The Three Traits of a Winning Invention

Posted on March 27, 2013 by Stephen Key

What makes a great idea great? That’s an interesting question worthy of intense and lengthy debate. But I’m more interested in clarifying what makes an invention easy to license.  I’ve discovered, through decades of experience and the experiences of my students, that easily licensable ideas share definitive qualities. If you’re wondering how difficult of a time you’re going to have licensing your invention, there are no better questions to ask of your product. Your idea might be great! But that has little bearing on how easy it’s going to be to license. Some ideas are simply ahead of their time. And that’s fine. But all of the ideas my students have been able to license quickly and with great success share the following traits. At the least, you should assess how much time and energy you really have to invest. How hard are you willing to work?

First, your invention must have a strong benefit. What is a strong benefit? A benefit that’s easy to understand and that strikes consumers immediately. You don’t have to spend much time explaining the idea, because people get it. It’s obvious. Why is this important? Because it’s more likely you’re solving a problem people regularly encounter and actually need solved. And your product is doing a good job of it, because it doesn’t require a lot of explanation. It’s almost a no-brainer. Yeah, I need that!

It’s easy to manufacture. I cannot stress this enough. Your invention doesn’t require new equipment to be manufactured. Manufacturing overall isn’t too expensive. And as a result, it fits into the magical sets of retail price points every company adheres to. Easy.

There’s a large market for it. People want it. A lot of people. Any company that chooses to produce it is going to get a return on their investment.

If your invention doesn’t share all of these qualities, that’s not to automatically say you won’t be able to license it. But it will be much harder to do. All of these qualities reduce risk for a potential licensee, essentially removing doubt and the reasons they might have for not wanting to license your idea. You’ll have to do a lot more convincing if your invention stands out. And my perspective has always been that it’s just as easy to come up with a great, easy idea as it is a great, difficult one….

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The Good, The Bad, and The Ugly of Licensing

Posted on March 25, 2013 by Stephen Key

The good news is, you did it! You found a company that wanted to license your idea and negotiated a contract. Smooth sailing from here on out!, you might be thinking. Don’t. Unfortunately, as in life, there are no guarantees. Contracts are living agreements, I’ve learned. They’re not static. And in the few months or more it takes to transform your idea into an actual product — that is to say, to develop, distribute, market, and sell it —there are many things that can go wrong. Most of them may be out of your control, at this point. But that doesn’t make failing to see your product succeed in the market any less disappointing. I’ve had this happen to me many times before. The timing may be off. Your potential licensee drags their feet and misses a window of opportunity, like a specific buying season. You’re out a year. Maybe your product does make it to market, but it doesn’t sell. No one reorders. That’s the kiss of death. It’s a flop. Maybe the company failed to get behind your product fully, choosing not to invest in marketing. Maybe the employee that championed your idea is transferred or promoted. These instances have all happened to me. Sometimes I’ve walked away from a licensing contract and collected no more than an upfront fee. Other products of mine have sold for a year, but no longer. And a few rare products have sold for ten. It’s hard to predict what you don’t know, but you should be prepared for these realities. Contracts may be breached and you’ve got to decide how to act moving forward.

The best thing you can do to ensure that your product idea doesn’t meet an ill-timed fate is to stay on top of the process and abreast of what’s going on. Stay invested. Don’t assume that someone has your best interests in mind. Make yourself useful and available, but not a pest. And keep your fingers crossed. Sometimes things get a little off-track. Keep coming up with more ideas, and learn as much as you can from the experience.

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“I have an invention.”

Posted on March 22, 2013 by Stephen Key

“I have an invention.” I’ve probably heard that sentence uttered no less than thirty thousand times in the past three decades. Everyone has an idea! I’ve built my business, inventRight, on that very premise — that everyone, age, sex, wealth, and education be damned, has the capacity to invent. We’re all consumers, with likes and dislikes and desires and frustrations. That little spark of, “but if only…” can strike us all, if we allow ourselves to unleash our creativity and imagination. But unfortunately, most people never get up off the couch and do anything with their ideas. I’ve met men and women who proudly tell me they have an idea. Actually, it’s more like they’ve had an idea — the same idea — for years! They’ve been holding on to the very same idea for years. I probably shouldn’t be as baffled as I am, given how often this occurs.

