Even with a seasoned team and strong funding, Quibi shut down after six months. Here’s what you can learn from it.
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Quibi started with a vision to create the “next generation of storytelling” but announced a shutdown after just six months of being in business. They had everything in place — a robust and credible team, close to $2 billion in funding, famous Hollywood celebs onboard and an optimal time for launch. In an open letter released recently, Quibi’s team assures that it wasn’t the lack of trying that brought them where they are and that they have “exhausted every option.”
Here are three takeaways for entrepreneurs from Quibi’s fiasco.
1. Keep track of the user’s evolving needs
Quibi launched during the lockdown and targeted a segment whose needs changed: Students and young professionals who would have been a potential audience for the 5-to-10 minute bites disappeared as the ecosystem changed. With people staying back at home, they preferred full-length features viewable on their larger screens which Amazon, Netflix and Disney offered, among others. Quibi’s content strategy had more fault lines. They roped in megastars for their content and marketing, while their target audience is more susceptible to micro-influencers and lesser-known celebrities.
2. Have a strong product improvised by feedback
Quibi didn’t integrate social sharing, seamlessly shutting down a primary organic marketing channel. As Quibi had a mobile-first approach, social sharing should have been a priority prima facie. Quibi added the ability to cast screen to a larger device much later. User’s complained about the basic features primarily focused on the product’s UI/UX within their app store reviews.
3. Justify the value proposition
Quibi entered a nearly saturated market with the type of content being its sole differentiator. They planned on disrupting the market aiming for 7 million premium subscribers while they ended up falling short of the target by a considerable margin — 2 million subscribers.
The idea behind a user paying monthly for premium content didn’t work out. Only about 10 percent of the total users turned into paid subscribers once the 90-day trial period ended. It should have opted for a freemium model instead where a limited catalog or an ad-supported version would have been accessible for free members, similar to what YouTube Premium does.
On the marketing front, they should have spread the budget over a more extended period focusing on new user acquisition and retention optimizing the funnel rather than accelerated brand awareness. Even before launching the product, Quibi had spent heavily on its Super Bowl Ad.
Entrepreneurship is a risky bet. According to an HBR study, 75 percent of venture-backed startups fail. Taking calculated risks, informed decisions and improvising upon the value proposition and offerings according to the feedback is received is what’s important. If the fundamentals aren’t in place, even a seasoned team backed by substantial funding shall fail.