From that moment forward, I knew that Ben Kaufman was on to something that we needed, especially in our Appliances division. He was rapidly prototyping and crowdsourcing and turning out new products in a matter of weeks. His company was organized around his network of thousands of amateur inventors, which he had transformed through his passion and oversight into a cohesive community. Quirky’s MO was to democratize invention; I felt he was ushering in a new era of innovation. He was the embodiment of what I would come to call an emergent leader. I felt that finding a way to partner and fuse all that he and Quirky represented into GE’s industrial operating system, without destroying them in the process, was the massive challenge GE had to solve in order to thrive for the next one hundred years.
Appliances seemed like the perfect starting point. A consumer business that produced refrigerators, washers and dryers, and stoves, the unit was an outlier for industrial GE. Jeff had tried to sell Appliances, but the sale fell through, and we needed a new plan. The consumer brand was solid, but the quality and product set needed an upgrade. And it was a poor fit for the high-tech digital industrial we were becoming. (The Appliances team had tried for nearly five years to figure out a smart home play, where appliances are connected to the Internet, but got mired in technical details.) Realizing that Appliances would have to become better at product quality and manufacturing if it were going to turn a real profit, Jeff committed $1 billion to make it our test bed for advanced manufacturing.
“I need some good ideas for this business,” Jeff said to me, and anyone who would listen.
I kept coming back to Ben. Linda and I were talking to him every few weeks, trying to figure out how we could work with Quirky to inject new ideas into GE. At one point, Ben suggested we hire them on a $300,000/month consulting contract. Ben liked to talk crazy money.
I had taken over responsibility for GE’s licensing business. I wanted our GE-branded consumer products to be higher quality. I believed products sold under our brand needed to enhance GE’s position as a digital innovator. Cheap electric can openers, blenders, and computer cables weren’t doing it.
The licensing team’s great asset was its access to thousands of patents from our research lab that either weren’t being used by GE or had additional potential. So we set on the idea of sharing our patent portfolio with Ben’s community.
In April 2013, we announced a partnership with Quirky in which GE would open up two hundred patents to Quirky’s community of inventors to create new products or businesses. It was also a good testing ground for a bigger GE/Quirky partnership. Brad Irvine, then president of GE Licensing, was taken with how fast Quirky worked—and with Ben himself. Brad would call me once a week saying, “You’re not going to believe what Ben did today.” The “amazing Ben Kaufman” would lead an all-nighter with his team and spit out dozens of potential GE-licensed products the next day. Brad sent the sketches to me—and they were good!
I found myself thrilled by the energy Ben was bringing. He wasn’t perfect—he could be a brash punk who rubbed some people the wrong way. But he was breaking things that needed breaking, something we desperately required.
So I suggested our efforts needed to have a bigger connection to GE’s digital future for the products to make sense. We were building the Industrial Internet, but that wasn’t relevant or tangible yet to a consumer. Consumers would never see firsthand a GE jet engine that reports its status to an airline’s headquarters. “Could we do connected products with Quirky?” I asked. “That might make our digital story more understandable.”
“Funny,” said Brad. “Ben just sent us some ideas about that.”
Brad went to work on a licensed-product agreement. Linda and I were the brand and design champions. And Ben was the Captain of Speed. “We’ll have six products in the market by Christmas. It’s the only way to make this work,” Ben said. “I’ll see that we distribute them in Home Depot.”
It was summer, and we didn’t have even one product. And yet we knew somehow Ben would do it.
I was using Quirky as Exhibit A of what it meant to work within a fast-moving, community-driven culture. Every Thursday night, Quirky held Inventors Night, an Internet product fair with Ben as master of ceremonies. The community would vote on ideas they wanted to see commercialized. The Quirky product team then selected the ones they thought could best be designed and sold, and a panel of judges weighed in. Ben exuded a cocky charm that the community just loved.
