Stephen Key - Become A Professional Inventor-Stephen K. M. GN (2020)

BECOME A
PROFESSIONAL
INVENTOR
The Insider’s Guide to COMPANIES LOOKING
FOR IDEAS.
STEPHEN KEY
WITH JOHN C. LEE
EDITED BY MADELEINE KEY & JANICE KIMBALL KEY
STEPHEN KEY MEDIA
Copyright © 2020 by Stephen Key Media, LLC. All rights reserved

Except as permitted under the United States Copyright Act of 1976, no part
of this publication may be reproduced or distributed in any form or by any
means, or stored in a database or retrieval system, without the prior written
permission of the publisher.
This publication shall not be construed under any circumstances, by

implication or otherwise, as the giving of legal advice and/or the practice of
law. ver ii
Cover & Interior Design By: James Shehan
To Madeleine, my eldest daughter, thank you for giving me a voice.
“Coming together is a beginning, staying together is a process, and
working together is success.”
— Henry Ford
CONTENTS
Title Page
Dedication
Preface
Acknowledgements
Foreword
Introduction
PART ONE
1. Companies Are Looking for Your Ideas!
2. Licensing: The New Business Model
Licensing Versus Venturing
PART TWO
3. Behind the Scenes of the Invention Submission Process
4. Submitting Your Idea to The Right Company
PART THREE
5. rotecting Your Ideas
6. What You Need to Land a Licensing Deal
7. Reaching Out to Potential Licensees
PART FOUR
8. The Dreaded Silence
9. Reasons Why Your Product Idea Was Rejected
PART FIVE
10.
Preparing To Answer The Hard Questions
11.
From Initial Interest to a Deal: Negotiating Licensing Agreements
PART SIX
12.
Where's the money?
13.
Fighting to Get Paid
PART SEVEN
14.
28 Interviews With Industry Insiders
INTERVIEWS
Toys
Brian Chapman
Ben Dermer
David Small
Sara Farber
Bob Ruginis
Jesse Faunce
Hardware
Corey Talbot
Health and Beauty, Massage Apparatus, Travel Accessories
Lawrence Cruz
Pets
Jonathan Zelinger
Amanda Hutton
Ward Myers
Cannabis
Jonas Matossian
Arkady Grigoryan
Juvenile and Baby
David Contract
Dental
Mike Parlante
Novelty Gift
Sam Hurt
DRTV
Trish Dowling
Hospitality
David Middleberg
Sports Medicine
Donald Bushby
Music
Justin Norvell
Bob Kasha
Kitchen
Brendan Bauer and Hilton Blieden
Automotive
Atul H. Patel
Golf
Simon Touma
Ed Holda
Organization
Jeff Gawronski
Packaging
Barry McKillip
Product Development
Louis Foreman
15.
Increasing Your Chances of Success
How to Be a Pro: A Case Study
PART EIGHT
PREFACE
What does it mean to become a
professional inventor today?
I guess it depends on who you ask.
T otruly
me, it means you have created something new and unique that people
want – and had enough determination and persistence to actually
bring it to market.
The tough part? Bringing it to market. Aka commercialization.
There are many inventors who have patented their inventions, and they
should be extremely proud of that. It’s an accomplishment. But personally,
to me, having a patent is not enough.
Like my patent attorney John Ferrell once said, “Protection is easy.
Selling is hard.”
My first true invention was a rotating label that delivered 75% more
space. Before that, I licensed toys and novelty gifts; products that were just
fun and intended to put a smile on people’s faces.
But after reading an article in The Modesto Bee about how there wasn’t
enough room for important information on medicines, and as a result people
were becoming sick and dying, I set off to come up with a solution that very
day.
I had previously created and licensed a rotating cup and canteen for
children. Could I apply the same concept to a label? And would it result in
more space for important information? I remember walking over to
Walmart to purchase a container off a shelf and then walking back across
the street to Kinko’s (the printing chain) so I could begin building a rotating
label using the copy machine.
To my amazement, I created something that truly had value. When you
place a second label that has a window cut out of it over a first label and
spin it, additional information printed on the base label is revealed as the
container is spun. It was a fundamentally simple idea to use two labels. the
top label had a window. When spun, that window revealed information
printed on the base label.
I couldn’t believe I had truly invented something. Becoming an inventor
was something I was sure I could never possibly do! So, of course, I sent
my creation to my patent attorney. They couldn’t believe this was a new
idea. They had seen some of my previous ideas; they knew I wasn’t really
an inventor.
But when they did a prior art (patent) search, nothing came back. I
remember John calling and saying, “Steve, you’ve invented something truly
useful.”
I was so proud! I was an inventor! I had invented a new label
technology.
But I soon discovered – in a very awkward meeting at Procter &
Gamble’s technical corporate office – that I was not the true inventor of this
idea. During this meeting, Procter & Gamble’s legal team slid over a list of
numbers and said, “Mr. Key, we’re not going to pay you one penny for this
idea. It’s already been invented.” They were right.
You see, there was prior art on my idea. Prior art that had not been
uncovered by my legal team. the invention I thought I created was actually
invented and patented back in the 1950s.
I thought to myself, “How can this be true?” I felt embarrassed and
totally deflated. At that point, I guess most people would walk away and
give up. But not an inventor.
I kept asking myself, “If this has been invented, why has it never come
to market?” It bothered me. this was a great idea! Why, even though there
were patents, had it never made it to market?
Very intelligent, caring people told me to give up.
I wouldn’t. And that’s when I became a true inventor.
I needed to know the answer to my question so I could solve my
problem. And that’s what inventing is really all about. the hard parts.
Making discoveries, making changes, making mistakes, pushing through
obstacles, being determined, and never giving up on finding a solution,
even when everyone is so tired of hearing about it. When everyone else is
ready to throw in the towel, you push through.
There’s simply something truly special about being an inventor. There is
something burning inside of you that just can’t be extinguished. You can see
things that most people miss.
Figuring out why this innovation hadn’t come to market was a pure
exercise in inventing. I studied label manufacturing techniques. I studied
what kinds of materials were used to produce labels. I had samples made. I
wrote dozens of letters to potential customers, until I found one.
I pushed through rejection after rejection.
I pushed through the uncertainty of filing patents on a technology you
are not sure is ever going to generate a dime.
I believed in myself when everyone else wondered if I was losing it.
And in the end, I obtained 20 patents on this very same technology. We
sold tens of millions of labels and won 15 packaging industry awards, as
well as two Edison Awards in New York City the same night Nike and Ford
were honored.
I still remember making that first prototype of a rotating label at
Kinko’s in Modesto, California. I showed it to the employees. They thought
it was very clever, and so did I. I’ll never forget the feeling of walking back
into Kinko’s years later when Alex Trebek was on television showing my
rotating label and it was selling in Walmart stores across the country.
That day, everyone in the Kinko’s applauded.
Proving to myself that I could do this was the greatest gift I have ever
given myself. Now, I was truly an inventor.
That was decades now. Now I’m 63, and part of a team that is going to
turn the packaging industry on its head. We’ve developed a solution to the
plastic rings often seen on six packs of beverages. there’s far too much
plastic in our oceans and landfills. I’m proud to be part of Fishbone
Packaging. After years of developing the concept, working on different
materials, building samples, attending trade shows, and reaching out to
companies, I just flew out to one of the largest beverage companies in the
world to make a presentation.
There are a lot of obstacles for us still to overcome. We’re pushing
through. And I’m ready! It’s exciting and nerve-racking. It’s the most
amazing experience ever. And I’m so happy to be able to do it again.
Because an invention doesn’t mean much if you cannot bring it to
market and share it with the world.
“My job is not done until I see that idea implemented and shipped.”
– Vinodh Gopal, Senior principal engineer at Intel and the
company’s 2019 Inventor of the Year. More than 170 patents granted.
Being an inventor is all about the journey. The struggle. The failure.
And yes, the success when it finally happens.
Through it all, I’m on the edge of my seat. I’m alive! I love being an
inventor!
In this new book, I’m going to share with you what it takes to become a
fulltime professional inventor. I hope you enjoy the ride too.
One more thing.
Holy shit! 486 pages? How can anyone read such a long book? That’s
what I would say if I picked this up.
But I’m here to tell you, I wanted to cover this topic as thoroughly as I
could. And I felt the only way to really do that was by interviewing
companies that are looking for ideas and including those interviews in the
book. So, I did! the interviews included cover no less than 17 different
industries, adding nearly 200 pages to the book. I encourage you to read
these at your leisure and return to them. They are not required reading.
What you’re left with is the typical length of a business book, which is 300
pages.
ACKNOWLEDGEMENTS
T here is nothing like bringing a product idea to market. To see your

product on store shelves, on TV, and people using it is one fantastic
feeling. Helping others achieve invention success is equally as
rewarding.
I could not have had such a wonderful career without the help of so
many.
I’m going to start off by thanking first and foremost, my wife Janice.
She has believed in me since the first day we met. I’m not quite sure what
she saw, but she saw something in me when everyone else had their doubts.
Including myself!
As she has said many times, I was a “diamond in the rough.”
I hate to say it, but she is still polishing my edges even today. I cannot
even begin to thank you for everything you’ve done, Janice. Not only in my
personal life but also for my career. I couldn’t have done any of this without
you. I ask myself every day, what did I do to deserve you?
My eldest daughter Madeleine: Thank you from the bottom of my heart
for putting up with everything. When we were sitting in our kitchen in
Modesto, California a decade ago and you said to me, “Dad, I’ll write for
you,” I had no idea where this would lead. You have been my voice for
more than 10 years. I wouldn’t have the voice I do today in our inventing
community without you. Thank you for making me look good and helping
me make better decisions.
Andrew Krauss, my partner at inventRight: When we met at an
inventors group meeting you hosted at Santa Clara University 20 years ago,
you saw potential. You kept believing in our mission to help other
inventors. In fact, your intentions have never wavered since day one!
Without your commitment, dedication, and vision we wouldn’t be leading
the inventing industry today. Thank you for handling the day-to-day
operations while I dream!
I am indebted to everyone at inventRight! Our team is amazing. With
your help, inventors are becoming more successful. We have a voice in our
community. And for that I cannot thank you enough.
Jon, thank you for making everything run smoothly with all of the calls
we receive daily. You make a wonderful impression on everyone you meet
and are truly an ambassador for our company.
Heather, you truly amaze me with all of the talents you have. We’re just
now beginning to discover even more of them! I appreciate you helping me
with all the daily calls, but also for organizing other events outside your
daily duties. Thank you for keeping me on track.
Sylvia, thank you for joining us. Identifying potential students that we
can truly help with their inventions isn’t easy. Thank you for guiding them
and making good decisions for them and for us.
Terry, thank you very much for helping our coaches do the best job
possible helping our students. Your commitment and dedication inspires
me.
Paul, you’ve been impressing me since the first day you became a
student. Thank you for handling contract negotiations and keeping your
students on track to achieving licensing deals.
Judy, thank you very much for staying with us during your journey
traveling and living in another part of the world. You have such a calming
effect on your students and are truly an asset to us.
Arleta, thank you for doing such a great job with our students in
addition to handling other responsibilities in the company. I can always
count on you to look out for their best interests.
Ryan, I don’t know how you do it. You have a serious fulltime job and
are still such a positive and influential part of our inventing community.
Somehow, you squeeze more out of 24 hours in a day than most people
could even dream of. You are a true leader.
Brayton, you have a wonderful sense of humor. You’re going to have a
excellent career. Thank you very much for being part of our community.
Amy Jo, thank you for your loyalty. I have asked you to do so many
different things over the years. You’ve taken on each responsibility
gracefully and handled it beautifully. There’s nothing you cannot do. Thank
you for helping so many.
Jeff, from the first time I met you you’ve been surprising me. I wasn’t
quite sure when you first came on board how you would fit in; now, you
bring so much to our company. Thank you for helping us rebrand and make
decisions based on analytics.
Scott, your positive outlook and desire to pursue opportunities inspires
me. Thank you for helping so many students.
Lynnsie, you have taken this company to a new level. The hard work
you’ve put in establishing an amazing design program is helping so many
people achieve their licensing success. Thank you for your dedication.
James, back in the day when things were a little tight, I told Janice:
“Whatever we do, we have to keep James.” Thank you for being with me
for over 20 years. You’re probably one of the most talented people I know,
and you ask for very little. There isn’t anything you cannot tackle and do.
You’ve seen me at my worst and at my best. Please keep those secret.
Courtney, you embrace the passion and dedication to this industry I
have felt my entire career. Thank you for helping the next generation of
inventors. Don’t ever change.
Megan, I cannot thank you enough for being part of our team. You make
things run extremely smoothly! Your attention to detail is amazing! Thank
you for making me look good.
Eli, thank you very much for joining our team. You have made a big
difference in a very short period of time. Your enthusiasm is inspiring.
Gene Quinn, looking back years ago we didn’t get off on the right foot.
But I’m so happy to have your support and friendship now. You are truly
one of the individuals on a white horse helping our inventing community.
Thank you for everything.
Benjamin Harrison, thank you for being such a good friend. You’re a
great sounding board. Your support is amazing.
I also want to thank our inventing community for all your support throughout the years. It brings
me great joy when I’m on the road meeting you. Your enthusiasm makes me feel absolutely amazing.
John Lee, you surprise me all the time. Your talents are limitless. Thank
you for stepping up and helping me write this book. You were truly
fearless! I am looking forward to seeing all of your accomplishments in
your career.
FOREWORD
Why I Wrote This Book
few years ago, while travelling with my wife Janice to speak at an

A inventor’s organization in Texas, I had the opportunity to interview
Alex Lee, then-president of OXO. OXO is a leading player in the kitchen
products industry, with more than 1,000 products on the market and
numerous design awards. the company also has a long history of embracing
open innovation, primarily working with design firms and inventors to find
and develop its products. My wife and I were sitting in the car in a
McDonald’s parking lot while I conducted the interview on my phone.
There is one thing that really stands out in my mind about this interview.
Alex shared with me that if it were up to the corporate attorneys at
OXO, the company would never look at another outside product submission
again. Their concern was that outside submissions opened the door for legal
exposure. (Isn’t it great to know that while we worry about companies
stealing our ideas, they worry about inventors suing them?) Alex said he
would continue accepting product ideas, even as he lamented: “It’s a bit like
going to a flea market. You see hundreds of items and only once in a while
is there something worth looking at again.”
Immediately intrigued, I wondered why that was. Why were so many
submissions to OXO failing to meet the mark? What was going on? In fact,
I couldn’t stop thinking about it.
Years later, I discovered that this was a hardly an issue exclusive to
OXO.
Let me explain.
In 2017, I cofounded an organization called Inventors Groups of
America (IGA) with my longtime business partner Andrew Krauss. Our
goal is to educate inventors and provide free resources to help the inventing
community. In one of our newsletters, we introduced our members to an
open-innovation kitchen novelty product company called Fred (formerly
Fred and Friends.)
We included a link to submit products to the company in the email and
within 24 hours, our contact there had received more than 100 product
submissions — all of which were terrible , he told us. Please, he asked, do
not share this link with your community again. Shut down the submissions.
Delete the newsletter.
How were the submissions terrible? Well, the ideas weren’t new or
novel, for one: They could be found on the market after searching on
Google for less than five minutes. How else were they terrible? Well, most
weren’t a good fit. People had submitted toys, hardware, and pet products
— to a novelty products company! The company’s time had been wasted, in
other words.
When a door like that closes, everyone loses.
Most inventors believe that if they just knew who to contact inside of a
company, they could land a licensing deal. Inventors believe it’s about
access.
It’s not. It’s about approaching this the right way. Which requires doing
your homework, building relationships, and submitting products correctly.
It’s about being more professional.
These stories illustrate why I was motivated to write another book about
licensing.
