Chumby The Clumsy Goes Global

Chumby is a cute little digital device with a strange story. Duane Maxwell, Chumby’s co-founder and vice president of software development, laughs as he says it began a couple of years ago when Steve Tomlin, a managing member of San Diego’s Avalon Ventures, was staying in a hotel. “They always have an alarm clock on the bedstand and nobody can figure out how to set it. There’s no way to tell if it’s already set and the alarm’s going off at 3 or 4 in the morning ’cause the previous guy needed to catch a plane.”

Lesson No. 1: The alarm clock had become… well, ridiculous. Lesson No. 2: All the hotels have Wi-Fi and a clock radio at every nightstand. Conclusion: Why can’t that device be Internet-enabled? Why not display weather, restaurants, news, and other information that’s important to hotel guests? So Tomlin contacted his friends and says he has this crazy idea…

“You can’t get any attention if you make another chrome-and-plastic, hot-tech, iPod-looking machine. So we intentionally created a very controversial package when we developed a soft electronic device, ” Maxwell explains.

The device they created is Chumby. It’s a funny, small, light embedded computer. Xconomy’s Wade Roush has defined the Chumby as one-quarter clock radio, one-quarter video and music player, one-quarter web terminal and one-quarter stuffed toy. It is a touch-screen device that entertains and informs. Its widgets can provide your music, pictures, games, net sites. And because Chumby is partly made of soft leather, it also is reassuringly squeezable.

Duane Maxwell and Chumbies

Duane Maxwell and Chumbies

“A lot of people hate it. A lot of people love it,” Maxwell says. “We have a lot of people who really love it because they were tired of the standard shiny hi-tech device. ”

Sure enough, the Internet is full of passionate debate over the Chumby—between ardent fans and strident critics.

But the controversy over the Chumby is exactly what its developers wanted. Maxwell says they never spent a dime on marketing. “This is another net phenomenon. We didn’t have the budget for Apple-style mass marketing, but it turns out that word of mouth—particularly among hackers and technically sophisticated people—carries a lot more weight than advertising. So we made an effort to target them.”

“Chumby the Clumsy San Diegan” got its premiere in August 2006. The place was Foo Camp, an annual hacker conference, where Chumby people gave away device prototypes, even more “beanbaggish” than the final product. “We encouraged them to hack Chumby,” Maxwell says. “We wanted it. We don’t care. We even gave them tools for that. As a result, we got a lot more content coming in, and we are not a target for hackers, because you can’t get famous hacking Chumby.” In fact, Chumby vice president Andrew “bunnie” Huang is a famous hacker who has written a book about hacking the Microsoft Xbox.

Maxwell emphasizes that Chumby is not a hardware company but a software service company. There are a lot of cool new innovative applications and gadgets inside Chumby. The company is especially proud of its picture-framing technology.

Chumby’s Tomlin is a former America Online executive, who serves double-duty at Avalon Partners and as the founding CEO of Chumby Industries. Under his leadership, Chumby is now moving the software to other devices and plans to seek growth there. Chumby itself is popular in Japan. It landed in Australia three months ago, and sales are also starting now in Europe. “We’re actually moving East all the time,” Maxwell says. “That’s how we’re expanding, when the economy is slowing down in the U.S. We’re still selling more units than we did before the economy started to slow.”

How can a small start-up with modest amount of capital get into consumer electronic markets? “There are now a lot of services in China that are normally done by manufacturing partners. Right now you can pretty much go to a factory in China with a cocktail-napkin design and they’ll do it all for you. I think a lot of companies will start to do this,” says Maxwell.

Chumby Industries only deals with one contractor: PCH International. “They take care of it all,” says Maxwell. A Chumby can only be bought online, and the price is $200. “When you place an order, it goes to our factory in China and they ship it directly to the consumer. We only keep a small number of Chumbys here for repairs and replacements.”

Chumby Industries in San Diego now has 25 employees, down from 40 a year ago. According to Maxwell, they laid off some people three months ago “like everyone else now has had to do.”

Investors have entrusted Chumby with a total of $20 million in venture funding. In December 2006, Chumby Industries got $5 million Series A funding from Avalon Ventures, Masthead Venture Partners, and O’Reilly AlphaTech Ventures. In November 2007, the same investors gave $2.5 million more. And in March 2008, Chumby got $12.5 million in Series B funding from the lead investor JK&B Capital and the existing investors Avalon, Masthead, and O’Reilly.

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