Why Did Quirky Fail?
Introduction
Remember when everyone thought crowdsourcing would change how we make things forever? I sure do. Back in 2009, a bright-eyed 24-year-old named Ben Kaufman launched Quirky with a simple but powerful idea: let regular folks submit their invention ideas, then have a community vote on which ones to make real. The best ideas would become actual products you could buy in stores. Pretty cool, right?
As someone who jumped from running my own startup to investing in others, I watched Quirky’s journey with both excitement and worry. Their rise was stunning – $185 million in venture funding, deals with GE and Home Depot, and a TV show on the Sundance Channel. But then came the spectacular crash in 2015, with layoffs, bankruptcy, and dreams shattered.
So what happened? Was it just another case of startup hubris, or were there deeper lessons hiding in Quirky’s story? Let’s dig in and find out why this innovative platform that had so much promise ended up in the startup graveyard.
Table of Contents
- The Quirky Vision: What Made It Special
- Early Wins: When Everything Seemed Possible
- The Business Model Problem
- Manufacturing Nightmares
- Too Much, Too Fast: The Scaling Challenge
- The Funding Trap
- Leadership and Culture Issues
- The Final Straw: Wink and the IoT Gamble
- What Survived: Quirky’s Legacy
- Lessons for Entrepreneurs and Investors
- Could Quirky Work Today?
- TL;DR
- Q&A About Quirky’s Failure
- Quiz: Would Your Platform Business Survive?
The Quirky Vision: What Made It Special
Quirky wasn’t just another startup. It represented a new way of thinking about innovation.
Before Quirky, bringing a product to market meant you needed technical know-how, manufacturing connections, and distribution channels. Most great ideas from regular people stayed just that – ideas. Quirky promised to change all that.
Here’s how it worked: Anyone could submit their invention idea for $10. The community would vote and comment. If your idea got picked, Quirky’s team of designers and engineers would turn it into a real product. When it sold, you’d get a cut of the revenue – typically around 10% of sales.
The magic came from combining three things:
- Crowdsourced ideas from everyday people
- Professional development and manufacturing
- Community involvement throughout the process
This wasn’t just theoretical. Products like the Pivot Power flexible power strip and the Aros smart air conditioner actually made it to store shelves and into people’s homes.
What made this vision so appealing? It democratized innovation. It turned passive consumers into active creators. And it gave Quirky access to an unlimited pipeline of potentially great ideas without the huge R&D costs that big companies face.
Early Wins: When Everything Seemed Possible
Quirky’s early days were filled with genuine wins. The company launched in 2009 with $7 million in funding and quickly gained momentum.
Some of their early hits included:
| Product | Inventor | Sales | Success Factor |
|---|---|---|---|
| Pivot Power | Jake Zien | $29+ million | Solved a common problem with a simple, elegant solution |
| Cordies | Stephen Stewart | $10+ million | Fixed annoying cable management issues |
| Bandits | Courtney Ward | $3+ million | Simple rubber bands with hooks |
| Pluck | Mark Fusco | $4+ million | Yolk extractor that went viral |
These successes created a virtuous cycle: more media attention led to more inventors, which led to more product ideas, which led to more successful products. By 2013, Quirky had raised a total of $91 million and was valued at $400 million. They had over 400 products and partnerships with retail giants.
The community grew to over one million members. For a while, it seemed like Quirky had figured out a new innovation model that could change product development forever.
Major companies took notice. GE partnered with Quirky in 2013, investing $30 million and opening up thousands of patents to the Quirky community. Home Depot, Bed Bath & Beyond, and Best Buy all carried Quirky products.
With high-profile investors like Kleiner Perkins and Andreessen Horowitz on board, Quirky appeared unstoppable. They even landed a reality TV show called “Quirky” on the Sundance Channel, further spreading their gospel of democratized innovation.
But beneath this success, problems were brewing.
The Business Model Problem
Quirky’s business model seemed clever on the surface but contained fatal flaws that would eventually bring the company down.
The fundamental issue? Quirky was trying to be everything to everyone. They were:
- A product development company
- A manufacturing company
- A distribution company
- A marketing company
- A community platform
Each of these roles requires different expertise and resources. Few companies can excel at all of them simultaneously.
Let’s break down the economics:
For each product, Quirky had to:
- Review thousands of submissions
- Design and engineer the chosen ideas
- Create prototypes
- Set up manufacturing
- Handle quality control
- Manage inventory
- Build retail relationships
- Market the products
- Handle customer service
- Pay royalties to inventors and community members
All while trying to maintain reasonable prices and margins.
The numbers simply didn’t work out. According to former employees, Quirky lost money on many products. For example, the Aros smart air conditioner, while innovative, reportedly cost more to make than its selling price.
As venture capitalist Ben Einstein noted in his analysis of Quirky’s failure: “Quirky was spending about $65M a year to generate $50M in revenue.” No business can sustain that kind of math for long.
Manufacturing Nightmares
One of Quirky’s biggest challenges was manufacturing. Making physical products is hard – really hard.
Unlike software, where you can push updates to fix bugs, physical products have to work right the first time. A single flaw can lead to returns, warranty claims, and even product recalls.
Quirky faced several manufacturing problems:
First, they were developing too many different types of products. One week they might be making kitchen gadgets, the next week electronics, then bathroom accessories. Each category requires different manufacturing expertise, supply chains, and quality control processes.
Second, their production volumes were often too small to achieve economies of scale. Without large orders, manufacturing costs remained high, squeezing already tight margins.
Third, quality control became a serious issue. The Aros smart air conditioner, developed with GE, faced reliability problems. The Egg Minder smart egg tray (yes, that was a real product) had connectivity issues. These problems damaged Quirky’s reputation and led to expensive returns.
As one former employee put it: “We were trying to be hardware startup accelerator, but we were learning all the painful lessons of hardware development ourselves with each new product.”
Too Much, Too Fast: The Scaling Challenge
Quirky grew at a breathtaking pace that ultimately proved unsustainable.
In just a few years, they went from a small team to over 300 employees. Their New York headquarters felt more like a tech giant than a startup, complete with a fancy Chelsea office featuring a giant “Q” sculpture and a slide between floors.
The company was launching a new product every few days – far too many for any organization to properly support. By 2015, Quirky had developed nearly 500 products, a pace that would challenge even the largest consumer product companies.
This rapid scaling created significant operational problems:
- Customer service couldn’t keep up with issues across hundreds of different products
- Marketing couldn’t give each product the attention it needed to succeed
- Engineering had to rush through development, leading to quality problems
- Inventory management became a nightmare with so many different SKUs
The “fail fast” mentality of software startups simply doesn’t work when you’re dealing with physical goods. Each product failure wasn’t just a learning opportunity – it was an expensive mistake that tied up capital in unsold inventory.
As Kaufman later admitted: “We were building a company that could bring products to market in 30 days, but the retail market wasn’t ready for that. The customers weren’t ready for that.”
The Funding Trap
Quirky raised an impressive $185 million in venture capital, but this massive funding may have actually contributed to their downfall.
With each funding round, expectations and valuations rose. Investors weren’t looking for steady, sustainable growth – they wanted a unicorn. This created immense pressure to scale quickly and generate huge returns.
The company’s final $79 million round in 2014 valued Quirky at approximately $800 million. At that valuation, investors weren’t looking for a modest success – they needed Quirky to become a billion-dollar company.
This pressure led to several problematic decisions:
- Expanding too quickly into new product categories
- Opening expensive retail locations
- Taking on the Wink smart home platform (more on that later)
- Maintaining a large staff before reaching profitability
In startup investing, we call this “setting the bar too high.” Once you take significant VC funding at high valuations, modest outcomes are no longer acceptable. You’re either a home run or a failure.
As one investor told me after Quirky’s collapse: “They were building a nice $100 million business, but they took funding that required them to be a billion-dollar company.”
Leadership and Culture Issues
Ben Kaufman was a charismatic founder with an inspiring vision. At just 24 when Quirky launched, he had already started and sold a previous company (Mophie). His enthusiasm for democratizing innovation was genuine and infectious.
But leadership requires more than vision and charisma.
Former employees have described a culture that prioritized speed over sustainability and growth over profitability. Decisions were often made impulsively rather than strategically.
