Quirky, An Invention Startup That's Raised $91 Million, Lays Off Its CRO And Revokes A Big Employee Perk In October

Quirky, Ben Kaufman's New York-based invention startup, has laid off a few members of its sales team, including its CRO, and postponed pre-planned time off for all employees in October.

Quirky takes ideas from its community, like bendable power strips and money straps for mobile devices, and brings them to life. It helps the inventions find their way into big-name retailers like Bed Bath & Beyond. Quirky has raised more than $90 million to date.

In June, Quirky let go of its Chief Revenue Officer, Bill Lee, citing performance reasons, the company confirms. It also fired a few members of the staff who reported to him along with a designer and community team member who weren't "fits for the brand," according to a company spokesperson.

Kaufman says there's nothing wrong at Quirky despite the turnover. Sales are easy to measure. Employees either hit their targets or they don't.

"I have the highest regard for Bill, the work he did prior to Quirky, the work he did at Quirky, and the work he will continue to do after Quirky," Kaufman says. "We agreed it was best for him to move on. He remains an advisor to the business."

Lee declined to comment for this story.

Quirky is also in the process of becoming its own retailer, like its competitor Fab.com, which may account for some of the recent sales team turnover. It's creating an entirely new brand and e-commerce experience for itself.

Quirky is a vertically integrated shop that uses the community for its research and development. People can submit ideas for gadgets to the site and Quirky will execute them. If you come up with an idea that Quirky ends up making, you get a cut of the sales. Quirky only makes money when tens of thousands of its products are sold, so it makes sense for Kaufman to buff up Quirky's e-commerce experience and become less reliant on other retailers.

In addition to the turnover, Quirky recently delivered some disappointing news to employees. In an August staff meeting, Quirky told employees their pre-planned week off in October was being postponed.

Every quarter, Quirky offers a one-week blackout period where the entire office shuts down and employees are paid to be scarce. It's the company's most shining perk.

"[It's a time where all of us as a team can all relax simultaneously and know that there is nothing to worry about," Kaufman wrote when he announced the perk in January. "A time for us to reflect on the successes and failures of the prior quarter, and prepare mentally for the one to come." He also wrote that he had a right to take the perk away if necessary.

A company-wide memo told employees the Q4 blackout would be moved to Thanksgiving week, which is a short week to begin with. They were told if they had already made plans, to tell the company "what they were up against" so it could help them make alternate plans to work.

Kaufman says he isn't going to cancel blackout periods altogether. Next year's blackout calendar has already been created.

"It seems weird to take time off when it's our largest shipment time of the year," says Kaufman.

Quirky's HR boss Rochelle DiRe said in an email that the company had to take away the Q4 blackout week because there's too much work to be done. Quirky is on the hook to deliver a ton of products for a partnership it has with General Electric called WINK. WINK encourages Quirky's community to submit ideas for smart products, ones that utilize mobile devices and the Internet to make them work better.

While Quirky may be ahead of schedule right now, its business model is generous to its community of inventors and may not be sustainable. Quirky offers a lifetime royalty to whomever comes up with the idea on its platform. It gives the person 30% of online sales (wholesale) and 10% of retail sales (in Bed Bath & Beyond stores) if Quirky decides to turn the idea into a product. That's a lot of money to be giving away, especially when hardware companies already have thin margins.

Here's the email Quirky sent to its employees on August 28th informing them of the postponed blackout week. Emphasis was added by Quirky, not Business Insider.

From: Rochelle DiRe
Date: Wednesday, August 28, 2013
Subject: following up on today's staff meeting
To: nyc <nyc@quirkyinc.com>, SF <sf@quirkyinc.com>

Hello team,