All of the Quirky employees attended, and the evening was punctuated with takeout and beer. I brought in any GE leader I could wrangle to watch the show. Mark Little, head of R&D, loved being a judge and helped pave the way for his researchers and Ben to collaborate on a host of possible new products, such as how to redesign a home fuse box or a home generator.
A few months after Quirky and GE inked our connected-product licensing deal, Home Depot agreed to be our exclusive retail outlet. We were on track to deliver our six connected devices in time for Black Friday, the opening of the holiday sales season. Some of the six Home Depot devices ended up being hugely popular, such as the Pivot Power Genius, a smart version of the Pivot Power bendable power strip, and the Spotter, a multipurpose sensor that could signal a range of remote actions, such as if water were leaking in your basement or your baby were waking up in the bassinet.
Others, like the Egg Minder, an egg tray that lets you check the freshness of the eggs in your fridge from your smartphone, were frivolous. We tried to convince ourselves that preventing salmonella was a worthy cause, but it was a dud—and worthy of the ridicule it received. The community had voted that one up, but the community was wrong. What was worse, Ben ordered the production of thousands of the Egg Minders. Everything had to be ten times bigger for him. Those egg trays sat idle in a warehouse. Ultimately you have to have somebody with market and product skills to manage the portfolio.
In these inevitable moments of what seems like “failure” is when the learning happens, and indeed, experiments like the Egg Minders set the stage for GE and Quirky to create something truly innovative: one of the first consumer software platforms for the smart home.
Not long into our partnership, Ben needed to raise another round of investment for Quirky and asked GE to invest. By then, we were already at work on the smart home platform, called Wink, which was far more ambitious than the Egg Minder and other “Quirky by GE” doodads at Home Depot. Ben wanted GE to invest $50 million. I could only get Jeff to agree to $30 million, on the theory that a closer partnership could usher in a new future for GE Appliances.
I brought Jeff to Quirky to seal the deal. He said to Ben, “If you can deliver on the small appliances, then hell, maybe you can run the whole Appliances division.”
That was just what Edison Jr. wanted to hear.
There was a madcap burst of activity at the last minute as I led a team to do financial due diligence on Quirky, which had already raised over $100 million. I contacted Scott Weiss, a partner at Andreessen Horowitz—the “hot” VC in Silicon Valley—who headed the Quirky investment. Scott told me Ben was a genius: “He reminds me of a young Steve Jobs.” (I should have asked if he knew the young Steve Jobs.)
Appliances CEO Chip Blankenship, as expected, was not a fan of the idea.
“It was bad enough we’ve had to hang around him. But now we’re going to give him money?” he said.
Chip thought Ben was clever, but he also thought that because Quirky only made small consumer items, Ben had little ability to scale big appliances GE-style.
Jeff called the two of us together. “Chip, I think you can learn from Quirky. I like what they’re doing,” he said. “And frankly, it’s the freshest idea we’ve had for Appliances in a long time. Let’s give it a shot.”
While Chip hated the idea of joining with Quirky, many others at Appliances were eager to partner on something new. Ben and CTO Kevin Nolan dove in on the small appliances challenge, choosing
an air conditioner as the first product. Kevin wanted to work fast and with the community; he loved the new methods he was learning from Ben. He was a good teacher for Quirky as well, helping them understand supply-chain management, and engineering sophisticated technologies at scale. I remember watching Kevin draw out how air conditioners were made—from sheet metal to showroom. Ben, who never went to college but had launched his third start-up by age twenty-one, was soaking it up.
The Aros air conditioner Kevin and Ben began to work on was the first of its kind, an Internet-connected unit that allowed users to control it from a smartphone app that tracked energy usage and made economizing suggestions. It was the perfect encapsulation of what we hoped for from the partnership: the marriage of an algorithm from a Quirky community member—a former U.S. Energy department employee—GE technology and production know-how, and Ben’s product-development process. It was a fleeting glimpse of an upgraded OS, an exhilarating validation that GE could become the kind of adaptive organization found in Silicon Valley.