As I hope many of you know, this is not my first book. Each time I have
written a book, I have promised my readers that I will “give it all away.”
What I mean by that is, I do not withhold information in my possession to
try to get you to buy something else. I give you access to everything I know
on a certain topic at the time I write the book. So, if you’ve read One
Simple Idea: How to Turn Your Ideas into a Licensing Goldmine or Sell
Your Ideas With or without a Patent you might be wondering, what else is
there to say? What else can I learn about product licensing and how to
profit from my creativity?
A lot!
One Simple Idea provided readers with a basic outline of the 10-step
process I developed to license product ideas. I’m very proud it has helped a
lot of people do just that!
But there are many more people who are still failing to license their
products, and it’s not because they have a bad idea. Rather, I’m convinced
it’s because they don’t really understand how product development and
licensing works, both in terms of how to navigate the submission process as
well as what’s actually going on inside companies reviewing their product.
It has become clear to me that additional information and guidance is
needed.
And that’s why I wrote this book: To peel back the curtain on open
innovation, independent inventors, and licensing. To give you an insider’s
guide. To update you on the very latest trends and best practices within the
industry.
Since One Simple Idea and Sell Your Ideas were published, much has
changed. I have learned a great deal more than I knew then. Those books
largely focused on my own experiences as a product developer. I have now
consulted with and helped thousands of other people license their ideas in
industries that were unfamiliar to me. After interviewing a great number of
highly successful inventors, I have a firmer grasp on what they all share in
common.
Perhaps even more importantly, I’ve taken the time to approach many
companies that embrace independent inventors to ask them directly: What
are you looking for in terms of your relationship with inventors? How do
you want inventors to work with you? What should inventors do and not
do?
Through my columns for online magazine news platforms including
Forbes , Inc., and Entrepreneur , I have been able to access decision-makers
at leading companies across 17 industries. These industries include: Toy
and game, hardware, beauty and health, pet, cannabis, juvenile and baby,
dental, novelty gift, As Seen on TV, hospitality, sports medicine, music,
kitchen, automotive, golf, organization, and packaging.
The 28 experts I have interviewed at these companies have been very
candid about their experiences with inventors. I have included quotes from
these industry insiders as well as others that illuminate and support my
statements throughout the book. In Chapter 14, you will find longer
interviews with each of these 28 insiders.
So, you are not just getting my opinion after years of experience, you
are getting the scoop from people on the inside and behind the scenes of the
consumer product licensing industry.
You possibly know that, together with my longtime business partner
Andrew Krauss, I run a company called inventRight. We coach inventors on
how to license their ideas, helping them through every step of the process.
These days, we see a signed licensing agreement once a week on average.
On our YouTube channel inventRightTV, we publish new videos about
inventing and licensing weekly. Working behind the scenes helping our
students get the best deals possible has exposed us to a lot of information
and insight that is not readily available to others. Our students have licensed
their ideas in practically every industry imaginable. I have seen the good,
the bad, and the ugly about licensing.
I know what you should do and what you should NOT do! Many of
your product submissions are not going to the right companies. Many of
your product submissions are not going to the right people. Many of you are
not developing relationships with companies, or you are asking for things
that are unreasonable, or pushing for the process to go too fast. If you really
understood what’s going on, I think some of these problems could be
eliminated.
My goal in writing this book is to help you transition from an amateur
inventor to a professional inventor. To do that, I am going to share
everything I’ve learned — not only from my own experiences as well as my
students, but also from the folks inside companies who are in the business
of accepting or rejecting your product submissions.
It’s all here. Your very own insider’s guide to the consumer product
licensing industry.
Keep reading.
INTRODUCTION
What You Will Learn From This
Book!
ou are going to learn how to submit your ideas for products the right
Y way! You are going to learn how to be professional at the licensing
game. Here are just a few of the things you will walk away having
learned from this book.
The most important thing you will learn is how to build strong
relationships with the companies you want to invent for, aka potential
licensees. Most likely, this company will reject your first product
submission. Maybe even your second, third, and fourth. But, if you take the
time to develop a relationship with that company, you may be able to
become an asset. You may find that the company begins to ask you to create
in a certain category in which they need new products. To be successful at
licensing, you need to be seen as an asset and not a liability. You do NOT
want to be perceived as an amateur inventor. Both companies and inventors
have told me just how important these relationships are.
“In this business it’s all about relationships. Know how and know
who.”
— Richard Levy, toy inventor with over 100 licensed toy ideas,
including selling 75 million Furbies from Hasbro.
“95% of what we deal with in terms of new products comes through
personal relationships.”
— Ben Dermer, Senior VP of Creative Development at Spin Master,
the #2 manufacturer of games and puzzles in North America.
You will learn how to tell if a company is inventor-friendly or not. I will
teach you how to read and assess submission agreements (which are
required by most companies) so you can determine whether you should sign
it and move forward. There are companies that say they want to review
your ideas, but truthfully? They do not. They are not genuinely interested in
working with inventors and the benefits of open innovation. Before
submitting your invention, it’s important to read through the language on
these agreements very carefully. There are other red flags to watch out for
that I will point out. Sometimes there are “red flags” on company websites
or that pop-up in conversation with a company – and I will teach you to
watch for those signs.
You will also learn how to determine which companies to submit your
ideas to. I have already mentioned the horror stories of people submitting
pet products to a kitchen goods company — and while that seems obvious,
it still happens a lot. But there are other, less obvious, reasons why you
might select certain companies over others for your product submission.
“We don’t want to discourage people from sending in their items. But
with that being said if they did their homework first and had their
checklist to see what else is out there, we would have more qualified
items.”
— Trish Dowling, VP of Merchandising at DRTV company Allstar
Innovations, the maker of hit products including the Snuggie.
How to answer the questions you receive from companies. Oftentimes,
inventors are so excited when they receive a positive response from a
company that they start giving away all kinds of information too soon. Just
because a company makes a request doesn’t mean you have to supply it
right then and there — but of course, there are many questions that you do
need to answer to keep your project moving forward. You don’t want the
company to get frustrated and walk away.
How to reevaluate and redesign your initial submission. Is no one
getting back to you? Are you only receiving negative responses? I explain
how to resubmit, tweak, and redesign your product submissions. This is an
essential component of becoming successful at licensing. Rarely does
anyone knock it out of the park on their first try.
“Typically, with our top inventors we give them live feedback on their
idea and they say ‘Hey look, let me shape it a bit more and come back and
re-present it’. Inventors who have the capability of taking an early idea
and altering it to meet the needs of our business have a very high
likelihood of that item going in the line and being produced.”
— Brian Chapman, President and Head of Global Design and
Development at Hasbro, the world’s largest toy company by revenue.
“We typically can spot flaws — fatal flaws in either the marketing
strategy or the execution. And if the inventor could be objective and just
listen, then they can learn from that and hone their product to the point
where it is more sellable.”
— Louis Foreman, Founder and Chief Executive at Enventys
Partners; founder of Edison Nation; creator of the TV show “Everyday
Edisons” and publisher of Inventors Digest.
How to follow up with companies correctly. Unless you have been doing
this for a long time, you probably don’t know what’s going on behind the
scenes at a company after you submit your product. When and how do you
follow up? How long do you wait? What’s the best way of asking
questions? I help you navigate the dreaded black hole.
The right way to make use of Non-Disclosure Agreements (NDAs). The
re’s a lot of confusion about the benefits of NDAs. Sometimes, inventors
ask for an NDA to be signed upfront. Sometimes, companies do. In my
experience, it’s often better to wait until further along in the process. I will give you the information
you need to sign an NDA at the right time.
“We always encourage inventors to sign the NDA because it protects

the inventor and we don’t want to be liable or responsible for any sort of
miscommunication in any way.”
— Olyvia Pronin, Marketing Director at Wham- O-Toys, which has
created and marketed many of most popular toys of the last 70 years.
How to create strong marketing material. You do not have to submit a
prototype of your product at first. You can and should use simple but
powerful marketing tools such as sell sheets and one-minute videos to
communicate the benefits of your product clearly. Powerful marketing
materials can make the difference between a company loving your idea,
rejecting it, or not even bothering to review it. Frankly, if your sell sheet
isn’t done correctly, they won’t look at it.
“Make sure that you convey your idea to the point that anyone can
understand it! It’s not about how fancy your sell sheet looks – it’s about
how clearly you convey the idea. that’s the biggest thing.”
— Atul H. Patel, former product manager with 15 years of
experience at Bosch, GM, and Daimler, some of the largest automotive
companies in the world.
Which industries have the best revenue opportunities. I have analyzed
the major industries that license consumer product ideas and do the math
for you. Like I’ve always said, licensing is fundamentally a numbers game.
This will help you make better choices about where to focus your creativity.
In some, the opportunity is huge!
this book is intended to help all of us — the inventing community — do
a better job submitting products to companies. When we do a better job of
submitting, we improve the chances of licensing our ideas, which in turn
improves our chances of profiting from our creativity.
Before we get started, I also want to explain what this book is not. One
thing I have learned being a professional creative making money from my
creativity is this: Sometimes I was just a designer and sometimes I had
actually invented something. You can make money from your creativity
regardless of what you call what you make, be it inventions, ideas, artwork,
concepts — you name it.
So don’t let the word “inventor” scare you. I think all of us can be
inventive. Most of my ideas were not inventions. And my biggest idea? The
one that produced the most revenue/royalty for me? That was an
invention… invented by someone else long before me! Actually, it was a
just a concept in a patent. I figured out how to manufacture and then license
it.
I guess basically what I’m saying is you can make a living from being
creative with your ideas. It has nothing to do with what they’re called or if
they even can be protected. (In fact, throughout the book, I use the words
inventor and product developer interchangeably. It makes no difference
what you call yourself. In the past, we advised inventRight students to refer
to themselves as product developers. These days, the term “inventor” is
actually quite popular.)
There are many, many books and resources about topics like building
prototypes. This is not what this book is about, or many of the things people
like to focus on when it comes to inventions.
Because all it takes today is to be inventive .
this book is about how to become a professional at creating ideas that
generate revenue. But that’s not as sexy as the phrase “become a
professional inventor.” Everyone can identify with that.
At the end of the day, regardless of what industry you’re inventing for,
there are things in common when it comes to licensing and collecting
royalties from your creativity.
You need a point of difference, and you need to present it well. Your
value proposition or one-line benefit statement needs to be clear and
concise.
Building relationships is crucial. In the end it’s who you know and who knows you. They don’t
care what you’ve done in the past. They only care about what you’re showing them today.
Selling the benefit first is always paramount. Sometimes a prototype
will be required. But don’t forget, you can fake proof of concept to get
interest.
Try to act normal and be rational. Act like an asset in other words.
Don’t embarrass the person who’s going to champion your idea within the
company.
You need to be prepared to answer the questions these companies are
going to ask you.
Invest in an industry and it will invest in you. Don’t jump around.
Stop worrying about protecting your ideas. Be smart and focus on
selling instead. Understand how the game has changed and use the tools
needed to give yourself perceived ownership.
As Andrew always likes to say, keep inventing!
PART ONE
Open Innovation is More Popular
Than Ever.
1. COMPANIES ARE
LOOKING FOR YOUR
IDEAS!
C ompanies need us. They need our ideas. Let me say that again!
Companies need us – in fact they need YOU. Now, you may wonder,
“How is that possible? Why would a company need me? They have teams
of experts in product development, engineering, and marketing. Why would
they look to independent inventors for anything?”
When I asked Mary Couzin – toy inventor and founder of ChiTAG, the
largest toy and game conference for inventors in the world – why inventors
are important to toy companies with inhouse designers, this is what she
said.
“Because all of the biggest brands and hits came from outside
inventors! Nerf, Twister, Jenga – you name it. It’s not that inhouse
designers aren’t good, it’s just that inventors have ‘outside the box’
ideas.”
Companies have opened their doors so that creative people around the
world can submit ideas to them for free. Yes, for free! It’s called open
innovation and it’s growing by leaps and bounds! Companies in every
industry are opening their doors and looking for new product ideas. Toys,
hardware, kitchen tools, automotive accessories, medical technologies,
packaging, and fitness are just a few of the many industries that have
embraced open innovation. Companies in these industries want to see your
ideas for new products.
To be fair, the toy industry has been in the open innovation game for a
long time. Some of the world’s best-known toys and games were licensed
from individual inventors including the Frisbee, Hula Hoop, Furby, Rubik’s
Cube, Phase 10, Super Soaker, Teddy Ruxpin, and Bunch-o-Balloons.
Because products from inventors have proven to be so profitable, toy
companies have built online submission portals and created teams of people
within their companies to review and handle outside product submissions.
It’s fair to say that the toy industry is a bit further along than others in the
way it deals with inventors. But other industries are catching up!
Research has proven that all companies – no matter the industry – that
have embraced open innovation are outcompeting their competitors by
coming out with more and better products more quickly. It's no surprise,
then, that open innovation is reportedly outpacing all other methods of
product development.
It’s a great time to be an inventor.
“It seems increasingly likely that products and services resulting from
the creative behavior of ordinary individuals may not only become more
prevalent than those coming from experts or geniuses in particular
domains, it many actually become the most important source of creative
breakthroughs.”
— Harvard Business School professor Teresa Amabile in her
working paper “In Pursuit of Everyday Creativity.”
Companies have realized that good ideas can be developed outside their
walls. Smart companies realize that allowing independent inventors, like
you and me, to submit product ideas gives them access to more ideas than
their own employees could ever come up with!
Toy and Game Industry
“Every year we are constantly looking for new products. And so much
like the film industry relying on writers, the toy industry needs inventors
to come up with concepts. So, we spend quite a bit of time and invest quite
a bit in that relationship.”
— Ben Dermer, SVP of Creative Development at Spin Master, the
#2 manufacturer of games and puzzles in North America.
Hardware Industry
"We love to work with inventors because they are passionate about
their ideas. They usually have real-life experience with them. The only
thing left for us to do is flesh out the business aspect, and that's what we
help with."
— Corey Talbot, VP Marketing and Product Development at Hyde
Tools, which sells more than 1,200 products.
Health and Beauty Industry
“As a company, we’re thankful that people give us a chance to
consider their ideas. And we treat everyone with a lot of respect so that we
have a good reputation and we’re trustworthy as a business partner.”
— Lawrence Cruz, Chief Patent Counsel at Conair, the $2 billion-
dollar maker of small appliances, personal care products, and travel
accessories.
Pet Industry
“We are an innovative group, we love design, we love invention, we
love newness. We encourage all inventors to come see us – we always
have a place to look for new products and to expand our horizons.”
— Charlie George, Finance and Operations, Petrageous Designs
Cannabis Industry
“I’ve always thought that working with inventors would bring some
fresh perspective, and, so far, it has. GPA prides itself on working closely
with its clients to help make their products better. To get that secondary
perspective on what the market needs as well? In my opinion, that’s
invaluable.”
— Jonas Matossian, Director of Strategic Development for the new
cannabis sector of GPA, a global packaging firm.
Juvenile and Baby Industry
“There was an inventor group that came to us seven or eight years
ago with the concept of a food-maker that automatically steams and
blends baby food. They had not developed the whole product; so, we took
the concept, we developed the product behind it, and then launched it.
That’s how our brand Baby Brezza got its start. Now we’re the leading
brand of baby food makers.”
— David Contract, Head of Marketing for the Betesh Group, owner
of several of the most popular baby brands in the United States.
Dental Industry
“The smaller and midsize companies are hungrier and more likely to
embrace niche items. For us, these kinds of items are a win-win. And
since we have less market size, we’re hungrier, there’s less red tape, and
so it’s easier to get things done and we’re more likely to jump on
something new.”
— Mike Parlante, Director of Business Development at DynaFlex,
provider of orthodontic supplies.
As Seen on TV
“We love inventors, we want new products and we want you to bring
your new ideas to us. We will help you bring your new idea to market.
