlessness of a boarding school warden. The only company in recent memory that was able to stand out is TikTok, which succeeded by spending billions on advertising. In doing so, they have become such a threat to Facebook that Mark Zuckerberg feels no shame in asking the president to play political foosball with them.
I was looking back at my piece on Color, and I realized that many of the apps and services that grabbed my attention back then didn’t actually manage to keep it that long. Nimbuzz, Evernote, Instapaper, and PicPlz all made a pitstop on the attention freeway, but where are they now? Instapaper was terrific as long as the founder stayed on board. Ditto with Evernote. Of the applications I used to use back in 2011, only Spotify has thrived — and Daniel Ek is still in charge.
It doesn’t matter how much money a company raises or what valuation it gets. What makes services/apps work and get our attention? They either bring happiness, utility, or both. Value, not valuations is what makes a business work.
Take it from the old me from 2011: “Put all the things that are part of your daily routine into these two buckets — happiness and utility — and you will see it for yourself that in the end, those two are the driving forces behind a successful app, service, device or media property.”
October 21, 2020, San Francisco