5. A Quirky Way to Product Innovation

Ben Kaufman started to break rules when he had his parents remortgage their house, just before high-school graduation, so that he could travel to China and find a manufacturer to produce his latest invention—mophie, a new type of headphone. Eventually, a quite successful ending for mophie’s Shenzen adventure rewarded Kaufman’s effort and sparked his enthusiasm for venturing into more products and raising funding from investors, yet, mophie turned out to be also a learning experience for Kaufman. He grasped how hard it is for a single inventor to take an idea for a new product, no matter how good it is, to the shelves of a retail store. Moreover, he learned that something had to be done in order to change that. Kaufman turned to developing a technology that supported collaborative decision-making in product development. The venture turned out to be harder than expected as it was difficult to get validation for the idea. Anyway, that was just the start of something much bigger. Quirky was born.

Quirky is a product development company launched in 2009 that envisions itself as “the Procter & Gamble of the 21^st century” according to its founder. What does it mean for Quirky to become the leading consumer products innovator of the future? It promises to “make invention accessible” by welcoming anyone to submit a product idea that solves a problem that people encounter when going about their daily lives. Then Quirky develops these ideas into successful consumer products, taking them to market together with a community of contributors that supports a design-led, collaborative product development platform.

“I have often had ideas for products that I kept in a shoe box but did not have the funding to move forward. In my wildest dreams I never thought I’d be looking at a finished product. When they unveiled it, I just had a warm feeling in my stomach that said: it’s real.”¹

¹Quoted from a promotional video for Aros published by Quirky.

Jake Zien is the inventor of Pivot Power, a power strip that is “one of the crown jewels of the Quirky empire.” Zien came up with the idea as teenager, when a team from NASA visited his high school to hold a contest for creative ideas. He was solving a simple problem—in power strips, some plugs and chargers block available ports next to them. So, Zien made a prototype, won the contest, and was awarded a few goodies for his feat. Ben Kaufman uses Zien’s story to illustrate the challenges inventors face. “He could not commercialize, he could not change the way we all consume power with a pat on the back and a t-shirt. Invention was inaccessible to Jake.”

Product development involves high upfront costs and various risks for a single person to bear, which discourages even the most enthusiastic inventors with great ideas for new products. Quirky takes on those costs and risks by combining capabilities in design and engineering with community feedback to product development which reveal users’ insights on preferred products and features.

Quirky receives thousands of idea submissions weekly. Quirky receives a license to use the intellectual property (IP) of each idea submitted, becoming the owner of all IP if the idea develops into a product. Ideas pitched to the community can be anything from a drawing to a working prototype or a patent but they need to solve a problem, be simple and be feasible. Community members who build up on submitted ideas do it for free and may be rewarded eventually for doing so.

Each idea is live on the website for 7 days during which the community reviews it, identifies similar products, and eventually votes on the best. After community curation, Quirky reviews the ideas and decides which should proceed to Eval, a weekly product evaluation ritual broadcasted live from Quirky’s headquarters. Quirky’s staff and community review, understand and debate each idea during Eval, ultimately voting on whether or not the idea should be green lit for full-blown product development. Those that did not get voted through Eval receive feedback from peers and from Quirky.

Then Quirky reaches out to its community members again. Eval is the kick-off for a community-driven process of iteration of design, engineering, branding, and pricing, supported by product expertise, which has enabled Quirky to launch two to three products weekly. Quirky’s staff and community work in parallel and their inputs feed each other’s work. Community members know product details, have access to creative directors’ notes, suggest design improvements, and influence brand strategy by choosing name, tagline, color, and pricing.

This out-in-the-open process is quick and efficient, taking new products from idea to market in a matter of weeks or even days. Table 5.1 shows product releases until 2014. As the community pool and the product portfolio grow, revenues are growing as well. In 2010, Quirky earned $1.2 million in revenues, which increased to $48 million in 2013 and was expected to reach $100 million in 2014. Growth has been financed by venture capital. By 2014, Quirky had raised $175 million in four rounds of funding from top-shelf venture capital firms, including Andreessen Horowitz, Kleiner Perkins Caufield & Byers, and GE.

Table 5.1 Inventions and Product Line Extensions Launched by Quirky²

²Source: Broadcast of Quirky Town Meeting (17/2/2015) at http://www.ustream.tv/recorded/58936980.

Community members earn influence points for submitting ideas, curating through voting and rating, developing through research, design, and branding, and committing to buy products in the pre-sales stage. The community receives a portion of all gross sales on a royalty basis, depending on how the product is eventually sold. The inventor gets the largest share (40.5 percent) of this community pot and other contributors share the rest according to the algorithm. In 2013, Quirky distributed $3.8 million in royalties to inventors and community influencers.

