Manufacturing guy-at-large.

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Failure to iterate

Added on by Spencer Wright.

For context, read Ben Einstein's very smart post, "The Real Reason Why Quirky Failed."

Quirky had two classes of customer.

As Ben describes, Quirky sold pieces of hardware to one class of customer. I was one of them - I bought a few of their products (and generally disliked them) a few years back. And as Ben accurately noted, those products were often poorly supported and maintained. Which sucked for those customers.

But Quirky also sold a second product, in the form of product execution services & royalties. The customers of this product were people with ideas, and those customers "paid" Quirky by giving them the right to develop, manufacture, and distribute those ideas. 

I believe that Quirky's key failing was that that second product never got market fit. In other words: As a person with an idea for a hardware product, it just never made sense to give up the rights to that idea in exchange for product execution services & royalties.

I bring a few pieces of supporting evidence for this claim:

  • First, anecdotally: While Quirky was in business, I had a few (passable) ideas for products that I didn't have the bandwidth to execute - and I didn't give them to Quirky. And when I had a pretty good idea for a product, I didn't even consider Quirky as an option - opting instead for Kickstarter, which provided me with *much* more value in return.
  • Second: As evidenced by the fact that Quirky halved their royalty structure in early 2015, we know that they struggled to figure out how the economics of that product really worked.
  • Third, compare the paths of Quirky and Kickstarter. Both of their business models necessarily requires people to have ideas, and to give up some part of those ideas in exchange for help getting them off the ground. But while top tier Kickstarter creators (see Pebble, 99 Percent Invisible, countless others) have in many cases made their second and third campaigns *way* bigger than their first, Quirky creators never had that kind of follow-on success - or never attempted it in the first place.

I believe that this - exchanging ideas for execution and royalties - was Quirky's primary product. They were, to be sure, very proud of that fact: Kaufman repeatedly said things like "The mission of what we do is to make invention accessible to people all around the world." Nothing about the best coffee maker, or air conditioner, or flashlight: Quirky's primary product was invention services, and they would live or die based on the extent to which they convinced people to give them good ideas. But they failed to iterate on this product, and it never attained product-market-fit. And so no matter how successful their [insert consumer product here] was, that disconnect would ultimately have killed them regardless.


Added on by Spencer Wright.

There are a lot of reasons to run a Kickstarter campaign. It can provide a relatively low-risk way to get market validation; it can be a non-dilutive way to cover startup costs; it can be a good way to quickly reach a large number of customers.

But notes like this - man, they're hard to beat: