Have you ever thought of a quirky but innovative product that might be useful to the masses but didn’t follow through with the idea? Sometimes these flashes of genius get lost in the shuffle. Startup quirky is hoping to be the platform for product ideas that are born on napkin doodles and in other unorthodox ways. The site then tries to use crowdsourcing to develop the product, by engaging participants in collaborating on every aspect of product creation – from ideation, design, naming, manufacturing, marketing, to sales. It’s like a social network for product development.

Founded by serial entrepreneur Ben Kaufman (he created mophie and kluster), quirky lets users submit their product idea for $99. Users can also vote, rate, and influence other people’s product ideas. Every week users can post ideas on quirky to be rated by the quirky community. After a seven day evaluation period, the quirky community chooses one product from the pool of submitted ideas to move forward through the process. quirky’s community engages and contributes to every part of the product’s development, weighing in on everything from naming to logo selection to packaging.

The product is pre-sold at the quirky online store. Once the product hits a pre-sales threshold, credit cards are charged, and the product graduates to production and delivery. $0.30 of every dollar generated from the sale of a quirky product goes back to the creators, and the people who voted, commented, and rated the project idea along the way, giving the community an incentive participate and engage in each product’s development. The creators are given $0.12 of that $0.30.

With the launch of the site, quirky has also revealed its first product, created by friends and family of quirky employees. The Sling Back is a universal wire retractor that holds up three feet of any type of wire ( headphone cords, small power cables, USB cords, firewire cables, or printer cords) up to 1/8″ in diameter. On the development page of the Sling Back, quirky lists the creator (in this case, Ben Kaufman) and the top “influencers,” the people who contributed to the development of the retractor. The site says that so far, two other products are currently being developed. Each product lists the stage of development they are in and how much time is left before a decision will be made. For example, “The Ouch Pouch,” a designable sling that has pictures and decorations needs a logo.

quirky seems like an innovative idea although, I do think that the creators of the product which ends up being developed may get the short end of the stick when it comes to sales, especially given that they are putting up $99 per idea. But, on the flip side, these ideas, which may be otherwise discarded or forgotten, are given the chance of being created. The site is similar to one of Kaufman’s previous ventures, NameThis, and other sites IdeaBlob and Innocentive.

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Kluster, the crowd sourcing startup that launched earlier this year, has introduced support for new private Klusters designed to help groups manage decision making.

Each Kluster offers users a chance to ask a group a question (say, “What features should go into the new TechCrunch tablet?”). Each participating member is then categorized from the administrator panel – in this case, we might categorize voters as “Designers”, “Engineers”, and “General Consumers”. Once the data has been compiled, survey administrators can use the sites “klusterEQ” to manage how much weight should be given to the responses from each participant (we might want to rate a Designer’s style rating higher than a Engineer’s).

Kluster seems to be taking a multi-pronged approach to the crowdsourcing space, which includes a number of competitors like Ideablob and Innocentive. Last month the site launched NameThis, a site that lets companies ask the crowd what they should call their new product.

Private Kluster Tour! from Ben Kaufman on Vimeo.

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Let me just say before I begin that I think everyone should come up with their own names. I could never understand why companies pay naming consultants to come up with empty product or company monikers that nobody can remember anyway. (Unless you are Altria, and you just want people to forget that you are really Phillip Morris). Well, now companies can ask strangers on the Internet to name their product. I’m not sure this is a much better idea, but it is more fun.

Crowdsourcing startup Kluster (which launched in February), publicly opened up a new site today called NameThis. It works pretty much like Kluster, except it is only for coming up with names for products or startups. A company pays $99 to put up a challenge describing the product or entity to be named, the community suggests names and votes for the best ones by investing their allotted ‘Watts.” The people who come up with, influence, or invest the most in the top three names split $80 among themselves, and Kluster keeps the rest as its fee.

There are obvious problems with this and with crowdsourcing in general (for instance, read about the implosion at Cambrian House). But one thing this has going for it is simplicity. Anyone can come up with a name. (Anyone can steal a name too, but that is another issue).

The site just launched today, so most of the “namestorming” challenges are just for fun. They include thinking up a better name for the Verizon G’zOne, Hot & Crusty Bakery, the Chevy Nova, Wolf Blitzer, and the Microsoft Zune. Some contenders so far: Divr (for Verizon), the Chevy Supernova, Wülf Blitzkreig (sic), and the Microsoft Rune (spelled correctly, but would be more apropos if spelled Ruin). There is even one real company that needs a name for a universal inbox service.

Just to see what people would come up with., I asked Kluster to put up a challenge to rename our recently launched video site TechCrunch Elevator Pitches. We went through an internal debate of our own before settling on that name. And some of our rejected candidates, like CrunchTime and PitchCrunch, have already come up independently on NameThis. There are also some we didn’t think of: IdeaCrunch and LaunchCrunch. Most of the rest are subpar. But you only need one good name.

Did we pick the best name or is the crowd coming up with better options? (Not that we are going to change the name. This is purely an exercise.)

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Kluster, which is supposed to launch later today in a public beta (Update 2/19: the site just went live a day late) and will be used by attendees at next week’s TED conference, is designed so that companies can offer cash rewards for each phase of a project. Participants who back the winning idea get to share the reward. Projects can range from creating logos and marketing campaigns to designing a product.

Participants start off with points, or “Watts,” that they can invest in different projects. Explains Kaufman:

Our Watt system is like a currency. You get a certain amount of Watts. As you do more things you get more Watts. Instead of voting on ideas, you invest your Watts in concepts you like.

So if a company decided to offer $5,000 for the best new logo to come out of Kluster, some graphically-inclined members might upload a few sketches. Other members could then invest Watts in the design they think is best suited for the company’s product, make suggestions for improvements, or upload their own variation of the logo. Whichever logo gets picked by the company at the end wins the $5,000, which is distributed to all the members who backed that particular logo based on how much they contributed to the idea, how early they got behind it, and what percentage of their total Watts they put at risk. Kluster computes what your stake is in any given project.

Watts are never directly convertible into dollars, but they do influence how much of a cash reward each member is entitled to. At the end of each phase, all the Watts invested in the losing ideas are redistributed proportionately to the investors in the winning idea. As people collect more Watts, they gain standing in the community and have more to invest in subsequent projects.

Kaufman came up with the idea for Kluster at his last startup, Mophie, which makes iPod accessories and was recently sold to mStation for an undisclosed sum. One of Mophie’s hit products is the Bevy, an all-in-one iPod Shuffle case, bottle opener, cord-wrap, and keychain. The company designed it at last year’s MacWorld conference in 72 hours with input from 30,000 customers using software that was a precursor to Kluster. According to Kaufman, Mophie sold hundreds of thousands of the $15 cases.

He took the proceeds from the sale of Mophie, plus $1 million from Village Ventures, to capitalize Kluster. The business model is to collect fees from the participating companies. For each cash award that is distributed to members, Kluster collects 15 percent on top of the award. If a company wants to run a crowdsourcing session for a private group, Kluster charges for that separately based on the number of participants (public projects are hosted free). Kaufman is also exploring other ways to make money: recruiting users with particular skills to a project ($5 a head for each experienced graphic designer, for example); selling sponsored “feature” spots on the homepage to promote a project; user surveys, analytics, and targeted advertising.

Kluster’s success or failure will depend on the quality of talent it can attract to its site, and how active members become in contributing to projects. Members can debate different ideas, upload photos, videos, and even CAD files. Everyone has their own profile page, and can keep track of how many Watts they have. Unfortunately, the site doesn’t offer any Web-based product-design software, which is what a crowdsourcing site really needs.

But Kluster seems to get the economic incentives right which is half the battle. The other half is convincing companies that this is worth their while. For now, admits Kaufman, most companies see this primarily as a marketing exercise to engage their most avid customers and maybe generate some viral buzz. It will take a hit product to come out of this process for them to look at it as an actual source of innovation.

Rather than offer a cash reward up front, Kaufman initially wanted to structure the economics so that winning products get a $1 royalty per unit that is eventually sold. That turned out to be too hard to sell, but it is the direction where all of this is going. For crowdsourcing to really take off, the market needs to decide which are the best products. Not some brand manager.

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