In the famous opening to The Music Man, a group of traveling salesmen on a train sing about how times have changed since the Model T Ford made people “want to get up and go.” But one thing those salesmen agree hadn’t changed, and it never will: You gotta know the territory. It’s true, whether you’re selling button hooks or cotton goods — or content for mobile devices.
Carey Smith | Founding Contrarian
The most dramatic startup flameout of 2020 had to be that of Quibi. I’m not ashamed to admit that I felt a twinge of schadenfreude when it was announced that the video-streaming platform had gone under, a mere six months after its ballyhooed debut. I’m willing to wager I wasn’t the only one who felt that way.
In case you missed it, Quibi delivered short-form content to mobile devices, and only mobile devices. It was designed to fill those agonizing minutes we spend waiting to pick up dry cleaning, or for the cross-town bus to reach our stop, or for any of the other times we’re stuck with nothing to do but play with our phones, because heaven forbid we’d ever be alone with our thoughts.
Quibi was the brainchild of Jeffrey Katzenberg and Meg Whitman, aging tycoons whose combined net worth is comfortably north of $5 billion. And yet, they felt comfortable taking $1.75 billion from investors who couldn’t be bothered to check and see whether the wheels were securely on their Hollywood bandwagon.
It’s said in making decisions about everything Quibi that Katzenberg and Whitman listened to their guts. What they should have listened to were the people who told them they were nuts: Nuts to construct the platform without sharing features, nuts to pay exorbitant amounts for clearance-table content, and nuts to proceed full speed ahead while the whole world was in lockdown, binge-watching full-length episodes of Tiger King.
And instead of pouring tens of millions of dollars into marketing, they should have paid for and pored over solid market research, because that might have led them to reconsider entering a highly competitive market, especially one tailored to a much younger demographic. But maybe not, because when you’re Katzenberg, you think your gut knows best. It’s hubris, and sooner or later, it’s everyone’s nemesis.
I’ve been as guilty of hubris as the next person: At the fan company, I was sure I knew what people wanted. Though that may have been true with our industrial customers, our residential customers were an entirely different animal. Luckily, it didn’t take long — or other people’s money — for me to recognize the error of my ways.
Ultimately, a lot of factors contributed to Quibi’s downfall. But to me, they all can be traced back to hubris. Sadly, it’s a tale as old as time, to quote Beauty and the Beast, a hit for Disney back when Katzenberg was in charge. But that was long ago, and times have changed — a lot. Apparently, Katzenberg’s gut just couldn’t keep up.
If there’s a lesson in Quibi for young entrepreneurs, it’s this: Although it takes guts to launch new ventures, that doesn’t mean you can always trust your gut. Do your research, and know the territory. You gotta know the territory.