You’ll get to see the final product on store shelves and there’s nothing
better than this type of success.”
— Teresa Sinapi, Director of Brand Marketing at Allstar
Hospitality Industry
“There is a constant need for products that are more efficient, more
affordable, and can provide benefits in terms of cost savings and that are
environmentally sound. We are constantly looking for products and
innovations in those areas. We are looking for simple things.”
— David Middleberg, Director of Global Sourcing Star Linen USA
and Star Linen UK
Music
“People on the outside visit our R&D department. There’s stuff we’re
working on right now that came from the outside that we’re really excited
about; it hasn’t been released publicly yet.”
— Justin Norvell, EVP of Product at Fender
Kitchen Industry
“I cannot emphasize enough how important innovation is and to
bring us things that have not been seen before. Bring a steady flow of
things that have not been seen before.”
— Brendan Bauer, Cofounder Grand Fusion Housewares
Automotive Industry
“We want to grow our share of the market through the selling of
innovative and different products. I feel, from experience, that there are
probably an awful lot of ideas out there being dreamed up by people that
belong in the marketplace. They’ve identified a problem they are having,
they are scratching an itch to an extent, and we would like to be the
recipient or given the opportunity to review a lot of these ideas.”
— Luke Berry, Head of Innovation at Halfords Group, a UK and
Ireland-based automotive retailer with 450 outlets and 350 repair
centers
Organization Industry
“I love working with inventors. I mean that’s how I got started: With
one product, one idea. I have a very soft spot for people starting off with
one niche idea or one good idea. Really all it takes is one idea to get
someone to follow what they love to do and make new products that help
people.”
— Jeff Gawronski, Founder of Dorm Company Corporation
If a company likes your idea enough it will license it from you. Licensing is a brilliant way to be
rewarded for your innovation without having to start your own business. Sometimes people refer to
licensing as “pay as you go,” because companies only pay you if your product idea sells. You collect
a royalty on every item they sell. Essentially, you are renting your idea to the company. You still own
it, but they are using it and paying you in return. Companies will rarely buy your ideas outright even
if you have a patent. They would rather “pay as you go” because there’s far less risk. You’re
providing ideas without costing the company large sums upfront and that’s why companies love this
arrangement.
Companies today know that most products have a very short lifespan
and so in order to stay competitive, they need to keep coming out with new
ones. A company might have 10 inhouse designers on full time salaries, but
if they open their doors to independent inventors, they could have countless
more product ideas. It’s about being competitive by harnessing more
creativity. And we’re in an age of open innovation not only because
companies want more ideas, but also because companies want better ideas!
Inhouse designers don’t always produce the best work for the
companies they work for. Early in my career I had the opportunity to
observe and work with inhouse designers on multiple occasions at different
companies. I was surprised to realize that most of these inhouse designers
weren’t particularly happy. They often worked on projects they’re weren’t
excited about and rarely got the recognition they deserved. Designers and
inventors create out of love of creation. There’s something magical about
seeing an idea of yours come to life! I can tell you from experience, it’s a
deeply gratifying feeling and it has little to do with money.
Years ago, Disney connected me with a juice manufacturer to create a
new product called Twist N Chill utilizing my Spinformation rotating label.
My rotating label uses two labels and allows a consumer to see more
information on a bottle by twisting the outer label. That additional space
could be used to tell a story, and I was told by one of the top executives at
Disney it was a perfect fit because they’re storytellers. Disney brought in
three of their inhouse designers for our first creative meeting at their
corporate headquarters in Southern California. I couldn’t believe it; I was at
Disney working with their great designers.
So, I was very surprised when I learned that the marketing manager for the project ultimately
decided not to use their inhouse designers. They opted to hire me and another outside designer to do
all the creative work for this project instead.
Why me? Looking back, I remember observing the faces of the three
inhouse designers in our meeting and they didn’t seem to be particularly
excited about working on this project. For them it was just another task on a
list that was probably a mile long. There was no enthusiasm whatsoever. On
the other hand, I was very excited about the product and I am sure that it
showed. It was more than a job for me. I wanted to see my Spinformation
idea on store shelves. It was my idea and I passionately wanted to see it on
the market where it would generate royalties for me. The marketing
manager knew that working with fellow employees was going to require
motivating them, whereas she could see the excitement on my face. It was a
smart move on her part because she knew I would work extremely hard for
her.
I learned that independent product developers, in general, are more
motivated than inhouse designers. Inhouse designers create ideas for their
companies while on the clock. They punch out at 5 pm. Independent
inventors like you and me think about our creations seven days a week. We
never stop thinking about our ideas. We drive our spouses nuts talking
about our ideas – trust me, I get it.
Early in my career I started submitting my ideas to a novelty company
called Applause. Even though they rejected my ideas, I built a strong
relationship with Leslie Gross, Director of New Product Submissions. I was
surprised when she started asking me to design products. They had a huge
appetite for new ideas for every holiday and I quickly proved to them that I
was able to come up with a lot of ideas. Soon enough, they started licensing
ideas from me!
I wondered why they were working with me until the day I got to visit
their headquarters and meet their inhouse designers. All the designers were
in the same room sitting at their respective desks. They looked very young
and not particularly enthused. Their work was clearly just a job, nothing
more. And here I was so enthusiastic to see my creations come alive! It
made so much sense. I was motivated and they knew it. My phone never
stopped ringing for new ideas even after I got out of that particular industry.
I learned that I could “out design” inhouse designers. I could leverage a
company’s manufacturing and distribution power to bring my ideas to
market without struggling to start my own business.
More and more companies are embracing licensing. Small companies to
large corporations have realized the benefits of working with outside
product developers like us. Companies are fantastic at things like
marketing, manufacturing, and advertisement, but creativity is something
else. Innovation is not a science, it’s an art. Companies constantly struggle
to innovate, so they have opened their doors to work with creative people
like you and me. It’s a perfect situation for us. Let someone else do the
heavy lifting of running a company. You can be an idea factory and profit
from your creativity!
“We have found that working with inventors who are properly
screened and who have been briefed upfront about the process and
expectations can actually increase speed to market and cut down on
development costs.”
I know this works for lots of people because my coaching program
called inventRight helps inventors bring their ideas to market and teaches
them to become professionals. And while I’ve seen many successes, sadly,
I’ve also seen countless failures. Our students have the highest rate of
licensing success in the industry because of our coaching and membership
materials. They ask me, “Stephen, we love inventing. How can we do this
fulltime?” I asked myself the same question many years ago because I
loved being creative, I didn’t want to have a boss, and I wanted to share my
creativity with the world.
ftat’s a big reason why I decided to write this book. I want to help you
do this the right way. As independent product developers, we need to make
sure we are assets to companies, not liabilities. We want to keep the doors
of open innovation open!
So, this book is about providing you with proven, successful strategies to win at the invention
submission game and become a professional inventor. But first, let me spend a bit more time
explaining how and why licensing is a perfect business model for us creative types.
2. LICENSING: THE NEW
BUSINESS MODEL
F ormodel
those of you who are already familiar with licensing as a business
– you can probably skip this chapter. But there may be folks for
whom this concept is relatively new, so I wanted to include this material.
Who doesn’t have an idea? Just about everyone on this planet at one
time or another has had an idea for a product. But, and here’s the kicker,
what are you going to do with it? In my opinion, this is where everyone gets
confused. Most people think if you have a great idea the first thing you
need to do is protect it. If you ask your friends and family, they will say,
“You’d better get a patent on that!”
Ask a patent attorney and they will likely tell you the same thing. “Hey
that’s a pretty good invention, you better protect it!” If you think about it,
that makes sense because that’s what patent attorneys do for a living:
Protect ideas. Their legal mind has been trained to protect ideas regardless
of whether they’re marketable or not. But many patent attorneys don’t
realize that patents are not necessarily required to license ideas today. And
of course, it may not be in their best interest to tell you that 97% of all
patents never recoup the money spent to file them.
Then again, there are many patent attorneys and patent agents who do
have your best interests in mind. It’s not their job to tell you to do your
homework. It’s not their job to determine if you have a marketable idea.
Their job is to protect your intellectual property. When you need a
patent attorney, they’re invaluable. It’s up to you to determine when you do.
Maybe you’ve watched reruns of the hit reality television show Shark
Tank . Every time you hear a pitch, one of the sharks asks, “Do you have a
patent on that?” Even the sharks would like to have “ownership” of a
product through intellectual property protection. But then again, who
wouldn’t? The truth is, ownership is nearly impossible today given our
current patent laws and the lightning-fast pace of the retail environment.
Perhaps you think that you need to start a company to bring your ideas
to market. Maybe you’ve even gone down to the small business association
to help you learn about starting a business from mentors. Most of these
mentors are older and have been bringing products to market the traditional
way for years. Maybe you joined your local inventors’ group and have been
exposed to industrial design firms that offer services such as expensive
prototypes or patent attorneys who sell protection.
The traditional business model of starting a business to bring a product
to market has been taught in all the major universities for years. Startups
have become the latest craze whereas in reality very, very few become
successful. The success rate of starting a new business has and always will
be extremely low. It costs an incredible amount of time and money to build
a successful company. And frankly, if you are successful at starting a
business, it will be copied. Today, it’s all about speed to market.
The traditional method of starting a product business requires that you
write a business plan, raise money, manufacture, advertise, figure out
distribution, hire people, file taxes, and a host of other tasks. Truthfully?
Most of us do not have the desire, knowledge, skills, or money to start a
business. I speak from experience because I once started a small company
designing and selling guitar picks. It was a great learning experience and I
have written about it in One Simple Idea for Startups and Entrepreneurs . I
sold that company because it required too much of my time and energy and
there were so many things involved that I wasn’t good at! It was profitable
for me and my partner but it was also just too much work!
“I did not realize the amount of capital required; I am still a believer
of venturing at different times but I’m much smarter about understanding
cash flow management than I was before I had this experience. We sold
millions of dollars of SportShade.
There was one point where we were $300,000- $500,000 in debt and
we had been debt free prior to that. We are debt free people
– so it was a very painful lesson learned. It turned out to be a good
product for us and we eventually got on top of it, but it was like crawling
out of a manhole.”
— Carrie Jeske, Inventor, President of Inventive Ideas, and
Principal Consultant with As Seen on TV company Will It Launch
My point is, there are many people who might try to sell you on the
traditional path to commercialize your product idea. There’s an entire
industry that has been built on selling services to help you start a business.
And guess what? These services can be very expensive. If you are creative
and have lots of product ideas, this traditional path is just not a great option
for one obvious reason: There’s no way the average person can start a
business for every one of their ideas.
“It’s really an amazing risk-free opportunity for an inventor when it
comes to licensing. A successful company in the DRTV industry nets
about 10% profit after all expenses including salaries, advertising,
manufacturing, inventory, fulfillment etc. Typically, an inventor is offered
between a 3-5% royalty. That means an inventor is getting 30-50% of the
company’s profit without having taken a risk at all! Why would you start
your own business?”
— Michael Weinstein, President of Digital at Bluewater Media and
former Chief Marketing Officer for Allstar Innovations
Most people and many organizations that advise inventors haven’t ever
actually done this themselves. They don’t really have current information.
The “traditional” business model of getting a patent and then starting a
business never worked for everyone, even in its best day. I cannot tell you
how many inventors I have met who have expensive prototypes and patents
that they have not able to commercialize. You can spend tens of thousands
of dollars and go nowhere. It’s very unfortunate. How many small startups
end up with inventory they can’t sell and are in debt?
“It’s almost always preferable to find someone who will license your
idea. Do as I say, not as I did. I started my company from scratch, raised
a lot of venture capital, hired marketing folks, and got into
manufacturing. As an inventor, I would have been better off trying to
license my technology.”
— Congressman Thomas Massie (R-KY). His startup never went
public or was wildly successful, as he pointed out.
So, my approach is to change it up! Flip the script! Don’t use the
traditional business model. Don’t build prototypes, file expensive patents,
or even start a business. Bring your product to market through licensing
instead. I’ve built my whole career around licensing and have been teaching
others about it for the past 20 years.
In today's market, do patents even matter?
The reality is that patents aren’t as important as they used to be.
Now don’t get me wrong. Patents can be very helpful if you have a large
and/or complex idea that’s going to require significant time and money. For
such ideas, you’re going to need ample capital, a great team, and a “wall”
of patents, trademarks, and copyrights. These types of product ideas are
usually in industries such as packaging, pharmaceuticals, automotive, and
medical. Think about the time and money it takes to develop and bring a
new drug to market – that needs a patent. Or what about making a change
to an automobile? Think about the time and money involved to change the
manufacturing equipment! That needs a patent.
For most products though, because of their short lifespans in the
marketplace, a patent is not needed. Why spend the effort to get a patent
when there’s little guarantee that you’ll recoup the cost?
“There are many products that the life of the product is shorter than
the time it takes to examine and issue a patent.”
Most inventors can get by utilizing a well-written provisional patent
application (PPA). This is something that is filed with the United States
Patent & Trademark Office (USPTO) prior to submitting your product to
companies. It’s affordable, creates what I call “perceived ownership,” and
provides an inventor time to determine whether their idea is marketable. It
also gives the inventor and/or the company that licenses the invention the
option to file for a patent later on. Companies, like people, like options.
Another reason why patents have less value for most consumer products
is that it’s nearly impossible to stop copycats and infringers today. It’s sad
but you see them pop up every day. I believe that retailers, especially
Amazon, accept copycats as a way of life because Amazon is going to make
money regardless of whether you buy the original or the copy. If Apple, with
thousands of patents covering the iPhone, can’t stop copycats, why do we
think we can?
Sadly, new patent laws make it even more difficult to defend your
patents. And, even before those new patent laws took effect, defending your
patents always took a lot of time and money. What do I mean by a lot of
money? I mean a couple of million dollars! Do you have that type of
money? Do you want that type of headache?
“Even with all the patent protection in the world it’s almost impossible
to protect things. If Apple cannot successfully protect the iPhone, what
chance do the rest of us have really?”
— Sam Hurt, Cofounder SUCK UK (Novelty gifts)
Today’s business environment is not like it used to be. These days,
companies realize it’s not as much about protection as it is about selling!
Sure, many people think that it would be wise to own an idea – to have a
monopoly on a product. But really, it doesn’t matter. You don’t need a
traditional, expensive utility patent, but you do need something I call
“perceived ownership.” If you’re going to license an idea, you need to
establish that the idea is yours and not someone else’s. This will allow you
to get paid for your idea. The good news is, you can create perceived
ownership in a number of ways and without a patent.
The new business model is: Create perceived ownership of your ideas and license them to
companies that are already in business. Established companies already have manufacturing,
distribution, shelf space, marketing, and sales. What they don’t have is a fresh supply of new product
ideas. You can provide them with that! Companies need new product ideas to stay competitive and
that’s why they love us independent inventors.
However, and this is an important point that I need to make to you, not
all companies want to work with inventors because some of us are
unrealistic, unreasonable, and quite simply a pain in the butt. There – I said
it! Most inventors are “creative types” who don’t know how to act like
professional product developers. Inventors are often too emotional or
demanding when working with potential licensees. I call them high-
maintenance inventors. If an inventor wastes a potential licensee’s time, the
company can become frustrated and close its doors. That is not good for
any of us!
It takes time and money for a company to review product submissions
from the outside. If a company sees too many poor ideas or deals with too
many high-maintenance inventors, they will stop taking outside product
submissions. I have experienced this firsthand. I have seen companies that
are initially open to independent inventors close their doors after being
flooded with ideas that are clearly not fit for their business. It’s a waste of
their time and money to review ideas that should never have been submitted
in the first place.
“Do your homework! Don’t re-present the wheel and say it’s new. Be
respectful of the executive’s time.”
