Quibi carves out a premium spot in an invisible streaming war
In the world of business-focused armchair quarterbacking, the launch of Quibi is like the Super Bowl. It’s expensive, polished, and highly anticipated. And there’s plenty of people waiting to call it was a waste of time.
In a recent podcast interview, founder Jeffrey Katzenberg made the case for Quibi. He pointed to the current landscape of short, mobile-only videos, largely dominated by Alphabet’s YouTube, Instagram’s IGTV, and TikTok. The common thread uniting all of this content: it’s user generated. Katzenberg is convinced that short, mobile-only video is a growing segment rather than a flash in the pan. He also thinks that audiences will be willing to pay for a more quality product. (His comparisons between Quibi and the HBO of the late 1990s are pretty compelling.)
As for Quibi’s critics, they lament that it’s only on mobile, that it spent too much money getting to launch, that the tech isn’t more exciting. All of those things might be true. Some of the launch programs might not be winners. Flipping your phone from portrait to landscape view isn’t groundbreaking. But the bet at the heart of Quibi is whether or not mobile-only video has a premium market, and in order to believe that it does, one needs to regard mobile-only video as a market in the first place. Smaller pivots around launch day realities — subscription prices, television integration, ad policy — are going to be scrutinized over the coming months, but really none of that stuff matters. (Same for executive departures.) While YouTube and IGTV battle for user generated content, Facebook Watch is inking deals for talk shows and MMA fighting.
The mobile video landscape is changing rapidly, and it’s turf that critics love the best. But we wouldn’t be surprised if in five year’s time, folks looked back and insisted that of course Quibi was bound to be successful. Whatever you do, don’t accuse us of making a prediction.
Word on the Street
If a “mission driven company” can’t hold up their mission when it matters most, then how much of a strategic misfire was declaring that mission in the first place?
CEO Bob Iger was ready to leave Disney on top, but now the entertainment conglomerate is fighting for its life.
After years of stagnation in the social media space, pandemic lockdowns are leading to swift innovation around spontaneous communication apps.
Airbnb lays off contractors and postpones summer internships. (We talked about Airbnb a few weeks back, and how the company missed the window for their IPO.)
If drone delivery is poised to take over logistics, why is it not capitalizing off of the current pandemic lockdowns?
Land O’Lakes quietly removes Native American woman from its packaging during a recent redesign.
Could car buying be one of the consumer behaviors that looks very different post-pandemic?
Macy’s puts Bluemercury up for sale. (We talked about Macy’s strategic struggles a few weeks back.)
$KHC - The Kraft Heinz Company
It’s been a touch couple of years for The Kraft Heinz Company. Its private equity officiated marriage left the newly combined company weaker than its parts. 2019 saw their credit rating go from not good, to bad, to worse, and then there was the accounting probe.
But under the new leadership of CEO Miguel Patricio, the firm appears to be rising to the challenge of the moment. They are running three shifts in order to keep up with increased food demand, and report record-breaking output as a result. They’re adjusting to the challenge of social distancing in their factories, including unexpected compensation issues.
It’s tough to watch a company continue to fall face first in the mud, especially one comprised of so many iconic American food brands. (The 29-year old former CFO, a “partner” at 3G Capital, was also a perennial head scratcher.) Ultimately, one way to right the ship is by demonstrating operational excellence, and Kraft Heinz is seizing this moment to show their critics, and customers, that they’re up to the challenge. The next question is whether post-pandemic, the company will stop droning on about planograms and produce a strategic vision to solidify the company’s recent gains.
Bookshelf
Sarah Frier’s “No Filter” came out this month, tracking the rise of Instagram from niche photo sharing app to culturally transformative social media behemoth. The story illustrates the strategy employed by Instagram’s founders Kevin Systrom and Mike Krieger: a focus on aesthetic over growth, a preference for in-personal outreach to key users, and a resistance to product features aimed at short-term gains.
Because Instagram was purchased by Facebook so early in its story, just 18 months after launch, the tale also pulls back the curtain on the inner workings on Facebook. Readers observe Facebook’s quest for more users and more attention, and how this led to the deployment of product features that increased growth, even if they ultimately degraded the overall product. The early to mid-2010s saw Facebook stray from personal friend networks to public discussion around its Newsfeed. (It was in this period, personally, that Facebook became an obsolete product for us.) Today, competitors like Snapchat are attempting to outflank Facebook on the personal relationships front, showing how quickly one firm’s ceded territory can be conquered by another.
But perhaps the biggest question hanging over the entirety of Frier’s book, in one form or another, is this: should Instagram have sold to Facebook in the first place? From this vantage point, the answer seems to be background sourced from the founders themselves: They were drowning in the app’s explosive growth, and desperately needed the infrastructure and resources Facebook was able to provide them. Fair enough. But venture capital was already opening its coffers to Instagram prior to its sale, with some investors even being turned away.
To ask the question from a regulatory point of view: should Facebook have been allowed to buy Instagram in the first place? Facebook stressed, in 2012, that Instagram complimented its own product by offering a mobile-first photo-sharing application, and that the competitive landscape for photo-sharing was robust. That Instagram had no revenue at the time didn’t hurt. But after the deal, most competitors folded and Instagram took off, reaching a level of popularity that eventually began to threaten Facebook itself. That is where Frier’s tale leaves us, shortly after Systrom and Krieger depart Instagram in 2018.
To revisit the Big Question of “No Filter,” however, is to ruminate on the steps the company took to reach its place as the dominant social platform of the 2010s:
The book details how Instagram staff resisted product changes urged by Facebook, like a long-sought after repost button, and the deep understanding of Instagram’s ethos and aesthetic that allowed them to stand firm in their resistance.
It shows how Instagram reached out to celebrities, offering concierge support to get the biggest names in Hollywood, music, and sports to use their platform, a feat Facebook never figured out.
In one scene, Instagram’s Systrom admits to the press that they copied Snapchat’s Stories feature, simply saying that it represented a new means of communication, instantly quashing the “inauthentic founder” kind of negative press that continues to dog Zuckerberg.
And when viewed from that vantage point, the strategic management view, the Big Question feels sad, moot. Instagram shouldn’t have sold to Facebook, and there’s probably little value to come now that it is fully under their management. Perhaps the best thing for Instagram going into the 2020s is a regulatory break-up, and a reinstatement of the independence it once had.
She Said It Best
“For the past 10 years I’ve been staring wide-eyed and with alarm as the sweet, gentle citizen restaurant transformed into a kind of unruly colossal beast. The food world got stranger and weirder to me right while I was deep in it. The “waiter” became the “server,” the “restaurant business” became the “hospitality industry,” what used to be the “customer” became the “guest,” what was once your “personality” became your “brand,” the small acts of kindness and the way you always used to have of sharing your talents and looking out for others became things to “monetize.”
— Gabrielle Hamilton, chef and owner of NYC restaurant Prune, in an essay on shutting down her business due to COVID-19. The restaurant industry has been grappling with issues like rising rents, fair pay and benefits, and alternative pricing models, but Hamilton’s essay explores these issues from a deeply personal place. Many of her questions can be applied to small business regardless of industry, a timely reminder of those which are particularly vulnerable during the current pandemic.
That’s all for now.
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