Crowdsourcing is a great method of bringing people together who can achieve more when they cooperate than they could ever have accomplished alone. A great invention is a combination of a good idea and a good execution. This is the idea behind Quirky, an interesting idea that had a dream start, then (spoiler alert) fails but in the end gets a second life with new owners.
What is Quirky?
Some people overflow with (great) ideas but don’t have the resources or know-how to bring these ideas to life. On the other hand, some people have the capabilities to bring ideas to the marketplace and make them successful but aren’t terribly creative. Quirky was created in 2009 by Ben Kaufman as a marketplace to bring these people together.
“We’re making invention accessible”
Crowdsourcing innovation is a way to get an audience, potentially even buyers, for a product before it is even in production. Quirky retains the rights to ideas and facilitates communication between inventor and executioners. It pulls invention out of isolation and created a community in which people work together to create new products (Quirky.com).
The platform succeeded in creating a community and successful products.
For example, Garthen Leslie came up with a smart air conditioner, uploaded a rough idea to Quirky and with the help of the community came up with extra features and a name: Aros. Quirky then patented the idea, manufactured it and sold the product to big retailers such as Walmart and Amazon. Leslie’s return for his idea was 10% which in this particular instance amounted to more than $400.000, but also the community also benefitted with $200.000 that was distributed to all of the members that contributed to Aros (Silvester, 2015).
However, the invention business turned out to be difficult. Crowdsourcing as a method of quality control turned out to be flawed. For every Aros there were many examples that did not do too well. These cost the company money, a lot of money. For instance, the Beat Booster that cost the company $388.000 but only ever sold 30 units (Popper, 2015).
There is almost never one single reason a company fails. In the case of Quirky there are several, with these being the main ones:
Crowdsourcing as Market Validation
Quirky operated under the assumption that when the community ‘upvoted’ a product enough it would be a success in the market. However, this turned out not to be the case. In real life companies, an R&D department would thoroughly test ideas with pilot runs etc. However, Quirky has a fast-to-market mentality and it negatively impacted quality. The company started to receive many complaints by inventors feeling rushed and buyers feeling deceived with faulty products that did not live up to the hype (K, 2015).
Capital Risks & Brick-and-mortar retail
The company’s margins were thin, they took everything on themselves including manufacturing and distribution resulting in high upfront costs. Quirky decided not to solely focus on its core competency (facilitating ideas) but also on logistics, supply chain management etc. Especially when dealing with large brick-and-mortar retailers (with high minimum inventory demands) inventory costs are high, very high resulting in high capital risks when products were not successful (K, 2015).
Lack of Economies of scale/iterations
Where ‘normal’ companies generate and execute 2 or 3 ideas per year, Quirky aimed for more than 50. Resulting in many, but incoherent products. This resulted in a lack of recognition of Quirky as a brand. This absence of focus also led to an absence of iterations of successful products (Einstein, 2015). Aros, one of the company’s major successes could have been a multi-million company on its own if the company had decided to improve the first version with feedback from its customers. Yet, the company decided to invest time in putting, even more, products on the shelf instead, while not creating economies of scale (Fixson & Marion, 2016).
The founder of Quirky, Ben Kaufman, was only 25 when in 2015 his company grew to 300 employees and raised over $185 million in capital.
He was lovable, ambitious and well on its way to make it in the business world since he was a good salesperson (Lagorio-Chafkin, n.d.). One Quirky member said: “I’m pretty sure he could sell ice to Eskimos” (D’Onfro, 2015). He was excellent at spotting talent and persuading them to come work for him. However, it has also been said he failed to listen to their knowledge soon after. For example, Kaufman demanded a team to work on Egg Minder. A smart egg tray which notified people on their smartphone that they were almost out of eggs even though a team of engineers claimed it did not make much economic sense (Popper, 2015).
Bankruptcy & Restart
After 6 years, in 2015, Quirky filed for bankruptcy. The before mentioned problems turned out to be too big to handle and the company could no longer pay its obligations. The company, at that point, had gathered more than 1 million registered users and brought more than 400 products to market (Lohr, 2015). However, this turned out not be the end for Quirky. On February 8 2016, it was announced that Quirky acquired new financiers and owners and the company relaunched in May 2016. The company redefined its definition of ‘public’ and made the process more private requiring people to sign up and log in before contributing to society. Furthermore, it has changed its evaluation methods, however not much is communicated in detail on this change (Quirky Blog).
Only the future can tell if this new and improved version of Quirky will last as it is too soon to tell right now. However, it is clear that crowdsourcing innovation can yield great revenues the only question is how to manage this exchange of responsibilities to great joint profitability for all parties involved.
D’Onfro, J. (2015). How a quirky 28-year-old plowed through $150 million and almost destroyed his start-up. Business Insider. Retrieved 3 March 2017, from http://www.businessinsider.com/quirky-ben-kaufman-2015-4?international=true&r=US&IR=T
Einstein, B. (2015). The Real Reason Quirky Failed. Bolt Blog. Retrieved 2 March 2017, from https://blog.bolt.io/the-real-reason-why-quirky-failed-c362b3a3abd7#.6o9f8r6nk
Fixson, S. & Marion, T. (2016). A Case Study of Crowdsourcing Gone Wrong. Harvard Business Review. Retrieved 3 March 2017, from https://hbr.org/2016/12/a-case-study-of-crowdsourcing-gone-wrong
K, C. (2015). How Not to Crowdsource : The Demise of Quirky – Digital Innovation and Transformation. Harvard Business School. Retrieved 2 March 2017, from https://digit.hbs.org/submission/how-not-to-crowdsource-the-demise-of-quirky/
Lagorio-Chafkin, C. What Happened to Quirky?. Inc.com. Retrieved 2 March 2017, from http://www.inc.com/christine-lagorio/what-happened-to-quirky.html
Lohr, S. (2015). Quirky, an Invention Start-Up, Files for Bankruptcy. Nytimes.com. Retrieved 2 March 2017, from https://www.nytimes.com/2015/09/23/business/the-invention-start-up-quirky-files-for-bankruptcy.html?_r=0
Popper, B. (2015). Exclusive: the secret struggles of Quirky, a seemingly successful startup. The Verge. Retrieved 3 March 2017, from http://www.theverge.com/2015/4/24/8488531/quirky-invention-powered-by-quirky
Silvester, J. (2015). The Rise and Fall of Quirky — the Start-Up That Bet Big on the Genius of Regular Folks. New York Magazine. Retrieved 1 March 2017, from http://nymag.com/daily/intelligencer/2015/09/they-were-quirky.html