Quibi and the Perils of Ignoring the Wisdom of the Crowd
The short-lived billion-dollar backed startup got seduced by the fallacy of the visionary entrepreneur
By raising $1.75 billion and then shutting down just six months after it launched, mobile streaming service Quibi has now guaranteed itself a place on the list of business history’s great cautionary tales. Business-school professors will be teaching Quibi case studies for years to come, trying to explain in detail exactly how a high-profile startup backed by billions of dollars and experienced leaders like founder Jeffrey Katzenberg and CEO Meg Whitman went so wrong. But the most important lesson that Quibi’s demise demonstrates is already painfully clear: If pretty much everyone thinks your product or service is bound to fail, you should probably listen.
What was most striking about Quibi from the start, after all, was that it was met with near-unanimous skepticism, if not outright disdain. Quibi was a “billion-dollar boondoggle.” It had a “fatal (but fixable) flaw.” It was “doomed to fail.” Forbes was already talking about how “Quibi Can Succeed Even After It Fails” in July 2019—eight months before the service even launched.
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Of course, in our hot-take world, there are always going to be critics of any new venture. But in this case, the chorus was close to universal. And the criticisms of the service were both specific and prescient. Critics pointed to the fact that Quibi was offering a service — short-form entertainment streamed to your mobile device — that YouTube and TikTok (and Facebook and Instagram, etc.) were already offering, and that there was no evidence Quibi’s bet on “high-quality” short-form content was something users wanted. They suggested, rightly, that users already had no dearth of things to do on their phones while they were commuting or waiting on line: Between the aforementioned streaming services, Twitter, email, mobile gaming, Facebook, Reddit, and so on, few of us were struggling to fill time on our phones.
Quibi’s fate was foreseen by everyone — except, it would seem, the people inside the company. So why didn’t they listen?
Then there were the practical criticisms: $4.99 a month ($7.99 a month for ad-free content) was too expensive in a world where the company’s mobile competitors were free and where services that charged — like Netflix — offered vastly larger libraries. Quibi was weirdly un-integrated with social media: It didn’t allow screenshotting at first, and didn’t allow users to comment or easily share videos with friends or followers. And then there was the simple, but obviously important, fact that once the service launched, its content — as, again, many people pointed out — was unmemorable when not downright bad.
The point is that Quibi’s fate was foreseen by everyone — everyone except, it would seem, the people inside the company. So why didn’t they listen? Well, we know why: the cult of the visionary entrepreneur, exemplified by Steve Jobs. It says, in the crudest sense, that if everyone thinks something is a crazy idea, but you think it’s brilliant, you should trust yourself and place the bet, because, as Jobs put it, “People don’t know what they want until you show it to them.” Lots of people, after all, thought the iPod and the iPhone and the iPad were going to be flops. But Jobs trusted his own vision, and changed the world in the process.
Now, there are many problems with this narrative, even if you ignore the fact that very few people in the history of business have had as keen a sense of technology’s possibilities as Jobs did. First of all, while you can certainly find stories from 2007 about how the iPhone was going to fail, Apple’s most successful products were widely recognized as game changers when they were introduced. Jobs’s biggest failures, by contrast, like the Apple III and NeXt, were widely recognized as doomed as soon as they debuted.
The criticisms of Quibi were the criticisms of informed users, and ignoring informed users is a great way to fail.
More important, though, the Jobs dictum about people not knowing what they want applies mainly to products or services where you’re giving users something genuinely original. In that case, it may make more sense to ignore the crowd, because the crowd doesn’t really have much context for understanding what the product will do or the value they might derive from it.
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But that was very much not the case with Quibi. Quibi was not a radical new service. It was delivering something we were all very familiar with — “high-quality” TV shows and movies. They were chopped up into 7- to 10-minute chunks, but that too was not radical: We’ve all gotten used to consuming content in bite-size forms. Quibi was not trying to give people something they had never seen before — like, say, Apple did with the iPhone. It was trying to do something that was similar to stuff that was already out there, but to do it better. And given that, it absolutely made sense for Quibi to listen to the wisdom of the crowd, because people collectively have a good sense of what a successful user experience is and what it isn’t, how much they’re willing to pay for content, and how they want to fill their time. The criticisms of Quibi were the criticisms of informed users, and ignoring informed users is a great way to fail.
To give Katzenberg and Whitman credit, they ultimately did listen — that’s why they shut the company as quickly as they did. Other executives might well have tried to stick it out, to insist that their vision was the correct one, and that the audience would eventually come around. But Katzenberg and Whitman recognized, if belatedly, what the market was saying, and rather than succumb to the sunk-cost fallacy, chose to end things while there was still money left to return to investors and take care of their employees. It was a smart play. It’s just unfortunate it was the only smart play in Quibi’s history.