{"id":7206,"date":"2018-03-24T22:43:43","date_gmt":"2018-03-25T02:43:43","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/a-quirky-attempt-at-crowdsourcing-inventions\/"},"modified":"2018-03-24T22:43:43","modified_gmt":"2018-03-25T02:43:43","slug":"a-quirky-attempt-at-crowdsourcing-inventions","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/a-quirky-attempt-at-crowdsourcing-inventions\/","title":{"rendered":"A Quirky attempt at crowdsourcing inventions"},"content":{"rendered":"

Overview<\/strong><\/p>\n

Quirky is a crowdsourcing platform which allows inventors to connect with specialist manufacturers within Quirky who will develop and support their inventions.\u00a0 The company was founded in 2009 by Ben Kaufman, at a time when VC funding was scarce; the thesis was that many inventors had ideas with huge potential but did not have the time, resources, or abilities to bring those ideas to life.\u00a0 The platform was open to anyone with an idea for an invention or who wanted to participate in the process.\u00a0 After aspiring inventors submitted their ideas, members of the community then voted on their favorites; the winning inventions would be created by Quirky, with a payout to the inventor for their idea (30% from sales on the Quirky website \u2013 later dropped to 10% \u2013 and 10% from sales at other retailers). \u00a0See Exhibit 1 for Quirky’s design process.<\/p>\n

 <\/p>\n

What went right<\/strong><\/p>\n

Quirky was a quick hit given the investor community\u2019s interest in funding crowdsourcing platforms at this time.\u00a0 The company grew quite rapidly, reaching 300 employees and raising $185 million from several brand name VCs including Andreesen Horowitz and Kleiner Perkins.\u00a0 Quirky\u2019s (proverbial) stock was flying sky-high \u2013 Inc.com even asked \u201cIs This the World\u2019s Most Creative Manufacturer?\u201d.\u00a0 The first mega-hit for Quirky was Pivot Power, the pivoting power strip which sold over 600,000 units in its first two years (see Exhibit 2).<\/p>\n

The user base growth continued to accelerate, surpassing 500,000 as everyone wanted to be part of the new trend.\u00a0 Revenue reached $18 million by 2012 with over 100 products reaching market by that point.\u00a0 CEO Kaufman claimed that not a single one of those products lost money, while noting that the company as a whole was still losing money due to the related infrastructure.\u00a0 The VCs were oozing with affection for Quirky, convinced it was only a matter of time before they reached profitability and scale.<\/p>\n

\u00a0<\/strong><\/p>\n

What went wrong<\/strong><\/p>\n

In July 2015, Kaufman announced that Quirky had virtually run out of money and that he would be stepping down as CEO.\u00a0 The company had struggled to raise additional funding earlier in the year which led to the layoffs.\u00a0 Later in the year, Quirky filed for Chapter 11 Bankruptcy.<\/p>\n

As Steve Jobs once famously said: \u201ca lot of times, people don\u2019t know what they want until you show it to them\u201d.\u00a0 Well, I don\u2019t think this is entirely true: customer research and understanding are important for success in almost all situations.\u00a0 Jobs\u2019 creativity allowed him to make a set of products that would have been tough for customers themselves to envision, but this was a rare situation.\u00a0 Truly groundbreaking products frequently require innovators to think so far outside the box that they are beyond the realm of possibility for customers.\u00a0 For these types of products, I don\u2019t think Quirky\u2019s crowdsourcing model can be effective.\u00a0 However, for a simpler product such as t-shirts made by Threadless, the model can work well since customers will have a full understanding of the product at hand.\u00a0 But Quirky targeted gimmickier products that couldn\u2019t really be profitable longer-term.\u00a0 For example, they put a lot of effort into a product described as \u201cset of wheels to turn any object into a remote control car\u201d which never actually generated a single sale.<\/p>\n

Quirky also made two other critical errors: too broad of an industry focus and unnecessary working capital risk.\u00a0 Quirky accepted ideas for a wide variety of consumer-facing industry even though their manufacturing abilities could not possibly have spanned such a wide range of potential products.\u00a0 Quirky also took substantial working capital and inventory risk as they built out the inventions with no knowledge of its true sales potential.\u00a0 Early in 2015, they finally stopped manufacturing themselves and began forming partnerships with larger manufacturers who were able to take the risks themselves.\u00a0 However, by this point the writing was on the wall.<\/p>\n

Quirky also seemed to lack quality controls and customer complaints began piling up.\u00a0 Even relatively simple products did not meet user expectations, demonstrating how the company was manufacturing products above its capabilities.\u00a0 Instead of pumping the brakes and trying to get the basics right, Kaufman insisted on pushing forward with aggression while continuing to burn cash.<\/p>\n

Quirky is currently being operated by new owners.<\/p>\n

See this YouTube clip to hear about how Ben Kaufman thinks about innovation and entrepreneurship:\u00a0 https:\/\/www.youtube.com\/watch?v=FFOvzxxQx8c<\/a><\/p>\n

Exhibit 1: Quirky’s Design Process<\/p>\n

\"\"<\/a><\/p>\n

Exhibit 2: Quirky’s biggest hit, Pivot Power<\/p>\n

\"\"<\/a><\/p>\n

 <\/p>\n

Sources:<\/em><\/p>\n

https:\/\/hbr.org\/2016\/12\/a-case-study-of-crowdsourcing-gone-wrong<\/a><\/p>\n

http:\/\/fortune.com\/2015\/07\/15\/kaufman-quirky-wink\/<\/a><\/p>\n

http:\/\/www.businessinsider.com\/ben-kaufman-steps-down-at-quirky-2015-8<\/a><\/p>\n

http:\/\/nymag.com\/daily\/intelligencer\/2015\/09\/they-were-quirky.html<\/a><\/p>\n

http:\/\/www.businessinsider.com\/quirky-ben-kaufman-2015-4<\/a><\/p>\n

https:\/\/www.inc.com\/magazine\/201310\/josh-dean\/is-quirky-the-worlds-most-creative-manufacturer.html<\/a><\/p>\n

https:\/\/www.forbes.com\/sites\/chunkamui\/2011\/10\/17\/five-dangerous-lessons-to-learn-from-steve-jobs\/#566ea6913a95<\/a><\/p>\n

https:\/\/www.inc.com\/christine-lagorio\/what-happened-to-quirky.html<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

How Quirky\u2019s unusual approach to idea generation left them without the high-quality products necessary to achieve success<\/p>\n","protected":false},"author":2010,"featured_media":7207,"comment_status":"open","ping_status":"closed","template":"","categories":[673,1482,695,343],"class_list":["post-7206","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-crowdsourcing","category-innovation-and-design","category-invention","category-manufacturing","hck-taxonomy-organization-quirky","hck-taxonomy-industry-technology","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/competing-with-or-against-crowds\/","yoast_head":"\nA Quirky attempt at crowdsourcing inventions - Digital Innovation and Transformation<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-digit\/submission\/a-quirky-attempt-at-crowdsourcing-inventions\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"A Quirky attempt at crowdsourcing inventions - 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