Otto DIY here. You might be thinking to yourself, who is or what is Quirky? To answer simply, Quirky is/was a company that had a unique model of huge potential only to fail miserably. So now you are probably thinking, "then why is Otto interested in it?" Well, it turns out, what didn't work for Quirky, might actually work for us.
Quirky was a community-led invention platform with a vision to reinvent 'inventions.' They were a typical company that built products, but their model was inspiring. How it worked was product ideas would be submitted, pitched and voted on by the community and Quirky would produce, sell and ship giving royalties to the inventors. Pretty cool yeah?
The number one reason startups fail has to do with building a product with "no market need." It would be safe to assume Quirky reduced that risk because the community identified that need. However, not so fast.
Quirky was off to a fast start and received $175 million in funding, but they fell short, and in 2015 Quirky filed for bankruptcy. So how was that possible? There were 3 main reasons it didn't work.
1) Lack of iteration
The business model of Quirky was clearly inventive, but they lacked how to invent. When you build a product, there needs to be multiple iterations where in time you tweak and evolve according to the customer's feedback/need. You can't simply release a product and expect instant success. Quirky would invent the product quickly then move to the next. This hurt sales because issues that occurred were never resolved. Having a version 2.0 would have helped sustain sales.
They had every type of product. It was almost impossible to think of what they stood for. Being so diverse spreads your brand thin, thus people don't remember who you are as a business. That means you lose credibility as a company, which shows up in your sales.
Even if a community does the first step of validation, you still need to validate the product with the buyer's market. With having so much capital, they were able to produce large quantities from the start, rather than starting small to see if people buy first. Making deals with such large companies like Walmart and Target requires you to send them mass quantities to get on their shelves. If the product is a miss and "not needed", that's a lot of unbought product. They were at a point of selling 50 products a year, and the misses must have been damaging.
So by taking this case study, how does Otto fair?
That's up for you to decide.
Our idea is this:
Our community is strong with 4K builders who post their own Otto inventions weekly as we speak. They create their own Otto toy, which is themed or has added functionality. Thus it seems logical to try this model.
We are basically focusing on one product line, which is an Edtech robot to improve critical thinking and meta-learning for all ages. A crucial skill to have for the future of work and technology. As a one type of product with do-it-yourself attributes, our inventors can produce the design toy itself. By using a 3D printer tool shed we can produce the first 3D printed sold products that are approved by the community. If sales increase rapidly we then would create a mold from an industrial manufacturer to sell for large quantities. If the sales don't happen, we take it off the store. But what's good, we use limited resources to test and can scale when required.
Just like Quirky, the community does the first round of validation. Then Otto DIY tests the market by selling in their store and on other channels. In fact, we like to call this model learn-to-job, as Otto would, in fact, have their community of builders learn how to make and design robots, and can earn for having lifetime royalties for that product being sold. Of course, first, their invention needs to be approved by the community of builders. As said before, engineering and coding is a crucial skill to have. Otto supports learning from first-timers to advance. Anyone can do it.
If we would go through with this, we will need to do a test. Currently, we have two 3D printers at our disposal. We plan to soon try a challenge with our community to submit their own Otto invention, we all vote and place the winning product in the store. The idea is to try selling just a batch of 10 we can manage with our 3D printers which we have the electronic equipment for. And try the journey model out from the image above.
So there you have it. By studying the case study we need to follow these guidelines:
Validate and test if people buy after community validation.
Start simple. Make the product when it's sold. Generate first sales directly from our 3D printers. Then make the mold for lager distribution if sales become successful.
Stay tight to our brand as an Edtech toy.
And lastly, iterate after the first draft of the toy is tested on the market.
By following these examples where Quirky failed we should hopefully improve our probability to succeed. What’re your thoughts?