It seems to me the original premise was very interesting but it had some flaws, and the execution did not find a way to handle mitigate those issues. I had no involvement with the company, but based on a couple of articles I too can be a Monday Morning Quarterback and throw out these thoughts...
1.) TheRisk/Rewardmodelpossibly overvalued the idea?
In my opinion, the model sounds like it may have put too much value in the idea, even if it is well refined one and comes with a great name. The leave-the-rest-to-us business model which includes handling all of the engineering, manufacturing, marketing, and retailing just feels like Quirky was taking on too much of the work and the risk. We've all seen how important execution is, how risky it can be and how unexpected things will happen. It seems they had all the skin in the game after the idea was presented and refined. Shifting the balance a little bit (ie lowering the 10% to the inventor to say 5%) maybe would have helped some, but it likely would not have covered the costs of the products that never made any profits. I dont know what the models looked like but I would want to see if Quirkly had enough upside factored in across the porfolio for the wins to make up for the losses.
Possible solution? What if the output of an Eval was automatically submitted to KickStarter? Quirky could have matched the funds at some level (ie 50%). This could have helped further gauge customer demand and also created product specific funds for contingency labor on a product by product basis.
2.) The Greenlight Process was too easy?
400 products in 6 years? That's a lot. Hindsight is 20/20, but there had to be some clues somewhere that certain products were either weak in terms of demand, expensive relative to other solutions or kind of hefty in terms of resources needed. This quote from the NYMAG article is pretty telling: "I failed to see how any of us could know what a product scout from a company like GE or Mattel could know". And that played itself out 400 times. Sure, some of those products were legit and others will get lucky, but the higher the volume, the more the losses will add pile up.
Perhaps they felt the need to greenlight lots of products to keep the community engaged. So really, this is something that weighed on the original premise.
Possible solution? Tighten up the ROI requirements for a product within the greenlight process.I would love to see the development costs, BOM costs and sales of each one of those 400 products. I wonder where they would be if they never greenlit ideas #201-400. Certainly some of the results of the products from years 1-3 could have guided the greenlight process in years 4-6. I would love to hear how/if the launch criteria changed over the years.
3.) Lack of focus
I agree lack of focus hurt. The different types of products made it tough to build a brand. The variety probably also taxed the team who had to constantly learn about new product categories or new technologies, etc. I've been through this a little bit. It's fun and invirgorating, but it can also be exhausting.
Possible solution? Some constraints would have definitely helped. Limiting ideas to certain product categories would have helped, but it could have also limited engagement opportunities for the community. Again, this could have been seen as antithetical to the original premise.
How many people NEEDED the products that were being created? Marketing 101: some items are WANTED and some things are NEEDED. Many of these things were "nice to have", and that is not an ingredient for consistent, long term success.
At PlayStation, the Strategic Business Development group looked at a lot of potential hardware/accessory and service partnerships. I had a colleague that liked to say "hey, 30,000 superfans will buy 1 of anything we roll out." The question then is, can you justify the effort if that's all you sell? Obviously, that leads to the next question, what is breakeven? And then, what is breakeven when you factor in Weighted Cost of Capital and/or the opportunity cost of what you dont move forward on?
Possible solution? Same as #2 - tightening up that greenlight process. Maybe bring in market experts to help.
5.) Product Iteration
I dont see this as critical of a misstep as others have mentioned. Sure, revisions on products could have made them better and more profitable, helping the overall financial picture. But which of the 400 do you iterate on? Do you slow down the pipeline of new ideas or mix them in or pick up the pace and do both? It was probably true in many cases that v2 of a good product could have had more promise than a shaky new idea.
Also,hardware purchasers dont benefit from revisions the same way that software users do. 1st time purchasers often dont buy again, and you need to factor that into the forecasted sales of the next batch you build. Also for hardware, revisions that lead to more non-recurring-engineering (ie upgrading the integrated chip or the changing the mold) add more fixed cost to be amortized. Hardware business cases often try to include high volume component purchases to get the per-unit costs down to get the business case to work but if you want to iterate, you either buy a smaller batch and eat the higher per-unit costs for v1, or for v2 you live with the sub-optimal batch of whatever you bought or you eat that inventory. Not a fun dilema.
Again with the community - directing resources back into launched products could have engaged some of the community, but I could see how it might be boring if there were 1 or 2 clear flaws that didnt require much discussion or voting or collaborating, and thus be a disappointment to the community. A lot of this and you may start to lose engagement.
Overall, iterations on some products could have helped for sure, but I feel the other reasons above would have impacted the business more beneficially. Hardware is a tough game. These are some of the exact reasons I went back to software. :)