Rapid growing pains can make or break any start-up. The creators of the live-streamed trivia game show HQ Trivia were also behind the hugely popular, but now defunct, social-media app Vine – a venture that did not end well after creators Rus Yusupov and Colin Kroll sold it to Twitter for $30 million only to watch from the sidelines as it was shut down a few years later. Did they learn anything from the experience?
If nothing else they may have learned to keep on keeping on. HQ Trivia is one of the hottest tickets in tech right now, thanks to the duo's appreciation of a tried-and-tested business model: taking something already proven to be popular by others, such as a game show, and repackaging it in such a way as to render it unique.
HQ Trivia is broadcast live in the United States twice a day for 15 minutes – at 3pm and 9pm eastern time. Its premise could not be simpler: the host asks a dozen multiple-choice questions, which get increasingly difficult with each round. Answering all 12 correctly earns each contestant a share of a cash prize pool, which has ranged from $2,000 to $18,000.
If you think that’s pretty meagre earnings, the victorious could be sharing that pool with any number of other players smart enough to get all 12 questions right too. So they could walk away with perhaps $50.
Universal interactivity
But cash prizes are not the motivation. The inherent genius of the game lies in the fact that any viewer can play, tapping their smartphone screen to choose an answer. The game’s developers have created of a truly universal interactive format, which allows for an unlimited number of contestants to play simultaneously for the pool of cash.
With millions of people in the US tuning in every week to play or just watch, the nation appears to be addicted to HQ Trivia like it was Flappy Birds, Game of Thrones and Call of Duty all rolled into one. And before you roll your eyes and think "Only in America", HQ Trivia is coming to a smartphone near you with the launch of a UK version announced this month. And, believe me, it's addictive.
The scale of interactivity is what has people so hooked. On average, the show attracts about 400,000 viewers in the afternoon and more than 600,000 during prime time. To provide some perspective, Amazon's first online live Thursday NFL broadcast, last September, averaged an audience of 372,000.
The firm behind the game, Intermedia Labs, is not yet trying to turn a profit but is in the process of negotiating for more venture funding that could value it at as much as $100 million. However, it might not be the best strategy to try to get too big too quickly. Investors' appetites for what is ostensibly a novelty product – regardless of how solid and innovative the tech underpinning it may be – is not what it used to be.
"Novelty really is the best word to describe the early currency of start-ups such as Intermedia Labs, often focused entirely on maximising market valuation," says Andrew Escher, partner at MediaTech Ventures, a US-based community which fosters and supports companies and individuals in the media and tech space.
When a company gains significant notoriety early on for one niche product or service, the decision to channel all its efforts into the growth of that single, key offering, or diversify – thereby lowering risk – has frequently been the difference between putting a unicorn out to pasture early or using it to drive growth opportunities.
“The difficulty for an app-based start-up like this – which is already generating enough revenue [through advertising] to keep their 30-plus team going – is bringing it to to the point where it has developed enough to warrant major investment,” says Escher. “Are these guys going for unicorn status or are they looking to survive and make a decent return with some slow growth into adjacent sectors?”
The desire for unicorn status is not what it used to be. After the implosion of various start-ups with inflated valuations (Jawbone, Theranos, Zenefits), not to mention damaging allegations pertaining to sexual harassment and mismanagement beginning at Uber, some investors may be longing for other kinds of returns.
Social consequences
More broadly, various experts believe start-up success in the future will come through focusing less on the bottom line and more on the social consequences of what it is they are trying to achieve. A more socially-aware business model, says Monique Morrow – author, chief technology officer of new frontiers development and engineering at Cisco Systems and president and co-founder of non-profit Humanised Internet – will result in prosperity as well as positive outcomes for society.
“Start-ups that think about being purpose-driven, and benefit society, will certainly be successful,” she says. “Social good is the new currency, so to speak. So a start-up team needs to challenge one another with questions like: ‘Is what we are doing together going to serve a purpose? What are our own values and how are we going to live up against them?’”
Morrow points to recent comments made by Larry Fink, founder and chief executive of the world's largest investment company, BlackRock, as evidence of the need for greater social awareness in business. (According to Bloomberg, one out of every three dollars investors send to fund companies in the US goes through BlackRock.)
Chief executives at several of the largest public companies in the world received an unexpected piece of correspondence last month. The letter contained some advice Fink felt compelled to share with the heads of every company in which his $6 trillion firm currently has interests.
He told them all to take into consideration the societal implications of their decisions and remain focused on the long term. “Indeed, the public expectations of your company have never been greater,” he reportedly wrote.
“Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers and the communities in which they operate.”
It is doubtful social good was high on the agenda of the creators of HQ Trivia. While the game show isn't necessarily a negative force in society, it does little to improve the well-being of anyone other than those who can correctly answer 12 multiple-choice questions in one sitting.
