A very large portion of well funded, early stage startups that crash and burn in LA are typically because media people have a hard time conceptualizing lean startup, and rapid iteration etc. Over the years I've accepted it's not so much hubris as it is entertainment is just a different industry with a different way of doing business and people who found success in entertainment think that method they achieved translates to tech startups, when it unfortunately doesn't.
In Hollywood you put all this time and money into one big event like a film, or an album or a pilot and people scoop it up due to marketing. They consume it, then they are done. If they like it they ask for more. So if you have the money you spend all of the money at once to make the best thing possible, put as much marketing and PR against it as possible and people will consume it anyway. Usually you make some of your money back. If consumers ask for more, that's a bonus. Then you go out and raise more for the sequel or the next album or whatever.
Of course tech is different - you can't put all that money into the first iteration and expect it to pay off. You need to stretch it out over many experiments and control burn over years. It's just a totally different financial model and business plan. There are so so many Quibis out there that never got past private alpha / beta. The execs spend YEARS crafting that perfect alpha, open it up privately to friends and family, it flops and then they throw in the towel just like that. I've seen it more times than I can count now
There wasn't a ton of market research, iteration or testing, at least not up front. Executives would green-light a project and budget based on their personal experience and/or biases and opinions about what will work and what won't..
Not sure if that's still the case (this was ~10 year ago), but that rarely works in tech.
- Movies begin as risk assessments and cash flow analysis in the finance dept based on historical data.
- The revenue graph for a movie is a function of release month, the number of celebrity actors in the film, the box office receipts, followed by DVD sales, followed by TV release and a long tail of syndication (airlines, cable etc).
- Studios know, for example, that a romantic comedy in Feb staring Jennifer Aniston and Adam Sandler will make a guaranteed $35 million at the box office regardless of what the movie is. A summer blockbuster with Will Smith will have a guaranteed $100 million in box office and DVD sales spread out over time. Sequels to popular movies will bring in a certain minimum income guaranteed. Movies that minimize dialog and maximize action do well in the global market. Include China or a Chinese celebrity actor in the plotline and you are guaranteed millions of additional revenue. This provides the bean counters information on how much to spend on movie production to minimize risk and ensure a steady revenue stream throughout the year.
- So the finance dept will green light a February rom-com with a production budget of $10 million, a summer blockbuster where there can splurge $75-100 million on production etc. They monitor other studio release dates to avoid going head-to-head with their releases. They keep a stable of celebrity actors on studio contract and force directors to include plot lines that maximize a global audience.
- It is only after the finance dept gives the green light and budget that they go and look at possible movies to make and pick a director. Story ? - that's just about the last thing to work out (Pixar is the exception).
While there‘s a limited subset of AI like GANs that I‘d actually call creative, the usual tabular models are none of these.
So what do you do to maximise chances for a box office success?
Do a sequel to (or remake of) a well known movie, hire a star, use the standard playbook (never skip the „all is lost“ moment for dramatic effect) and add a love scene.
If you ever wondered why 2020 Hollywood feels like the same boring stuff in 8k UHD over and over again.
I think Netflix did pretty well with just hiring some known creative people and telling them „whatever you do, just use your gut feeling and we‘ll buy it“.
That's been going on since the first wagons rolled into Hollywood.
I'm pretty sure even Shakespeare was doing a 16th Century, theatrical equivalent.
That's your toolkit. Build from there. And that' been true since we're telling stories, more or less.
Those Netflix decisions about who to hire are extremely data-driven - much moreso than Hollywood. House of Cards was their proof of concept in 2013:
> Sarandos says their wealth of data on user viewing habits proved there's a large audience for Fincher, Spacey and political thrillers.
https://web.archive.org/web/20130126061225/http://www.huffin...
But I get your point, either extreme can potentially produce less than great results.
Really initial production is only half your production costs, and is a tricky process where what's greenlit often doesn't bear much relation to what comes out the other end. So the market research and metrics work better when you know a bit more about what the final product is.
This condition needs a name. I've done it myself too many times to count. The first time was back in 2004 with a Facebook rival at Yale University. We had all this great social photo and media sharing but it wasn't growing against the simplicity of Facebook. So, after a couple months of not being Facebook, we gave up and got jobs
<face palm>
You can't easily change the design of the space shuttle after you built it, so you better get it right.
Consumer hardware isn't quite so permanent, you can always recall the whole thing (samsung phones, early famicom), if you have the money.
