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TOWN MEETING
February 2015
STRICTLYPRIVATEANDCONFIDENTIAL
It’s easy to think

things are going well.
0
12.5
25
37.5
50
2010 2011 2012 2013 2014
Gross Product Revenue Net Revenue
GROSS PRODUCT REVENUE
70% growth

in Net Prod...
PRODUCTS LAUNCHED
2011
22 new inventions
2 line extensions
2012
26 new inventions
38 line extensions
2013
30 new invention...
2012 2013 2014
# OF DIRECT UNITS 65,662 108,376 509,851
# OF INDIRECT UNITS 2,123,072 5,445,382 3,537,068
TOTAL 2,188,734 ...
2012 2013 2014
# OF DIRECT ORDERS 26,760 43,468 129,924
# OF INDIRECT ORDERS 13,181 20,674 48,426
TOTAL 39,941 64,142 178,...
2012 2013 2014
OCEAN SHIPMENTS 51 86 236
AIR SHIPMENTS 129 142 173
TOTAL 180 228 409
79.4% MORE SHIPMENTS IN 2014 VS. PREV...
MORE PARTNERS
0
6,000
12,000
18,000
24,000
2011 2012 2013 2014
NEW RETAIL PARTNERS 2014
MORE ROBUST PARTNERSHIP
WITH GE ON...
MORE COMMUNITY
0
250,000
500,000
750,000
1,000,000
2011 2012 2013 2014
REGISTERED COMMUNITY MEMBERS
At the turn of 2015, w...
MORE IDEAS
IDEAS SUBMITTED TO QUIRKY
Just passed the +300k ideas
submitted to Quirky LTD
0
30,000
60,000
90,000
120,000
20...
ACROSS SO MANY CATEGORIES
4%
5%
6%
9%
11%
15%
20%
29%
Electronics
Home
Wildcard
Kitchen
Health
Travel
Play
Parenting
SFO OFFICE
Wink is on fire.
Wink adds a new home 

every 60-90 seconds.
1mm users & 3.6mm devices
And is on track to end 2015 

with more than
but this isn’t he full story.
For 6 Years, we’ve used Town Meeting
as a forum for transparency.
Sharing the good, the bad, the ugly.
Tonight won’t be a rainbows and
butterflies Town Meeting.
Tonight won’t be a rainbows and
butterflies Town Meeting.
At scale, Quirky has a number
of major challenges to
making invention accessible.
The last 6 months

have been our hardest.
TWO BUCKETS:
COMMUNITY 

CHALLENGES
BUSINESS 

CHALLENGES
$
BUSINESS 

CHALLENGES
$
Quirky does not make money.
Our margins are consistently under pressure.
Why? Not enough scale in too many categories.
Storage
Organization
Kitchen
Cleaning
Toys
Health
Pets
Power
Connected
Fitness
Audio
Gadgets & Accessories
The only brand to span as wide of a retail footprint/
While we have scale…
11,789,414
million
units shipped
817
containers shipped
We don’t have true scale
in any one category
And that means we lose money.
• Not enough weight with suppliers
• Not enough terms with retailers
• Not enough marketing ...
This does not make invention accessible.
Let’s illustrate the problem very clearly:
Invented by Gyro
3598 influencers
picked at eval Jan 24, 2014
FREEWHEEL
TOOLING 100K
MANUFACTURING NRE 20K
REGULATORY CERTIFICATION 5K
APP DEVELOPMENT 60K
QUIRKY DEVELOPMENT COSTS ~$100K
EST. OV...
36
But Quirky isn’t a toy company
• Despite being in 22k+ retail doors we don’t have distribution in toys.
• No brand reco...
Invented by Kansas
3183 influencers
picked at eval Jan 9, 2014
VANISH
With Home Depot, we defined the goal of MSRP at $130
!
…so we spent about $360k dollars engineering it.
!
VANISH WOULD HAVE TO RETAIL FOR OVER $250
Invented by Sonia
2280 influencers
picked at eval June 5, 2012
SHEATH
MARGIN CHALLENGE
($15 scissor vs $5 competitors)
SHEATH GROWTH MARGIN
STANDARD SCISSOR/OFFICE
PRODUCT CATEGORY GROSS MARGIN
-5%
+35%
Invented by Phil
4107 influencers
picked at eval Dec 12, 2012
BEAT BOOSTER
FACTORY NRE $15,000
TOOLING $163,800
REGULATORY CERTIFICATION $14,048
SAMPLE BUILD $10,800
INTERNAL ENGINEERING / OPS COST...
WE’VE SOLD 28 UNITS SINCE DECEMBER
Are these great ideas?
Does the world need & want them?
Yes.
Can quirky do them justice?
sell them and scale them profitably?
No.
This wasn’t a problem for several years, because the
investments we made in each idea were relatively small.
But we need to fix this.
Because Making Invention Accessible
for 6 years isn’t the goal…
…Making Invention Accessible forever is.
These Ideas have value, and deserve to exist in the
world. We just aren’t able to do this alone.
INTRODUCING
POWERED BY QUIRKY “PbQ”
How it works.
• PbQ will enable 21st century invention.
!
• Brand partners leverage the Quirky
platform for product ideati...
Our platform provides the necessary
services to enabling 21st-century
invention.
!
Categories that will remain owned and operated by Quirky as core categories:
HOME OFFICE TOYS PETS FITNESS
POWER CONNECTED...
More to come…
TOYS PETS OFFICE AUDIO HOME
We are a platform for enabling invention,
rather than a brand of products.
COMMUNITY 