If you have an idea, but you don’t do anything about it, sooner or later, you’ll see that invention online, or in stores, or on TV. And then you’ll really be kicking yourself, because your idea was a good one. If only you had chosen to do something about it. Getting started isn’t nearly as difficult as you might think. But first, a few don’ts. Do not run out and file a patent. It might feel comfortable and wise to protect your idea, but it’s not. If you don’t have any idea how your idea might fare in the market, don’t even thinking about filing for a patent. Also, don’t tell anyone about your idea, as tempted as you might be to share it. Keep it close. If it’s a good one, you want it for yourself, don’t you?

The first thing you should do is start determining if your invention has legs. Who would sell it? Who would buy it? Why? Do some research. Is the idea truly new? Does a similar product already exist? It might seem inconceivable to imagine starting a company to manufacture, distribute, and sell your idea, but that’s the beauty of licensing. Licensing is very doable. Companies all over the world are looking for the next great idea. Those ideas don’t need to come from within their own four walls. Open innovation is growing in momentum, and there’s no reason you shouldn’t take advantage of that — especially when you already have an idea! Don’t succumb to fear and inertia.

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How to Patent an Idea

Posted on March 20, 2013 by Stephen Key

Patenting an idea isn’t very complicated. My advice? Hire a good attorney to help you. Do you know what’s much, much more difficult? Making a patented idea mean something. And by that I mean, making a patented idea profitable. Patents are slips of paper. They don’t guarantee much, because patents can be designed around. Your attorney might be amazing. Together, you might file claim after claim, doing your best to build a wall of protection around your idea. But to truly ‘protect’ it from being implemented by someone else, you’d have to keep filing claims year after year. I don’t think that’s very practical. And I speak from experience here. Don’t get me wrong — I have patents! I think patents can be meaningful. But the undeniable truth is that the vast majority are not. Ideas are fluid. Products are tangible. The best way to protect your idea is to get it to market quickly.

So the question I’m guessing you should be asking yourself instead (or at least, at first) is, “Do I have a remarkable idea?” And to answer that, you need to know if it already exists and if people are willing to buy it. The easiest and best way to start answering these questions is to do some research! Get out of the house and visit the stores you think would sell your product. What are the benefits of other similar products? How does your product idea compare? Most importantly, does it have a unique benefit? Use Google to help you do a prior art search. But more concerning than the existence of other patents is a lack of certitude about how many consumers need or want your product. If not enough people are willing to pay for it, it’s not going to go anywhere. Patented or not.

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Crowdfunding For Inventors

Posted on March 19, 2013 by akrauss

Andrew Krauss interviews Cheryl Downing, a small business/crowdfunding marketing consultant, on crowdfunding marketing.

AK: What is crowdfunding?

CD: Crowdfunding provides a means for people to gather donations from individuals–usually over the Internet–for the purpose of funding their projects. For inventors, this offers an option to quickly evaluate the marketplace viability of their new product idea, as well as provide funding to fast-track their working prototypes to products.

Crowdfunding is essentially like having the opportunity to get free money. It is not a loan and these donors, also known as backers or contributors, do not own equity in your business. Equity crowdfunding will be an option down the road in the U.S., after some government hurdles are cleared. However, here we are discussing non-equity crowdfunding through websites, such as Kickstarter.

AK: Why would someone want to donate money to an inventor?

CD:  People want to help other folks have the opportunity to achieve their dreams especially in a tough economy where it is challenging, if not impossible, to get a loan.

Additionally, for inventors or anyone developing products, the costs for do-it-yourself manufacturing using tools such as 3D printers are rapidly decreasing. When you combine this with the increasing availability of supportive environments, like do-it-yourself makerspaces with machining and 3D prototyping equipment, backers understand that there are some amazing possibilities for product development within reach now for relatively small amounts of money. By the way, local makerspaces can be found by checking resources such as Make Magazine’s Maker Community Groups (http://makezine.com/groups/index.csp), or websites like Makerspace (http://makerspace.com/makerspace-directory) or The Maker Map (http://themakermap.com/).

Speaking as someone who was involved in marketing and sales for Xerox Corporation during the desktop publishing revolution, it is very exciting to see product developers gain the ability to direct their manufacturing process.

AK: How does the crowdfunding process work?