But a website is easy to change -- there's no sense making it perfect before you know if people will use it.
But this sentiment is exactly this issue! "Before you know if people will use it" -- the point is that when people don't use it, is it because it was a bad idea to compete with Facebook or because the design wasn't right? When to give up and when to iterate?
- "I'm a rich/powerful/successful media person. I had success in my industry doing business a certain way, so why shouldn't I be able to translate that into running a tech startup too?"
- "I'm a good programmer and I don't see any reason why Zuckerberg would be smarter than me. What's so special about Facebook? We can beat them."
- "I'm in touch with what most people want, and this product idea totally makes sense to me. All I need to do is polish it up, and I'm sure I'll find users who are as excited about it as I am."
Or, the flip side of the same coin is really about ego. One of the hardest lessons of the lean/agile/tech-y start-up culture (in its idealized form), is to not let ego interfere with learning, but also to be able to let go of ego-centrism without giving up confidence or competence (i.e. you don't have all the answers and you should be fundamentally humble and curious, BUT you should not forget or overlook your existing skills or competencies either).
I doubt it's practical for individual episodes yet. You would likely need a month between episodes to do this, and people would just forget about your show in that time.
Some folks on Patreon are experimenting with it. One of my favorite series Astartes[0] puts out episodes every rare once and awhile, but we all clamor for them nonetheless.
You couldn't run a normal show this way, for sure. But it is interesting to see the results of it in the small.
It's simply infeasible to adjust a show to fan feedback on a weekly basis I think. You'd need either a really small show, or one where most of the elements (sets, lighting, wardrobe, etc.) stay pretty consistent between episodes, then the work would just be a matter of tweaking the story, rather than figuring out how to get the whole crew out to all the locations required to make a traditional tv show.
So you cant really change that much week to week.
Consider also the way standups hone material over many performances building up their set.
So there are incremental feedback models in entertainment - but they’re rare.
I guess remakes and reboots are a crude model of iteration as well, although it’s not like each new iteration of Spider-Man is a refinement of the last based on audience feedback - it’s still speculative ‘here’s that same thing repackaged in a way new audiences will love!’ thinking, rather than creeping towards product-market-fit
This situation is emblematic of the fundamental conflict it would face. On the one side the desire to produce rapid cheap bite-size content to iterate on for a metrics-based tech company, on the other blowing all the cash for said content on the Hollywood tactic of putting star power on the red carpet
most ventures fail, whether it's in tech or entertainment. tech has billion dollar flameouts too--webvan, theranos, etc. entertainment has startups that hit big too--parasite for example. founders who exit successfully can more easily raise the next time around, just like directors and producers who have a hit.
each industry thinks it's unique and different, but that's due mainly to ego, not to (many) true differences. even cultures largely overlap. people with gobs of money can (and if warranted, should) fail too.
for instance, the movie (and tv) business more readily lends itself to a repetitive process constrained on storytelling, which is more focused, on a macro scale, than tech. it would be akin to tech companies settling on only building web businesses over and over again, albeit with different twists. the video game sector has possibly hit that kind of stride.
i don't know that this affects their ability to succeed though, well-funded or not.
Streaming video for example has more or less stopped producing viable venture startups on the B2C side. Successful new ventures in streaming, the ones who will actually make money, are folks like Disney and Warner with IP. Their business advantage is horizontal integration, rent seeking for content with killer margins over company-controlled pipes. Disney Plus, HBO Max apps have zero notable tech innovations. The only criteria to the consumer is that the content is exclusive and the app stays in the background and doesn't fail. OTT video, as a vertical for consumer innovation, is over.
Same goes for SaaS, ecommerce, social networks, gaming, music, news etc. Maybe we'll get some standout disruptions from time to time as hardware evolves. But the tech is all about plumbing from here on out..
If the investors are known for hockey stick growth tech startups, your company is a tech company even if you are just long real estate.
But now the market is verrmy different. You are either going for niche ( educational, documentaries, animal planet.. you name it ) or attempt to compete with big boys, which invariably means heavy investment in licensing deals.
I personally think someone did not do their research.
Quibi is different in that they tried to make a bunch of new content from scratch, and no one cared. They weren't tapping into an already existing well of demand for specific content.
Instead, there wasn't anything there that people already knew about/wanted. Consequently, there was no reason for people to want the platform. (i.e. Why do I want to pay for this new thing?!?)
