Quirky to Create a Smart-Home Products Company

Quirky to Create a Smart-Home Products Company


The repurposed red brick warehouse in Manhattan’s Chelsea neighborhood is a bustling hub of modern industrial activity. Skilled young workers are hunched over pristine machine tools and 3-D printers that churn out prototype products.

This is the home of Quirky, a start-up that now fields 4,000 new product ideas a week, picks three winners and then takes over all aspects of production, from making blueprints to marketing the goods through big-box retailers like Home Depot and retail websites, including Amazon.

Most of Quirky’s top-selling products have been inventive, stand-alone devices — like a power strip that pivots so a plug never blocks an adjacent socket, and a plastic stem that inserts into a lemon or lime and becomes a push-button citrus spritzer.

Yet increasingly, the ideas coming into Quirky — about one in four — are for home products that can communicate with a smartphone or a household Wi-Fi network. These are ideas pursuing the much-promoted vision of the smart home, or the consumer Internet of things.

The vision has been around for years, but the reality has remained elusive. “The Internet of things is still for hackers, early adopters and rich people,” said Ben Kaufman, Quirky’s 27-year-old founder and chief executive.

But Quirky, like others, thinks that is about to change. The company will lead an ambitious effort, beginning next month, to accelerate the adoption of smart-home products. It is setting up a separate company, Wink, whose main technology is software intended to be the equivalent of an open operating system, helping to seamlessly connect all kinds of automated home devices.

Wink’s smartphone and tablet app will offer consumers a single digital dashboard to link and control a user’s smart-home devices. With a few finger swipes, for example, you could instruct the lights in the kitchen and dining room to turn on when the automated door unlocks.

For the last year, Quirky has worked with a group of manufacturers, encouraging them to adopt its technology and approach. Fifteen companies plan to offer nearly 60 Wink-enabled products in July. The companies are as varied as giants like General Electric, Honeywell and Philips and fast-growing start-ups like Rachio. The connected products include light bulbs, video cameras, garage doors, water heaters and lawn sprinklers.

Smart-home products now communicate — or fail to — in a cacophony of ways. “Wink is trying to fill that gap,” said Bill Alderson, director of marketing for Rheem, a large manufacturer of water heaters, which is one of Wink’s partners.

Quirky is by no means alone in trying to connect devices in the emerging smart-home business. Several companies address the challenge mainly with hardware hubs, like Revolv, SmartThings and Insteon. Apple offered a software entry this month, introducing its HomeKit technology for writing apps for Apple’s iOS operating system that will control smart-home products.

Nest Labs, maker of a breakthrough digital thermostat, said it would soon let developers write apps to let its thermostats and smoke alarms talk to other home devices.

But the Quirky and Wink approach impressed Home Depot enough that it chose Wink as its technology partner. Home Depot now sells 600 smart-home products, six times as many as it did two years ago.

“We wanted a partner who could take all these products and make them work together,” said Jeff Epstein, its vice president in charge of home automation products. “Frankly, Quirky and Wink were the only ones who could do that — at least so far.”

Home Depot, Mr. Epstein said, will have Wink displays in nearly all its 2,000 American stores, starting on July 7. The packaging on Wink products will have one of two logos: one for “Wink app ready” products that can communicate with a home Internet router, and one for “Wink app compatible” products that require a hub as a translator.

A hardware hub is a machine, about the size of a hardcover book, that can handle communications from wireless technologies including Bluetooth, ZigBee and Z-Wave, as well as Wi-Fi, the open Internet standard. For Wink, hub-making is a near-term necessity because many smart-home devices on the market now do not yet use Wi-Fi. “We would love not to be in the hub business,” said Brett Worthington, vice president for partners at Wink.

Home Depot and Amazon will sell the Wink hardware hub for $79. The Wink app will also be available on July 7, on Apple’s App Store and on Google Play for the Android app.

The endorsement from well-known product companies and Home Depot is unusual for a young start-up. But Quirky, founded in 2009, is growing rapidly and has prominent backers. Its revenue is surging, on track to reach $100 million this year, the company said. And it has raised $175 million from leading venture capital firms, including Andreessen Horowitz and Kleiner Perkins Caufield & Byers, and from G.E., America’s largest manufacturer. Quirky’s crowdsourced, streamlined model of production has been hailed as perhaps the next wave of manufacturing.

Quirky stands to benefit substantially from the smart-home market, especially if Wink can accelerate the growth of the business.

Demand is picking up. Sales in eight major categories of networked home products — led by lights, thermostats and video cameras — are expected to reach 25 million units and $3.5 billion by 2018, up from 11 million units and $1.4 billion last year, according to Parks Associates, a research firm.

And Google’s purchase of Nest for $3.2 billion this year is a promising sign. Another came on Friday, when Nest announced that it planned to buy Dropcam, a maker of Internet-connected home video cameras, for $555 million.

“But for the connected home to really take off, the experience for the consumer has to be simple, fast and easy,” Quirky’s Mr. Kaufman said, adding that Wink’s mission was to make that happen.

For G.E., Quirky and Wink have provided a way to hasten the big industrial company’s entry into the smart-home market with its two consumer lines, lighting and home appliances, said Beth Comstock, G.E.’s chief marketing officer. Wink grew out of a collaboration with G.E. on joint products, like a smart air-conditioner that adjusts to a household’s pattern of use, to reduce electricity consumption. The Wink software was initially developed to control such Quirky and G.E. co-branded products.

Chris Klein, chief executive of Rachio, a start-up that makes software-controlled lawn sprinklers, views Wink as another step in the consumerization of the Internet of things. “In the past, it was too expensive and complicated, like setting up your own supercomputer,” Mr. Klein said. “But all this is becoming affordable and doable.”


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: