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.