Personally, I found Quibi's advertising so annoying and pointless that I would likely never be interested in looking past it to see what the platform was all about.
On the other hand, if they had started pushing shows/creators as an anchor for the platform (with something like an "only on Quibi ..." branding say) it might have been more interesting. I.e. make the platform secondary to the content, convince people they want the content, and that gives them a reason to look at the platform in the first place.
Basically, the consumers don't care about the platform itself so much as they care about what it provides them.
I'm not sure if that ad was targeted at Americans, at British, or at Americans who watch British stuff, but I can't imagine how it would come across well at any of those target audiences.
This is more like Vessel, the more tech-backed version of "let's split the middle of Youtube and Netflix for more short-form stuff" that nobody has shown they wanted, now or then. Just with shit-tons more money to throw at celebrities vs more youtube-creator stuff.
Kinda. It's USA/Japan only, so from the other side, it basically looks like "The American version of Crave", rather than Netflix, which a global behemoth.
The problems with Quibi had nothing to do with the developers, designers, or product managers. The only real app specific problems, such as forcing it to be mobile only, likely came directly from the executive team. The undertaking was flawed from the start and lots of people in the entertainment industry believed it was a monumental waste of cash well before the service launched and anyone had a look at the actual tech.
I think I first heard of Quibi from their superbowl ad. That right there is a red flag. There's a certain class of people who think the thing that they happen to do is the most important thing in the world. You have MBA types who argue "good managers can manage anything" (ie you don't need domain knowledge). You have marketers who think that any success is purely a function of the marketing put into it. Worse, any successful launch (eg Disney+) will be seen as a success for marketing.
Time and time again we've seen throwing money at marketing fail to sell a bad product.
The whole focus on celebrities for Quibi I find interesting, particularly in light of this comment about where the money came from. I'm imagining people who are just horribly out of touch in that they come from an era when celebrity endorsements can sell anything. Or maybe it's people who just want to hang out with celebrities. What better way than to run a "studio"?
I mean, Reese Witherspoon getting paid $6m to do a voice over for a show about cheetahs? Wow.
The more I see about Meg Whitman the more I'm convinced she's just an idiot who happened to be in the right place at the right time (with HP). Like I'm honestly shocked eBay went anywhere with her at the helm. Because what else has she done? Tried to buy political office (and failed). Quibi. RIP.
>>Staffers reportedly “seethed”[1] at Reese Witherspoon’s $6m salary ... (Witherspoon’s husband Jim Toth is the head of talent and content acquisition at the company.)
Nepotism, much?
[1] https://pagesix.com/2020/06/02/quibi-staffers-seethe-at-rees...
That's not an accident.
Good managers can manage anything, if the thing has potential. What they can't do is succeed by managing nothing.
Well, in this case at least she partnered with the right person. I am not sure if anyone in Hollywood raises money better than Jeffrey Katzenberg (both for business and politics).
If I had run eBay and HP I think I’d be trying to hide that from my resume.
Companies and funders go back to these people with opportunities because they understand some parts of the market that people like me don't (finance, how to make these top level connections). I think like F Scott Fitzgerald kind of said,"Let me tell you about the ... [Ceos]. They are different from you and me". [1] It's fun to switch up that quote, but I do think they think of companies and strategies a lot differently than I do. I think about what is good technology, what will programmers use to build solutions.
https://www.goodreads.com/quotes/10367-let-me-tell-you-about...
She was lucky to be hired at EBay, but growing a small company into $8B in revenues is a highly credible act that validates a certain set of qualifications that are essentially rare.
Nobody really knows what the next big thing is going to be, but some people are strong in some areas. They theoretically make a good team on paper. But it's hard to know what the reality is.
He is content oriented, she is operations oriented, I'm not sure if anyone was behind the end-to-end experience.
That said, hard work and good decisions are also important. =)
Eric Jackson's book, Musk's biography, and other sources paint Paypal as an organizational mess. Successful mergers are no small order. Whitman succeeded.
...a Quibi subscription is $4.99 a month with ads and $7.99 a month without...
There's no downside for a CEO who invests in a failed new venture like Quibi. Very easy to explain away. All his peers did the same, it was an investment in the future, attempt to diversify, outside the box thinking, etc. There is MAJOR downside for NOT investing in a new idea that takes off like a rocket ship, that CEO will look like a fool and "the world passed him by" to investors, peers, employees, talent, etc.
Think in terms of "reputation expected value" of the various CEOs and the multitude of major investors makes total sense.
