Case Study: Finding a Problem-Solution Fit in Your Startup & the Netflix that Never Was

Let me take you back 4 years ago to just before Covid. There was a well-known filmmaker by the name of Jeffrey Katzenberg who had an impressive career behind him. Among other things, he worked in Disney’s animation department on projects like Aladdin, the Lion King, and Beauty and the Beast. He was also one of the co-founders of Dreamworks with Disney. A successful career by all means. He came up with the idea of a streaming app called Quibi where people could watch movies directly on their phones.

He secured funding from some of the biggest media companies like Sony, NBC Universal, Alibaba, and Walt Disney. People could watch movies directly on their phones during their commute to work. Due to Jeffrey’s career, he attracted big names such as Jennifer Lopez, Dwayne “The Rock” Johnson, and Kevin Hart to join the project. They managed to secure a staggering $1.75 billion to launch this app.

Quibi launched in 2020 and failed 6 months later, never to be revived.

Knowing what we know about the popularity of Netflix, what could possibly have gone wrong?

Fail #1 Failed to identify real pain points and challenges

At the core of a product-market lies the profound understanding of real pain points and challenges faced by potential customers, coupled with innovative solutions that address these needs effectively.

The journey from idea conception to market success hinges significantly on one critical factor: problem-solution fit.

The first crucial step towards achieving problem-solution fit is to identify and understand the real pain points and challenges faced by your target audience. This requires a deep dive into customer research, market analysis, and empathetic listening. Engage with potential customers to uncover their frustrations, unmet needs, and areas where existing solutions fall short. By actively listening to their experiences and concerns, you can gain invaluable insights into the problems that truly matter and are worth solving.

Quibi failed hard here. The part that I left out above was that their streaming app was designed as short-form content with max 10-min videos and that users had to pay $5 a month for to subscribe or $8 for ad-free content. It was aimed at people who commuted and wanted to watch something while they were on their way to work.

Immediately it is clear that Netflix was not their biggest competitor at the time, it was TikTok (and also YouTube to some extent). The only problem is that TikTok and YouTube were already free. So there was no reason for people to want to pay for the same access on another app. TikTok was also popular with content from everyday people whereas Quibi streamed only content from media houses, and very often subpar content that these media houses were all too happy to pick up from the shelves and dust off, finally able to get some eyes on it.

Fail #2 Didn’t understand their customers

Once you have identified potential pain points, the next step is to validate their significance and relevance through customer validation.

Schedule one-on-one interviews with individuals who represent your target demographic and delve deep into their experiences, frustrations, and aspirations. This simple step could’ve saved them millions.

Jeffrey and his co-founders seem to have had no understanding of their typical customers and their consumption behaviour. 10-minute movies or documentaries on your way to work sounds like punishment rather than entertainment. Working your way through Instagram reels or TikTok videos sounds way more fun and like the perfect opportunity to spam your friends with funny videos or join the savage comment section.

The second big mistake was to not have any ‘share’ features on the app. Would TikTok even be as popular as it is without the ability to share a funny video clip about office shenanigans with your coworkers, or a compilation of funny animals with your best friend? Quibi didn’t have this feature nor were screenshots possible. Not to mention that Quibi’s initial release did not support streaming on television, it was only for phones.

Customers don’t want to feel limited and boxed in. Give them freedom and this is why TikTok is thriving. Anybody can join and start creating content, your success is not dependent on the app’s limitations, it is dependent on the quality or entertainment value of your content.

Fail #3 Failed to validate the product-market fit

With a clear understanding of the pain points and challenges faced by your target audience, the final step is to validate the alignment between these problems and your proposed solutions. Develop prototypes or Minimum Viable Products (MVPs) that address the identified needs and pain points in innovative ways. Test these solutions with your target audience through pilot studies or demonstrations and get their feedback. This way, you can refine your offerings and reach a strong problem-solution fit that forms the foundation of your startup’s success.

The final death sentence for Quibi was Covid and the impact it had on people actually commuting to work. With everybody working from home for months following, there was no need for a streaming app like Quibi as Netflix, YouTube, Disney+ and TikTok covered short- and long-form content. Not to mention either free or affordable subscriptions whereas Quibi charged ridiculous prices for subpar content. An MVP would have been much cheaper and possibly have given them an opportunity to pivot into a direction that was more aligned with what consumers wanted.

This was a fascinating case study to research as I never heard of Quibi (for obvious reasons) but it highlighted the importance and the impact seemingly small decisions about the features can have during development, and how crucial it is to test the MVP with your target audience.

There are certainly more reasons why Quibi failed and if you are interested, have a read here or watch a video on it here.

Happy week!

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