CD: In a nutshell, you set up a campaign on the crowdfunding site. You describe why you and your project deserve the money, generally using video (under three minutes) and text. You select a project category, which for inventors might be design or technology. You define a fundraising goal. You offer thank you gifts, known as rewards or perks, if people pledge to donate money at certain levels. When the campaign begins, you then promote the heck out of it. By the end of the campaign (typically 30 to 60 days), you hopefully have raised all the money you need. (I will say more about promotion and calculating your fundraising goal in one of our next few sessions.)

Generally, backers’ credit cards are not charged until the campaign is over. In some cases, it may take a couple of weeks before you actually receive the money, with fees deducted. After the campaign is over, you will also receive the backer’s contact information. After that, the real work begins of fulfilling all of the rewards, while simultaneously starting your new business.

This description is, of course, a vast oversimplification but it captures the gist of the process.

Note that for some crowdfunding sites, such as Kickstarter, you have to submit your project for review upfront. If it is accepted, you can then begin your campaign. If not accepted, you can try moving your project to a different crowdfunding site, such as the ones I mentioned earlier.

AK: What are the fees involved? Also, what is fixed and flexible fundraising?

CD: Generally speaking, the fees are based on which of two fundraising options the inventor chooses upfront, which cannot be changed once the campaign starts:

  • Fixed / All-or-nothing – This means that if you don’t raise the full amount of your fundraising goal, you get nothing. For some crowdfunding sites, like Kickstarter, this is your only choice. If you achieve your goal, you are charged approximately 4 to 5%. If you miss your goal, your backers are not charged, so you are not charged any fees, but you also get no money.
  • Flexible – This option costs you 8 to 9% in fees, but you get whatever money you raise.

Additionally, there is a credit card processing fee charged by a payment site, such as Paypal or Amazon.com. That vendor collects a credit card processing fee, currently ranging between 2 to 5%, depending on which payment vendor the crowdfunding site has chosen.

Therefore, the total in fees ranges from approximately 6 to 14% of the pledged money.

AK: Why would anyone choose the fixed fundraising model?

CD: Ultimately, you have to determine which fundraising option best meets the needs of your business. For example, if you feel that you cannot start your business financially unless you reach your fundraising goal, then having part of the money does you no good and you might as well choose the fixed option. Or, if you don’t reach the fixed funding level that might indicate that there is not enough market interest in this product idea at this point in time.

Obviously, since Kickstarter is a popular crowdfunding site and only uses the all-or-nothing model, there are enough people who don’t consider it an obstacle.

AK: What are the odds of reaching your fundraising goal?

CD: This is affected by a wide variety of factors, which I will discuss shortly. However, based on the statistics I’ve come across so far, it appears that approximately 43 to 46% of projects are fully funded. Obviously, this means that less than 50% of projects do not reach their goals.

On the other hand, some projects, especially technology-related projects like the Pebble E-Paper Watch (which raised over $10 million), can spectacularly overachieve their goals.

AK: Cheryl, the focus of your business is marketing. How does that come into play in crowdfunding?

CD: Marketing is critical to the crowdfunding process in two ways. The first is directly tied to your fundraising efforts. If you are going to have a shot at reaching your fundraising goal, before you begin your campaign, you need to figure out:

  • Who your ideal customers are, so that you know to whom you are promoting
  • What those prospective customers/backers need to hear, view or read to convince them to back you, so you know what messages to convey and how (such as video, text, photos, etc.)
  • How you get your fundraising request in front of them and get them to take action (make donations and virally spread the word about your campaign), which ties to how you find them online
  • How you will manage your campaign, especially if you are working a full-time job, which involves coordinating your marketing strategy so you don’t burn yourself out

Second, assuming you actually want to manage a business full-time at the end of the campaign (as opposed to starting work on your next idea), you need to consider the issues I just mentioned but on a much broader scale. In other words, how will you continue to market beyond the campaign? You need to think this through before beginning your crowdfunding campaign. Why? If you reach or overachieve your fundraising goal at the end of your crowdfunding campaign, you are then almost immediately in business and you need to be ready to hit the ground running.

As a long-time member of the Inventors Alliance association, which you lead here in Silicon Valley, I understand the passion and intensity inventors have. With that said, running a business is a different skill set. Some inventors, like you and Stephen Key, have the ability to step back and evaluate their products objectively in terms of what can be cost-effectively marketed. If an inventor is unable to do that, then he or she may want to find some business mentors, advisors, and/or team members, before they fast-track themselves into a business venture.

