Quibi raised 1.75 billion dollars for a moment that disappeared at launch

Quibi was founded in 2018 by Jeffrey Katzenberg, the former head of DreamWorks Animation, with Meg Whitman as chief executive, and it raised 1.75 billion dollars before and during its short life. The offer was precise: shows made with Hollywood talent and budgets, cut into episodes of less than ten minutes, watched on a phone held upright or sideways. It cost 4.99 dollars a month with ads or 7.99 without, and it launched in the United States and Canada on 6 April 2020, a few weeks into the pandemic lockdowns.

In May 2020 Katzenberg told the New York Times that he attributed everything that had gone wrong to the coronavirus. The company added casting to televisions and, in July, a screenshot tool. On 21 October 2020, six months after launch, Katzenberg and Whitman announced the shutdown in an open letter, writing that Quibi had probably failed “because the idea itself wasn’t strong enough to justify a standalone streaming service or because of our timing.” Roku bought the content library in January 2021.

The premise was a time of day

Every value proposition starts with a premise: who it is for, in which situation, with which need. Quibi’s premise was a slice of the day, the gaps between other things, on the bus, in a queue, in a waiting room, when a phone is the only screen at hand. That is a precise premise, and precision is usually a strength. It also made the whole offer depend on a context the company did not control.

In April 2020 that context disappeared for most of Quibi’s audience. People were at home, next to televisions and laptops, with long evenings and every other streaming service already installed. The product still worked. The situation it was designed for had gone, and nothing in the offer had been built to travel to a different one: at launch the app ran only on phones.

Quibi’s own letter left open whether the idea or the timing was to blame. From the outside, the two are hard to separate, because a premise tied to one moment of the day carries its timing inside it.

A new format with no way to be learned

Short premium episodes for phones were a new category, and new categories are learned socially. People see a clip, a quote, a screenshot passed around, and they try the thing because someone else did. At launch Quibi blocked screenshots and offered no way to share scenes on social platforms; The Verge reported in May 2020 that sharing features were being added as the app struggled to find subscribers. A format that nobody can quote, clip or pass around has to be learned one subscriber at a time.

In adoption terms, the motivation was weak and the opportunity narrow. A customer needed a reason to want this format in particular, and the moments when they could use it had just shrunk. Those are the two legs of the MOA model that money buys least directly. Advertising can explain a product, a free trial can lower the price of trying it, and neither creates the situation in which the product is the obvious choice.

Capital as a substitute for proof

Quibi committed most of its money before the market had told it anything. The shows were commissioned, the technology built, the launch slate fixed, all on the strength of a premise that had not been tested with paying customers at a small scale. In our method the order runs the other way: the premise and the promise are tested in the cheapest form that can fail, and the capital follows the evidence. Money spent that way amplifies what works. Spent before the evidence, it only makes the eventual answer more expensive.

The question we would put to any team planning a launch built around a specific moment is plain: if that moment changed tomorrow, would the offer still have a reason to exist? If the answer depends on a habit you are assuming, test the habit first, and train your team to design launches that can learn from the market before the money is spent.