CHALLENGES
Quirky was built by you, and for you.
We started small.
And have progressed into larger,
more complicated things.
This has created a number of
questions, complaints, suggestions… etc.
• What type of products does Quirky want, and which will they actually make?
• Can we really launch 3 products a week?
• W...
All things we intend on answering tonight.
Overall, things don’t feel like they should.
!
Community


Quirky
(we’re all community)
!
Community
vs

Quirky
+
!
Community


Quirky
(we’re all community)
!
Community
vs

Quirky
+
Removing Subjectivity
Truly putting data in the front seat.
Allowing the community to do more, so that we can
!
do more & make more.
Quirky 2.0
Its been a year long project
(With many distractions)
Focusing on submissions,
collaboration & evaluation
SUBMISSIONS
Things to know:
!
• You can still submit without
being a designer, bring on the
napkin sketches or not even
na...
✓ Features & Functions
✓ Inspiration
✓ Sketches
✓ Renders
✓ Pitch Video
UPON SUBMISSION, THERE
WILL BE PROJECTS.
THESE 5 P...
Very few people can
do all this alone.
We are a community company
PUBLIC
!
Everyone can see,
contribute, and help
with your submission
!
PRIVATE

Invite only for
participation/viewing
frie...
Incentivizing Collaboration
Influence Management
You have full control of
what, who, and where
your influence goes
!
80% of influence will be
in your control. 20% will
be ...
Let’s assume you’ve
completed all of your
projects
!
Now what?
!
How does something go to
eval?
Submit to Eval (if a private idea, this
will force it to become public)
!
… or leave with your idea and all the
work that’...
Quirky quickly validates 

the check marks
A transparent “coming up in eval list / queue”
While in queue, Market Research
project happens
!
Comp Shop, Pricing, Etc
Eval 2.0 Overview
All complete ideas in every category
every week.
(Unless its a challenge week)
Eval will proceed as always,
ending in a vote.
But everyone will vote, not just
people in NYC.
On PbQ ideas, there is double
acceptance required to move forward.
!
eval selection + partner approval.
Beta of 2.0