So trying to do it first isn't necessarily insane - try to beat the organic disruption there, so they can capture the result.
I'm just not convinced the market for "short [currently free] shit to watch while killing time on my phone" is ever really going to grow into a TV-and-movie-killing Netflix/Hollywood replacement, as compared to a smaller more casual market with smaller returns.
You could possibly pull off more premium ad rates, though... but you could really only do this from inside Google.
[1] https://watchnebula.com/ [2] https://www.floatplane.com/
They were wrong. People want high quality, professional content.
That’s pretty much the idea of supply side and “trickle down“ economics. People with capital are the most important players. People who do the work are not important and replaceable.
I had a vague idea of bread crumbs falling off the table of the 'lords' to be consumed by the 'populace'.
My idea was : someone buys a multi-million Yacht, well they need a captain, cook and other staff to maintain their ship. The wealth (from buying a luxury item) trickles down to the employees. Of course, this was a simple intuition and the idea had no formal definition for me.
> Years ago, this column challenged anybody to quote any economist outside of an insane asylum who had ever advocated this "trickle-down" theory. Some readers said that somebody said that somebody else had advocated a "trickle-down" policy. But they could never name that somebody else and quote them.
https://www.creators.com/read/thomas-sowell/01/14/the-trickl...
No, but plenty of economists have used the phrases "supply-side economics" and "Laffer Curve" to discuss (and advocate) the policies that "trickle down" was coined to disparage.
It should be taken as seriously as if a physics PhD tried to persuade your state that it should use solar power to convert lead into gold.
This is interesting.
It's probably hard to distinguish companies w/ entirely different culture and talent from the outside, it might be easy to lump any new company into the same category of "disruptive" or something.
If you had to draw this distinction - which signs would you look for?
Edit: my point is, yes, it's easy in hindsight to think it would be a success (and surely, a lot of things help). But HBO Go enjoys much less success (and has a lot of technical issues)
Tidal was built to compete with Spotify, see where it went.
And since they already had the content and the marketing channels, the only thing they had to spend real money on is engineering. There's also a lot of cachet attached to working for Disney so I bet hiring talent was not an issue.
I'm guessing they would love for Disney+ to replace DVD/Blu-ray sales. Rather than making a one time sale, the customer pays for it every month! Forever!
Quibi was interesting bec it was trying to be something that no one else was doing, that requires more than an s3 bucket behind a Netflix clone.
All the other things they tried were foolish and self-defeating: mobile-only (can't watch on my laptop or TV, which makes it harder to watch with a friend), no screenshots (no sharing/memes to promote conversation about the app or content), etc.
There is an ocean of short-form content creators on YouTube, many of them quite talented, who are increasingly desperate for some kind of alternative platform. It would've been so much cheaper and more effective to scoop up a handful of the better ones to create exclusives than to bank the farm on the waning star-power of establishment Hollywood folk. I don't really understand who the target audience is supposed to be.
I feel bad for the handful of decent shows (there must be a few right?) that are stuck on this weird patronizing-feeling platform. "I, just like you fellow kids, enjoy Music-Band and short-form video content on the Cell-Phone, and Celebrities!" platform.
From my understanding, Quibi is a unique usage model, with unproven content, neither of which has initially panned out.
That's the entire point. You don't throw billions at something new -- you prove it out first and then throw billions at it.
> In 2018, the startup (then called “New TV”) announced that it had raised $1 billion in funding. Among the initial investors were a who’s who of Hollywood studios: Disney, NBCUniversal, Sony Pictures Entertainment, Viacom, AT&T’s WarnerMedia, Lionsgate, MGM, ITV and Entertainment One (now part of Hasbro). Tech investors include China’s Alibaba Group. That funding round was led by VC firm Madrone Capital Partners; other investors were Goldman Sachs, JPMorgan and John Malone’s Liberty Global. The Katzenberg-founded WndrCo investment vehicle also is a Quibi investor.
It sounds like a bunch of old-school media companies and Hollywood studios trying to play Silicon Valley, and thinking they can build a Decacorn by spending lots of money and hiring famous celebrities, instead of doing small-scale MVPs and market-validation.
There's a lot of non-techies outside of SV who seem to think that developers/designers/product-managers are just doing the menial plumbing of building out other people's ideas, and that anyone can do the same thing if they just had access to capital. Maybe this debacle will convince them that there's more to building a successful business than just capital and "an idea".