What's Next For Quirky's Future? CEO Resigns
Earlier this year Ben Kaufman, the former CEO of Quirky, hosted a Town Hall meeting at his company’s headquarters on the West Side of Manhattan, NY.
A big crowd showed up for it and of course there were scores of people who checked it out through a live stream.
Normally when Kaufman - a man who has amusingly branded himself as the ‘World’s Least Important CEO’ - hosts an event like this he only has good news to share with investors and inventors alike. These kinds of events have long allowed Kaufman to highlight his company’s growth while underscoring new inventions they were backing and offering consumers.
However this Town Hall Meeting was unlike any other the company hosted. It was one that rather spelled doom and gloom about its future.
Yes, this Town Hall event shocked everyone to the core.
“It’s easy to think things are going well,” he told the audience back in early February - during his flashy power-point presentation. “But this isn’t the full story.”
The full story is that Kaufman’s company has blown nearly all its $185 million they raised since forming in 2009, resulting in layoffs and are now more are imminent.
A dark cloud hangs over the company’s future.
And even worse is that Kaufman announced only two weeks ago that he was officially stepping down as the company’s CEO. Since then he has been honest in saying that Quirky needed a more revised leadership structure, and a new plan of attack in raising more funds in order to survive.
“I hope we raise more money,” says Kaufman. “Everyone is in good hands.”
Quirky On The Rocks?
Quirky has always strived to make “invention accessible.”
Since its inception Quirky has been a powerful platform for inventors.
“Our mission is to make invention accessible. We believe everyone can be an inventor and invention can happen anywhere,” writes the company on its website.
The future doesn’t look promising for them nor for their massive online audience - all of whom can pitch an invention, vote on projects that should be developed, and contribute ideas on final products and branding and marketing initiatives. Quirky also oversees and manages the designs and the manufacturing of inventions, and online sales.
The company also owns Wink, a platform that allows consumers to purchase an array of smart-home products. The synergy between the two has not been the greatest as of recent and earlier this summer Quirky tried to sell Wink, however this initiative never came to fruition. Kaufman will also no longer head up Wink.
In all Quirky’s revenues are quite healthy, but it’s their overhead expenses is what’s hurting them. They have money coming in, but they are spending more on the manufacturing and production side of things. Slim margins are having a profound impact on their operations, that’s for sure.
“To be blunt, we overbought in some categories,” admits Kaufman.
With this and the fact they are having trouble getting more investors on board has many questioning Quirky’s future.
Will Quirky Survive?
Kaufman indicates that the company has also spent too much time investing in odd types of inventions. Two cases in point, which are reflective of bad business decisions, was a bathroom mirror that removes fog, and a set of wheels that can transform any object into a remote controlled car. Kaufman and his team spent nearly $1 million developing and manufacturing these two inventions and neither of them left warehouse.
“Are these great ideas?” ask Kaufman “Yes. Can Quirky do them justice, sell them, and scale them profitably? No.”
The company has literally been pumping in millions of dollars to produce all sorts of inventions, but with a low return on many of them has proven to be a detrimental factor on the company’s bottom line.
The reality now is that “people don’t want a Quirky air conditioner, they want a good one,” says Kaufman, who bluntly explains the reality of what today’s consumers want.
The next steps for the company will obviously be to raise more money from new investors and perhaps secure new loans to maintain its operations.
Before Kaufman’s departure he did reveal some new strategies that the company would immediately pursue and how inventors will still be able to discover their dreams.
One big one is the company forming stronger alliances with larger companies, including General Electric. A big company like GE, and others for that matter, will be the ones who will front the capital to produce the best inventions for consumers.
“It’s a total flip, the exact reverse. The old model was we pay for everything and then give a royalty,” says Kaufman. “The new model is, partner pays for everything and they give us a royalty, some of which we give to the community.”
So what does all this change mean for inventors?
Kaufman says that with bigger corporate giants on board paying to produce new projects means that inventors will have a bigger platform to express their ideas. However, the number of inventions that will actually hit the market will be much smaller under the company’s new strategic approach.
Kaufman is leaving Quirky on a good note. His moniker as ‘The World’s Least Important CEO’ has been changed on the company’s website to ‘The Least Important Ex-CEO.’ On its news/blog page Quirky has even posted a video of Kaufman strapped on the front of a high-speed train. In the video Kaufman’s face becomes expanded as the wind hits his face, and the video shows his straps slowly coming apart as the train speeds up. Does this video suggest that Kaufman enjoys the fast paced life of a CEO but is a leader who doesn’t have a fail-safe plan during a crisis? Quirky has left it to the viewers to interpret. Still the video was done with innocent humor.
The new CEO of Quirky is Ed Kremer. He has held the position of Chief Financial Officer for the last while and he has big plans to put the company in a new direction. Quirky has not yet made a big fanfare announcing Kremer to the new role.
While Quirky has been getting some negative attention in the press, hundreds of inventors each week are still posting their projects in hopes of going to the big league.
Quirky is just like any company that produces and manufactures products. They have plenty of overhead. Restructuring has and always will be a reality for any business in our globalized world.
Quirky now has its own big task ahead: to reinvent their business model. They too now have to be inventors in their own right – yet again.
Kaufman was the one who founded Quirky six years ago. Now they are entering a new chapter and it will be interesting to see how they employ their new business model and overall branding.
And you can bet that Kaufman will continue his dream of promoting inventors and innovators.
A recent Twitter post he made sums up his ambition, sense of humor, and forward thinking approach: “Interning at a cool custom 3D printed headphone company. Anyone want a pair? I get a good discount here.”