One of the main reasons I wrote this book is to stop this from
happening! We want open innovation companies to keep their doors open! I
will show you how to become an asset to companies and increase your
chances of success with the licensing model. You will learn how to build
strong, long-lasting relationships with these companies and leverage their
strength in the marketplace to help you become successful.
My philosophy is fairly simple. Sell the benefits of your idea before you
do anything else. Do not file expensive patents, build prototypes, or start a
business until you determine that your idea is marketable. I cannot
emphasize this enough! If your product idea is not marketable, there’s no
reason to commit the time and money involved in these other steps. You
don’t need a prototype sitting on your shelf or a patent hanging on your wall
if there’s no market for your idea! In today’s business environment,
licensing is one of the fastest ways to bring your ideas to market.
For us creative people, the goal is to be an idea factory! You should
come up with lots of ideas and reach out to inventor-friendly companies
using great, affordable marketing materials that introduce and explain your
idea. You don’t have to spend a lot of money on any of your ideas! By
using licensing to bring your idea to market, there is very little financial
risk. You can come up with products anywhere and anytime. You don’t
have to live in one particular place – you can do this part-time and enjoy
other things in life!
“I cannot believe how helpful you guys have been (at inventRight).
You are teaching people how to do things the right way. When I first
started out, I was venturing – I was making and selling my own product –
and I had to raise about $250,000 which all came from friends and
family! Licensing is a much, much easier path!”
— Carrie Jeske, Inventor, President of Inventive Ideas, and
Principal Consultant with As Seen on TV company Will It Launch
I’ve seen too many inventors fall victim to fear – fear that their idea will
be stolen or that they don’t have the knowledge or funds to bring their idea
to market. Don’t let fear keep you from trying! If you don’t try you can
never succeed.
My goal is to help you understand more about the consumer product
licensing industry so you can be your own boss and achieve licensing
success. For the first time ever I’m going to peel back the curtain and give
you an insider’s guide to how companies evaluate your product
submissions.
I’ll teach you how to be an asset to these companies so you can go from amateur inventor to
professional product developer.
Seeing my product ideas in the world – on television, on store shelves,
and in people’s hands – is one of the greatest experiences I’ve ever had. I
want you to have it too.
LICENSING VERSUS
VENTURING
Inventor: Michael Van Horst
Product Licensed: Push & Hang by Hangman Products
Background: Michael noticed that many people struggle to hammer
two level nails to hang a large picture frame and had a great idea for a
product that would help. Like many inventors, he was very excited about
his idea, so he hired an attorney and filed for a patent. Michael looked into
finding a manufacturer in China. He even started marketing his product on
his own, but the venture quickly became overwhelming. After becoming an
inventRight student, Michael successfully licensed his product, which is
now in major stores including Ace Hardware throughout the country. He
says that he would have saved a considerable amount of time and money if
he learned about the licensing model earlier.
Stephen: Describe your experience getting started with the Push &
Hang.
Michael: I was excited! I was going a thousand miles an hour and I let
my emotions drive me. My emotions almost broke me financially. I went out
and got a patent. I hired an attorney. I had a video made. I went crazy for a
little while. I went through the gamut of trying to figure it out myself, trying
to go to China myself. I didn’t know anyone.
I was going to give up like most people do. I was going to throw this
thing on the closet shelf twice in two and a half years. But I believed in the
product, I knew it was going to make a difference, and I stuck with it.
Stephen: What did you learn from that experience? Why licensing?
Michael: The number one thing I had to learn was who to trust – who to
trust and talk to along the way. Once you have a product that might make it,
everyone wants a piece of you. But they’re not really there to help you, they
just want a piece of your company. When I started checking out China, I
couldn’t get the price point low enough. And that was my biggest deterrent.
With licensing, going through a company that’s done it many times before,
we beat my cost in China by two thirds. And now I have a successful
product on the market!
Watch my interviews with Michael before and after his product
launched on my YouTube channel inventRightTV.
PART TWO
Understanding Companies Looking
for Ideas
3. BEHIND THE SCENES
OF THE INVENTION
SUBMISSION PROCESS
B efore I share with you the right way to approach licensing your idea, I
want to pull back the curtain just a little bit. I want to explain to you
how the invention submission process works and what’s really going on
inside of a company after you submit your idea. I am hoping that this
information will help you realize why the steps that I outline later in the
book make sense!
Okay, here’s the scenario: You came up with a great product and you
submitted it to a company that’s looking for ideas. Maybe you reached out
to the company on LinkedIn, perhaps you found an invention submission
portal on their website. We will talk about all of those methods of getting in
later.
You think it’s a great idea, but you don’t hear back. Communication
goes silent. You wonder, “Did they receive it? Did I get to the right person?
Are they going to copy my idea?” Everything is racing through your mind.
Before you know it, weeks go by and you’re panicked. I’ve seen this
scenario play out more times than I can count. I call it “the dreaded black
hole.” Your product has slipped into a dark mysterious place and you have
no idea what could possibly be going on – and so you imagine the worst.
What should you do?
“Our product sources mean everything to us and we have a very
organized formulaic process internally for looking at hundreds of
products. We try our very best to get back to everyone in a timely manner.
Sometimes we do, sometimes we don’t.”
First, let’s talk about what is likely happening behind the scenes.
The invention submission process
I think most companies are very poor at working with inventors. There
are a few companies that have been accepting invention submissions for
years that have a process in place that’s easy to understand. But these
companies represent a small minority and even if you’re working with one
of these inventor-friendly companies, you still need to understand what’s
happening behind the scenes.
You must realize that your idea is not the most important thing at this
moment to these companies. They’re extremely busy selling their existing
product lines, filling orders, taking care of customer service problems,
fixing manufacturing issues, advertising, social media – the list goes on and
on. It takes a lot to run a successful company and there are fires to put out
every day. New product development is not always on the top of the list.
Yes, creativity is extremely important to be competitive in the long run, but
in the day to day operations of a company, new ideas are most likely not the
top priority.
“Product development managers constantly have to put out fires with
product, quality control or any number of other issues they are
responsible for… they are often forced by management to prioritize other
projects. That takes time away from inventions.”
Now, for a brief moment, let me step to the side and talk about the toy industry. As I mentioned
before, this industry relies heavily on inventors and has been practicing open innovation for a very
long time. Toy companies tend to have very well-defined processes set up to review your product.
The process is typically documented on their online submission portal. They will get back to you
more quickly than what I am about to describe. New products are their lifeblood.
“The toy industry is a fashion business. There is always lots of
change. Every year there are new products on the market, so toy
companies have to look to outside freelance inventors to come up with
products to feed this huge appetite for new items in the market.”
— David Small, toy inventor and Cofounder of Shoot the Moon, a
company that has licensed more than 100 products generating $4
billion in retail sales.
When companies do review product submissions, it generally requires a
team of people as well as significant time to do a thorough evaluation to
determine whether your idea is worth the investment required to bring to
market. If the company is small enough, it may just be the owner or CEO
who evaluates your idea. But with companies that are big enough to have
good distribution in place, the process requires a much larger team to
review your ideas. People from sales, marketing, legal, and manufacturing
need to weigh in. Gathering all these people together is often a logistical
challenge if there aren’t already good practices in place for evaluating
outside ideas. People take vacations. Sometimes employees live in different
parts of the country. Most companies just don’t meet regularly to review
product submissions because individual departments usually prioritize their
own obligations.
If a company meets as frequently as once a month to discuss potential
new products, they’re in the minority. There are a few different industries
that actually meet quite regularly such as DRTV (direct response
television). I was told by an industry insider that his company meets once a
week and every team member is required to bring 10 ideas to the table. I
just want you to know that this is an exception to the norm. The DRTV
industry is unique in that it only takes one or two good ideas a year for a
company to be successful, so they prioritize looking at many ideas. And, as
amazing as it sounds, few products are developed on the inside – the
majority of DRTV products come from an outside inventor!
“Once you have a process in place for working with inventors, it’s
much easier. Without a process in place it can be grueling and results in a
lot of wasted time for both the inventor and the company. The process and
speed have changed more recently. We are taking in more information
online – it’s easier for us to collect it and it’s easier for the inventor to
submit their inventions.”
When you submit a product to a company it needs to be cataloged, so
ideas usually get funneled to one person – someone who manages all the
submissions. Too often, inventors want a shortcut or a special contact,
someone else “on the inside.” In my opinion, trying to get around the
gatekeeper is usually a bad idea. Your idea will almost always get sent back
to the person identified as being in charge of the process. You want to show
a potential licensee that you can be a team player. You don’t want to give
the impression that you’re difficult, or even worse, uncooperative by not
following their procedures.
“Don’t bypass the submission process, because that can really stall an
idea. If you know someone who works at Hasbro, don't send them your
idea – send it in to the global product acquisitions team.”
You simply must learn about a company’s process of reviewing
submissions. Without this information, you’re in the dark. The review and
evaluation process could take place once a week or once a month, or even
once a quarter! It simply depends on the company. Knowing a company’s
timing and procedure for reviewing product submissions is an important
step to avoiding panic and making the right strategic decisions.
If a company doesn’t state its process online, reach out to someone in
product development, sales, or marketing and ask about their invention
submission process so you thoroughly understand how it works. You must
play by their rules! Later in the book we’ll discuss best practices for
communication, including some situations where you might have to reach
out to multiple contacts.
How companies evaluate your ideas
Like I mentioned, there is likely to be a team of people reviewing your
product idea. Each of these people is looking at your idea from a unique
perspective depending on what their role is in the company. Understanding
these perspectives is critical!
Sales and Marketing
“Each manager in each department has their own sense of which
products are selling and whether or not there’s a need and whether or not
it’s something that they want to take a chance on…. There are lots of
factors. Sometimes it’s timing. Sometimes it has to do with the conditions
of competitive products or the willingness of people to put money in and
their personal experience on the line to develop the market.”
accessories.
Sales and marketing people are tasked with growing the company. If, in
their opinion, your product has any chance of helping increase business,
they are likely to be positive about it. If they see that it complements
something else in their existing product line or fills a gap in the company’s
product offering, they are likely to be positive about it. If they’re smart,
sales and marketing teams will want to test the waters with your product
idea to see if their opinion is correct. They’re going to want to show it to
potential buyers, in other words.
That’s why the marketing materials that you use to pitch your idea must
be polished and look professionally produced. The benefits of your product
should be crystal clear to anyone who views your marketing material. You
don’t necessarily have to spend a lot of money to produce these materials.
I’ll go into much more detail about sell sheets and product videos and
provide some great examples to help you accomplish this.
“If I believed in an idea, I’d run it by our salespeople, other product
managers, and engineers. Their feedback would help me determine
whether to pitch a project up the line or not.”
On the other hand, if sales and marketing people do not get excited
about your idea, it is unlikely to go any further in the submission process. If
it’s not a good fit for their product line, if the item already exists on the
market, if your marketing material is confusing and the benefit is not clear
you are likely dead in the water.
Manufacturing/Engineering
“When an idea submission comes in, the inventor relations people
sent information about the product to the different groups, like
electronics and mechanical. The costing group measures the item and
figures out the manufacturing costs. The labor and mechanical people
will look at the mechanism and see whether it is producible. And the
electronics team will take a look at the electronic designs.”
— Bob Ruginis, former Director of Electrical Engineering at
Hasbro
The person who represents manufacturing or engineering has to figure
out how to make your product at a price that makes sense. They will most
likely have to get a price quote from whomever manufactures their
products. (Sometimes companies have their own manufacturing facilities,
but others utilize contract manufacturing.) In order to produce your product
at a reasonable cost, they may suggest changes in material, sizing, or other
product specifications.
Often, if you have a prototype, they may send it over to a manufacturer
in Asia to get a quote. It’s the smart thing to do on their part, and of course
that process is going to take at least a month. Some companies will have
manufacturing experts inhouse to evaluate your idea. Here’s a pro tip: A
working prototype or CAD drawing will make it much easier for a company
to evaluate your idea. But these things cost money. It’s unwise and probably
impossible to create a prototype or CAD drawing for every idea you have. I
would recommend proceeding with these tools only after you’ve generated
legitimate interest in your product from the sales and marketing folks.
Legal
Legal departments are often a pain in your side. They might require you
to sign a non-disclosure agreement (NDA). They will probably attempt to
verify that you are the rightful owner of the idea you’ve submitted. They
might do a prior art search to see if anyone else has come up with this idea
before. They’ll check for patents.
You are not required to have a patent to establish ownership. 99% of the
licensing deals I’ve seen take place without a patent. There are many other
tools to establish what I refer to as “perceived ownership” of an idea. For
example, a well-written provisional patent application and the ability to
clearly articulate your product’s point of difference from other items on the
market when asked. Chapter 5 will dive into strategies to establish
perceived ownership – but please, again, you are not required to have a
patent.
So, all of these people representing all of these departments are going to
evaluate your idea from a different perspective. A good evaluation of an
idea takes time so you must be patient. Don’t jump to the worst conclusions
if they’re not getting back to you as quickly as you think they should.
Learn which companies want your ideas!
Every company has a different invention submission process. They are
not all created equal. In many cases, you can determine whether a company
is friendly to outside inventors by studying the tone and language of their
inventor submission agreement. I consider this an absolutely critical step
that will greatly increase your chance of success. I’ll discuss a perfect
example of an invention submission process from a company that is
friendly to inventors.
OXO: OXO is a manufacturer of kitchen utensils, office supplies, and
housewares based in New York City. Finding information about how to
submit your product idea to OXO couldn’t be easier.
Just scroll to the bottom of their homepage and there’s a link titled
“inventor submissions.” Read this page and there are clear signs that they
want ideas from outside inventors and product developers. All the pertinent
information is provided. They have specific requests for the information
they need to review your idea such as a written description, hand drawings,
photographs, a video demonstrating product use, and a website about your
product. They ask if you have any intellectual property that has been filed
or if you have disclosed your idea to any other companies. They clearly
explain their policy on NDAs – they do not sign NDAs because of the
chance that they might be working on a similar idea. This is standard
practice and avoids the potential for confusion if you see down the road that
they release a product that is similar to an idea you previously discussed
with them. The submission agreement also gives you a clear time-table for
evaluation, 6-8 weeks. They also state that everyone who contacts OXO
with an idea will receive a response for their submission. Obviously,
depending on how busy the company is this time frame can and does vary
– but overall you can tell that OXO wants to see your ideas.
this is a model example of a straightforward and inventor-friendly
submission process. And I know from personal experience they do indeed
get back to everyone. In my opinion, OXO’s process gets an A+.
Not all companies are inventor-friendly
Unfortunately, not all invention submission processes are as easy to
work with as OXO’s. Some companies are just not friendly to inventors.
Just as OXO’s invention submission portal is very clear and welcoming to
outside developers, others can be written in such a way that’s just not
inviting. The tone and language of an invention submission agreement can
give you invaluable information about a company’s attitude toward
independent inventors. I’ll start with some examples of red flags you should
avoid:
“Your submission and its content automatically become the property of , without any
compensation of any kind owed to you.”
Or
“ may use or redistribute your submission and its contents
for any purpose and in any way, including but not limited to using it in
new product or services, or to improve existing
product or services.”
Or
“Your submission does not grant any right to us under existing or future
patent. However, except for claims of patent infringement, we will have the
unrestricted right to use and disclose your submission. Since patents are
sometimes inadvertently granted on ideas that are old or obvious, we
reserve the right to contest the validity, infringement or enforceability of
any patent.”
I’ve seen submission agreements clearly state that you may not hear
back from the company – they claim no obligation to respond! Sometimes
an agreement will say that under no conditions will they give you feedback.
Companies that use this type of language don’t look like great potential
partners to me!
Some companies refuse contact by certain means such as email or
phone. Some companies want you to send your submission form in the
mail, not online. This obviously makes the process more difficult.
Some invention submission opportunities are community-based.
They’re called co-creation communities. The idea is that a company can co-
create value with help from their customers. Typically, these are contests.
You may receive a small fee along with a very small royalty. For example, a
single payment of $1,000 and half a percent royalty. In my opinion, this is
not a desirable reward for a great idea.
Sometimes a company will only look at issued patents. I consider this
old school. In today’s economy, products have very short lifespans, so it
usually doesn’t make sense to commit to the years long process, not to
mention the expense, of getting a patent. Companies know this. I think
they’re not being serious when they require a patent to look at an idea –
there are exceptions to this in certain industries which I will talk about later.
Some companies even make you agree to a binding arbitration if there’s any dispute or
controversy about your product submission.
Some companies use unfriendly language to turn you away. Take the
perspective of your potential licensee. They obviously need to protect
themselves. Companies that are looking at invention submissions do open
themselves up to problems. A company’s size or business model may not be
ideal for licensing. Often enough, strict guidelines for submissions or a
seemingly unfriendly attitude towards outside developers is simply a
response to a history of dealing with unreasonable inventors. Yet
sometimes, they really just haven’t done due diligence in creating a well-
defined process. You have to do your homework to learn about how a
company works with invention submissions!
Usually when invention submission agreements have a negative tone
and language the company has had problems with outside submissions. It’s
meant to convey that they do not value open innovation. I typically see this
type of language from very large companies, but know that smaller
companies can have similar attitudes. I would avoid these companies.
If you come across an invention submission agreement that has a
questionable tone or language, please read it carefully. If things are not
clear, I recommend getting legal advice.
Typically, when a submission process is easy to find and clear about its
expectations, the company genuinely wants to look at your ideas. However,
if an invention submission process is hard to find on the company’s website
don’t immediately assume that the company is not open to outside
developers. Many companies just don’t get that many product submissions
and therefore do not have a procedure or department for handling them. It
does not mean that they aren’t willing to license great ideas. I suggest that
you always ask. Okay, enough of all this background! Let’s learn how to
submit products the right way!
4. SUBMITTING YOUR
IDEA TO THE RIGHT
COMPANY
Y outhathave a great idea that you’re extremely excited about. You believe
you have found the perfect company to submit it to. You already
use and love some of this company’s products and you think that your
idea will fit perfectly with their product line.
And, even better? They have great distribution. Their products are
everywhere! Now you’re thinking, “I just have to get in, I just have to find
the right person.” You go to their website and the first thing you do is look
to see if they have an online submission portal. You look at the navigational
bar at the top and you don’t see anything. You scroll down to the bottom of
their homepage and bingo. You find it. “Do you have an idea? Click here.”
You’re ready! You have a sell sheet and a one-minute video to market
your idea. You start reading their invention submission form and you fill it
out.
Stop! This is the mistake 90% of inventors make. You have not done
enough homework yet – not nearly enough!
I’ve already shared with you the horror story of Fred & Friends
receiving hundreds of product submissions that did not fit into their product
line or maybe were even on the market already. I told you that this deluge
of bad product submissions caused Fred & Friends to ask me to remove the
newsletter highlighting their company from the archives of the Inventors
Groups of America website. I’ve already shared with you aquote lamenting
the fact that inventors do not do enough homework.
Look, I know you’re excited and that makes you want to hurry. Getting
someone inside a company to look at your idea seems like the hard part and
now you have access through this website! You want to pitch your idea
now! Why wait? What if someone else comes up with something just like
it?
What you should do is slow down and do your homework to make sure
your product is actually a good fit first.
Inventors often ask me, “How can I become more successful? Why
aren’t companies getting back to me?”
Here’s what successful professional inventors who consistently license
ideas do. They carefully look at a potential licensee’s website to determine
if they’re a good fit for their ideas. Only after they determine that a
company is a good fit do they submit their ideas. If they get rejected, they
keep submitting more ideas to this company. They constantly work on
building up their relationships with the companies they want to invent for.
Both parties begin talking to each other and actually exchanging
information.
When you have a relationship with a company and they see you as an
inventor who’s knowledgeable about their business, they start to listen to
your ideas. They will ask you for your ideas!
“The more you understand the industry, the more you understand the
marketplace, the less chance you are going to be surprised by something
you didn’t know.”
You have to be disciplined with your creativity and deeply
knowledgeable about what a certain company is looking for, so you limit
your pitches to quality ideas that are right for the company. You have to
invest time with the company before they’ll invest in time with you. This is
how you truly become a pro. It’s as simple as that.
“Relationships are critically important. Once you establish one, you
want to continue to work with that company. We love our inventors who
are like an extended part of our team. And I think that’s when you have
the most successes.”
I know you’re saying to yourself, “Well maybe it could be a good fit,”
or “Maybe they should go in this direction, there’s opportunity they’re
missing,” or “I can show them a new opportunity that they’re not taking
advantage of.”
I’m here to tell you, no! No, no, no!
Honestly, if you send a company a product idea that’s obviously not a
good fit, you just burned a bridge. They will not take you seriously. It
doesn’t matter that you have a great idea, your idea only needs to be great
for the company you’re pitching to. Not only are glaringly unfit
submissions hurting your chances of successful licensing agreements, they
are weakening the relationship between companies and independent
developers. We inventors have a responsibility to act professionally so
companies continue to welcome outside developers with open arms.
You must determine if your product idea is a good fit for the company.
You and only you.
“Our time is valuable and your time is valuable. We want to make the
most of these meetings and the more homework an inventor can do
upfront, the more they can understand this industry and therefore the
more they can understand our company. It's beneficial. They should take
the time to look at our website, see the types of products that we're
manufacturing, and understand what our price points are.”
— Jonathan Zelinger, President of Ethical Products, a family-
owned pet company for 65 years.
This is not as easy as it sounds. Companies will rarely tell you exactly
what they’re looking for because they might be sharing confidential
information. They’re not going to just spell it out for you. You have to do
the homework to figure it out. You have to read between the lines!
I’m going to go take you through the steps to thoroughly evaluate a
company to see if it’s a good fit for your product idea. I want to teach you
how to read between the lines. These are the steps you have to take to build
fruitful and long-lasting relationships with potential licensees.
First, look at the company’s total product line. The re’s almost
always a prominent link on a company’s homepage that takes you to their
“catalog” of products. Look at it very carefully. You want to understand the
product line to the best of your ability. What do their products have in
common?
Then you have to ask some very important questions. Do they have any
products that are similar to mine? Does my product idea have any points of
difference when compared to theirs? Also, does my product idea have a
point of difference compared to other related and similar products on the
market?
If your product is a clear improvement on an existing product, there’s
probably a market for your idea. Your potential licensee will know that
there’s a very good chance it can be manufactured at a cost that makes
sense for their business. Remember that a new product really has to do two
things:
1) it has to fit into the company’s existing product line and 2) it has to
be unique – meaning clearly different compared to similar products that are
already on the market.
“Inventors need to put themselves in the shoes of the customer they
want to buy the product. They need to ask themselves the same sort of
questions as if they were standing in front of the shelf and had the
opportunity to buy that product. Why are they going to buy it? What is it
going to do for them? And is it going to do it better than what’s already
available?”
The last thing you want to show a potential licensee is an idea that’s too similar to (or exactly the
same) as a product they or anyone else is already selling. Why manufacture a “me-too” product?
Companies will see through this very quickly. All it takes is a simple Google products search. I know
because I’ve talked to these companies. They’ve repeatedly told me that they see this way too often
from inventors – that people submit ideas that are already on the market. This marks you as a rookie
and as someone who didn’t take the time to do a very professional job. They will not want to work
with you and you have just made a very bad first impression.
“The problem is a lot of idea submissions to us can be found in a 15-
minute search.”
“I see a lot of submissions that you just look up on Amazon and
there’s 50 other sellers with similar items or you go to Walmart and
there’s a whole aisle.”
Next look at the company’s mission statement. This can tell you a lot
about the culture of a company. Most companies have a mission statement
that’s easy to find. Sometimes it’s just an “about us” tab at the top of the
homepage. You can gather valuable information from this. I’ll use OXO’s
mission statement as an example:
“We believe in a better way. At OXO, we look at everyday objects and
activities and we see ways to make things simpler, easier, more thoughtfully
designed – better. We notice things. We notice pain points and pains-in-the-
neck. We notice problems people don’t realize are problems until we solve
them. We see opportunities to improve a product or a process, or a part of
everyday life, and we make things that make things better.”
What you should take from this is that OXO specializes in improving existing products. This is
the core tenant of their business model. It makes perfect sense from a business perspective. There’s a
lot of risk in venturing completely new product categories. OXO’s strategy is to make products that
we already use better. You should infer that they do not want you sending them ideas for novel or
new gadgets!
Sometimes a mission statement is not easy to find. That mission
statement from OXO wasn’t conveniently located at the top of their
homepage. They actually don’t even have an “about us” link. But it’s
certainly not secret information. You just have to do your homework. I
searched “OXO brand” and the first video result I found was an “OXO
Brand Video.” It’s less than two minutes long and the mission statement is
the entire script for the video.
Next, look at the price points of the products that the company sells.
Is the estimated price point of your product within the range of retail prices
of their existing products? Companies very rarely introduce products that
are out of that range. They already know their customers’ spending habits.
They know that a given product category has an established price range. If
you’re product is a “Cadillac” and your potential licensee sells “Kia” your
idea is not a good fit for that company. Most of the time you can estimate
your retail price point by thinking about materials and doing some research
about products that are similar in size and scope that are already on the
market. If not, have a contract manufacturer give you a price quote.
“The number one thing is to really understand the business. Know
exactly where the toys are sold and what categories they are in and their
price points.”
Now, look at the materials the company typically uses. Can your
product be manufactured using the same materials? If not, this could
potentially be a problem. You want to make it easy for them. You want your
product to be compatible with their existing manufacturing process. If your
product is made out of materials that they’re not already using, it could very well be a red flag that
your idea is not fit for them.
As an example, most of OXO’s products are made from materials such
as silicone, glass, and plastic. If you’re submitting to OXO, make sure your
product uses those types of materials.
“When we present an item to our clients, we present not only the idea
but a lot of background as to how it’s going to be manufactured, what the
cost is going to be, and the best way to manufacture it along with the best
components to use. I think that having the knowledge of manufacturing
dramatically helps us to license products.”
— David Small, toy inventor and Cofounder of Shoot the Moon, a
company that has licensed more than 100 products generating $4
billion in retail sales.
“We’re in the commodity business. The first thing that the hotel is
going to ask me is how much it is! Because it’s a tight market – and in a
competitive market you have to keep that cost down.”
— David Middleberg, Director of Global Sourcing at Star Linen US
and UK (Hospitality, Hotel and Healthcare)
“The biggest things that inventors need to know is that their idea is
going to get “costed” as submitted. Engineers do not have the time to
redesign everything before it gets manufactured. So, inventors need to
look at how their product can be made most efficiently.”
— Bob Ruginis, former Director of Electrical Engineering, Hasbro
Does this company have a blog? Read it! A company’s blog can tell
you a lot about its products and strategy. It may share its vision for the
future. Sometimes you’ll find the mission statement in the blog posts.
OXO maintains a company blog called The Good Tips Blog , which is easy to find at the top of its
homepage. The blog has many articles about the design process of different products. There’s even a
behind-the-scenes section with an article titled “OXO by the Numbers” which gives you details about
ideas they actually tested.
this information is incredibly helpful to have! Combined with OXO’s
clear mission statement and a thorough understanding of its product line,
you should start to get an understanding of their business strategy. Good
job! You’re starting to read between the lines!
Don’t forget to Google the company. This may seem obvious, but I’m
finding that many of you are not making the effort to learn as much as you
can about your potential licensees. A simple search may turn up recent
articles about the direction the company is headed. Industry experts or
executives from inside the company might even discuss trends. You can
gain a clearer picture of the company and its goals. You might even find
that the company is selling off the division that your product would fit into!
It’s probably not a good time to submit a new idea.
What else should you look for? What kinds of things about this
company might influence whether or how you submit your idea?
Are they privately held? If so, they can make decisions fairly quickly.
Or are they a large publicly traded company that’s probably more risk-
averse? Know that smaller companies are more likely to look at ideas that
might expand their normal product category. They’re willing to tolerate
more risk because they’re looking for products that will help their business
take off. They want to take market share away from others. Big companies
are often just trying to protect what they already have.
Are they a young company with an entrepreneurial spirit? Are they
actively looking for ideas? Or are they an older company that’s set in their
traditional ways? Older companies already have market share and
established relationships so they’re far less likely to take risks with new
ideas. Market leaders have more to lose and they have the power to buy up
ideas (or even whole companies) once they’re tested by smaller players.
My wife worked for E&J Gallo Winery as a vice president of
marketing. She saw firsthand the shift inside the company from developing
their own products (time-consuming, expensive, and risky) to simply
buying companies that had already taken the risk and proven demand for a
new product or brand.
Does the company have a history of lawsuits and complaints from
inventors? Or do they have a good reputation for working with outside
product developers? I always tell my inventRight students to type the
company’s name into their search bar followed by “lawsuits and
complaints.” You’ll be amazed at what this might turn up and how it might
influence your decisions. (Truthfully, you should also employ this tactic
when researching consultants, attorneys, and anyone who you do business
with.)
Are they looking for the latest gadgets? Or do they stay in one
particular established category? When I visit trade shows I can tell right
away if a company is open to product submissions just by looking at their
product mix. If they have a lot of stand-alone products in different
categories, they’re probably working with a lot of outside product
developers.
You can learn invaluable information from this kind of homework. You
might determine your product idea is too new. Your potential licensee might
not take those type of risks. Maybe they’re just averse to gadgets. By
understanding the company you’re submitting your product to, it allows
you to start building a relationship. You can determine if your product idea
is a good fit – not just with their product line but with their culture of
innovation.
Use what you have learned
One of the biggest benefits to slowing down and studying your potential
licensee carefully is that you’ll have helpful information for creating
effective marketing material to pitch your idea. You want your invention to
look so similar to the products in the existing line that it could fit right in
tomorrow. In other words, when you submit a product to a potential
licensee you want it to look and feel like theirs.
Look at the colors they use for their products. What fonts do they use in
their marketing materials? What is the style of their marketing
(contemporary, classic, minimalist)? Look at how the features of their
products are presented. It’s not about your product. It’s about how your
product fits into their business.
“The quality of the presentation is obviously important. You can tell if
someone has seriously thought-out their product, and if they haven’t it’s a
dead giveaway and the product is getting kicked down the line.”
Again, OXO offers a great example. Their website uses a very clean
white background with simple descriptions and benefit statements about
their products. There’s no distracting graphics at all. It’s easy to see a
product and understand its features. If you’re pitching to OXO, your
marketing material should be similarly concise and simplistic in style. Use
these types of observations as a roadmap when you’re designing marketing
material for potential licensee. Material that’s too generic does not show
your product well. Chapter 6 will dive deeper into creating effective
marketing material.
“If the inventor hadn’t had such good marketing material I most
likely would not have moved forward.”
Doing your homework upfront will save you valuable time and greatly
increase your chances of landing a successful licensing deal. I can’t
emphasize this point enough. Don’t just throw your ideas up against the
wall to see if they stick! Do your part to fairly and objectively evaluate your
product idea.
It’s critical to understand that you should play the “long game.” The
most successful inventors I’ve known in my career take this approach. They
focus their creativity on a particular company’s product line. They know
these companies’ products inside and out. They study Amazon reviews to
see what problems customers are having.
A company will typically stay within a certain product category at a
specific price point because they have a customer base that they already
know well. To successfully license ideas, you need to understand this
information as well. Pitching an idea that’s too new, doesn’t fit an existing
product line, is too similar to other products in the market, or inconsistent
with customers’ needs will not increase your chance of success.
In my experience, inventors get way too emotional. I get it, you’ve
invested time and money in your idea. But you have to make sure you’re
utilizing the right strategy. I want you to manage your expectations so you
can act rationally. You have to slow down!
