Quirky Raises a $68M Round Led by Andreessen Horowitz to Reinvent the Invention Process
Quirky, a crowdsourced invention platform, has raised a $68 million funding round led by Andreessen Horowitz, joined by Kleiner Perkins and existing investors. The company, which has raised $97 million to date, says that the funding will be used to expand its platform into a number of verticals, such as Quirky Electronics, Quirky Kitchen, and Quirky Toys, which is a business-y way of saying that it's gearing up to release a lot more products.
Founded in 2009, Quirky has built a community of 260,000 users that can submit and vote on product ideas. The community helps guide a product through its initial concept all the way through to the testing phase, at which point Quirky's design team gets to work on making a 3D-printed model and further refines the product. Essentially, Quirky allows anyone to submit an idea and then works until it finds a few diamonds in the rough, which it then helps to develop and sell.
Everyone that contributes to a product's development is granted a certain percentage of "ownership" in the finished product and receives a kickback from each sale. Items sold through one of the company's 188 retail partnerships with companies like Toys "R" Us, Target, and Staples, give the community a 10 percent kickback – online sales through Amazon, Thinkgeek, and a number of other partners increase the kickback to 30 percent. The company expects to pay its community $2 million of its projected $20 million in revenue this year.
Though the company has been operating since 2009, the idea for Quirky actually came to founder Ben Kaufman after the release of his first product, a pair of headphones he developed while he was still in high school. He had convinced his parents to remortgage their home and give him a little over $100,000 to develop that product, and expected that once the money was in his hands, developing and releasing the product would be easy. After several trips to China, Kaufman realized that he actually needed to master a list of "50 or 60" disciplines to make his product a reality. He managed to get the product released and founded Mophie, which is now known for its battery-charging iPhone cases.
Then, once that was finished, Kaufman decided that Mophie wouldn't be enough. "I didn't want to spend my life building iPhone condoms," he says. "I wanted to reinvent the invention of inventions[.]" So he sold Mophie and started working on what would ultimately become Quirky to help other inventors make their products a reality.
Instead of building something like Kickstarter, which helps one-shot inventors raise money from the masses, Kaufman applied what he knew about product development and built a platform to share that knowledge. As he learned during those trips to China, getting capital isn't even half the battle when it comes to product development. Inventors that turn to Kickstarter ask the masses for money in exchange for a product; inventors that turn to Quirky ask the community to help build a product in exchange for money.
There's certainly a place for both models, and Kickstarter has seen monumental success with its model. As its products continue to raise increasingly higher amounts of money without any proof that they will deliver, however, Quirky's "build the product first, make money later" model may start to make more and more sense.
The most "special and magical" thing about Quirky, Kaufman says, is that it's a machine designed to ensure that only the best products are released. Quirky will design and develop products that aren't "super phenomenal," he says, but none of those products will see the light of day if the company decides that they don't meet a certain standard of quality. With as many as 1,500 people working on a single product that is then tested and judged by experts, bad ideas don't make it past the cutting room floor.
Contrast this with Kickstarter's approach. The company doesn't attempt to regulate the quality of any product that is released, and leaves every step that doesn't involve money up to the development team. As Kaufman's experience trying to develop his first product shows, however, the ability to raise money doesn't guarantee that a product will ship. An inexperienced team will always be inexperienced, whether it raises $5 million or nothing.
At last month's PandoMonthly, Reid Hoffman compared entrepreneurship to jumping off a cliff, saying “in order to jump off a cliff, you kind of have to believe you can assemble a plane on the way down.” Kickstarter offers a way for entrepreneurs to purchase the plane's wings and engine – Quirky guides them through the process of putting those parts together.
[Image courtesy Quirky]