If we understand it correctly, in Quirky’s town hall Ben Kaufman the CEO went over how they’re splitting their product lines in an effort to make their crowd sourced/voted/invention ideas profitable. In the first part of the presentation the inventions are costing too much of Quirky’s working capital.
OWNED and POWERED. Owned, is something Quirky can try to make profitable make products in: connected home, connected appliances, electronics.
Powered by Quirky will be, toys, pets, home, audio, home, cleaning, etc. will have a partner. Any idea that is accepted will be paid for by the partner, GE was the example, it will not use Quirky’s “working capital” – the partner such as GE. The first group to participate is GE. Example was, beat booster only sold 28 units.
They went over about 10 big changes:
Quirky is closing the e-com site, you cannot purchase via their web site. They’ll link to other places to purchase. Average order took an extra 7 days to process and ship, 3,200 unanswered emails. 1,500 calls/day.
If an idea does not happen, it’s set to private and you re-submit it for Quirky 2.0. The archives are not searched. You need check marks for eval.
Things that are chosen at eval and not made in owned, they’ll keep talking to you. In “powered by” there’s a 30 day window, if it doesn’t happen you’ll get an email that says how to get your IP back.
Kids are allowed to invent on Quirky 2.0 (not beta) – children of all ages, with parental approval, working with government.
Reminder, they’re no longer searching for archives for “similars”.
Product engineers +23%, Quality engineering +40%, WINK +140%, customer service +487%. 2014 went from 192 to 241 in 2015. Restructuring the company for PbQ (staff reduction).
No more referral payments.
No longer doing 3 virtual product launches per week.
Withdrawal limit dropped from $75 to $50, effective 2/18/2015.
Quirky is removing the requirement that every product they make starts with a community idea. Ideas can come from GE, Quirky staff, etc.
“Topic they fight hard to avoid bringing up” – Quirky is “not making money”. Quirky was paying 10% of the revenue. The community made $9m from Quirky, Quirky has “lost over $100m” (Quirky has raised $185 million).
Quirky will honor prior commitments.
Effective tonight 11:59pm ET 2/17/15 there are new terms and conditions. Going forward if you’ve earned less than $500k, 5% if Quirky product, 3.5% PbQ royalty, 10% non-royalty IP. On the next $500k royalties go down (about half).
Payments have not been paid out since 9/2014, going to be paid by 2/27/2015. Going to pay each quarter going forward in 2015. The problem is retailers are returning products (about 25%) gross sales vs net sales.
Questions that came in:
- What was wrong with the GM structure (general manager).
- Quirky France was an “utter disaster”.
- Can the community act as a crowd funding site? Not in the cards.
- Receiving better ideas is most important.
- What happened to Doreen? Moving on to being advisor.
- What is the next product for sale? Spotter or Norm, connected stuff.
- Should the community have a say on portfolio products? Issue, someone has to pay for it.
- What’s the delay of QA of products?
- AC launch challenges? It was a loud, people did not want a “Quirky” AC. First big campaign.
- What is happening to the products in the shop now? After Quirky 2.0 launches, linking to powered by Quirky.
- How does Quirky plan to be more transparent throughout the year? Community wants lists of products, sales, etc.
- What about Paypal for payouts? Exploring.
- Nothing will change for PbQ, except no more Quirky working captial.
- PbQ will not be a different company, but will define a new leader.
- Quirky will be showing to PbQ to partners if it’s in eval.
- Partners can get involved with dev.
- How many products will die? Do not know.
- There could be thousands of ideas of in eval.
- No partner for power announced.
- For lighting it’s GE.
- Will inventors have any control over what partners are used?
- When will the rest of the PbQ partners be announced? Next in March.
- How will the ending of the inspiration platform effect things? It will not.
- Can you make different types of accounts on Quirky 2.0? No.
- What’s happening with community voting on ideas. There is no voting.
- Finding a PbQ is challenging?
- Any Canadian partners?
- Where there be ideas screening, how to keep sub-par ideas out.
- Will inventors be able to edit and resubmit? No if they say no.
- Will community have access to archives? No.
- Community will scout ideas.
- Everything is time stamped.
- What is launch date? Faster than google.
- Enrique, here’s the deal, your 153 ideas are ported over private, then you collect check marks.
- GE appliance patents sold to swedes, next question.
- Rending needed for prototype.
- Slow down.
- What happens to my idea for multiple manufacturers.
- If it’s in OWNED it will move forward.
- Double trigger accepted for PbQ.
- How do you know the Quirky staff does not have an insider advantage?
- Would a connected pet door be a Quirky product or OWNED product?
- Will the inventor be able to allocate influencer contributions?
- Cost of Quirky 2.0 “at least a few million dollars”.
- Not moving to apps.
- That is a big 3d printer in SF. 5 Axis machine and “expensive circuit board machine” tour at 2:12:50
They said the deck (slides would be posted here, it’s not been posted yet) – Recent filing here, Beth Comstock of GE* is a Director and so is Carl Bass from Autodesk, we did not know that. Quirky is currently looking for $50m.
Update: 2/18/15, slides are posted.
*Notes: GE’s 2011 tax fall out.