“Many inventors fall in love with their ideas way too early. It may
solve a problem they have personally but they don’t do the research to
determine if it’s really feasible.”
If you stay in one industry long enough, you’ll get to know all the
players, product lines, trends, and business strategies – everything you need
to successfully target your next creative project to the right companies.
Follow these guidelines and your potential licensees will consider you
an asset. You have to invest time with them before they will take you
seriously as an outside product developer. Work to build good relationships.
You want to be a professional product developer, not a high-maintenance
inventor!
Finding the Right Potential Licensee
Inventor: Chuck Lamprey
Products licensed: Rock n’ Roller, Super Treadz, Roaming Runner,
and many, many more.
Chuck Lamprey has been a successful product developer in the pet toy industry for 10 years. It
took some time for Chuck to get traction licensing product ideas, but he now licenses products
regularly, typically a couple of ideas every year.
Stephen: Why pet toys?

Chuck: I come from a high-tech background. I’m here in Silicon Valley.
About 10 years ago, I got kind of burned out. I said I’m not that excited
about this stuff anymore. It’s fast-paced, you have to always be thinking. I
had seen (Stephen and Andrew) speak before at the local inventors’ club
and loved the concept (of licensing), so I decided, what the heck, I’ll give it
a shot. And I thought, what really interests me? What is fun? Fun was a big
factor for me. I thought dogs, cats, why not? I know a little bit about them,
I’ll just jump right in.
Stephen: What’s made the biggest difference in your success?
Chuck: For me, it’s been getting to know people. Getting to know the
ins and outs of what’s needed in the industry. My biggest issue was not
understanding that cost is big factor; that durability is a big factor in the
pet industry.
Stephen: Any advice for the next inventor?
Chuck: The most important thing is persistence. There’s a lot of
rejection so just stick with it. Don’t do something crazy like mortgage your
house. But stick with it as long as you can. I have a hundred ideas a day. If
one doesn’t sell, I move on to the next one.
Check out my full interview with Chuck on my YouTube channel inventRightTV. We talk about
co-branding and licensing, trade shows, and branching out to different industries.
Finding the Right Potential Licensee
Inventors: Dr. Christopher Cetta and Dr. Richard Kaye Products
licensed: Precision Aligner Button, by MAO
(Mid Atlantic Ortho)
Orthodontists Dr. Christopher Cetta and his partner Dr. Richard Kaye are inventRight students
who have licensed multiple patent-pending designs for the dental industry. Their most recent idea is a
solution to frequent problems their patients were having with the metal pieces used to secure rubber
bands for teeth straightening and bite alignment.
Stephen: Tell us about licensing your first product.

Dr. Cetta: Certainly, I would say that your first idea is a challenge. I
would tell other students, don’t get discouraged by bumps in the road. You
just have to get past those. For example, when we were pitching our
concept, like anyone else, we got a lot of no’s. We were approaching bigger
companies that maybe weren’t a good fit for our product. It’s very easy to
get stars in your eyes and approach the biggest companies and think you’re
going to be a multi-millionaire. But you really have to look at the product
line. See where the product line will fit. And find the right partner for you. It
did take us 4-6 months before we found the right partner.
Stephen: Any advice for inventors who are just starting out?
Dr. Cetta: Don’t give up. It’s completely normal to face rejection. It does
get frustrating, but don’t take that personally. If you believe in your product,
just keep getting it out there. Sure, you can take that to an extreme. If you’ve
been pitching for multiple years, maybe it’s time to jump ship. But there will
just be some road blocks that you’re going to have to get past.
Check out my full interview with Dr. Cetta on my YouTube channel inventRightTV. We take a
closer look at his dental innovation and discuss the benefits of working with a partner.
PART THREE
Getting in the Game
5. ROTECTING YOUR
IDEAS
L et’s start this chapter off by sharing what I hear from inventors every
day. Every. Single. Day.
Is a company is going to steal my idea?
Do I need a patent?
Do I need a trademark or copyright?
I get these questions from inventors constantly! In most cases, I don’t
think inventors should be nearly as worried as they are. A positive social
media presence for companies is incredibly important in our current
business climate, so it makes little sense for them to risk their reputations
by stealing ideas. Can you imagine reading reviews or articles about a
company stealing ideas and how quickly that would spread throughout the
internet? Personally, I’ve heard of very few situations where a company has
actually stolen an idea that was submitted to them. Has it happened? Yes?
Does it happen often? No, emphatically no.
There’s another reason why it’s unlikely that a company will steal your
idea. As I have previously stated, most companies have embraced open
innovation. They want, actually they need, our ideas. If a company were to
steal someone’s idea, the inventing community would quickly dry-up in
terms of product submissions — and ultimately that would render a
company less competitive.
“50%-60% of our portfolio started as an idea from the outside.”
“35%-40% of our items are coming from inventors.”
My takeaway after interviewing all of the folks that I talked with to
research this book, as well as my experience over the years, is this:
Intellectual property is a tough subject and a hard topic to lay out in black
and white terms. Most companies nowadays acknowledge that it is pretty
difficult to protect anything. Some of the bigger companies that are market
leaders may use patents or other intellectual property tools to stop a major
retailer from carrying a copycat item. The really, really, really big
companies may use litigation to protect their products – after all they can
afford to! These cases are few and far between.
Ideas that potentially have a long lifespan and cost a considerable
amount of money to produce are likely to require patents. Not just one
patent, patents. There are certain industries that are the most likely to
employ this strategy, and they include medical devices, packaging
innovations, automotive changes, aerospace, and other highly engineering-
oriented industries like energy and computer hardware. It is a cost benefit
analysis made by the company comparing the potential life of the product
versus the capital investment required to bring it to market and to protect it.
Smaller and mid-size companies, particularly in consumer-oriented
categories, have a different perspective. Their strategy is to keep innovating
to stay ahead of their competition. Speed to market is more important in the
long run than a patent.
Of course, intellectual property helps to keep some people honest.
The broadscale policy I can recommend is that you protect your idea
with what is necessary for your industry and what is necessary to get a
licensing deal. And I am here to tell you that today, it’s usually not a patent.
There are other tools that are more affordable. Keep reading!
“I don’t mind if it’s patented or not, because we have the opportunity
to get products to market fast.”
— Luke Berry, Head of Innovation at Halfords Group, a UK and
Ireland-based automotive retailer with 450 outlets and 350 repair
centers.
“Patents are nice but not essential.”
— Nick Mowbray, Co-CEO Zuru Toys, one of the fastest growing
toy companies in the world. Bunch O Balloons, one of their hits, sells
about 30 million units a year.
“(Intellectual property) doesn’t matter to us.”
“It’s not super important. It’s nice to have. If someone gives us a
product and already has a patent on it, it’s nice to have that. In most cases
that can command a slightly higher royalty rate. But it’s not, you know,
totally necessary. If we have a product that we feel we can manufacture
and be first to market, we will move forward and work on a royalty
agreement even in the absence of a patent.”
“We will work on an item whether it has a patent or not. And if we
decide to go forward, we will help the inventor get a patent in the U.S. and
China because that benefits both of us.”
“Patents are important, and they’re not. It’s a long, complicated
question. They are important for some people; for me, they’re not. I’m
happy to look at all inventions, whether they’re patented or not.”
— Elias Amash, President of GRIP (Grand Rapids Innovative
Products). GRIP carries a product line of more than 1,500 specialty
hand tools, sporting goods, household items, automotive, air tools,
wood working, and general merchandise.
“Patents are massively important.”
— Barron McKillip, Research Scientist at Multi- Color Corp and
Former VP of R&D at CCL Label, two of the largest packaging firms
in the world.
It is important to realize that companies are in fact sometimes already
working on a product that is similar to an idea that has been submitted. This
often leads to confusion for both sides. Often, inventors are too quick to
assume that their idea has been intentionally ripped off.
So what protection is really necessary before you submit a product? It
all depends on your product and who you’re asking.
If you watch Shark Tank , you’re going to hear that you need to protect
your idea with a patent. This is not true for many products.
If you ask friends and family about your new invention, they’re
probably going to say you need a patent as well. Everyone has heard of
patents and has a general notion that a patent allows you to “own” your
idea. No. Your friends and family clearly have your best interest in mind
but they have little real-life experience in protecting inventions and
bringing them to market.
Many patent attorneys will also tell you it’s an absolute must to have a patent or some type of
ownership of your intellectual property to get a licensing deal. Again, this is not true in most
situations. Remember: A patent attorney has a unique set of skills which exist to help you get a
patent, but not necessarily to help you get a licensing deal. Getting a patent is NOT the same as
getting a licensing deal! Far from it. Patent attorneys are not businessmen! Don’t take business
advice from a patent attorney.
Now don’t get me wrong. Patent attorneys are very valuable and
necessary. I’ve worked with the same patent attorney for more than 25
years. I know when to ask for his advice and when not to as well.
On the topic of protection, my business partner Andrew Krauss adds,
“An incredible form of protection is licensing your product to a company
that is first-to-market, so other knockoffs are “me-too products” and your
licensee is the company (along with you) making the most money. When
you license your idea to a big company, you are that big company! When
you try to sell a product yourself, you can get crushed very quickly. It can
be as if you never even existed, let alone were first to market. So, no — it’s
not all about patents. Success is more about distribution and being first-to-
market fast and in a big way.” I couldn’t agree more.
Patents: Why they might not be
needed for your idea
I see a licensing deal signed each and every week and most of the time there’s no intellectual
property issued. Patent attorneys hate hearing this because it’s bad for business.
97% of patents never recoup the cost required to file and obtain them. I’m not surprised, as there
are more products on the market than ever and the lifespan of most products is very short. If a
product is only going to sell for 2-4 years, it doesn’t justify the time and cost of getting a patent!
There’s also the problem of online copycats.
Even if you can afford the countless hours and massive financial resources to fight infringers, you
might not even be able to defend your intellectual property in federal court because of new patent
laws. You may end up dealing with the Patent Trial and Appeal Board (PTAB). And if you end up in
PTAB it’s going to cost you hundreds of thousands of dollars to defend your patents. Your odds of
success aren’t that great either. Most patents get overturned in PTAB – which means the inventor
loses everything. Even if we had stronger patent rights for inventors, it would still be very difficult to
fight an opponent that is better equipped financially.
The reality is that completely protecting an innovation will require much more than just a patent.
It will require a significant amount of time and money. It’s not about who’s in the right or wrong.
Anything can be argued in court.
Companies can make slight changes or variations to your idea. They can reverse- engineer your
product to find information that will make it hard for you to argue that the idea is yours in federal
court. Patents are just words. And those words can be interpreted differently by patent examiners,
judges, and a jury. I learned this firsthand in 2003 when I fought the toy company Lego in federal
court. After three years the case came down to an argument over two words.
The process of protecting your intellectual property has always been a very expensive and time-
consuming problem. I’ll mention Apple again. Apple is one of the largest companies in the world and
they can’t protect their innovations with an army of attorneys and tens of thousands of patents, let
alone billions of dollars. If they can’t do it, how can we?
“If you’re successful, 99% of the time you will be copied. You are a victim of your own success.
But you don’t make money by suing people, you make money by selling products. I have
personally spent about $1 million suing people, but more than the money is the stress.”
— Jonah White, inventor of the smash novelty gift “Billy Bob” fake teeth, 22 million sold.
Here’s the good news – everything that I just shared with you doesn’t matter in terms of your
ability to license your product!
Companies have realized that chasing infringers and spending lots of
money to defend ideas in court is a losing tactic. Because of the short
lifespan of products today, it just doesn’t make sense. The best approach is
to sell and not worry about protection.
“Sell first and sell fast!”
— Michael Weinstein, President of Digital at Bluewater Media and
former Chief Marketing Officer for Allstar Innovations
As I discussed earlier, companies need ideas from us to stay
competitive. They are trying to get good ideas to market, not steal them or
wage protracted legal battles over ownership, so you shouldn’t spend more
resources on protecting your ideas than necessary. Don’t think that filing a
patent for your invention is always a necessary step to getting to a licensing
deal.
Before the Lego case, I used to think that I “owned” an idea if I was
granted a patent for it. However, I learned that in reality ownership is often
determined by successfully defending your ideas in court. And that takes
time and money. Lots of time and money.
Instead of thinking about patenting an idea so that you “own” it, I
suggest you consider establishing what I call perceived ownership . Let me
explain what I mean by that phrase.
Perhaps I’m a bit jaded from my experience in federal court, but I
believe you don’t truly “own” anything. When I first came to this opinion I
was so upset and disappointed – it really shook my world view. I was one of
many who believed that if I had a patent, that meant I “owned” something.
Well, I had six patents and I still had to go to federal court to defend my
ownership. The judge in the case issued a ruling on two words just a few
days before the case was to go to court. After that ruling my adversary Lego
and I agreed to settle the case.
What if the judge’s ruling had been different? Would I have had to go to
court? Would I have lost? I had spent literally hundreds of thousands of
dollars obtaining those patents – and their future came down to one person’s
interpretation of two words?
What I realized is this: Patents are a collection of words and drawings.
Words and drawings can be argued about… and the side with the more
skillful attorneys and deeper pockets is the most likely to win the argument.
That’s the way the patent and legal system works.
So, back to perceived ownership . What I learned over time is that many
industries don’t require patents because of the speed at which they move.
But they DO want to have some confidence that the product idea you
submit to them is original and that it is yours and not someone else’s.
Creating documents, having phone conversations, and keeping a paper trail
that establishes you as the inventor is what I call perceived ownership.
Companies do not want to get a letter in the mail after they introduce a
product suggesting that they stole it. Some companies may want the option
to file a patent down the road, but they do not need to have a patent today to
review the product and move forward. The very best way to create
perceived ownership is to write and file a well-written provisional patent
application – which I will discuss in just a moment. There are other ways
too.
And if you ever have to defend your ownership of an idea, it’s perceived
ownership that matters, not any single patent. A patent might be a tool in
your overall strategy, but it is not the only way to create perceived
ownership. What is really important is that you utilize the correct business
strategy to create that perceived ownership. There are many tools and
strategies outside of patents that will help with this.
How to create perceived ownership
First, find inventor-friendly companies. Look for companies with a
proven track record of licensing ideas from independent developers.
Working with inventor-friendly companies is the best protection you can
have because they value you and your product ideas.
Make sure the company’s submission requirements are fair. You will
find many companies that claim they’re open to product submissions but
have submission agreements that are unreasonable. Run from these
companies! As a rule of thumb, steer away from companies that don’t have
an invention submission process in place. Working with companies that
don’t have experience with outside inventors typically takes far more time
and effort than working with companies that consistently license ideas.
Make sure your idea is new. Do a thorough search online. Know your
point of difference. To me this is probably one of the most important things
you can do. Too many potential licensees have told me that a simple Google
search often shows that a submitted idea is not new or original. Don’t waste
their time or yours.
“Do something that stands out. Do something that others aren’t - so
when you send your marketing material to a company, it’s going to get
their attention.”
— Scott Baumann, Professional inventor and CEO of Procreate
Brands, LLC., which has more than 40 worldwide licensed products in
its portfolio. inventRight student.
Do a prior art search and make sure you know your point of difference
versus any issued patents. I highly recommend you learn to do this yourself.
There are classes online that will teach you how. It’s impossible to find
everything, but learn as much as you can and have fun. You could hire a
firm that specializes in prior art searches but ultimately, learning to do this
yourself is an invaluable skill. When a potential licensee asks you about
patents or products that are already on the market, you want to have an
answer. You can turn these questions into selling points if know your point
of difference very well.
File a well-written provisional patent application (PPA) . I think a
well-written PPA is one of the best tools that inventors have to protect their
ideas. A PPA is a fast and affordable way to protect your idea while you
refine it, test the market, figure out manufacturing, and generate interest
from potential licensees. You can file a PPA without an attorney or the
formal documentation that a non-provisional patent application requires.
For 12 months, a PPA will give you the same legal protection you would
get under a regular patent application. It allows you to include the “patent
pending” notice on documents, your sell sheet, and prototypes you present
to potential manufactures, vendors, and customers. Also, a PPA will give
you or your licensee the option to file a non-provisional patent application.
In many situations, you can eventually negotiate for your licensee to
pay for the filing of a non-provisional patent application.
Most individual inventors will be able to file a PPA as a “micro-entity”
which will reduce the filing fee to $70. This makes a PPA a very affordable
option!
I wrote extensively about how to write provisional patent applications in
my last book, Sell Your Ideas With or Without a Patent . inventRight also
offers for sale a software program called SmartIP. Designed by
IPWatchdog.com founder, law professor and patent attorney, Gene Quinn,
SmartIP makes writing a strong provisional patent application a very
streamlined process.
Do not share your ideas on social media. Tha t means Facebook,
Twitter, LinkedIn, and Instagram. Keep them to yourself! In some
countries, showing your product idea in public is considered “public
disclosure” and you can potentially lose any intellectual property rights if
you have not previously filed for them.
Use non-disclosure agreements as a way to set a professional tone.
Don’t ask a company to sign an NDA at the very beginning. Show them the
benefits of your product first. If they seem interested in your idea and want
more information, then sign their NDA but make sure you read it very
carefully. If a company’s NDA doesn’t seem balanced, have an attorney
make changes. NDAs can also be used if you have trade secrets. If you do, I
highly recommend working with a patent or licensing attorney to draft a
strong NDA.
There are many types of NDAs. I do not recommend piecing together
your own from the internet. Also, you can use an NDA that has work-for-
hire language when working with a vendor or anyone else that you’re
consulting. That way there’s no co-ownership. Also, if working with any
Chinese manufacturer, make sure you have them sign an NNN (non-
disclosure, non-use, non-circumvention).
File a trademark if it’s appropriate. There are many examples of
shameless counterfeiters online, especially on Amazon. These scams are
often word for word replicas of your product name, features, and benefits.
Trademarks can be an easy tool to prove rightful ownership to a retailer.
File a copyright. The y’re another affordable tool to deter online
thieves.
Copyrights will protect your photographs and images.
File a design patent. Design patents are issued “for a reproducible
change in the decorative appearance, configuration, ornamental design, or
shape of a utilitarian item.” They are different from utility patents, which is
what most patents applications are for. Just like trademarks and copyrights,
design patents are relatively easy and affordable to obtain.
Trademarks, copyrights, and design patents take a minimum of 10
months to obtain, versus 2-4 years for a non-provisional patent. For more
information, please consult my last book, Sell Your Ideas With or Without a
Patent.
Be wary of crowdfunding. Crowdfunding is a catalog for copycats,
especially for thieves abroad. You’ve seen the countless fakes on Amazon. I
think the dangers of crowdfunding outweigh the benefits if you’re trying to
license an idea. DRTV companies frequently run a test of a product before
making a final commitment to an inventor and that sometimes creates
problems.
Don’t get seduced by TV. Sure, shows like Shark Tank are fun and the
exposure can be fantastic. But I’ve heard too many stories about product
ideas that were copied after appearing on TV. I’ve also heard stories of
contestants who have found themselves accused of stealing ideas. TV is
more about advertising than licensing ideas. I recommend you focus your
energy elsewhere.
Attend trade shows. Trade shows can be incredibly valuable for
product developers. They’re a great way to familiarize yourself with other
products in your industry. I do not recommend purchasing a booth to
display a prototype of your invention, which is an opportunity some trade
shows offer inventors. Instead, you should walk the show to introduce
yourself to potential licensees and get a better sense of the market,
including where it’s headed. There’s an entire strategy behind using trade
shows to license your product ideas — which professional inventors Sara
Farber and Amanda Hutton touch on in their interviews — and which I’ve
written about extensively online.
“If you’re looking to sell a lot of products to a lot of companies,
attending a trade show is a good opportunity to see everyone and meet
everyone.”
“No, I wouldn’t recommend just sitting at a booth with all your ideas.
There probably are people who would intentionally rip stuff off, but there
are also people who wouldn't intentionally rip stuff off, but you don't
know where you see something sometimes. It gets into your head and it
gets into the ether and then you might come up with something similar
and you don’t even know that you got it from seeing this other item.”
— Sara Farber, Professional toy and game inventor and Cofounder
of Galactic Sneeze, which has both ventured and licensed games,
including three to Kikkerland Design in the fall of 2019.
“Absolutely we’ve seen examples where inventors have presented
prototypes to people at shows and then magically seen the same item,
called something else, make its way to the market 6 months later. So, yes
there is risk. If you don’t have a patent and you’re not ready for the
market, I would very much agree the item should be shown privately.”
— Michael Weinstein, President of Digital at Bluewater Media,
formerly Chief Marketing Officer at Allstar Innovations
“(Attending trade shows) is very important. You can talk to the experts
there pitching items, see product demonstrations, and see what else is
already out there and where the holes are. So that’s very, very important.”
Get to know retail buyers. Start making contacts with all the retailers so they know that you’re
an inventor producing original works. I’ll explain in the next chapter how creating good relationships
with retail buyers can be extremely helpful, especially if you find that your idea has been copied.
Always do a thorough background check. Whoever you’re working
with, make sure to look at their profile on LinkedIn. Understanding
someone’s area of expertise will help you negotiate with them.
Avoid anyone or any company that promises to do all the work for
you. It doesn’t work that way. Creating licensing agreements takes
legitimate work, time, and knowledge. If something sounds too good to be
true, it usually is.
Always create a paper trail. After every conversation, summarize the
important points of the conversation and highlight the next steps. Also, this
is a great way to keep your project moving forward.
Create strong marketing material. Creating strong marketing material
and highlighting the benefit of your product idea builds your perceived
ownership of an idea. I’ll discuss this topic in detail in the next chapter.
Tell your story on social media only after you’ve licensed your
product idea to a company. I cannot stress this enough! Not only can you
tell a newsworthy story about your product, you can create authenticity by
making that story personal! Be genuine and transparent and you’ll build an
audience and an army.
“If I had licensed a really good idea I would want to tell as many
people as possible as soon as possible. You want your name associated
with it. You want as many people as possible to know it’s your idea before
another company comes along and does it.”
These strategies have little to do with protection and entirely to do with
perceived ownership. It’s not just about patents anymore. If you have a truly
original idea, this is newsworthy in itself! You must create a narrative to
support your idea. Take these steps and you’ll be in a great position to
defend your ownership of an idea if it ever becomes an issue. But first, you
have to get your product to market. Let’s discuss the tools you’ll need to
effectively sell your idea.
One last thought: For inventions that are very complex and require
significant capital to implement, you’re going to need a different strategy.
You may need a team, significant funding, and a wall of intellectual
property along with trademarks, copyrights, NDAs, etc. These types of
inventions are usually in the medical, packaging, auto, or software
industries. Big ideas typically justify more robust intellectual property
protections and you may need to file a non-provisional patent application,
perhaps more than one. You’ll have to work with a patent attorney and may
have to defend your patent(s) in court. Part Four of my last book, Sell Your
Ideas With or Without a Patent takes a deep dive in to the lengthy and
complex process of obtaining a patent.
Protecting Your Ideas
Inventor: Roxana
Product licensed: Sophisti-Clean Water Bottle Wash & Dry Set
I’ve seen many inventors run into their product idea out in the world
after they have submitted it to a company and wonder if it’s been stolen.
I’ve experienced this firsthand when I saw my own product in a television
ad. Ultimately, I don’t think you should automatically fear the worst. In
general, I think it’s a wise approach to give companies the benefit of the
doubt and ask questions. That’s the advice I gave Roxana and here’s what
she learned from the experience:
Roxana: I had an idea. I got my sell sheet and PPA ready and submitted
to a company. Then I went to a trade show and saw that the company had a
part of my idea in one of their designs. I wasn’t sure if they stole my idea or
didn’t. I was numb at that moment. I didn’t know what to do.
(I advised Roxana to craft a very nice email explaining her experience.
The company did get back to her and revealed that their idea came first,
and that they had even patented it. That’s not the reply she wanted to hear.
She felt a little doubtful at first, but….)
Roxana: I decided to do a patent search, and sure enough, it was there.
And it had been filed before I ever submitted my product to the company! It
felt good to see it. It feels nice to know that they’re an upstanding company
and were kind enough to share information.
Stephen: The fact is, companies take a risk when working with
inventors. I think it hurts the relationship between independent product
developers and open innovation companies when inventors quickly assume
the worst – that their idea has been stolen. The reality is that the good
companies are going to play fair because they need us. Inventors should
respect that to help keep their doors open to outside developers.
Watch my full interview with Roxana on inventRightTV.
6. WHAT YOU NEED TO
LAND A LICENSING DEAL
L anding a licensing deal is not that difficult. Many people make it out to
be an impossible task. But I’m here to tell you that I see it done each
and every week.
Let’s look at the big picture. Companies know that in order to stay
competitive they need to innovate. So, you must come up with a product
idea that your potential licensees’ customers need and want. The idea
should solve a problem they have or perhaps entertain in a new and clever
way. It’s as simple as that.
There’s always a risk when launching new products. What if it doesn’t
sell? What if the company ends up with unsold inventory? What if another
company comes out with a similar product? Your job is to show your
potential licensee a new product idea while taking away as much risk as
possible. Make it extremely easy for them to pull the trigger on your
project. That’s why you have to reach out to inventor-friendly
companies and provide them with ideas that are a good fit for their existing
business model.
Here are the tools you’ll need to land licensing deal:
1. The right attitude
Without the right attitude, you won’t get far. Your goal is to be an asset
to companies that are looking for great ideas. You want to make them want
to work with you.
Remember, you set the tone. At the very beginning, tell them you’re
excited about working with them. At this stage, the goal is to convince them
that you’re a team player (and not just convince them, but actually be one!).
Ultimately, you want to establish a relationship in which they trust you
because you know their business and you are going to be an asset not a
liability. Once you have a good relationship with a company, you’re going
to submit ideas. Even when those idea submissions aren’t quite what they
are looking for, since you’ve invested in them, they will invest in you by
giving you feedback about your ideas, or maybe even a specific target to hit
for your next submission. Having the right attitude is key to building this
relationship.
Always be knowledgeable – make sure you’ve done your homework so
you can field any question. Be reasonable. I’m willing to bet that you’re
fired up about your idea. It’s yours, you created it! But don’t let your
passions get the best of you. Be willing to listen and negotiate. Look at
things from your potential licensee’s perspective. They might manage over
a 1,000 SKUs (Stock Keeping Units); don’t act like your idea should be the
center of their universe. Have a positive attitude and you won’t be seen as a
“high maintenance” inventor.
“I think it’s important to mention that while inventors expect
companies to be respectful to them, we expect inventors to be respectful to
us.”
2. A list of inventor-friendly companies that are looking for ideas
I am always being asked for this. Sure, it’s a good place to start. As I
previously discussed, not all companies have the same attitude towards
independent product developers and you absolutely should identify the
right companies to submit your ideas to. But know that a list of companies
alone will not get you a licensing agreement. It’s not about access, it’s
about doing it correctly.
Knowing that a company is friendly to outside inventors doesn’t save
you from the work of thoughtfully developing your idea and navigating the
tricky waters of pitching it to a company. You should understand that a list
will never be perfect or complete because invention submission polices can
change. Companies will go out of business and new ones will take their
place. That’s why you can’t just rely on a simple list or database of
companies.
Instead of relying on other people’s lists you need to make your own.
And you do that by being confident in your ability to assess a company’s
attitude towards outside inventors. We already discussed this at length in
Chapter Four. Another way to do this is to look at store shelves where your
product could be sold. Reach out to companies in the same aisle. Don’t see
these other brands as your competition, they’re your potential licensees!
Also, make sure you always do a background check on whoever you’re
working with, even if you found them through a list of presumably good
contacts. See if there are any complaints or lawsuits on the internet; it could
save you a lot of time.
3. A prototype (whether or when?)
I absolutely love building prototypes. Who doesn’t want to see their
idea come to life? But creating a prototype for all your ideas is not
practical. It would be a losing game by the numbers. You want to pitch as
many good product ideas as possible. Spending time and money on a
prototype for every idea is not efficient in terms of time or money! So, you
shouldn’t be asking if you need a prototype for every idea, you should be
asking, “When do I need a prototype?”
Let’s take a step back. I recommend selling the benefit first, not the
product. Most companies would like to see a proof-of-concept after they’re
interested in your product idea. So, try to gauge the interest before going to
the trouble of building a prototype. If you cannot sell the benefit first,
there’s no reason to build a prototype.
“What we prefer to receive, and I only speak for us, is a simple
drawing, because the way we work is that we often deconstruct and put it
back together with our own take on it.”
“A video is great. At a very basic level we need a drawing. It doesn't
have to be a very fancy drawing. It could be a sketch. We don't need
blueprints or CAD drawings at the early stage. A lot of inventors now are
providing us with homemade videos showing their product in action with
a pet, which is very helpful as well. The more an inventor can do to
convey the attributes of the product to us in a minimal amount of time,
the better.”
You can show your product idea with a sketch or even better, a 3-D
computer generated sample. These models can look so real that people will
want to purchase it. 3-D models used to be extremely expensive, but
they’ve become quite affordable. A good computer-generated image can
also be utilized in the marketing material you use to pitch your idea.
“In many cases just rendering a product – a drawing of a product – is
sufficient to at least get early interest.”
But I want to tell you that the industry is evolving. A sketch will work
for a product that is a simple idea, a clever improvement on an existing
product, or something simple with no moving parts. If it’s something more
than that then just a sketch will put you in the amateur camp quickly. Once
again though, it’s all about timing.
So, you don’t necessarily need a protype to pitch an idea, but sometimes
there are important reasons to build one eventually. For one, a prototype
can show proof-of-concept (meaning your product can do what you say it
can do). It can show that your product idea actually works. Another reason
to build a prototype is to gain a functional understanding of how your
product works. You often have to tinker to know what works and doesn’t.
This information has huge value when writing a provisional patent
application.
“We want to see a prototype to see if the inventor can show us proof-
of-concept.”
— Nick Mowbray, Co-CEO Zuru Toys, one of the fastest growing
toy companies in the world. Bunch O Balloons, one of their hits, sells
about 30 million units a year.
Back in the day I used to take existing products and cannibalize them to
build my prototypes. I would make Frankenstein/Mr. Potato Head
prototypes. Today, you have the wonderful option of 3-D printing. Know
that the cost can be affordable for small objects and quite significant for
larger more complex projects.
You can always hire a professional prototyper, but expect to spend
anywhere from $500 to $20,000 depending on the complexity of your idea.
And don’t forget that prototypes break, so you might need more than one.
Just because a company asks for a prototype doesn’t mean you should
automatically send them one. You always have to gauge their interest.
There’s no way to know for sure that their interest is legitimate, but you can
learn more by starting a conversation. If they claim to be interested and ask
if you can provide a prototype, you might respond that you can indeed
provide a prototype, but ask some questions first:
What was it about my product submission that you think your
customers will like? How do you see my idea fitting in to your product
line? What is your review process once I send a prototype?
Most of the time I don’t recommend sending a prototype because you
can’t control how someone will demo it. Things often go wrong and a
prototype that isn’t used correctly can bury your chances of licensing an
idea, even if it’s a great one. If you do send a prototype, make sure you
send the appropriate information about how to use it correctly and don’t
expect to get it back. If you can get to a potential licensee in person, I
highly recommend doing the demonstration yourself. Another idea is to
propose meeting at a trade show where you can show and demonstrate your
own prototype.
