Quirky in Numbers: Entrepreneur Magazine shares new data on Quirky’s social product development business model

Entrepreneur-magazine-august-2011_lrg In the August issue of Entrepreneur, Jennifer Wang has a great story on Quirky, featuring the person of founder Ben Kaufman (everyone attending the MIT SCG Seminar in 2010 still remembers his presentation), but also sharing some great info on the company.

Read the full article here, but here are some of the facts I found most interesting:

Old world: If you have an idea and want to turn it into a product "Kaufman puts the upfront costs of building a company around a single product at about $200,000–just to get the paperwork done and the first prototype out." Combined with the risk, most people never get their product idea anywhere near retail shelves.

Quirky's approach:

Create an online community of 65,000 members (growing by 20 percent every month).

Have "every week hundreds of inventor hopefuls, or "ideators," submit their concepts online".

So called "influencers" than vote on the ideas and develop them further, together with Quirky's inhouse design team.

Requirement: Product ideas must retail for less than $150 and should not require integrated software.

Examples of products in the making and development: "an auto-stirring microwavable bowl with steam-release function; a modular tent-making kit for use with couch cushions and throw quilts; a yoga mat with magnetic or Velcro closures."

30% payoff: "Thirty cents of every revenue dollar goes back to ideators, and a number of them have already earned tens of thousands of dollars."

Typical income of inventors:

Michael McCoy, inventor of Cloak, a two-in-one iPad stand and case, that retails for $29.99. This item generated total sales of $100,128, and Michael got a share of $38,007 for this.

Jake Zien, inventor of the Pivot Power, an adjustable power strip with six outlets, that retails for $29.99. This item generated total sales: $13,021, and Jake got a share of $4,919.

Quirky's take: "The company retains the rights to all the cool ideas that are voted into the development process, and because the company gets validation from thousands of potential customers before making a move, Kaufman avoids all the costs associated with early design phases." => our idea of collective customer commitment at its best!

2011 revenue: Expected "to be between $6 million and $10 million"

Financing: Quirky has raised $12.6 million in funding.

Staff: Today 40, planned are about 80 by the end of this year.

Media: Ben is a master in self promotion and announcing his company, and so the Sundance Channel's will have a reality TV show featuring Kaufman, Quirky employees, the inventors and their stories, premiering in August.

Ben's core learning in running an online community:

"Face-time is important, transparency is important!" There's a whole department dedicated to "inventor services," and the company regularly holds virtual town hall meetings with the whole staff, inviting community members to log on and ask anyone on the team questions."

 For me, Quirky still is one of the best ideas of co-creation. Here is my earlier more extended analysis of their business model.

 

About the Author:

Frank T. Piller is a Co-Director of the MIT Smart Customization Group at the MIT Media Lab, Massachusetts Institute of Technology, USA, and a chair professor of management at the Technology & Innovation Management Group of RWTH Aachen University, Germany, one of Europe’s leading institutes of technology. Before entering his recent position in Aachen, he worked at the MIT Sloan School of Management (2004-2007) and has been an associate professor of management at TUM Business School, Technische Universitaet Muenchen. Frequently quoted in The New York Times, The Economist, and Business Week, amongst others, Frank is regarded as one of the leading experts on strategies for customer-centric value creation, like mass customization, personalization, and innovation co-creation. His recent analysis of the crowdsourcing business model “Threadless” (co-authored with Susumu Ogawa), an innovative crowdsourcing business model in the fashion industry, has been elected as one of the Top-20 articles in MIT Sloan Management Review.