But partnerships are messy. Even the best of them take a lot of work.
Early on, we had assigned a GE Appliances product marketer named Jon as project manager for Quirky, to align expectations and processes. Jon questioned Ben on administrative mistakes—Quirky was not an orderly process-driven organization—and Ben hated the oversight. “Jon is hurting us. He is manipulating, unhelpful, and incredibly time-consuming. He adds no value to our process, and requires a ton of babysitting.”
Now, I knew none of this to be true in an objective sense, but I had no doubt that, to Ben, Jon’s questions seemed like Orwellian surveillance. We asked Jon to be a bit less intrusive but also made it clear to Ben that he would have to accept Jon’s presence.
While Ben was the provocateur we needed, it started to become clear that Ben’s passion and authenticity and belief in his perpetual rightness would undercut even those who most supported him—like me. For example, there was the Local Motors spat. Eager to continue discovering new models of community-based innovation, I introduced our Appliances team to the founder of Local Motors, a start-up that made open-sourced automobiles. I thought that their community of engineers—many who had worked for major manufacturers—could help Appliances solve their bigger engineering challenges, things outside the Quirky consumer and digital wheelhouse.
A Local Motors partnership was also a way to calm the waters inside Appliances. The Local Motors CEO and cofounder, Jay Rogers, was a veteran of an elite group in the U.S. Marines, and his military sensibility appealed to Chip Blankenship’s engineering and process-driven perspective.
We announced in March that we were going to partner with Local Motors to launch a micro-factory to do limited-run manufacturing, and join with Local Motors to build an online community platform called FirstBuild where engineers could contribute to designing new machine-based products faster.
FirstBuild admittedly sounded a lot like Quirky, but its foundation was different, a successful way to merge the “maker” movement I had been pushing with the GE product challenges. It brought together the networks we had experimented with in those open innovation challenges, the flow of product ideas coming in from outside GE’s walls, and the fail-fast iterative speed of low-volume manufacturing inherent in 3-D printing.
Of course, Quirky was my bet. But Ben didn’t take kindly to my decision to allow Chip to partner with other challengers. “Wonderful!!!” he barked at me sarcastically.
We were partners, working together to make something great; the negativity was frustrating. I could see Ben’s point, but I also knew that Quirky’s strengths were not in heavy manufacturing—they were in product design, commercialization, and digitization. But Ben was convinced he could do it all. We wanted Quirky’s start-up DNA inside our walls, and we were happy to invest in it. But at the same time, we needed to make multiple bets across many industries and sectors.
As a scout and translator of what’s next, I couldn’t force Chip (or anyone) to embrace a new way. I can surround them with change-makers, harass and harangue them, and call in the boss, but ultimately they have to want to change. And to do so, they have to find their own path. You can’t mandate how that happens.
The tension with Ben was made even worse by the fact that he wanted to spend a lot of money, especially to launch a new advertising campaign. It became a huge issue, in part because as part of our investment in Quirky, we offered them access to our advertising inventory on NBC, as well as access to our ad agency, BBDO. But Ben wouldn’t take any advice. The ad ideas he was getting from the GE team were “NOT CREATIVE!” he said. “Too corporate!”
He finally decided on a campaign from Partners and Spade about how Ben was the “Least Important CEO in the World” because he worked for the community of inventors. But despite the title, it was really all about him. The ads did okay, aided in part by Ben deciding to spend Quirky cash on the creative and asking us to use all $10 million of the media time we had committed (and planned to use over three years). I let him, though I regretted my decision. I’m incredibly disciplined about myself, but ultimately, it was Ben’s company.
Despite the friction, however, Quirky’s network was offering GE the kind of open innovation it needed. The Aros air conditioner had been successful (although not as much as Ben had hoped, when, after our teams put in the production order, he secretly went back in and tripled it). We expanded the GE scope. Our Lighting group had been trying for a long time to develop an Internet-connected lightbulb, a consumer-grade LED bulb that users could manage with their smartphones and connect to other smart devices. But after five years of work, we had nothing to take to market. Yet within just five months, Ben and his Quirky team had the Link Bulb ready. It was another proof point for Quirky-style rapid prototyping as a way for us to do things cheaper and faster.