March 18th
OK, so lets talk about all of
the change required to
facilitate making invention
accessible in 2015 and
beyond.
FOCUSING
TO ENSURE WE HAVE A
LONG & PROSPEROUS
FUTURE TOGETHER
1. We’re going to sunset E-commerce.
!
We want to focus on being a community invention
company & platform, not a retailer....
!
• 1051% jump in daily order volume in Nov & Dec (compared to
previous 10 months)
• Daily email & call volume averaged 15...
Let the guys that specialize
on this do the heavy lifting for us so
we can focus on making products
Quirky will still have product detail pages. They
will link out to our most trusted retail partners.
!
(we hear they ship ...
2. There are lots of ideas in lots of various phases in
our pipeline that we need to bring clarity to.
Product State What Happens Now
Things not chosen at Eval We are not searching the archives, you can
resubmit under new ter...
3. We are going to allow kids to invent on Quirky.
When: Quirky 2.0 launch
Fuck, we better watch our mouths.
4. With the launch of 2.0, we are no longer searching
the archives for “similars”, this is unscalable.
5. Some changes to our internal teams.
PRODUCT ENGINEERS +23.5%
QUALITY ENGINEERS +40%
WINK +140%
CUSTOMER SERVICE +487.5%
STAFF GROWTH BY DISCIPLINE
192 241
2014 2015
Total Headcount:
We restructured our company 

to support PbQ
0
30
60
90
120
Engineering Customer Service Other
EMPLOYEES
Reduced the amount
of folks here to
service PbQ
2014 2015
EMPL...
6. No more referral payments
7. We are not going to force ourselves
into 3 Virtual Launches per week.
$75 $50
8. Withdrawal limit dropped:
9. We are removing the requirement that every
product we make has to start with a community idea.
How that works….


10. A topic we fight hard every day to
avoid bringing up, but we just have to.
Community Rewards
2009 2014
A look back
DIRECT INDIRECT IP TRANS.
BEFORE 3/1/2010 30% 30% 30%
3/1/10 – 7/10/2013 30% 10% 30%
7/10/13 – 2/18/2015 10% 10% 10%
You’ve made 9 million,
We’ve lost over 100 million.
>$40,00030 members
>$10,000
>$5,000
105 members
195 members
>$100k10 members
We will always honor prior commitments
But with new opportunity (PbQ partners drive a lot
more volume than little Quirky does/did)


100% of nothing is nothing.
… Comes a new structure
Effective tonight.
At midnight.
QUIRKY
PRODUCT
ROYALTY BASED

IP TRANSACTION (PBQ)
NON ROYALTY BASED IP
TRANSACTION
INVENTOR EARNED
< 500K 5% 3.5% 10%
QUIRKY
PRODUCT
ROYALTY BASED

IP TRANSACTION (PBQ)
NON ROYALTY BASED IP
TRANSACTION
INVENTOR EARNED
< 500K 5% 3.5% 10%
INV...
Definitions:
• Quirky Product: Products we produce, manufacture, design, distribute, and own the IP for.
!
• Royalty Based...
• Payout was based on sales less returns for the same time period.
!
• This calculation can overstate community payout sin...
• The historical community payout methodology lacked visibility and audit-ability
• The new methodology will be calculated...
2014 True up Feb 27, 2015
Q1 2015 April 17, 2015
Q2 2015 July 17, 2015
Q3 2015 October 16, 2015
Q4 2015 January 15, 2016
Q1 Q2 Q3 Q4
GROSS PRODUCT SALES $150 $100 $250 $400
RESERVE (15%) ($22.5) ($15) ($37.5) ($60)
ACTUAL REDUCTIONS FROM PRIOR...
Ask us anything.
Tonight.
Tomorrow.
Day after tomorrow.
As long as it takes.
Quirky Town Meeting 2.17.15
Quirky Town Meeting 2.17.15
Quirky Town Meeting 2.17.15
Quirky Town Meeting 2.17.15
Quirky Town Meeting 2.17.15
Quirky Town Meeting 2.17.15
Quirky Town Meeting 2.17.15
Quirky Town Meeting 2.17.15
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Quirky Town Meeting 2.17.15

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CEO Ben Kaufman, takes us through the good the bad and the ugly of 2014. He also sheds some light on where we're looking to move in 2015.

