The case study today is quite an interesting one. Imagine I tell you to think about combining Kickstarter and Takealot, what comes to mind?
So Quirky was something between the two. It was launched in 2009 as a crowdsourcing company that focused on making invention possible for entrepreneurs through means of crowdsourcing and manufacturing.
In short, people could submit their ideas to Quirky, the community voted on it and the best ideas were then selected and manufactured by Quirky’s team of engineers and technicians. Then all of these inventions would be distributed to big retailers such as Walmart and Amazon.
So where does Takealot come in?
Quiky’s website would showcase all of the inventions so it almost looked like the Daily Deals page on Takealot, the most random selection of products available.
Now you might wonder where the fail part comes in? Especially if I tell you that Quirky raised $185.3M over 9 rounds during the 6 years of the company’s existence and manufactured over 50 products a year.
So what went wrong?
My research showed #3 reasons why this startup had to close its doors in 2015. Despite great media coverage, user uptake (over 1 million users) and funding from big guys like General Electric.
The products on Quirky’s website ranged from low-cost kitchen gadgets to high-value air conditioners and more. There was no specific product line or industry focus, but a bit of everything. See the example below.
And if you look at Takealot – which is why I used this example earlier, you might be inclined to think well where’s the problem with that?
And that is where I also got stuck for a while. Arguing with myself that Takealot is also selling random items. So is Amazon. Just look at this extract from one of the articles:
The lack of focus had another crucial effect. Quirky’s website looked like a catalog for all kinds of random products, so whenever someone landed on their page they could not help but wonder what exactly Quirky stands for.
I am still not entirely convinced that this reason was a true reason. The factor that I would consider here is that Takealot stands for e-commerce as a retailer, so it is clear that they sell all kinds of products online. Quirky was an invention platform, manufaturer and a retailer so perhaps that caused the confusion as the invention & manufacturing was the focus more than the retail part.
But purely the diversity of the products as a reason for failure is an odd reason in my opinion. What are your thoughts on this?
So rewind and let’s look at another reason for failure.
Now this one I can get on board with. Due to the invention of over 50 products a year – I mean WOW! – there was simply no time for iterations. Once a product was manufactured, it was basically signed off and ready for distribution. Now, as we all know in manufacturing, a once-off prototype is never going to be the final product that you manufacture in mass. You release versions, test it, get feedback and adjust until you have a product that customers want.
Instead, they received numerous complaints about the quality of the products without updating any products as a result. Enough of these issues and you have no returning customers.
And the reason for this intense manufacturing? Quantity over Quality:
Everything in Quirky was designed for speed, and its priority was quantity over quality. After they launched a hardware product, they would hardly make any iterations even when there was a huge potential and room for improvement. The firm would simply move on to the next big thing.
It’s not necessarily wrong to focus on quantity over quality but you have to be careful in these cases. Industry standards for startups is to focus on a handful of products per year for this exact reason – being able to obtain the necessary feedback and iterate until the product is fit for purpose and won’t break down after one use.
So how it worked on Quirky was that inventors could pitch their ideas to the community and then everybody got to vote. The ideas with the highest votes were considered the best ideas and selected for manufacturing.
But what they failed to realise was that the people who voted weren’t their customers! These were fellow inventors and although some might have been customers, voting for an idea didn’t mean that the person was going to spend money on it.
If I tell you to vote for the idea you like best:
and now I tell you to pay for the product:
Would your answers stay the same? These are just imaginary designs to illustrate that those who like the ideas were not always the ones willing to pay for it.
And this is where Quirky misunderstood their customers and designed according to votes from other inventors instead of finding out if there was a market need for the product.
In line with this were subsequent manufacturing costs of products that couldn’t scale, which means production costs skyrocketed without the expected or needed revenue, and many of the products never became profitable.
This is where Kickstarter gets it right. Ideas are voted on in the form of people pledging money on the invention which is an ingenious way of doing market research with real customers. And putting new meaning to the saying ‘put your money where your mouth is’.
The idea of Quirky was and still is a great idea in principle. The timing for such a platform is perhaps no longer favourable as the market is dominated by the likes of Kickstarter, GoFund me and others – if you just look at the ones below.
And it even appears that some new life was blown into Quirky in 2017 but low-key and purely focused on the inventions without the aggressive go-to-market strategies they used before.
But my takeaway is that although they were disruptive, the founder (Ben Kaufman) was only 22 years old when he founded Quirky and maybe just a tad too ambitious to disrupt e-commerce, inventors problems and manufacturing obstacles all at the same time. Had he scaled down on the products and instead of all the big retailers, stuck with one in the beginning, the company might have had a different runway.
Getting carried away in a startup is not uncommon. You are looking at people full of passion and a vision to create something impactful. But staying grounded is so important so surround yourself with people who can share your vision but also keep you realistic. Not the negative Nancy’s who shoots down all your ideas, but people who can give you a nudge if you lose sight of reality now and then.
But it also goes to show that success is more fragile than you might think in a startup. What might look like success to the outside world might be the last futile attempts of a dying fire to cast a glow. We work so hard to get traction and then to maintain that momentum that small mistakes are often overlooked but time and time again, the devil is in the details.
What do you think about Quirky’s idea?
Have a happy week everyone!
If you want to chat some more, reach out to me at lizfuzy@gmail.com
