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How quirky 28-year-old Ben Kaufman plowed through $150 million and almost destroyed his start-up Quirky

Fellow Bootstrappers: We would never do this! Quirky CEO plowed through $150M & destroyed startup via @sai
9:13 AM Apr 29 2015

Stashed in: Startup Lessons, Kleiner Perkins, @sacca, Jerk Store, Internet of Things

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Here's the article about Quirky burning through $150 million:

Quirky has just 1 million registered community members.

From the beginning, Quirky's margins were thin, and as Quirky increased product launches in new categories, those margins became even thinner or, in some cases, non-existent. For example, the company spent nearly $400,000 developing a Bluetooth speaker that only sold 28 units.

Since the company’s founding, Quirky inventors have made $9 million, while the company has burned more than $150 million.

By February 2014, Quirky only had about $50 million left in the bank and it was burning through $5.8 million a month, Kaufman confirmed to The Verge. In September, it hired a new CFO who went into "fix-it mode" and implemented a series of cost-cutting measures, including three rounds of lay-offs in November, December, and February.

“We got a CFO in here who knew what the hell he was doing, and he told us a harsher reality than anyone else would tell us,” Kaufman says.

Seems a little... out of control.

Quirky launched a campaign in 2013 that plastered pictures of Kaufman on billboards and taxis, declaring him the “world’s least important CEO” and giving out his phone number. Kaufman is strong willed and charismatic, which makes people want to follow him. 

“His passion knows no limits and is completely infectious,” Quirky investor Chris Sacca told Business Insider in an email. “Whether in meetings with Fortune 500 CEOs, or on the manufacturing lines in the US and abroad, Ben is completely magnetic.”

As one Quirky community member puts it, “I'm pretty sure he could sell ice to Eskimos or BBQ ribs to ladies wearing white gloves.”

More than half a dozen former employees we talked to agree he's personable, but can teeter on unprofessional, peppering company announcements with expletives and casual jabs at coworkers.

“He’s a dick, but hilarious,” marketing VP Bret Kovacs wrote as a recommendation on Kaufman’s LinkedIn profile.

That style doesn't appeal to everyone. Six former employees, several of whom were laid off, agree that Kaufman can come off as a bully and creates a frat-esque culture where it's very clear whom his favorites are. If you don't laugh at Kaufman's sometimes-outrageous jokes, for example, you might feel like an outsider.

A former employee describes Kaufman as “ruthlessly flippant" and detailed a disturbing example. One day in 2012, a source says he saw Kaufman creeping between rows of desks. This person says Kaufman snuck up behind a few employees' backs, made a gun symbol with his hands, and pretended to shoot them. Soon after, the source says those people were fired. Another former Quirky employee corroborated the story. Kaufman staunchly denies it.

"When we're in an unfortunate situation where we need to cut people for financial reasons we take that super seriously," he says.

Kaufman has a high 80% approval score based on 39 ratings on the job-review site Glassdoor, where employees have encouraged him to “keep up the hustle” and complimented his down-to-earth management style. But a recurring  complaint  is that Kaufman needs a boss.

Three former employees told Business Insider that while Kaufman hires smart people, he does not take full advantage of their talent or advice. He is impulsive and often set in his ways, even when his decisions don’t make financial sense for Quirky or seemed like passion projects.

For example, Kaufman demanded the production of a smart egg tray even though a team of engineers and designers insisted it didn’t make economic sense. In another instance, Kaufman splurged on a $200 facial-recognition scanner for a conference room. Last year, he approved 500 art books with ideas submitted to Quirky by prison inmates to be printed for investors and community members as Christmas gifts, even though the company was hemorrhaging money. He admits the company bought too much inventory on some products, causing $25 million of its losses last year. 

“If I ever go too far, it’s because of the passion I have for this place, and the love I have for this place, and the community,” Kaufman tells Business Insider. “I want this thing to be so perfect and so great. And, yeah, often I may take it too far, but it comes from a place of love, you know?”

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