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Quirky Town Meeting 2.17.15

  1. 1. TOWN MEETING February 2015 STRICTLYPRIVATEANDCONFIDENTIAL
  2. 2. It’s easy to think
 things are going well.
  3. 3. 0 12.5 25 37.5 50 2010 2011 2012 2013 2014 Gross Product Revenue Net Revenue GROSS PRODUCT REVENUE 70% growth
 in Net Product Revenue in 2014 Does not count Service & Wink Revs.
  4. 4. PRODUCTS LAUNCHED 2011 22 new inventions 2 line extensions 2012 26 new inventions 38 line extensions 2013 30 new inventions 68 line extensions 2014 26 new inventions 49 line extensions ORGANIZATION CONNECTED PRODUCTS HVACSTORAGE CONNECTED
 LIGHTING
  5. 5. 2012 2013 2014 # OF DIRECT UNITS 65,662 108,376 509,851 # OF INDIRECT UNITS 2,123,072 5,445,382 3,537,068 TOTAL 2,188,734 5,553,758 4,046,919 MORE PRODUCT SHIPPED
  6. 6. 2012 2013 2014 # OF DIRECT ORDERS 26,760 43,468 129,924 # OF INDIRECT ORDERS 13,181 20,674 48,426 TOTAL 39,941 64,142 178,350 178.05% MORE ORDERS IN 2014 VS. PREVIOUS YEAR
  7. 7. 2012 2013 2014 OCEAN SHIPMENTS 51 86 236 AIR SHIPMENTS 129 142 173 TOTAL 180 228 409 79.4% MORE SHIPMENTS IN 2014 VS. PREVIOUS YEAR
  8. 8. MORE PARTNERS 0 6,000 12,000 18,000 24,000 2011 2012 2013 2014 NEW RETAIL PARTNERS 2014 MORE ROBUST PARTNERSHIP WITH GE ON PRODUCT DEV. NEW RETAIL PARTNERS 2014 MORE ROBUST PARTNERSHIP ON PRODUCT DEVELOPMENT RETAIL GROWTH
  9. 9. MORE COMMUNITY 0 250,000 500,000 750,000 1,000,000 2011 2012 2013 2014 REGISTERED COMMUNITY MEMBERS At the turn of 2015, we passed the 1MM community mark with 1,085,713 registered users
  10. 10. MORE IDEAS IDEAS SUBMITTED TO QUIRKY Just passed the +300k ideas submitted to Quirky LTD 0 30,000 60,000 90,000 120,000 2011 2012 2013 2014
  11. 11. ACROSS SO MANY CATEGORIES 4% 5% 6% 9% 11% 15% 20% 29% Electronics Home Wildcard Kitchen Health Travel Play Parenting
  12. 12. SFO OFFICE
  13. 13. Wink is on fire.
  14. 14. Wink adds a new home 
 every 60-90 seconds.
  15. 15. 1mm users & 3.6mm devices And is on track to end 2015 
 with more than
  16. 16. but this isn’t he full story.
  17. 17. For 6 Years, we’ve used Town Meeting as a forum for transparency. Sharing the good, the bad, the ugly.
  18. 18. Tonight won’t be a rainbows and butterflies Town Meeting.
  19. 19. Tonight won’t be a rainbows and butterflies Town Meeting.
  20. 20. At scale, Quirky has a number of major challenges to making invention accessible.
  21. 21. The last 6 months
 have been our hardest.
  22. 22. TWO BUCKETS: COMMUNITY 
 CHALLENGES BUSINESS 
 CHALLENGES $
  23. 23. BUSINESS 
 CHALLENGES $
  24. 24. Quirky does not make money. Our margins are consistently under pressure.
  25. 25. Why? Not enough scale in too many categories.
  26. 26. Storage Organization Kitchen Cleaning Toys Health Pets Power Connected Fitness Audio Gadgets & Accessories
  27. 27. The only brand to span as wide of a retail footprint/
  28. 28. While we have scale… 11,789,414 million units shipped 817 containers shipped
  29. 29. We don’t have true scale in any one category
  30. 30. And that means we lose money. • Not enough weight with suppliers • Not enough terms with retailers • Not enough marketing money to shine a light one very product. • Unable to realize economies of scale.
  31. 31. This does not make invention accessible.
  32. 32. Let’s illustrate the problem very clearly:
  33. 33. Invented by Gyro 3598 influencers picked at eval Jan 24, 2014 FREEWHEEL
  34. 34. TOOLING 100K MANUFACTURING NRE 20K REGULATORY CERTIFICATION 5K APP DEVELOPMENT 60K QUIRKY DEVELOPMENT COSTS ~$100K EST. OVERALL SUNKEN COST 500K FREEWHEEL STATS