Kaufman himself has acknowledged some of these issues. In a candid interview after Quirky’s bankruptcy, he admitted: “I’m a terrible manager. I’m a terrible CEO. I’m good at starting things. I’m good at getting things going.”
The company also struggled with retention of key executives. Several senior leaders departed in the years before the bankruptcy, including the COO, CTO, and head of data science. This revolving door in the executive suite made it difficult to maintain consistent strategy.
Perhaps most tellingly, Quirky’s board removed Kaufman as CEO in July 2015, just weeks before the company filed for bankruptcy. While he remained with the company, this move signaled serious concerns about his leadership during the crisis.
The Final Straw: Wink and the IoT Gamble
If Quirky was already facing challenges, their 2014 decision to launch Wink – a smart home platform and hub – pushed them over the edge.
Just as the Internet of Things (IoT) hype was reaching fever pitch, Quirky decided to pivot hard into this space. Rather than focusing on fixing their core business model, they doubled down on connected devices and smart home technology.
The Wink platform was ambitious: a hub and app that would connect various smart home products from different manufacturers. But Quirky vastly underestimated what it would take to build and support a reliable IoT platform.
The problems came quickly:
- A critical security issue forced a recall of all Wink hubs in April 2015
- Development costs far exceeded projections
- The technical challenges of integrating with third-party devices were enormous
- Support costs ballooned as users faced connectivity problems
As one former engineer put it: “We went from making clever kitchenware to trying to build a platform that would compete with Google and Apple. It was insane.”
Wink became a massive resource drain just when Quirky needed to focus on fixing its core business. By summer 2015, the company was reportedly losing $500,000 a day and desperately seeking additional funding or a buyer.
When no rescue materialized, Quirky filed for bankruptcy in September 2015. Assets were sold off, with Flextronics buying the Wink platform for just $15 million – a fraction of what Quirky had invested in it.
What Survived: Quirky’s Legacy
Despite its failure, Quirky’s impact lives on in several ways.
First, the invention platform itself was purchased by Q Holdings and relaunched in 2018, albeit with a more focused approach. The new Quirky now concentrates primarily on home, kitchen, and travel products – a much narrower focus than the original.
Second, several Quirky products continue to be sold. The Pivot Power flexible power strip remains available through various retailers and has become something of a design classic.
Third, and perhaps most importantly, Quirky helped popularize the idea of community-driven product development. While their specific approach proved unsustainable, the concept of involving customers in the creation process has been adopted by many companies in more targeted ways.
Finally, Quirky served as an important case study in what not to do when building a hardware startup or platform business. The lessons from their failure have helped shape more sustainable approaches to innovation.
Lessons for Entrepreneurs and Investors
As someone who’s been on both sides of the startup equation, Quirky’s story offers valuable lessons:
1. Focus is crucial
Trying to innovate across dozens of product categories simultaneously is nearly impossible. The most successful product companies maintain a tight focus, at least until they’ve built substantial resources and expertise.
2. Unit economics matter from day one
No amount of growth can compensate for losing money on every sale. Quirky’s “we’ll figure out profitability later” approach is a common startup mistake that rarely ends well.
3. Physical products aren’t software
The “move fast and break things” mentality of software startups doesn’t translate well to physical goods. Hardware requires more careful planning, longer development cycles, and attention to quality control.
4. Platform businesses need clear value propositions for all sides
Quirky’s platform needed to work for inventors, community members, manufacturing partners, retailers, and end customers simultaneously. This complexity makes platform businesses particularly challenging.
5. Beware the “too much money” problem
Raising more capital than your business model can effectively deploy often leads to wasteful spending and unsustainable growth. Sometimes less funding forces better discipline.
6. Leadership must evolve as companies grow
The skills needed to launch a startup are different from those needed to scale it. Founders must either evolve their leadership style or bring in experienced operators who can build sustainable systems.
Could Quirky Work Today?
