Business Model Breakdown will be a monthly blog series where we break down a great business model into its most elementary components, so that we can see how the company is changing the value paradigm in its respective industry.

A couple of weeks ago, we took a look at the heart of a business model. Today we will be examining the live, breathing business model of, an American company that has created an online, end-to-end product design shop and made it available to the masses.

Quirky and how it works: was conceived in the mind of a young twenty-something named Ben Kaufmann to turn product development into a social sport. The epiphany to start Quirky came when Ben was trying to design a new product for his inaugural business, Mophie (still in existence today), which designed accessories for Apple products. Instead of turning in-house for a new product design, Ben asked the community to submit their own designs and promised to turn the winning design into a store-ready product. The idea worked and Ben not only had a great, new product, but also inspiration for an entirely new way of product development.

The Quirky process contains three essential steps:

First, individuals (it can be anyone) submit ideas for a new product design.

Second, the community (called Influencers) votes on the idea they like the best. Once an idea is selected, Influencers collaborate and begin turning the original idea into a more polished version. To do this, they pick a name, conduct market research, create a tagline for the product and outline the industrial design requirements.

Once the product has been sufficiently influenced by the community, the Quirky staff work their magic and get the product store-ready by designing the product and dealing with all the logistics related to manufacturing and sales.

Quirky’s business model:

Now, to put this process in the context of a business model, let’s look at how Quirky creates, delivers and captures value.

Quirky creates value by opening up the entire product development process to the masses. Typically it would be extremely difficult to start a business with only a single product (like the type of product they would sell on Quirky), but now anyone with an idea can turn a drawing-board concept into reality.

They deliver value by providing the end-to-end structure for product development, from the original designs right up to the sales channels and retailers. By taking product design to the Internet, Quirky has eroded many barriers for the typical designer. Customers, retailers, and everyone else along the value chain reap the rewards in the form better quality, more efficiently designed products.

To capture value, Quirky has monetized many aspects of the design process and built sales channels to create added revenue streams.

To actually submit an idea on the Quirky website costs $99.00 US. Quirky turns a new product concept into reality each week, and on average they receive thirty or more idea submissions to be voted on. For every product that gets sold by Quirky, they take 60% of the revenues and give back 40% to the Influencers and the original inventor. To hedge their risks, Quirky only fully develops products that have a certain quota of units pre-sold, as the industrial design process is quite expensive. To ensure that the products are getting sold, Quirky has created an online shop to drive sales. To take it to the next level, they have created international and domestic sales partnerships with retailers and distributors, helping ensure that the Quirky products do reach the masses.

The beauty of the situation for Quirky is that they have endless possibilities for further ways to innovate the business model as the community grows, and as demand for Quirky-made products increases (assuming it does). It is a very unique company and one that would be very difficult to copycat given the sophistication and capital infusion required to build something similar.

Overall, the simple fact about Quirky is that it is a fun company where creativity shines. It is something that people want to be a part of, as it energizes everyone involved. If you’re thinking your business needs a little more character, call us and we’ll start brainstorming.

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