  35. 35. 36 But Quirky isn’t a toy company • Despite being in 22k+ retail doors we don’t have distribution in toys. • No brand recognition & consumer trust, etc.
  36. 36. Invented by Kansas 3183 influencers picked at eval Jan 9, 2014 VANISH
  37. 37. With Home Depot, we defined the goal of MSRP at $130 ! …so we spent about $360k dollars engineering it. !
  38. 38. VANISH WOULD HAVE TO RETAIL FOR OVER $250
  39. 39. Invented by Sonia 2280 influencers picked at eval June 5, 2012 SHEATH
  40. 40. MARGIN CHALLENGE ($15 scissor vs $5 competitors)
  41. 41. SHEATH GROWTH MARGIN STANDARD SCISSOR/OFFICE PRODUCT CATEGORY GROSS MARGIN -5% +35%
  42. 42. Invented by Phil 4107 influencers picked at eval Dec 12, 2012 BEAT BOOSTER
  43. 43. FACTORY NRE $15,000 TOOLING $163,800 REGULATORY CERTIFICATION $14,048 SAMPLE BUILD $10,800 INTERNAL ENGINEERING / OPS COSTS $185,000 EST. OVERALL SUNKEN COST $388,648
  44. 44. WE’VE SOLD 28 UNITS SINCE DECEMBER
  45. 45. Are these great ideas?
  46. 46. Does the world need & want them?
  47. 47. Yes.
  48. 48. Can quirky do them justice? sell them and scale them profitably?
  49. 49. No.
  50. 50. This wasn’t a problem for several years, because the investments we made in each idea were relatively small.
  51. 51. But we need to fix this.
  52. 52. Because Making Invention Accessible for 6 years isn’t the goal…
  53. 53. …Making Invention Accessible forever is.
  54. 54. These Ideas have value, and deserve to exist in the world. We just aren’t able to do this alone.
  55. 55. INTRODUCING POWERED BY QUIRKY “PbQ”
  56. 56. How it works. • PbQ will enable 21st century invention. ! • Brand partners leverage the Quirky platform for product ideation and development. ! • Harness the power of the community to enable fast and meaningful growth.
  57. 57. Our platform provides the necessary services to enabling 21st-century invention. !
  58. 58. Categories that will remain owned and operated by Quirky as core categories: HOME OFFICE TOYS PETS FITNESS POWER CONNECTED APPLIANCES ACCESSORIES ORGANIZATION 
 & FURNITURE STATIONERY 
 & WRITING ELECTRONICS KITCHEN BATHROOM CLEANING STORAGE 
 & ORGANIZATION DECOR & LIFESTYLE DIY, TOOLS & GARDEN OUTDOOR EDUCATIONAL, PUZZLES & 
 BOARD GAMES BABY ARTS & CRAFTS BUILDING BIKES & RIDE-ONS OUTDOORS TRAVEL FEEDING HOME GROOMING PLAY TEAM FOOTWEAR SPORTS APPAREL OUTDOOR EXERCISE ACCESSORIES
  59. 59. More to come… TOYS PETS OFFICE AUDIO HOME
  60. 60. We are a platform for enabling invention, rather than a brand of products.
  61. 61. COMMUNITY 
 CHALLENGES
  62. 62. Quirky was built by you, and for you.
  63. 63. We started small.
  64. 64. And have progressed into larger, more complicated things.
  65. 65. This has created a number of questions, complaints, suggestions… etc.
  66. 66. • What type of products does Quirky want, and which will they actually make? • Can we really launch 3 products a week? • What is the actual role of the community? • “Similar” Issues and growing number of products in various cues. • What is the role of our partners (do we listen to them, or our community)?
  67. 67. All things we intend on answering tonight.
  68. 68. Overall, things don’t feel like they should.
  69. 69. ! Community 
 Quirky (we’re all community) ! Community vs
 Quirky +
  70. 70. ! Community 
 Quirky (we’re all community) ! Community vs
 Quirky +
  71. 71. Removing Subjectivity
  72. 72. Truly putting data in the front seat.
  73. 73. Allowing the community to do more, so that we can ! do more & make more.
  74. 74. Quirky 2.0
  75. 75. Its been a year long project (With many distractions)
  76. 76. Focusing on submissions, collaboration & evaluation
