Context
Quibi was founded by producer Jeffrey Katzenberg, with Meg Whitman, former chief executive of Hewlett-Packard, as its head. The service offered short episodes for viewing on a phone, shot with the budgets of television series. Before launch the company raised $1.75 billion.
Symptom
The main hypothesis, that people would pay for short, high-quality video on their phones, was not tested on real subscribers before launch. Free short video already existed on other services.
Cause
The money was spent on content and marketing before demand was tested. When the hypothesis was not confirmed, most of the budget had already gone into a product that was hard to change.
The fork
Test demand cheaply, on a small set of episodes and a small audience, or launch the full product with a large budget right away.
Decision
The company launched the full service in April 2020.
Execution
The launch coincided with the start of the pandemic: people were at home, and there was no reason to watch "on the go." The service could not be watched on a television, and that was criticized. According to published reports, the company expected more than 7 million subscribers in its first year, and a few weeks before closing it had about 500,000.
Outcome
On October 21, 2020, six months after launch, Quibi announced it was shutting down. In January 2021 the content library was sold to Roku, according to published reports for less than $100 million. The founders named the pandemic as the main cause; critics pointed to the product idea itself.
What it means for you
A launch goes through tests from cheap to expensive: first demand, then economics, then scale. Big money before the first test of demand raises the cost of a mistake.
- Which main hypothesis about your product have you not yet tested on paying customers?
- How much does the cheapest test of that hypothesis cost?
- What will you do if the test does not confirm demand?
We would start by writing down the hypotheses about the product in order of risk and finding the least expensive test for each.
Key dates
| Year | Event |
|---|---|
| 2018 | Company founded |
| 2020, April | Service launches |
| 2020, October 21 | Shutdown announced |
| 2021, January | Content library sold to Roku |