The bulb was marvelous, and it, along with Ben’s enthusiastic personality, helped us reestablish a relationship with Home Depot, which had dramatically downsized GE Lighting’s presence fourteen years earlier in a pricing dispute. They loved Quirky.
Home Depot’s embrace of the Internet-connected bulb also helped Quirky and GE push the Wink platform, the smart home system that had spun out of the connective software system we had built for our Egg Minder and which now tied together connected appliances—light sensors, the Aros, and a security system we planned—with a kind of central control panel. (This was the kind of connected home platform we had envisioned in the early days of digital health.)
There had been some bumps, but Quirky seemed to be hot. We were creating products, they were getting noticed, Wink was taking off, and people were starting to see the smart, connected home as a coming reality. And then we got a piece of news that made me feel as if we had hit the jackpot.
Quirky was spending a lot making its way forward, so Ben was looking to raise money again. He had done the rounds with a number of VCs and had gotten a term sheet from Japan’s SoftBank that defied belief: the terms SoftBank offered would’ve doubled the valuation at which we had invested in Quirky less than a year before.
I was feeling incredibly positive about our investment and partnership, and proud of my decisions. That tingling childlike thrill had converted itself into soaring optimism. I rarely outwardly celebrate successes or show much pride—it went against my nature and, besides, I had seen plenty of “successes” fail. But this time was different. After the SoftBank numbers came in, I went around the halls of GE, virtually high-fiving people. I had a lot of skin in the game on this one. I had particularly felt challenged by the business development VP I had to go through to get the investment done, who was skeptical of Quirky because, as he said, “I don’t invest in things I don’t understand.” (That VP happened to be John Flannery, who took over for Jeff Immelt in 2017 as CEO.)
And then it all started to fall apart.
GE had been trying to sell the Appliances business for five years or so, but we had paused
when Jeff decided that we would use it as a laboratory for new manufacturing. Now Appliances looked attractive again. Quite suddenly, our ugly duckling looked more date-worthy, and appliance companies that had turned us down were again looking the unit over.
Ben got wind of Jeff’s intentions to sell, so he rifled an e-mail off to Jeff telling him he’d put together a deal and buy the division himself. No matter that he was under thirty and had no major management experience or money of his own. He was Ben Kaufman, dammit.
I talked to Jeff, who was bemused as always at Ben’s audacity, and he put a call in to the bankers he knew at J.P. Morgan. It was the longest of long shots, but we knew Ben wouldn’t let that bother him. And not long after, in mid-July, Ben’s offer actually did come in: J.P. Morgan and some new investors were ready to pay $2.5–3 billion to buy GE Appliances.
A lot of us, Linda and I and Kevin and even Jeff, were rooting for him. But we also knew it was a long shot. Jeff had to make a choice based on the best interests of our shareholders, not what felt right, and a coalition of investors with a twentysomething CEO candidate who wanted to take on loads of debt and leave GE with a minority stake was nothing if not shaky.
So we were prepared for the worst.
In September, Jeff announced that GE was selling Appliances to Electrolux for $3.3 billion. Jeff felt it had become a distraction for GE, and now it seemed like the investments we had made had boosted the division’s value. The time was right. The money was right. The buyer was right (though in the end the deal would fall apart on antitrust grounds, and we’d end up selling to Chinese manufacturer Haier for more money).
Ben was crestfallen. We had always said that the Quirky investment was a bet on a model that would help Appliances, giving us a faster, leaner footprint and a new, community-based manufacturing model. Ben had dreamed of being the new face of GE’s invention machine. While we understood the numbers behind the deal, the announcement put into question the partnership’s entire reason for being.
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