AI will transform markets and many new business models will emerge. There is nothing more; new technologies enable and expire business models. Let us see how mobile internet and AI affected two companies:
Option A: Have 10 great movie producers produce 200 short videos for your digital platform over two years (Quibi like). Quibi was a media company which developed short videos optimized for smartphones.
Option B: Allow tens of thousands of amateur creators, and use an AI to select the best videos daily and distribute them massively in your platform (Tiktok like). TikTok is a short-video sharing app and social network platform.
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In 2000, Option A would have been a good business because the computing resources to run AI and crunch the numbers were not (commonly) available for Option B. But with cloud computing and the age of AI here, Option B wins. The probability of getting a hit video compounds in Option B while A is limited by the insights of just 10 people; virality is key for short movies, on mobile.
The foundational model of TikTok is supreme. Quibi did go bankrupt despite being under the guidance of legendary Jeffrey Katzenberg and former eBay CEO Meg Whitman. People, as I have noted in the Grand Playbook of Business, your business model is more important than your ability to execute.
Yes, in Igbo mythology, dreaming about fetching water is a good thing because it symbolizes vitality as the road to the stream is never covered by weeds. But dreaming of fetching firewoods is bad, as after the firewoods are gone, the weeds take over the road. So, you want to be fetching water over fetching firewood as it means there is a future (the road is never covered by weeds). Quibi was like going to fetch firewood while TikTok is going to the stream for water.
The consistency of the AI discovering and releasing new viral videos, in a sea of constantly updated millions of new videos, will also keep the ecosystem healthy, unlike Quibi which was frozen in space. My message: improve your business model tech transforms markets.
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There could also be market for both Tiktok and Quibi-like business to coexist, so blaming Quibi’s demise on business model can as well be a conclusion drawn from faulty premise. Can we say with certainty that Tiktok is satisfying what Quibi would have been there for? What if Quibi’s problem stemmed from not producing enough contents and quality of content? Netflix is still up there, without being threatened by social media or AI, so if anyone can engineer a platform that specializes on professionally made videos that do not exceed 20 minutes, and can do so at scale, there might still be market. Right now that space is vacant, neither Tiktok nor Netflix gives you that.
Business models will always have their place, but we must also know how to design the right product for the right market, at scale too. Neither Facebook nor X (Twitter) can effectively replace traditional media, same applies for Tiktok against professionally made movie platforms. If we cannot distinguish these things accordingly, our ability to make informed decisions will be severely impaired.
Know your market, validate the solution you are proposing, then attack.