Learning From Quibi

On the b-side of Steve Jobs now-cliche quote, “people don’t know what they want until you show it to them,” is an idea underlies every startup, movie, or other ambitious quest: “I understand something about the world that others do not.”

Business ventures are rarely pure leaps of faith. Instead, they are acts of creation that are based on signals from the past. These signals provide an imperfect map to what the future could look like. It is up to a founder to see them, to interpret them, and to take the next step to build a new reality.

Successful ventures manage to tune into echoes that other people missed, or they find a way to remix and refine more obvious patterns into an offering that feels new, yet also eases an old irritant. In thinking about Steve Jobs and how successful creators have tuned into a message, and applied it somewhere else, it becomes clear why Jeffrey Katzenberg failed with Quibi.

The Precedent
I would again hearken to Steve Jobs for the precedent. The iPhone was not a new product cut from whole cloth. It was a remix. It simultaneously illuminated and alleviated specific pain points. Problems that most consumers had simply grown to accept as baked into their daily experience of life. This execution was famously distilled into one line: “An iPod, a Phone, and an Internet Communicator.”

Sometimes new ventures are simply “I can do this better”. Google provides the example here. Larry and Sergei saw a clear signal: massive usage of search engines like Alta Vista and Infoseek. And they used their own software expertise to improve upon the past.

Within more subjective areas such as entertainment, the ambient signal is “I like this…and you might too.” This can also be understood as a “gut”. Creators with a singular vision - Christopher Nolan and Judd Apatow come to mind - using their own internal compass to find stories that they connect with, and craft them into something the audience wants. Ultimately, these are little more than guesses. But they do represent examples of how the creators tuned into a message, and applied it somewhere else. In a commercial context, studios like Blumhouse and A24 have found ways to systemize this idea into broader success.

What signals did Quibi hear?
This is where I find the Quibi story interesting. What signals did they hear? And how did they inform the future that Jeffrey Katzenberg envisioned?

As one interprets public statements, Quibi’s management says they looked at a common signal: “broad and increasing consumption of mobile video”, and applied their own filter to what they saw as “good”. Upon doing so, Katzenberg decided he could deliver “good” in a way that others could not. But more importantly, Katzenberg seemed to believe that his version of “good” was better than what Youtube’s version of what “good” was.

Herein lies the most critical distinction between the Quibi vision and the reality of the marketplace. Katzenberg looked at one measure of quality: his own intuitive sense of what he liked. His “gut.” And he actively and vocally dismissed the more expansive signals from consumers, as defined by the billions of views that they paid to creators in places like Youtube, Instagram and Snapchat.

One might argue, as with the iPhone, this can lead to outsized success: zigging when others zag. In software and electronics, “good” is often measured by features: more storage, faster processor, more intuitive interface. On a more ephemeral level, it is also measured by “UX”. How well did the details work? And even more subjectively, how did this device or service make me feel? Excited to use it, or frustrated?

What Jobs Understood that Katzenberg Didn't

Steve Jobs saw an opportunity to make objective improvements to a reality (bad touch screens, no internet browser, crappy voicemail) that consumers had come to accept because the marketplace had told them to accept it. Few companies sought to challenge this status quo, though Palm in the 2005-7 era does come to mind. Although he dismissed the value of focus groups, Jobs didn’t skate past consumers’ desires. Instead, he focused on the latent needs that were simultaneously unarticulated by the consumer, and dismissed by technologists due to the current marketplace dynamics.

This describes pretty clearly how Quibi’s core insight could just as easily have been the right one: that people had learned to accept the status quo of crappy YouTube videos as “good”, and had not yet experienced what “good” truly means.

In this way, Jeffrey Katzenberg said to us, “I understand something about the world that others do not.” And yet, in saying so, he missed the essential lesson that could have been gleaned from his own industry: Popular culture is an existential conflict between what is “good”, what people like, and what people watch. This dialectic is the central feature of cultural businesses. Entertainment is rife with commercial successes that are critically dismissed. Reality TV - like the now-20-year-old Survivor or The Bachelor - is the best example. Fox News is another, perhaps more pernicious, one.

More damning is the fact that in public comments, Katzenberg and cofounder, Meg Whitman eventually came to define “good” as merely “expensive,” using budget, not taste, as the key difference between what Quibi offered and what was already available. This, in my view, is the fatal mistake. By using budget as the signal, they missed a zeitgeist that has been hiding in plain sight for the last 15 years, since Youtube was founded, and to the utter consternation of big media executives. One might even argue that Katzenberg sneered at lessons from his own experience: that big budget movies often fail, and sometimes small moves are amazing. The tragedy, if one can call a prosaic business failure that, is that Katzenberg is not a man without taste. He built a career shepherding the creation of amazing things at Disney, and then later at Dreamworks.

Was it a valiant swing and miss by Katzenberg?

On one level, this track record is what enables me to see this from the perspective of, “they took a valiant swing and missed.” And yet, on another level, I see this failure in a more cynical light. That it was yet another old media executive who could not bear to accept the idea that a zero-budget YouTube creator had the same inherent value as an Oscar-winning actor. Or that the “anointment” from Hollywood was the essence of commercial success.

None of this is to pass judgement on the Quibi thesis of mobile’s worthiness as a platform. In fact, my own view, which I have touched on in twitter discussions, and can explore in more detail, is that mobile is an amazing platform, and is ultimately a massive market opportunity. It is defined by the combination of creation, curation and distribution. It is a multitude of creative expressions in an array of forms: Games, podcasts, talk radio, music, gifs, photos, movies, clips, written stories, books. The common thread under all of it is ideas. Creative ideas. “IP”.

I continue to believe that mobile will be the place where big content finds its origins. In fact, Spotify is hinting at this through its acquisitiveness in the podcast realm. Daniel Ek sees something I think I may also now see. That if you find a way to shepherd great, small IP, then that can eventually turn into bigger franchise value down the line. The genius of Spotify is to be able to rationalize this concept with value that is available in the here and now: “podcasts delivered to a huge installed base.” But I think the bigger idea is around what the podcast concepts can eventually become through different forms of mobile expression.

A Proposal: an IP-focused Fund
I think that a smaller, open-ended creation fund may be an answer. There needs to be a foundation of technical development skill - the ability to express and integrate different modes of consumption and creation in one place (in an iPhone app?). The ability to distribute and manage it. And ultimately, most importantly, the ideas, stories and information that can be expressed through these technical platforms: The IP.

What I am describing here looks like a VC fund, but has some features of an incubator. I would not suggest that it makes sense to assemble a permanent team of developers and producers. But instead a light team of product experts who can bring expert-level development in when needed, and on good economic terms (either by paying fees or by sharing equity).

With creatively expressed ideas at the center, and a vision for how stories get told, I think such a model could redefine what a media company looks like in the future. And maybe in the process, it can create amazing and beautiful work.