—————–

Andrew will be interviewing Cheryl for a few more ongoing interviews on crowdfunding. Stay tuned.

—————–

Cheryl Downing is a small business/crowdfunding marketing consultant. She advises small business startups and product developers/inventors on how to cost-effectively grow their businesses quickly, including raising capital through crowdfunding. (Check out her crowdfunding classes.) Since 2001, Cheryl has volunteered as an SBA marketing trainer and been an active supporter of the Inventors Alliance association. http://www.cheryldowning.com

 

Andrew Krauss has been teaching and coaching inventors for over thirteen years as the President of Inventors Alliance – San Francisco Bay Area. Inventors Alliance is one of the largest and most successful inventor groups in the nation. He has had countless successful inventors lecture month after month at Inventors Alliance events.

Andrew Co-Founded inventRight with Stephen Key ten years ago to teach people inventRight’s methods to license their new product ideas.

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Why Companies Will Never Steal Your Idea

Posted on March 15, 2013 by typvsns

In the age of information it is easy to believe that companies can accessibly steal ideas and ruin a life. But it is for this very reason- the ease with which one can get information- that they do not steal ideas. It is simply horrific PR. The proliferation of data razes the previous playing field and creates a new licensing battleground. No longer can a company afford bad public relations because of the perpetuity of its existence on the Internet. Arm yourself accordingly so that if you are wronged you can rectify the problem – and become aware of how licensing can work in this new age.

Filing for a provisional patent application or having a patent on your idea is always the best protection. Eventually, if the idea is stolen and it is a huge hit, attorneys will queue around the block at the chance to line their pockets. The media generated by such a controversy is never good for the company.

Most companies have started to realize that rather than risk a damning lawsuit they can actually cut research and development costs by opening the door to the entire world. They understand that there are talented people not behind the walls of the company, and many businesses are looking for a way to get ideas for free. The advent of open innovation, and its acceptance within companies, allows a lowered risk wherein the ideas of the everyman can be bought in exchange for manufacture and distribution. Carefully consider each company you submit to, and know how its filing and submission processes work.

Don’t believe everything you read. Blogs exist detailing the past tragedies of peoples’ stolen ideas; it is rare, but it does occur that a company is working on a tangentially related product. While I find contemporary claims of theft to be ridiculous, there are definite ways in which you need to preemptively guard yourself from aggressive corporations. Do yourself a favor and ‘kick the tires’ of each company; research previous lawsuits, issues, and complaints. Correspond with the company and leave an excellent paper trail. Ensure that your idea and name is mentioned in full at some point in your communication. Being continuous with your emails will safeguard your argument, and it’ll hold up in court. And finally, always remain and be professional. Know their language, speak the same terms, and flesh out all expectations.

Guarding your ideas today seems daunting. Filing for a provisional patent application is a step towards full protection from companies. Ready yourself with knowledge of potential business partners by doing as much digging as you can about their history. Companies today will think twice before stealing an idea when you have this simple protection.

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How to endure rejection when selling your invention

Posted on March 14, 2013 by typvsns

Humans are creatures built for endurance. From our physiological capabilities and capacity for preservation we were built to stick around. Mucking around the licensing world takes a great amount of fortitude – and rejection letters just add to the mire. You have to learn how to develop a tougher skin and utilize any and all rejection letters to stoke your own fire. I could cover an entire house with the number of ‘no’s’ I’ve ever received. But each was a battle I fought and lost – and a reminder of some of the eventual wars I won!

You see, no matter the time or place, I maintain a level of professionalism with all of my correspondence. It isn’t me they are rejecting in their letters; it is my idea. The continuity of your relations with potential licensees depends on your ability to uphold communication and disregard rejection as an attack on your person. Develop the tough skin. You must keep coming back to resubmit your ideas. Rather than becoming the guy with ‘that idea’ present yourself to companies as someone capable of supplying them with a future product. When they notice that you are capable of doing them a service, they will begin to divulge more information on what exactly it is they do want. Keep resubmitting to net that ultimate deal.

Muster the strength to endure. Always stay professional in your communication, and present yourself with a positive outlook and attitude. Prepare your plans of attack wisely and resubmit ideas over and again; getting one yes will be worth those ten no’s.

