Death of a startup: Why it was closed having attracted $180 million service for Quirky inventors

Company Quirky was founded in 2009. On the website startup users could vote for their favorite product ideas in the field of “Internet of things”, and the project team of translating these ideas into reality. The concept of future products offered by the users themselves. For all time of its existence, the company raised approximately $185 million investment from influential funds — Andreessen Horowitz, Norwest Venture Partners and other.

The startup has managed to achieve partnerships with such major organizations as General Electric and Philips. The companys revenue in 2014 amounted to about $100 million. However, in August 2015 Quirky CEO Ben Kauffman left the position, and in September, the startup filed for bankruptcy. According to the management of the project, failure led low profitability of the majority of the companys products — their development was spent many times more money than they brought.

For example, the company introduced a Bluetooth speaker, which Quirky was worth $400 thousand, and in the end sold only 28 copies of the device. Founder of investment company Bolt Ben Einstein says that the Kauffman was attracted to the idea of “democratization of invention”. One of his first projects was a company operating in the same field, and Quirky. CEO of Quirky was of the opinion that a large group of people takes better decisions than a few experts.

According to Einstein, Quiky was literally everything to achieve success. The founder with experience in the industry, solving important problems (the startup that helped users to invent various gadgets — they didnt need to be engineers and work in a special laboratory), investments from top-of-funds, high-level experts in the Board of Directors, the community of involved users (according to the founders, the platform counted more than 1.1 million users) and “exceptional staff”. Ben Einstein believes that the company “flew too close to the Sun”.

The investor has talked to many former employees and friends to Quirky specialists — all of them, he said, noted that Quirky ambition far outpaced the capabilities of our team. Quirky wasnt enough to create one or two product per year, as did other companies. The management wanted to develop 20, 30, 50 products per year — its like bonding with wax feathers and try to fly like Icarus. The whole time of its existence teetered between his ambitious vision and a clearly failing business model.

Quirky worked on speed. Users chose a suitable product, the team realized it and sent for sale. In this case, said Einstein, lost an important component of product development — improvement through communication with users.

“Good company makes the same product, find out what users think, and with a few iterations makes this product exceptional. Every step makes your device better. Imagine what would happen if Apple released their first iPhone (even without attachments) and immediately thereafter engaged in the development of Apple Watch. Or if GoPro released its first camera and switched to other gadgets?”. In such a situation, says Einstein, almost all products the market has turned out bad or poorly written.

“Quirky has not conducted such iterations with their products. I have the Aros air conditioner is a good device, but with its own drawbacks. I bet the second or third generation Aros would solve most of the problems Aros, but well never know for sure”.

Aros could bring the company hundreds of millions of dollars, but Quirky chose to focus on the coffee, the feeder for Pets and other 50 devices. Lack of attention to its own products, says Einstein, turned unpleasant side effect. The inability to build its own brand.

“Looking at the range of products of a startup, I feel only confusion,” says the entrepreneur. Look at GoPro — the company is forcing buyers to pay for a fairly mediocre camera using its brand, built around sports and athletes. GoPro has built a very strong brand.

Einstein cites as an example a screenshot of part of the production Ouirky. “Can not be distinguished from any page of the online store,” he notes. According to the businessman, it is consistent with the concept of Quirky, a start — up was intended for those who are interested to invent something for themselves.

“As it turned out, people dont care who invented this or that thing — they only care what the value it brings”. Quirky tried to compete on all levels with all existing brands today. This is a losing strategy for any startup.

Source: google.co.uk/blog/can-success-failure-fifty-shades-grey-teach-startup-founder/

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