1. We hear terms such as startup platform and innovation platform mentioned everywhere… Could you briefly explain what a platform is?
- The concept of a platform may be somewhat unfamiliar. From a business perspective, new value is created when people who need one another meet and connect. Platform business pursues this kind of network economy between people and between companies. The term platform is also used beyond business, in fields such as software, technology, and automobiles. For example, Apple’s and Google’s operating systems are also called platforms.
You may therefore think the scope is too broad. But all these uses share two characteristics. One is the pursuit of network value that I mentioned earlier. The other is that a platform is not a self-contained, closed structure; it continually changes through its relationships with the outside world.
What are called innovation platforms today similarly connect people outside the platform and help people with ideas, money, opinions, and other resources create synergy through their interactions. The platform operator creates a space where people can meet, while those who gather there determine the substance of the innovation, so it can be described as an open structure.
2. What benefits can be gained from using a platform?
- Consumer demand has become highly diverse and changes rapidly, so the time a single product survives in the market has become very short.
In this situation, companies need a leverage strategy to maximize performance. For example, they can improve performance by leveraging their existing technology, products, organization, businesses, customer base, and external relationships. Social product-development or social-funding platforms enable people to do things they could not do alone because the platform helps them find others who can assist them. In social product development, for example, the person who conceives an idea cannot handle all aspects of product development alone, so the platform connects that person with people who can turn the idea into a product design and companies that can actually manufacture it.
Social-funding platforms help people who want to develop something new and ingenious but lack the funds required to develop or manufacture it. In the past, they would have had to borrow from relatives or friends or secure an investment, but now they can obtain funding when people who want to see the idea commercialized each contribute a small amount. Ultimately, the greatest benefit is that people who see value in one another can connect through the platform and exchange value.
Can we assume that a well-designed platform makes the startup ecosystem run that much more smoothly?
Someone in the startup ecosystem may have an early-stage idea and want to know whether it is something the market wants. In that case, simply posting the product idea and a video explaining it can be enough to seek funding from people who want the product. If innovation platforms are active, products with the potential to succeed can receive sufficient support more quickly and be launched in the market.
Conversely, the market can provide feedback before production so that effort is not wasted making products that would fail anyway once launched. Overall, this has the effect of increasing the emergence of innovation in the market. It lowers the barrier to participation in the startup ecosystem for everyone—people with ideas, money, technology, or knowledge—so naturally it greatly benefits the ecosystem itself.
3. The platform we are introducing today is Quirky. What kind of company is it?
Quirky is a company that rapidly turns people’s ideas into products that can be sold in stores. You might call it a nationwide workshop for ideas. A substantial number of its 120 employees are product designers. It has created a mutually beneficial structure in which ideas submitted by people are designed as viable products, sold in stores, and part of the revenue is returned to the original inventor. It was founded around 2009 in New York, United States, and is led by a young CEO named Ben Kaufman. Kaufman is regarded as one of the next-generation leaders following Facebook founder Mark Zuckerberg. He is also an inventor himself. After inventing iPod earphones in high school, he borrowed money from his parents to start a successful company. He later sold that company to another business, then founded the company that became Quirky.
Interestingly, the decisive event that led to Quirky’s creation began with an activity held at a trade show. Before founding Quirky, CEO Ben Kaufman exhibited at a trade show with his previous company and planned an entertaining event to attract attention. During the show, the company collected ideas for iPod accessories from visitors, discussed the popular ones, selected one, and turned it into a product to demonstrate before the show ended. The resulting product was an iPod case that also functioned as a bottle opener.
After seeing ideas submitted by people emerge as impressive products, the entrepreneur decided to turn the concept into a service and founded a new company, which later developed into Quirky.
4. So even without specialized technology or funding, anyone with an idea can commercialize it through Quirky. What specific process does an idea go through to become a product?
Anyone with an idea can submit it to Quirky. Quirky currently has more than 500,000 members, who suggest improvements to ideas and “like” the ones they favor. Quirky then selects several of the most popular ideas for commercialization.
For this purpose, Quirky headquarters holds a meeting every Thursday attended by all employees, experts, and community members. Professional product designers turn each selected idea into an appealing design, create a prototype with a 3D printer, and send the design to China for production. The finished product is then sold in US stores.
