Apple, Amazon, Tesla… We like to prostrate ourselves to the altar of innovation. So much so, in fact, that we tend to forget that just one catastrophically bad strategic decision would bring these companies down. It’s happened before, and it will keep happening.
Following Elon Musk’s acquisition of Twitter, here’s a guide to the biggest strategic failure in the corporate world, and what we can learn from them. There won’t be any reference to Blockbuster in this article; at this point it’s like shooting fish in a barrel.
#1 - Quibi
The failure
Quibi shut down in late 2020, a mere six months after launching its streaming service. It had raised $1.7B. That’s a short, expensive life for a company which had claimed it would revolutionize entertainment.
Its objective was simple : turn Youtube videos into high-end television. More specifically, creating 10-minute clips that would be watched on mobile, in portrait mode, during commutes.
What went wrong? First, pricing. Youtube and TikTok are free, and few customers were willing to pay for smartphone-only content.
Then, the pandemic. Right after the launch of the app, many people stopped commuting, and had much more time at home to watch content on a bigger screen. Not great for “transit entertainment”. The offer wasn’t even what mobile users wanted: it relied on A-listers instead of the Youtubers or TikTokers people were used to watching on the go. Bafflingly, viewers couldn’t take screenshots to post on social media, making it tougher to generate a buzz.
Finally, and perhaps most importantly, management was not up to par. Quibi’s CEO, Meg Whitman is not an entertainment start-up CEO, having led HP for 6 years. The founder, Jeffrey Katzenberg, is also a dinosaur from another era, and was said to be far too arrogant for the good of the company.
The lesson
Quibi’s failure is one of self-sabotage. Its core concept isn’t inherently bad. The company however relied on ego more than talent to create it. They went too big, too fast, and were caught up by the unexpected, as we so often are.
Their pricing decisions were equally awful. They might have saved the house by adding adverts to content, and making the app free. But then they wouldn’t have attracted the top celebrities they wanted, and the large funding that went with them. Not that either was necessary…
Lesson #1 : build the right team (not the best team), set the right price… and expect the unexpected
#2 - MoviePass
The failure
The cinema industry is ripe for disruption. Created in 2011, MoviePass long claimed to be the solution. Their logic was simple (and too good to be true). Offer a subscription to view one movie a day, anytime, anywhere.
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This is a very short summary of a longer article which you can find by clicking this link. I encourage you read it if you enjoyed the above.