  77. 77. SUBMISSIONS Things to know: ! • You can still submit without being a designer, bring on the napkin sketches or not even napkin sketch stage ideas. ! • You’ll fill in as much as you can
  78. 78. ✓ Features & Functions ✓ Inspiration ✓ Sketches ✓ Renders ✓ Pitch Video UPON SUBMISSION, THERE WILL BE PROJECTS. THESE 5 PROJECTS NEED TO BE COMPLETE PRIOR TO EVAL
  79. 79. Very few people can do all this alone.
  80. 80. We are a community company
  81. 81. PUBLIC ! Everyone can see, contribute, and help with your submission ! PRIVATE
 Invite only for participation/viewing friends, named comm members etc ! VS
  82. 82. Incentivizing Collaboration
  83. 83. Influence Management
  84. 84. You have full control of what, who, and where your influence goes ! 80% of influence will be in your control. 20% will be reserved for post- eval projects.
  85. 85. Let’s assume you’ve completed all of your projects ! Now what? ! How does something go to eval?
  86. 86. Submit to Eval (if a private idea, this will force it to become public) ! … or leave with your idea and all the work that’s been done on it.
  87. 87. Quirky quickly validates 
 the check marks
  88. 88. A transparent “coming up in eval list / queue”
  89. 89. While in queue, Market Research project happens ! Comp Shop, Pricing, Etc
  90. 90. Eval 2.0 Overview
  91. 91. All complete ideas in every category every week. (Unless its a challenge week)
  92. 92. Eval will proceed as always, ending in a vote.
  93. 93. But everyone will vote, not just people in NYC.
  94. 94. On PbQ ideas, there is double acceptance required to move forward. ! eval selection + partner approval.
  95. 95. Beta of 2.0
 March 18th
  96. 96. OK, so lets talk about all of the change required to facilitate making invention accessible in 2015 and beyond.
  97. 97. FOCUSING TO ENSURE WE HAVE A LONG & PROSPEROUS FUTURE TOGETHER
  98. 98. 1. We’re going to sunset E-commerce. ! We want to focus on being a community invention company & platform, not a retailer. ! When: Quirky 2.0 launch
  99. 99. ! • 1051% jump in daily order volume in Nov & Dec (compared to previous 10 months) • Daily email & call volume averaged 1510+ logs per day RESULTS • We averaged an extra 7 days to process & ship orders placed on Quirky.com • Average Customer Service call resolution time went up 18 minutes, and we reached a volume high of 3,200 unanswered emails at one point • Order abandon rate jumped to over 50% We’ve been challenged by e-commerce:
  100. 100. Let the guys that specialize on this do the heavy lifting for us so we can focus on making products
  101. 101. Quirky will still have product detail pages. They will link out to our most trusted retail partners. ! (we hear they ship products on time)
  102. 102. 2. There are lots of ideas in lots of various phases in our pipeline that we need to bring clarity to.
  103. 103. Product State What Happens Now Things not chosen at Eval We are not searching the archives, you can resubmit under new terms with launch of Q 2.0 Things chosen at eval and not designed In owned categories, status quo, in Powered categories there will be a 30 day window after a PbQ deal is announced where we will let you know if parter is moving fwd with product or not. Things chosen at eval and virtually launched Things in manufacturing pipeline Products on the market
  104. 104. 3. We are going to allow kids to invent on Quirky. When: Quirky 2.0 launch
  105. 105. Fuck, we better watch our mouths.
  106. 106. 4. With the launch of 2.0, we are no longer searching the archives for “similars”, this is unscalable.
  107. 107. 5. Some changes to our internal teams.
