

Analysis of Quirky: Do Consumers Know What They Want? - milesgrimshaw
http://milesgrimshaw.com/analysis-quirky/

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startupfounder
The most important footnote:

"Quirky also sells products through retailers, which I am confident are not
included in this data."

From the May 2013 Forbes article[0]:

'Sales this year will reach $50 million, he predicts, without a hint of
modesty, with “a huge chance of us crushing the s–t out of that number."
That’s contingent, though, on Quirky solving its distribution problem. While
retailers sell 95% of its inventory...'

Quirky is focused on 1) generating the best ideas and data on new products, 2)
rapid prototyping of the best of these products, 3) testing them in the
marketplace, 4) accelerated production runs in their Chinese facilities, 5)
building out their distribution channels.

Let's get something clear: Quirky is a Manufacturer not a distributer. This
analysis only shines light of Quirky as an online distributor which it is not.

[0] [http://www.forbes.com/sites/jjcolao/2013/05/09/can-a-
crowdso...](http://www.forbes.com/sites/jjcolao/2013/05/09/can-a-
crowdsourcing-invention-company-become-the-best-retailer-in-the-world/)

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codehero
So let's look at this from an inventor's perspective:

Feeling exuberant, I know Quirky will vet and accept my idea. According 109 of
823 accepted projects are on sale, so I have a 13.24% of getting my first
dollar. Royalties are paid out to contributors on 10% of gross revenue. The
idea originator automatically gets 40.5% of this revenue. So I would get a
4.05% royalty. Products are approximately $30, so my per unit royalty is
~$1.20

Let's say my cost for well thought invention idea is $1000 (includes time,
drawing, cardboard prototypes, etc). Looking at the spreadsheet attached to
the blog the average total units sold per product is 28378. However, this is a
heavy tailed distribution, so we'll make two estimates (from eyeballing the
spreadsheet, I divided the total units sold range into 1/3)

a 33% chance they will sell 500 units a 33% chance they will sell 5000 units a
33% chance they will sell 50000 units

So expected sales will be

$1.20 * (1/3 * 500 + 1/3 * 5000 + 1/3 * 50000) = $22000

So my expected value on idea submission is

(1 - 0.1324) * -1000 + 0.1324 * (22000 - 1000) = $1912.80

So I can expect to make about $2000 for a product idea on Quirky. Don't hold
back any criticism on this analysis.

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timboslice
Interesting. Reminds me of survey bias - where people answer one way because
they think that's what you want to hear, or because it aligns with their own
perceived values, but they _act_ a completely different way.

Can surveying the crowd for inventions produce mass-marketable ideas?
Probably. Does a large part of the value chain have to do with marketing and
distribution? Undoubtedly.

~~~
josephjrobison
Also important to know is what is the average income of those surveyed. If
those surveyed were 50%+ in developing countries, but 90%+ of purchasers are
in the US, then there's obviously funky data there.

