Good News, Inventors! Quirky Has 'Re-Invented' Itself, Pursuing Licensing Deals for Inventors
Who is capable of coming up with the next clever pet item, fun toy or must-have kitchen tool? You, potentially, if you’re so inclined. As consumers, we have power and insight. We know what we like and what we don’t like.
But, for many people, and not without good reason, inventing and bringing a new product to market feels out of reach. So, when the popular community-driven invention platform Quirky.com filed for bankruptcy in 2015, its 1.2 million registered members, fans, and the media at large were distraught. The company, founded by Ben Kaufman in 2009, had promised to democratize the invention process by emphasizing collaboration and transparency. And it made good on that promise.
It actually managed to bring to market a wide range of products in a very short amount of time. So, its bankruptcy hit many of us hard.
But, good news! Inventors have reason to rejoice, because Quirky is back! And notably, it's employing a distinctly different business model than it used to have, by exclusively pursuing licensing deals for the inventions created by its global community. Inventors should take note.
“We’re no longer manufacturing anything,” Gina Waldhorn, the company’s new president, clarified to me during a phone interview. “Instead, we’re working with third-party experts that have efficiencies of scale, sourcing, quality assurance, manufacturing, and relationships with retailers, to turn more ideas turned into real products, faster.”
At the previous startup she co-founded, Waldhorn helped connect big brands with early-stage tech startups. Before she was asked to steward Quirky's relaunch, Waldhorn said, she herself was a fan and a user, who attended the company's live, weekly product evaluations in New York City.
What Quirky will do
Essentially, Quirky has decided to partner with open-innovation friendly companies that have the capacity to get to market and thrive there. This intrigues me: As a long-time proponent of licensing as a business model, I find Quirky's announcement fantastic news. For the past six months, the company (which is also under new management) has been working closely with passionate community members to revamp its dashboard and relaunch the site.
And, as recently as June, Quirky brought back 25 legacy inventions (including the Pivot Power family) to retailers, including Lowe’s, Home Depot, Walmart, Target and Amazon. This summer, it began posting requests for new products on behalf of its partners.
I was excited to hear that Quirky’s new manufacturing partners were going to be involved from the very beginning of the product development process.
“They talk to us day in and day out about gaps in the market, trends, new technologies and potential materials,” Waldhorn explained of those partners. “We begin our process by talking to them, so we know what they’re looking for.”
When Quirky’s executive team evaluates ideas that community members submit, they keep those same parameters in mind. Potential licensees are subsequently brought in again, to comment on and select from a curated list of ideas.
A 'tiger' roars to life
This summer, for example, Quirky posted a specific challenge brief for a plush toy. Less than three weeks later, longtime Quirky user Debbie Schwartz found out that her invention Tiger Tunes (since renamed Tune Zoo) had won. The invention is a conductive technology that allows kids to hold the "hands" of the stuffed "tiger" and play music by tapping on the stuffed animal's -- or a friend's -- skin, activating conductive sensors that play music.
The company's blog explained that Schwartz's invention was chosen “because it was a creative plush execution and had components which aligned with the trends and technologies our manufacturing partners were most interested in -- such as touch sensors.”
Providing inventors with a target to hit is crucial to their success. I love that Quirky’s manufacturing partners are willing to disclose this kind of information, which is really a road map, because that way, everyone wins. Once there is a target there in front of you, it's much easier to hit.
“When we know what to focus on, we shine! Invention challenges bring everyone out,”Schwartz said, concurring. She's a retired schoolteacher from Florida who has always loved to invent, but failed to take action on any of her ideas until 2014, when she heard about Quirky and immediately created a profile. Since then, rarely a day has gone by when she doesn't log on.
That makes sense, because as Schwartz herself told me, the opportunity to collaborate on her invention ideas with friends who have become like family is a “dream come true.” Today, she said, she is constantly fine-tuning her approach to product development. When she needs help with some aspect of developing one of her ideas, she reaches out to a fellow member with the right skills. By submitting her own ideas, weighing in on others' ideas and getting to watch others both succeed and fail, she said, she’s learned what makes a product marketable.
“You need thick skin, to take constructive criticism, evolve and be flexible,” Schwartz said. “What you think is good for the market may not be true. You must listen to the community -- they give great advice.” I could not have put it better myself.
The role of manufacturers
Quirky’s manufacturing partners can also use the site to do their own market analysis, Waldhorn pointed out. “Manufacturers have an idea of what they want, but they also don’t know what they don’t know. They can see which inventions the community is driven toward and [is] rallying behind.” As crowdfunding has shown, there’s power in numbers. Added Waldhorn: Quirky can not only help manufacturers identify gaps they hadn't thought of, but its users can create the renderings and sketches needed to usher product development along quickly.
An idea that's been stuck in a partner’s research and development department for years may get just the jolt of validation it needs through the discovery of similar ideas already posted on Quirky's website.
Quirky also now intends to expand its product lines into new categories, beginning with partnerships in the toy, home improvement and pet industries. But the company’s number-one goal, Waldhorn stated, is to make the community money. Quirky does this by sharing with inventors the royalties on units sold. Also receiving a share are those who contributed to the invention’s success -- dubbed the "influencers" in the process.
Quirky will be taking anywhere from a 5 percent to 10 percent cut. When an invention is being sold directly to consumers, the inventor will earn a 3 percent royalty. When a third-party retailer sells the product, the inventor will earn 1.5 percent. This information is clearly stated on the company’s FAQ page.
“Legally, that is a great deal," Waldhorn said. "We don’t ask inventors to spend a dollar, ever, to start making money off of their inventions. We believe it’s fair. The inventor isn’t taking on any risk.”
For example, Quirky handles further design needs, some prototyping and intellectual property filings. The licensee is on the hook for most of the heavy lifting. In my own experience, inventors unfamiliar with the benefits of licensing sometimes balk at what they perceive to be a low royalty rate. But I completely agree with Waldhorn. Low-to-no-risk entrepreneurship is nearly unheard of.
“Open innovation is no longer a trend -- it’s on the road map of all the Fortune 500 companies,” Waldorn said. “I do think companies are recognizing how difficult it is to be successful. To truly practice open innovation, you need to have scale, be receiving a number of diverse ideas and [be] open to people of different backgrounds.
"You have to kiss a lot of frogs to find ideas that truly resonate and are groundbreaking!" she continued. "So, unless you have a well-thought-out methodology to manage, get through, prioritize, and validate ideas so that you find those gems....” What she was saying was that it's hard to do everything yourself.
Announcing that you have an open innovation program is one thing, Waldorn pointed out. But what it really all comes down to is closing the loop and getting to market. Inventors need true commitment. Are their products on the shelf? I agree. I'm extremely happy that Quirky is back and engaging in a dialgue with companies that want to embrace open innovation.
The ultimate test isn’t whether a licensing deal is secured, but rather, if there are reorders. Only time will tell.
What I really appreciate about Quirky is that it’s just as much of a learning tool as it is an opportunity to materialize your ideas. So much of what inventing is really about is being willing to keep getting up to bat -- to take your ego out of the equation and really listen. By taking away risk, Quirky has empowered everyday people to take action on their ideas. That’s something for all of us to celebrate.