How crowdsourced hardware maker Quirky brought money-losing inventions to market and ultimately cut a third of its staff
Ben Popper / The Verge : Tweets: @pkedrosky Tweets: Paul Kedrosky / @pkedrosky : Another sign that crowdsourcing is overestimated. Sometimes crowds are just crowds. http://www.theverge.com/...
Context & Ripple Effects
In February, the New York Times profiled Quirky's crowdsourcing pitch — submit an idea, the crowd votes, hardware ships faster. The Verge's reporting on the layoffs shows the other side of that ledger: the pipeline was feeding money-losing products into retail, and Paul Kedrosky's claim that a key '40 bidders' figure was made up undercuts the engagement metrics the model marketed itself on.
The April cuts are the first domino in a rapid unwinding covered across this page: by June Quirky had abandoned device manufacturing entirely while chasing a new funding round, before filing for Chapter 11 and selling its Wink smart-home platform.
First-order effects
- A third of Quirky's staff is out immediately, while the inventor community whose royalties depend on product velocity faces a pipeline built around items the company itself concedes lose money.
- Kedrosky's charge that the '40 bidders' number was fabricated hands skeptics a concrete credibility attack on the crowdsourced-validation story Quirky told investors and partners.
Second-order effects
- Within two months the financial strain forces Quirky to exit manufacturing altogether, converting it from a maker into an idea-and-design shop seeking outside capital to survive.
- Its Wink smart-home platform becomes the salable asset rather than the invention engine — the parts of the business closest to real hardware value are what attract buyers when the core model fails.
Third-order effects
- The postmortem that Quirky failed by building too many products instead of a few good ones points to crowdsourced selection as a verification bottleneck, not a shortcut — and Quirky's 2017 relaunch as a licensor rather than manufacturer confirms the structural retreat from owning production.
- Kedrosky uses the failure to argue both that crowdsourcing is overestimated and that venture capital needs to shrink by half for returns to recover — a broader case that capital chasing unvetted supply produces exactly this kind of collapse.
The trend: Crowdsourced hardware platforms are collapsing from full-stack manufacturers into licensing or design intermediaries, as unverified crowd input proves a poor filter for which physical products can make money.