One notable aspect of Quirky’s process is how it protects ideas. People inevitably worry that their ideas may be stolen when they post them in a public space where anyone can see them. Content for ideas going through Quirky’s process cannot be taken and used outside Quirky. Quirky also files patents for ideas selected for commercialization. Because the process from idea submission to sale of an actual product in stores takes only about two months, its strategy prevents copied products from reaching the market first.
5. People who submit ideas must receive some form of compensation for products to keep coming. How is revenue shared?
- Yes, the revenue-sharing method itself is one of Quirky’s most distinctive features. Quirky distributes 10 percent of the revenue from products sold among everyone who contributed to the product idea. For example, if an item priced at KRW 100,000 is sold, the KRW 10,000 corresponding to 10 percent is distributed according to transparent criteria among the person who first proposed the idea, people who suggested improvements, and everyone who helped name the product or set its selling price.
The person who submitted the original idea receives 40 percent of the amount distributed. Remarkably, more than 1,000 people typically receive a share of the revenue from a single product in this way. Quirky’s current success can ultimately be attributed to the clear incentives it provides to everyone who proposes ideas and contributes to commercialization.
6. Could you introduce one representative success story—what the product is, how much revenue it generated, whether it won any awards, and so on?
The representative success story most closely associated with Quirky is undoubtedly a product called Pivot Power. When plugging several power cords into a conventional power strip, have you ever found that the plugs interfere with one another and cannot all fit? Pivot Power solved this problem by redesigning the conventional power strip so that it could bend. Although based on a very simple idea, it became a major hit because it solved a problem many people experienced.
To date, members have earned more than KRW 1.2 billion from the product. Jake Zien, the student inventor, has earned about KRW 450 million since Pivot Power went on sale in 2012. The product also won a Red Dot Award for outstanding design in 2012.
7. Why do you think Quirky became established as a successful platform?
I would summarize the reasons in three points.
First, it has a well-designed process that enables it to make only products the market wants. People who propose creative ideas, people who improve them, and people who indicate whether they would open their wallets if a product were made gather and exchange opinions, helping ensure that only strong ideas likely to succeed in the market are commercialized.
Second, it operates a capable, high-powered design house that can immediately turn consumer-product ideas into excellent products. This makes sense given that Quirky’s predecessor, mophie, made accessories for the iPod and iPhone. Ideas come from community members, while in-house experts handle design and commercialization, creating a sophisticated blend of open and closed innovation. Quirky has also maintained ongoing partnerships with prominent US design schools to expand its product-design capabilities.
Third, as I mentioned earlier, it has a transparent distribution structure in which everyone who contributes—from the idea’s inventor to those who improve it—receives revenue. Quirky operates a points system called Influence to encourage voluntary member contributions in every area related to a product’s success, including the idea, design, product name, materials, and price. Revenue is ultimately distributed on this basis.
There must be organizations in South Korea that have benchmarked Quirky. Which ones are there?
To my knowledge, there have been small attempts in South Korea to benchmark Quirky, but almost none have undertaken any notable activities. Many services already existed for collecting people’s ideas and helping improve them, but Quirky’s distinctive feature is that it actually turns them into products within a short time. Very few startups have the necessary professional product developers in-house.
A service called Vision Factory has recently made a similar attempt, but it likewise has no in-house product developers and appears to have adopted a model that indirectly supports commercialization by helping secure funding. It is still at an early stage. It is also an open secret that the Creative Economy Town, ambitiously launched by the Ministry of Science, ICT and Future Planning under the new administration, benchmarked Quirky’s model. It differs from the Quirky model in that its primary mechanism is the work of mentors who review people’s ideas, provide feedback, or connect them with government support programs.
What do you think the Creative Economy Town needs in order to become successfully established?
It is difficult to make a simple comparison with Quirky because the Creative Economy Town is intended to provide the public with a one-stop service through support programs related to the commercialization of ideas and mentoring groups from relevant industries and academia. Nevertheless, it should consider several of the factors behind Quirky’s success that I mentioned earlier.
According to research by eYeka, an overseas company known for its collaborative platform services, only 1 in 100 people is truly creative; another 9 offer suggestions for improvement, while the remaining 90 vote or serve as early purchasers. Everyone can transparently view one another’s comments in an open, shared space. An innovation platform becomes meaningful only when all three types of participants engage and actively contribute.
Just as Quirky’s execution capability comes from its design powerhouse, I also hope consideration will be given not only to indirect mentoring but also to mechanisms that can directly strengthen execution.
End.