Could a Quirky-like model succeed today, armed with the lessons of the past? Possibly, but with significant modifications:
A more viable approach might:
- Focus on a specific product category where the team has deep expertise
- Start with higher-margin products that can absorb development costs
- Use pre-orders and crowdfunding to validate demand before manufacturing
- Build manufacturing partnerships rather than handling production in-house
- Grow more slowly and sustainably, even if that means turning down some funding
Several companies have adapted elements of Quirky’s model more successfully. For example, Misfits Market invites community feedback on product development but maintains a tight focus on food products. Grommet discovers and promotes innovative products but doesn’t handle manufacturing itself.
The core idea of democratizing innovation remains powerful. But the execution requires more focus, discipline, and patience than Quirky was able to maintain.
TL;DR
Quirky aimed to revolutionize product development by crowdsourcing ideas from regular people and turning them into real products. Despite raising $185 million and launching hundreds of products, the company filed for bankruptcy in 2015.
Its failure stemmed from trying to do too much at once (product development, manufacturing, and retail), launching too many diverse products without focus, an unsustainable business model that lost money on many items, quality control issues with physical products, and a costly pivot into smart home technology with Wink.
The key lessons include the importance of focus, sustainable unit economics, understanding the unique challenges of hardware, and ensuring leadership evolves as companies scale. While Quirky failed, its legacy lives on in community-driven innovation approaches and cautionary lessons for hardware startups.
Q&A About Quirky’s Failure
Q: Was Quirky a total failure? Didn’t some products succeed?
A: Quirky wasn’t a total failure in terms of innovation. Products like Pivot Power were genuine hits that solved real problems. The failure was in the business model and execution, not in the ability to develop innovative products. Even today, some Quirky products continue to sell under new ownership.
Q: Couldn’t Quirky have just raised more money to get through the rough patch?
A: By mid-2015, Quirky had already raised $185 million and was reportedly losing $500,000 per day. No amount of reasonable funding could sustain those losses without a fundamental change to the business model. Investors had lost confidence that the core model could become profitable.
Q: Would Quirky have survived if they hadn’t gotten into the smart home business with Wink?
A: While Wink accelerated Quirky’s downfall, the fundamental problems with their core business model existed before the Wink acquisition. Even without Wink, Quirky would have needed to dramatically restructure its approach to product development and manufacturing to become sustainable.
Q: Did crowdsourcing itself prove to be a bad idea for product development?
A: No, crowdsourcing itself wasn’t the problem. The issue was trying to crowdsource across too many product categories simultaneously without focus. More targeted crowdsourcing approaches have proven successful for other companies. The concept was sound, but the execution was flawed.
Q: What happened to Ben Kaufman after Quirky?
A: After Quirky’s bankruptcy, Kaufman joined BuzzFeed as the head of the company’s Product Lab, developing consumer products. In 2018, he founded Camp, a family experience company that combines retail with play spaces and activities for children. This shows his continued passion for innovative retail concepts despite Quirky’s challenges.
Quiz: Would Your Platform Business Survive?
Take this quiz to see if your platform business might avoid Quirky’s fate:
1. Does your business try to own the entire value chain from idea to customer?
- [YES] Warning sign! This approach requires massive resources and expertise.
- [NO] Good! Focusing on specific parts of the value chain allows for more specialization.
2. Do you make money on each individual transaction/product?
- [YES] Excellent! Unit economics must work from the beginning.
- [NO] Dangerous! “Growth first, profits later” rarely works for physical product businesses.
3. Are you launching more than one new product per month?
- [YES] Potential red flag! Each product needs support, marketing, and refinement.
- [NO] Smart approach! Quality over quantity allows proper focus on each offering.
4. Do you require multiple different types of users/customers for your platform to function?
- [YES] Watch out! Each additional user type adds complexity and potential points of failure.
- [NO] Safer! Simpler platform models have better chances of success.
5. Has your funding set expectations for growth that require you to rush product development?
- [YES] Dangerous territory! Rushing physical products often leads to quality problems.
- [NO] Great! Sustainable growth beats unsustainable hypergrowth.
Scoring:
- 0-1 YES answers: Your platform likely has a sustainable structure! Focus on execution.
- 2-3 YES answers: Caution zone! Consider restructuring problematic areas before scaling.
- 4-5 YES answers: High risk! Your platform may face Quirky-like challenges without significant changes.
Remember: The goal isn’t to avoid ambition, but to build sustainable models that can support that ambition over the long term.
