TASK FORCE:

PRE SALE

for the future of social product development

WHO• past Quirky inventors / experienced community social sellers:

Michael Cavada, Fred Ende, Sandra Lehr, Cody Stowers, William Fine, Samuel Greenlee

• John Lott – CFO

• Brian Kerr – UX

• Jessica Marati – Community

• Viresh Chopra - Creative Direction / Product Launcher

• Chad Hetherington - Retail Sales

• Nancy Chen & Anthony Del Plato - Data Analysis

• Nathan Smith & Mike Lacy - Technology

WHAT A SUCCESSFUL PRE-SALE PROCESS DOES:

1. Proves that a product can retail profitably (both online and at channel partners)

WHAT A SUCCESSFUL PRE-SALE PROCESS DOES:

2. Validates design / feature / function decisions made early in the process

WHAT A SUCCESSFUL PRE-SALE PROCESS DOES:

3. Provides an accurate indication of the trajectory of the product (helps us decide how long to go on first inventory purchase, etc.)

WHAT A SUCCESSFUL PRE-SALE PROCESS DOES:

4. Broader audience can surface design flaws that may have been overlooked by the limited number of people that worked on the product early on (for example, ‘Dude, you forgot the ON button’)

WHAT A SUCCESSFUL PRE-SALE PROCESS DOES:

6. Allows the general public to earn influence in the product (this is a big deal)

WHAT A SUCCESSFUL PRE-SALE PROCESS DOES:

7. Attracts media attention for the new product / awareness to Quirky

WHAT A SUCCESSFUL PRE-SALE PROCESS DOES:

8. Provides community members with the chance to promote their new creation across social media

WHAT A SUCCESSFUL PRE-SALE PROCESS DOES:

9. Clearly communicates what pre-sale is, and what being involved means

WHAT A SUCCESSFUL PRE-SALE PROCESS DOES:

10. Makes people vote with their dollar

WHAT A SUCCESSFUL PRE-SALE PROCESS DOES:

WHAT DEFINES ‘THRESHOLD’

1. The number of units sold that results in revenue collected on an item which covers:

WHAT DEFINES ‘THRESHOLD’

2. Up-front capital costs around manufacturing and launching an item

WHAT DEFINES ‘THRESHOLD’

3. R&D expense throughout the design process... time, materials, etc.

WHAT DEFINES ‘THRESHOLD’

4. Regulatory / safety testing fees

WHAT DEFINES ‘THRESHOLD’

5. Increased product liability insurance premiums

WHAT DEFINES ‘THRESHOLD’

KNOWN ISSUES:

1. Products can languish in pre-sale for an extended amount of time, for reasons not directly related to how great / marketable the product is

KNOWN ISSUES

2. As Quirky’s overhead and product complexity grow, the amount of units it takes to prove a product can be profitable grows substantially. We estimate that the average threshold will be ~3000+ by the end of 2011.

KNOWN ISSUES

3. 10-30% of presale orders do not confirm at time of shipping (drop-off rate depends on the item, and the time that lapses between threshold reached and SKU select)

KNOWN ISSUES

4. Pre-sale is too much of a learning curve for new customers – first-time shoppers are confused by the notion, online shoppers expect shipping in 3-5 days, and our pre-sale items inhabit the same space as our available items

KNOWN ISSUES

5. On average, once an item sells 50-80 thousand units, you’ve basically received the product for free because the amount of influence you earned from purchasing the item pays out more then you fronted – how can we better define, communicate, and hype these and other benefits of committing in presale?

KNOWN ISSUES

6. In the new Quirky retail landscape, products can hit threshold in a millisecond. However, revenue on our site per unit is usually 2x+ what it is at retail. How do we make sure we keep close tabs on dollars, not just units, especially since unit economics fluctuate so much when dealing with retail?

KNOWN ISSUES

7. There are often times when we feel really good about an item, and move forward with it despite its status in pre-sale. Is this the right thing to do? Should we be comfortable with this? Can we qualify what it should take for a product to move out of presale without hitting the number we’ve defined?

KNOWN ISSUES

8. Assuming we eventually ‘kill’ a product, there is the expectation from our inventors that they can get the IP back on their idea. However, we’ve already spent a fair amount of money/time/etc. on the actual research and development of the final product. How do we handle this?

KNOWN ISSUES

9. Our community's makeup and interests, combined with the power of certain niche gadget blogs to drive sales, means that some categories (electronics, Apple accessories, etc.) tend to do extremely well in organic presale, while others (pets, toys) don't. How do we give every product a fair shot at reaching threshold?

KNOWN ISSUES

QUESTIONS/THOUGHT STARTERS

1. Does selling 1000 units over the course of 18 months actually prove an item is great?

(trick question; the answer is no)

QUESTIONS/THOUGHT STARTERS

2. When do we kill an item that is languishing in pre-sale? What happens to the intellectual property?

QUESTIONS/THOUGHT STARTERS

3. How do we increase and improve the social forces surrounding pre-sale? The opportunity to earn influence is HUGE, and right now that is not played up enough.

QUESTIONS/THOUGHT STARTERS

4. Should pre-sale products live somewhere completely different than the ‘shop’?

QUESTIONS/THOUGHT STARTERS

5. Should there be a defined time frame for a product hitting threshold?

QUESTIONS/THOUGHT STARTERS

6. Instead of a fixed threshold, should it be trajectory-driven (units/time)?

QUESTIONS/THOUGHT STARTERS

7. What can Quirky staff do to help products get out of pre-sale faster? (videos, etc.)

QUESTIONS/THOUGHT STARTERS

8. What can the community do to help promote pre-sale products?

QUESTIONS/THOUGHT STARTERS

9. The question is often asked: why we don’t just ‘raise money’ instead of selling units? (reason: securities laws relating to royalties, etc.)

QUESTIONS/THOUGHT STARTERS

10. How do we effectively communicate what pre-sale means to new members?

QUESTIONS/THOUGHT STARTERS

11. We anticipate 55%+ products hitting threshold. Is this high, low, just right?

QUESTIONS/THOUGHT STARTERS

12. How do we keep our inventors / community active and engaged with a product when it’s sitting in pre-sale?

QUESTIONS/THOUGHT STARTERS

THE TASKFORCEPROCESS

THE TASK FORCE PROCESS

March 1st- Task Force planning begins

March 10th- Plan complete, Task Force called to arms. Planning deck sent. Basecamp invites sent to all members. Brainstorm-style discussion begins within Basecamp.

March 17th- Kick-off / brainstorm conference call (full Task Force participation, time TBA).

Quirky-led conversation, resulting in three to five clear directions we can go. Jess will take thorough notes and post on Basecamp.

A ‘writeboard’ will be started for each of the directions -- ‘bullet point / process style’ – and all Task Force members will work to refine the process, working in a ‘wiki’ environment.

April 5th- A ‘lead’ for each direction is chosen. Lead begins to prepare presentation of how the process could work.

April 12th- Conference call check-in (full Task Force participation, time TBA).

Each lead will discuss progress / challenges that still exist within their concept – things they’re worried about, things they’re excited about.

April 18th- Full afternoon @ QHQ. Each ‘lead’ will present their concept to the entire task force, Ben will join. Final direction will be chosen.

April 19th- UX/UI team briefed on vision / objectives

April 22nd- UX/UI team will deliver preliminary wireframes of the new process / post to Basecamp. Conference Call (full Task Force participation, time TBA)

April 26th- UX/UI refinements

April 27th- Town Meeting presentation of new plan

May- Technology / user testing

June- Implementation of new pre-sale process