The Fountain Institute is an independent online school that teaches advanced UX & product skills.
When hype comes before user insight...
When Hype Comes Before User Insightby Jeff Humble Dear Reader, Have you ever seen a hyped-up product that felt worthless? Today I want to tell you a tale of two companies and how they handled user demand. One took a hype-based approach, trying to create demand, while the other achieved real demand (and hype) through user insights. Hype-First Failure: Quibi (2020)
On its surface, Quibi made perfect sense to investors in 2020. The idea was to create Hollywood-quality ten-minute movies and shows designed for younger audiences who consume media primarily on their phones. Quibi raised $1.75B on this assumption, promising to revolutionize how we consume media on our phones. Led by a Hollywood executive, a long line of big-name producers was waiting to make content for the app’s Gen-Z users. Despite extensive advertising, including a Super Bowl ad, Quibi couldn’t live up to the hype. Ninety days after launch, Quibi lost 92% of its early users despite spending $1.75B on content and marketing. Shortly after, the company declared bankruptcy. Why did it fail? Once again, Quibi could not answer, “Why do I need this?” Its poor value proposition didn’t outcompete its customers’ defaults: TikTok and YouTube. The app charged $5 a month for mediocre content that couldn’t compete in quality with social media's user-generated content. While the initial assumption that customers wanted high-quality content in short form on their phones was correct, Quibi failed to see that their competition wasn’t Netflix but free apps like TikTok and YouTube. Quibi teaches us that understanding a little about your customer isn’t enough. You have to understand the customer’s perspective, particularly about your idea. Quibi got so hung up on its perceived sources of strength, like hype and content deals, that it neglected to check the strategy with the most significant source of strength a company can have: user insight. User-First Demand: Duolingo (2011-Present)
Duolingo is one of the most successful freemium apps of all time, and more than half a billion people have tried it at some point. Even though the company offers the app for free, it is valued at over $19 billion! The key to Duolingo’s success lies in a unique customer insight: the biggest barrier to learning a language isn’t difficulty; it’s motivation. People don’t quit because learning is hard; they quit because it’s tedious, overwhelming, or doesn't give them results. Only 10% of people who start learning a language actually stick with it. Persistence is the secret to learning a language, and it can be improved by helping customers form habits using features like streaks and leaderboards. Duolingo’s strategy is to make a habit-forming language app by mastering these areas:
While the app’s colorful design and cartoony feel can make it seem simple, behind the cute owl animations is a culture of continuous experimentation and AI driving their customer-focused features. Hundreds of tests are being run at any given time, and this allows Duolingo to get even deeper and more realistic insights as times goes on. The result is undeniable. Duolingo has over 500 million users and 74 million monthly active users and is the #1 education app globally, driven by gamification. In a single quarter of 2023, Duolingo made $137.5 million in revenue. Instead of assuming how people wanted to learn languages, Duolingo focused on habit formation. This commitment to a customer-first strategy has helped them dominate the category of language apps for over a decade. (If you want to learn how to create a strategy like Duolingo that focuses on user insight, check out my course: Defining UX Strategy.) Why shouldn't you build the business around user insights? It will be infinitely more useful than building a business around hype. Source
Until next time, start with insights, not hype! ✌️
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The Fountain Institute
The Fountain Institute is an independent online school that teaches advanced UX & product skills.
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