One of the most successful products is Pivot Power, a bendable power strip that makes it easy to plug in chargers of various sizes. Its inventor Jake Zien, at the time a design student at Rhode Island School of Design, earned $3.39 per direct sale of each item and received around $300,000 in royalties 1 year after product launch. By 2015, he earned over $800,000. Another 1005 people contributed to Pivot Power.

Apart from rewards, Quirky engages its community by putting ideas and inventors under the spotlight, either by extensive discussions of ideas every Thursday at Eval or by placing the inventor’s photo in product packaging. Also part of Quirky’s community engagement strategy is to play down the role of the CEO and leave the center stage of Quirky’s success to inventors and contributors.

“(the idea) was surfaced from the Quirky archive so we could fast track development for one of our interested partners. For this project, we have foregone Live Eval so we can kick off community research immediately. This is a great idea and a great opportunity that we don’t want to miss, so we’re excited to press forward so quickly.”

Together GE and Quirky set up two complementing initiatives within their partnership—Inspiration Platform and WINK, a smart home platform. GE released 2000 patents for the exclusive use of Quirky’s community, to find novel applications of GE’s proprietary technologies for home appliances. “The fact that you could use a GE jet turbine technology which is tested in a 777 to make a better ceiling fan, that doesn’t hurt GE in any way. It’s actually going to make them a little bit more money from royalties and allow that technology to actually prosper,” said Ben Kaufman at a press conference in 2014. WINK was developed as a software platform that supported a co-branded line of connected devices for the home that were controlled with web applications.

Within 4 months of their partnership, Quirky and GE had brought to market four new products under the Quirky & GE brand, such as an egg tray that reminds its owner of how many eggs there are and which eggs are the oldest. Yet, in September 2014, GE entered into a deal with Electrolux to sell its Home Appliances business and Quirky lost access to hundreds of patents of the white goods business. In fact, the Inspiration Platform had developed slowly and Quirky had not launched yet any product straight from it. Nonetheless, GE continued its partnership with Quirky in automation, energy, and lighting applications, and Quirky was allowed to continue selling its co-branded products.

WINK started off with strong support from leading manufacturing and retailers. Companies like GE, Honeywell, and Philips enabled their products to be compatible with WINK, and Home Depot was a first mover in actively supporting its adoption in retail. WINK being a separate company, Quirky will continue to try and compete with leading manufacturers in the connected devices’ business. Kaufman claimed that WINK was better off providing a platform for development of connected devices, rather than fragmenting the market by launching yet another one. The platform is set to comprise more than 1 million users and around 3.5 connected devices by the end of 2015. Continuing to grow, Quirky managed WINK to follow its inclusiveness strategy.

In its 6 years, Quirky’s portfolio has evolved from small plastic products into more sophisticated electronics supported by its unique operating model, its partnership with GE, venture capital, and a growing stream of revenues. Quirky achieved this by opening up to the community key operational aspects of product development and by rewarding all impactful contributions with a share of royalties. From the outset, Quirky tapped into the creativity and engagement of thousands to deploy a fast and flexible innovation process that brought three products to market weekly. In a TV commercial of Quirky, Kaufman is pictured as the CEO who rubs the inventors’ “regular-guy feet” because inventors are more important than the CEO who “just runs the company.”³ This is just another quirky way of thinking about the future.

³Source: Quirky’s promotional video.

In the following months I kept earning influence on products for my pricing choices, while venturing into proposing names and taglines for items as diverse as outdoor games, educational toys, and kitchen appliances. I also voted on others’ names and taglines. Later, I was able to influence style and design, which involved thinking about which proposed design would be both appealing and functional among a few that designers and engineers in the community had suggested in a previous step of the process.

The process is engaging. First, I wished to experiment with how it worked to know what I was writing about. I ended up following products and checking up on notifications, eager to vote, or propose an idea before time was up. Furthermore, the process is fun—it has a certain twist of gaming to it. Will someone vote on the tagline I suggested? How is it ranking now? (What about in an hour?) Am I getting influence points for this concept? Finally, each product has a story that I can read and connect to. That story starts with a person sharing a problem and a solution to it. Each chapter of the story is a product development step on its own with characters that influence its outcome. Reading through the chapters, we get to know about what is brought into the process and by whom, and appreciate different designs. Eventually, we may leave the website wondering why that wonderful tagline of ours only made it to the fifth most voted.

Quirky is appealing for someone like me, a layperson who finds product development fascinating in its most creative angle and who doesn’t mind the heresy of intruding in what is the experts’ business. For the 16 products I was able to influence, there were on average more than 2350 people doing the same. The interest of each person in this “community” underlies a myriad of diverse products coming to life at Quirky—be it a simple cleverly designed orange squeezer or a sophisticated music streaming system that operates in the not so far universe of the Internet-of-things.