And he’s hopeful he’ll land a fresh round of funding to help him, he told attendees at the Fortune Brainstorm Tech conference on Wednesday.
Quirky is a platform that crowdsources inventions. Anyone can submit their ideas, others vote on if they like the idea and can modify and contribute to it.
4,000 ideas a week, 1 million inventors on board
Despite its well-publicised problems, Kaufman has reason to think the company’s new direction will attract new backers.
Quirky has a community of over 1.1 million inventors who use the site and are still submitting “close to 4,000 ideas a week,” Kaufman said.
The new direction is called “Powered by Quirky.” Previously, people voted on ideas and if they got enough votes, Quirky would manufacture them and sell them through retail stores like Best Buy, Target, and Home Depot.
Today, he’s got big-name manufacturing partners like GE, Mattel, Harmon, Poppy, working with inventors and manufacturing the products under their own brand names. He’s adding a new partner every few weeks, he said.
The community wasn’t thrilled with the change when Kaufman announced it to them in February, he admitted. It puts the same big-name manufacturers in charge (and taking a cut) that Quirky was supposed to rival.
But they are now “along for ride. They want their ideas to be heard. They want Quirky to succeed,” he said. “If Quirky ceases to exist there’s no forum for their ideas. 100% of nothing is nothing,” he explained.
The inventors also understand that “they would rather have Mattel make five products a year, versus us making 10 toys a year because those five will be more successful” with the Mattel brand name on it, he says.
Troubled by a $US25 million subsidiary
Meanwhile, Quirky’s wholly owned subsidiary that launched a year ago, Wink, is doing well, he says.
It generated $US25 million of revenue in its first year, he says and is used by 200,000 homes, growing at about 1,000 homes a week, he says.
Wink makes a connected home product that controls all sorts of connected home products, like the Nest thermostat, smart GE lightbulbs, and Quirky smart light switches.
But Wink is both a blessing and a curse, Kaufman said. Because it was launched and funded as a subsidiary and not a spin-out, he can’t easily unwind it from the main company, sell-it or raise money just for Wink. The attachment to Quirky has plagued it. “I wouldn’t do that again, start a startup within a startup.”
So Quirky, “is still footing the bill for Wink,” he said. That included a nationwide recall last spring of Wink products to fix a completely avoidable error.
A lot of missteps
He was surprisingly open and honest about his other missteps like:
Inventions he said would bomb but did well. Bandit, a rubber band with a hook, sold 10 million units to ones he liked that bombed like the $US80 internet-connected egg tray, Egg Minder.
Problems with branding. “The brand couldn’t necessarily stretch as much as we though it would,” he said. The brand was fine for small fun stuff like power strips, but “when we started making $US350 air conditioners, people don’t want a Quirky air conditioner, they want a good one, that works,” he joked.
Problems working with big box retailers who wouldn’t allow testing of new products in just a few stores but demanded products be sold at all of them. This meant manufacturing thousands of units be manufactured, forcing Quirky to spend a lot of money making lots of items that bombed.
Problems with the business model. All told, it just “didn’t scale,” he said.
The upside, and why he’s hopeful he’ll get an investor to bite, is that Quirky has a built-in marketing scheme. Tens of thousands of inventors help with or vote on an item, and they tell their friends they helped create a product.
With the “powered by Quirky” plan, inventors will also get world-class marketing teams helping to promote their inventions.
And he’s got a little bit of runway to make it all work. Although he indicated on stage that he was out of money, he later told Fortune’s Stacey Higginbotham that he still had $US12 million in the bank.
Here’s a portion of the interview, where Kaufman discusses Quirky’s missteps.
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