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How to stay motivated when selling your invention

Posted on March 13, 2013 by typvsns

Motivating yourself is foundational for the fruition of your goals. When a project is large or stress accumulates, I like to sit down and specify my courses of action. This ‘roadmap’ I create affirms my direction and helps me plan for future moves. Being able to envision your goal in its entirety helps cement exactly what it is you should be doing and seeking. To me, the very act of detailing my future is rejuvenating, inspiring, and energizing – I have a new goal I must and can achieve!

Writing down your ideas couldn’t be simpler. Begin by asking yourself what it is you’d like to achieve and what the big picture entails. Fill in each step from end to beginning, double-checking for every course. I like to call my finished goal sheet my ‘roadmap’ because without it I’d be utterly lost, working aimlessly. Affirm and validate your roadmap by placing it somewhere easily visible. Aim to cross off a step every day- always try to progress. Checking your roadmap frequently and keeping the larger goal in mind helps you stay at ease with what it is you are doing day to day. Every morning I wake up excited and ready to tackle the day’s problems when I know of its lasting effects in the coming months.

As a next push forward, motivate yourself by seeking those who have been successful in your field. What is it that helped them the most? Learn from both their mistakes and accomplishments– you’ll often find that ‘staying motivated’ was and is a large factor in their overall outlook and success in life. Try and befriend these people, as they will have the best advice for you.

Life, projects, and stress can overwhelm. Take a preemptive strike by planning ahead and programming intelligently. Refine and revisit goals often – focusing on completing each step will greatly increase your motivation!

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Calling Companies That Want Ideas

Posted on March 12, 2013 by typvsns

It takes a certain amount of courage to be able to cold call companies. It is so common to hear of rejection that cold calling has almost become obsolete for many businesses. In my initial ventures into cold calling the fear of rejection itself kept me from properly securing new deals. It was when I realized some very easy lessons that I found that cold calling could garner results and actually be comfortable. Find success and reduce stress by trying the following:

First, try to see your product from the view of the customer. How is your product going to benefit or help the person you are calling? Understand whom it is you are calling by finding specific people within the company or networking through sites like LinkedIn, Facebook, etc. This will help you streamline the process so you avoid people who will not be interested. Tailoring your responses based on what your product does and whom you are speaking to will help you secure that deal.

Try to respond in a succinct manner. Be polite, asking for just a few minutes of their time. Don’t ramble on when describing your product, and don’t talk over them when responding. Treat each call as if you were face to face, and realize each person has a very, very limited time to talk. As goofy as it seems, dress up and stand during calls to boost confidence. Your enthusiasm for your product will speak volumes; if your passion shines through the call, it will be felt. Make sure to do anything necessary to ensure that you are excited and ready to sell your idea.

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How To Create A Product To License

Posted on March 11, 2013 by typvsns

I don’t believe creativity blesses only a few of us – all of us possess the ability to practice and grow our creative abilities. Creativity only means a different mindset- of exercising our potential and capability to see things differently. For some of us this is much easier to do than others- and I strongly believe an imaginative perspective helps in all aspects of life, from our daily disturbances to larger issues. For that reason, I encourage others to actively train their imagination. When I find myself struggling with a new idea, I like to entertain myself with a couple games to further sharpen my creative acumen. Not only do games tease our brain, they provide a quick outlet for any stress that may have built up over the day.

The aim of all of my games is to seek a solution in a manner that is ‘out of the box,’ even if it isn’t feasible. I consider this much like brainstorming for any important press release. The first game I like to play is “mix and match.” The point is to put together or deconstruct the components of an item in an effort to create newer or better combinations. For example, the iPhone is a cellular phone, music player, camera, etc. What else could I combine to create a new or improved idea?

The second game I enjoy is called “What if…?” What if I had rain boots that unzipped to create shoes? What if I could listen to music while swimming? Ask yourself anything ridiculous, and see what you come up with!

The last game that flexes my creative muscles is called “solve it”. Any problem that I came into contact with that day – or a particularly bothersome issue from any day – I try to solve in the wackiest, weirdest way possible. The point is to discover and root up any and all things you see as a problem.

Playing these games helped me gain perspective on my ideas and paved new paths for thinking in a variety of ways. Don’t necessarily limit yourself to reality, or what is possible/probable. Challenge yourself and your surroundings by refusing to believe that something is impossible.

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