  108. 108. PRODUCT ENGINEERS +23.5% QUALITY ENGINEERS +40% WINK +140% CUSTOMER SERVICE +487.5% STAFF GROWTH BY DISCIPLINE
  109. 109. 192 241 2014 2015 Total Headcount:
  110. 110. We restructured our company 
 to support PbQ
  111. 111. 0 30 60 90 120 Engineering Customer Service Other EMPLOYEES Reduced the amount of folks here to service PbQ 2014 2015 EMPLOYEE RESTRUCTURING
  112. 112. 6. No more referral payments
  113. 113. 7. We are not going to force ourselves into 3 Virtual Launches per week.
  114. 114. $75 $50 8. Withdrawal limit dropped:
  115. 115. 9. We are removing the requirement that every product we make has to start with a community idea.
  116. 116. How that works….
  117. 117. 
 10. A topic we fight hard every day to avoid bringing up, but we just have to.
  118. 118. Community Rewards
  119. 119. 2009 2014 A look back
  120. 120. DIRECT INDIRECT IP TRANS. BEFORE 3/1/2010 30% 30% 30% 3/1/10 – 7/10/2013 30% 10% 30% 7/10/13 – 2/18/2015 10% 10% 10%
  121. 121. You’ve made 9 million,
  122. 122. We’ve lost over 100 million.
  123. 123. >$40,00030 members >$10,000 >$5,000 105 members 195 members >$100k10 members
  124. 124. We will always honor prior commitments
  125. 125. But with new opportunity (PbQ partners drive a lot more volume than little Quirky does/did) 
 100% of nothing is nothing.
  126. 126. … Comes a new structure
  127. 127. Effective tonight. At midnight.
  128. 128. QUIRKY PRODUCT ROYALTY BASED
 IP TRANSACTION (PBQ) NON ROYALTY BASED IP TRANSACTION INVENTOR EARNED < 500K 5% 3.5% 10%
  129. 129. QUIRKY PRODUCT ROYALTY BASED
 IP TRANSACTION (PBQ) NON ROYALTY BASED IP TRANSACTION INVENTOR EARNED < 500K 5% 3.5% 10% INVENTOR EARNED > 500K 3% 1.5% 5%
  130. 130. Definitions: • Quirky Product: Products we produce, manufacture, design, distribute, and own the IP for. ! • Royalty Based Product: A product that is commercialized via a partner where we are paid based upon revenue received by the partner. % is based upon the revenue received by the partner, not % that quirky receives. This is how we structure PbQ deals. ! • Non Royalty Based Revenue: Purchase of an idea by a partner, where price is not dependent on Partner Revenue.
  131. 131. • Payout was based on sales less returns for the same time period. ! • This calculation can overstate community payout since it does not take into account markdowns, promotions and other deductions ! • Inconsistent payout schedules were mainly driven by delays in returns and other deductions processed by the customers HISTORICAL COMMUNITY PAYOUT METHODOLOGY
  132. 132. • The historical community payout methodology lacked visibility and audit-ability • The new methodology will be calculated quarterly and derived from Gross Product Revenue (what Quirky invoiced the customer for the quarter) less 15% reserve. • This reserve will be trued-up in the following quarter based on actual returns and other deductions taken by the customers. • The payout will be scheduled to be paid out 2 weeks after the quarter closes NEW COMMUNITY PAYOUT METHODOLOGY
  133. 133. 2014 True up Feb 27, 2015 Q1 2015 April 17, 2015 Q2 2015 July 17, 2015 Q3 2015 October 16, 2015 Q4 2015 January 15, 2016
  134. 134. Q1 Q2 Q3 Q4 GROSS PRODUCT SALES $150 $100 $250 $400 RESERVE (15%) ($22.5) ($15) ($37.5) ($60) ACTUAL REDUCTIONS FROM PRIOR QUARTER $0 ($10) ($25) ($20) RESERVE FROM PRIOR QUARTER $0 $22.5 $15 ($37.5) ELIGIBLE SALES FOR COMMUNITY PAYOUT $127.5 $97.5 $202.5 $357.5 FROM CURRENT QUARTER $127.5 $85 $212.5 $340 FROM PRIOR QUARTER $0 $12.5 ($10) $17.5 PAYOUT METHODOLOGY EXAMPLE
  135. 135. Ask us anything. Tonight. Tomorrow. Day after tomorrow. As long as it takes.

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