There are many types of prototypes. Some are working models
designed to show the function of a product, and others may be
representational and not functioning. A prototype can be full scale or
miniature and can be made from different materials, not necessarily the
same ones you want for your finished product. The important takeaway is
that your prototype should be developed based on its intended purpose.
Now, I must add here – there is one industry that absolutely requires a
prototype at some point, and that is DRTV. You can use a sell sheet and a
video initially, but at some point, you will have to submit a prototype,
there’s no way around it. The companies in this industry do not develop
their own prototypes, so you are going to have to provide one. They will
use your prototype for digital testing so it will need to be both a looks-like
and a works-like. If you have strong interest from a DRTV company, I
think you are going to have to invest in a good prototype!
“We must see what the product is and how it functions.”
4. Your value proposition: A one-line benefit statement
What’s so great about your product? You need a clear value proposition.
I call it the one-line benefit statement.
You want to limit your statement to one line, so think big picture. You
want to very quickly explain the value that your product brings – what the
product will do for the user. Reduce the benefits of your product to one
concise sentence. The iPod had a perfect one-line benefit statement. “A
thousand songs in your pocket.” It was so powerful, we all wanted one.
Please note that a benefit is different than a feature! The iPod didn’t tell
you what it was made out of, how long the battery lasted, its relatively
small size – or a myriad of other details that were factually accurate. It
shared with you the benefit to you – why you would want to buy one.
The easiest way to come up with your one-line benefit statement is to
consider all the features of your product. What do those features add up to?
Take Bunch O Balloons, one of best-selling toys in the world for multiple
years. What does this product do for you? Their one-line is, “Fill and Tie
100 water balloons in 60 seconds!” Speed! That’s the clear benefit.
Here are some examples of great one-line benefit statements: Chop
Magic: The fast & easy way to slice & dice.
Pocket Hose: The hose that grows to 50 feet!
And it’s not just products that have one-line benefit statements, they’re
everywhere! Look for benefit statements about the products, services, and
brands you use every day:
Apple MacBook: Light. Years ahead. Evernote: Remember everything.
If you can, make your one-line benefit statement emotional! A value
proposition that appeals to people’s emotions will get more attention than
one that feels cold or disconnected. Look online for examples of great
benefit statements. They’re everywhere – on websites, on packaging, in
newspaper headlines. Clickbait is usually just a clear benefit statement that
lures you in. Your one-line benefit statement can be used on all your
marketing materials, subject lines for emails, and even when you’re
pitching your idea in person.
“If you cannot grab someone’s attention in a minute or a minute and
a half you will probably lose that sale.”
— John Cremeans, Pioneer in the home shopping industry who has
pitched over 100,000 products with $2 billion in sales and 35,000 live
television hours.
“Pitching is actually an art. When presenting one-on-one to a
customer, watch their eyes and watch their facial expression. I remember
those. I refine my pitch every single time, and the pitch starts to get better
and better. You should 100% believe in your product, and that should
come across every time you make a pitch
— whether it’s to a camera, a one-on-one presentation to an investor,
or a presentation to someone you’re trying to sell.”
— Aaron Krause, Inventor of Scrub Daddy. Since 2012, he has sold
more than 25 million Scrub Daddies and his company is worth
upwards of 170 million.
5. Marketing material
You have a great idea. You clearly understand the benefits of your
product, you created it. The question is, how are you going to pitch this
great idea to a potential licensee?
I want you to know, that after interviewing many, many companies
about the submission process, your marketing material is the number one
thing that will guide a decision about whether the company wants to work
with you or not. Even if your product is not great and your one-line benefit
statement is lousy, professional-looking marketing material will get you in
the door. If your marketing material is amateurish or sloppy, your idea will
get put in a pile of items that don’t get looked at!
There are two items that are invaluable for marketing your ideas.
a.
Sell sheets
First, you absolutely need a one-page advertisement of the benefits of
your product. I call it a sell sheet. After interviewing hundreds of
companies, I can tell you that your sell sheet is the first thing they look at.
If your sell sheet does not convey your product’s benefit immediately or
if it looks like you did it yourself, they will put your product in the
“amateur” pile. Most companies do not have time to review products that
they have to “work” to understand. A professional sell sheet is your first
step to becoming a professional inventor. It makes an excellent first
impression and they will spend a few more minutes reviewing your product
submission.
The format of an effective sell sheet is very simple. Keep it to one page.
Your benefit statement should be at the top of the page. Next, make sure
you include a large visual of your product. You can take a photo of your
prototype. You may even use a 3-D computer generated model. Using
bullet points, write three to four features of your product. These features
should all contribute to the main benefit statement that’s at the top of the
page. Add your contact information at the bottom of the page. Email,
mailing address, and telephone number are all you need.
If you have a product logo, it will give a great finishing touch to your
sell sheet. It doesn’t have to be large and overbearing. Add it to the bottom.
Likewise, if you own a company and have a logo for it, you can add it to
the bottom but again, keep it small. You can also add “patent pending” if
you have filed intellectual property such as a PPA or non-provisional patent
application. You can keep this detail small as well.
A well-designed sell sheet should be pleasing to the eye. It should use
fonts and colors that are typically used for products in that category. Make
sure you study the company's website to create a sell sheet that’s consistent
with their product line! Look at their branding very carefully.
You should test your sell sheet on friends and family to see if they get
it. If they don’t get it quickly, you must re-design your sell sheet. A sell
sheet should be like a billboard advertisement. You should be able to pass it
at 60 miles per hour and get it instantly. Another good comparison would
be a one-page magazine ad. You should get what they’re selling at first
glance. Don’t be tempted to be wordy and detailed. The goal is to keep
things short and sweet. You won’t have room to provide every detail and
that’s perfectly fine. Remember, you’re selling the benefits of your idea, not
the intellectual property or the potential for profit. Sell the benefits and give
enough information so they ask questions and engage with you.
“It’s not about how fancy your sell sheet looks – does it convey the
idea? That’s the biggest thing.”
One of the biggest mistakes that I see is that inventors are making sell
sheets themselves. Sure, if you’re a graphic designer, have at it. But if you
don’t have graphic design skills, I highly recommend that you outsource
this task. There are multiple ways to make this happen. If you’re on a
budget, look for a graphic designer at your local college. Also, you can look
for a freelancer online on sites like Upwork and Fiverr. If you’re worried
about confidentiality, have them sign an NDA with work-for-hire language.
The potential downside to connecting with a freelancer online is that the
process may take a while. There’s a good chance that you’ll be
working with someone overseas whose first language isn’t English. You’ll
have to explain the idea of a sell sheet. You’re also going to have to play art
director. You’ll have to put in some work to get great results.
Because the sell sheet is such an critical tool that inventors are so often
getting wrong, at inventRight, we created a service called Design Studio
that provides you with a convenient online portal to get all of your
marketing materials in one place without having to worry about third party
services, communication issues, or other common problems that can slow
you down.
Want to see more examples of sell sheets? Visit my YouTube channel
inventRightTV and search “sell sheets.” I have recorded many videos
reviewing real sell sheets. There are also four sell sheets in the back of this
book for you to check out.
b.
A one-minute video
Who doesn’t love a video? A one-minute video that shows a problem

followed by your product as the solution to that problem can work as a very
effective marketing tool. A sell sheet is a must, but a good video is arguably
the most powerful marketing tool you can have today. This type of format
is extremely popular in the DRTV space. Look them up, almost every
DRTV product will have one.
You don’t have to spend thousands of dollars to produce a one-minute
video. Most of my students create their videos with a smartphone,
storyboard, and a good script.
I highly recommend that you embed your one-minute video in any
digital copy of your sell sheet. When you combine your sell sheet with an
embedded video, that’s all you need to market your product. You don’t need
to be a salesperson. You don’t need to dance on table tops. Your marketing
materials should sell for you.
When you provide your potential licensee with marketing material that
they can share with others, you’re making it extremely easy for them to
gather enough information to determine whether your idea is the right fit
for them. They’re able to share this information with their manufacturers,
buyers, and even supply chain.
Once you share your video with a potential licensee, make sure they can
watch the video! A broken link will not make a good impression. Also,
knowing if or how many times a potential licensee has watched your video
will help you determine if there’s interest in your idea. There are many
ways to do this. Most inventors use YouTube to host their videos. That
video should be private on YouTube. We mentioned in the last chapter why
this is an important strategy—you want to protect your idea. Don’t share
your idea on social media too early! If your video is private, and you’ve
shared it just once, or with a select number of potential licensees, you can
use YouTube’s built in analytics feature called Watch time report to learn
about who’s watching, how many times they’ve watched, and even how
much time they’re spending watching your video. Of course, if you’re
hosting your own video, you can use whatever software you prefer to
gather data about your one-minute video. Also, a reliable low-tech option
would be to send a follow up email with a link to your video to try to make
sure your potential licensee is watching it.
If you are submitting ideas in the DRTV industry – you probably want
to take your one-minute video “one step further” to make sure that it looks
like a professional advertisement. That doesn’t necessarily mean that you
can’t make it yourself, but it does mean that you will really want to take
lighting, voice-over, script – all the details – and make sure that they are
really well done. Past inventRight student Scott Baumann has elevated the
one-minute video to an art.
“Scott did a great job. Usually we give our assets to a producer and
then we do the test, which takes longer. Whereas with what Scott brought
in, we were able to test immediately because he had done all the work.”
“You, as the inventor of your own product, knows that product better
than anyone else in the world. You came up with that idea based on your
own experiences and your own vision of the world. No one is going to be
able to relay the attributes of that product better than yourself. Do not
ever leave it up to chance!”
5. Knowledge of manufacturing costs
Understanding manufacturing costs can be a big plus when trying to
license your idea – you can really move the project along much faster.
“Inventors should also pay attention to costs. There are hidden costs
of doing business at large companies, which is one reason why they can
be risk-averse. Learn more about their cost structure and cost structures
in the industry at large. It could be the best product in the world but it will
be cancelled if everyone involved cannot make enough money.”
Now I know that you are thinking: “How would I know anything about
manufacturing costs? I’m just a regular individual with a great product
idea.” I completely understand that reaction – I was in your shoes once, but
with some patience and homework you can develop an understanding of
this important detail that will assist you with your potential licensee.
If a company is interested in your idea, one of the first questions you’ll
be asked is, “How much is it going to cost to make?” It doesn’t matter if
your idea is great. If it can’t be produced at a reasonable cost, no one will
be interested. A related question is, “How can we make it?” Again, they’re
wondering, “Can we use existing production lines and equipment to
produce this new product?”
If your idea is simple, you can learn about how it can be manufactured
by studying other similar products on the marketplace. If your idea is more
complicated and you have a working prototype or CAD drawing, a very
smart move would be to reach out to a contract manufacturer. I generally
recommend choosing a contract manufacturer here in the United States as
opposed to one overseas. Yes, the price per unit will be higher but there will
be far less concern about having your idea stolen. You can also get an
estimate from the engineering firm if you hired one to do your technical
drawings. You shouldn’t be too concerned about your idea being stolen
from an engineering firm or contract manufacturer. You can have them sign
an NDA with work-for-hire language to cover the bases.
Some companies won’t need a manufacturing quote from you because
they’re very good at manufacturing themselves. They can easily look at
your product idea and estimate a manufacturing cost inhouse. That’s
somewhat unusual but it does happen.
But some companies are so busy that they will rely on the inventor to
help obtain an initial price quote for the product. If you don’t know the
right components, materials, or mechanical parts, you could be at a big
disadvantage. You might send your drawings or prototype to the company’s
supplier in China only to have it deemed too expensive to manufacture
because you left the materials up to the supplier’s decision.
No matter what, if your product is going to get to the market it is going
to get manufactured. It comes down to timing but someone, somewhere is
going to have to do an evaluation of the cost to product because ultimately,
the retail price point and profit margin (and your royalty) depends on that
cost.
Know that different ideas will require different approaches, but make
sure to always consider manufacturing. Adopt a detective’s mindset and try
to gain as much information as possible about your potential product. Also,
don’t forget that the information that’s initially gathered will be not be final.
Costs will always vary depending on scale of production. If seriously
interested, your potential licensee will get their own quotes.
“When submitting concepts, you really need to try to figure out what
the most cost-effective way to produce the item is – if you can include that
with your submission it really helps. Most things get pushed out to the
engineers to figure out and the engineers don’t really have time because
they are working on projects that have already been approved and are
going to market.”
— Bob Ruginis, former Director Electrical Engineering, Hasbro
Toys
6. Packaging concepts
Who wouldn’t want to see the package with your product in it on a store
shelf?
For some industries, a computer-generated graphic of the package on a
store shelf can be attention catching. It’s not always necessary but
sometimes can make your idea stand out among the competition. It makes
your idea look real. They get to visualize the end product, which can
generate interest and spark conversation. If you go this route, make sure it’s
done professionally.
7. Confirmation of market demand
The easiest way to obtain a licensing deal is to take away some amount
of risk. One way is by showing market demand. You could use a
crowdfunding site and show how many people want to purchase your idea.
“Crowdfunding is probably the closest thing we have to real intent to
purchase because the customer is literally buying something even before
it is made.”
To me, crowdfunding is a lot of exposure – maybe too much. I would
prefer to reach out to end-users such as buyers and see if there’s interest.
With good marketing material, especially with 3-D computer generated
graphics, it’s easy to get a read from buyers. 3-D computer generated
models can look very realistic — realistic enough that your product looks
ready for purchase. I’ve seen many buyers ask for the wholesale price after
seeing a computer model of a product idea.
You’re checking in with buyers to determine if you have an idea that
consumers will buy. Being able to show potential licensees that there’s
demand for your product is a great tool to have. Try it out, reach out to a
buyer at any major retailer through LinkedIn. Try to obtain some type of
read. Start a dialogue. You’re looking for input and suggestions from the
buyer.
One of my students reached out to one of the buyers at Costco and
asked him his opinion about his product. The Costco buyer liked it and
wanted more information. Then he found a potential licensee that was
currently selling at Costco. He told the potential licensee that Costco was
interested in carrying his product, which definitely caught their attention.
The Bottom Line, and Your Best Tool? Knowledge
this book is about bringing your ideas to market by licensing them to
companies, so knowledge may be the ultimate tool. You need to understand
what companies are looking for.
These are things you need to know:
• Your potential licensee’s product line and mission statement.
Their price point and the materials used in their products.
• What your product might cost to manufacture. You could get a
quote from a contract manufacturer. This is helpful to know so
you can determine that the price of your product will fit in to the
retail market.
• Your product’s point of difference compared to similar products
on the market. You’ve read the reviews for similar products on
Amazon. You’re able to show that there’s positive demand for a
product like yours. You have done a prior art search.
• That your product actually works. You built a prototype that looks
good and works very well. You’ve worked out all the bugs.
• How to put yourself in potential licensees’ shoes and understand
what they need to make good decisions. Give them good
marketing material that they can share with their retail buyers and
suppliers. Understand royalty rates and minimum guarantees for
similar products. This will make you seem very workable and
reasonable.
• That you have taken away as much risk as possible for potential
licensees. You should have a well-written provisional patent
application. You’re not reinventing the wheel, but you made a
simple improvement on an existing product.
Tools You Need Inventor
Interview
Inventor: Ryan Diez Product licensed: Woof Washer 360
Ryan had an idea for a simple dog washing tool as a kid and developed
a rudimentary version with his dad for a school science project. In his first
effort to get the Woof Washer 360 to market, Ryan took a passive approach
and relied on another organization to pitch his idea for him. For years, Ryan
waited but heard nothing. After joining inventRight, he was empowered
with the knowledge to bring his product to market himself and successfully
licensed the Woof Washer 360 to the largest DRTV company in the world.
Ryan’s product has been selling in major retail stores like Petco, PetSmart,
and Bed Bath & Beyond. A marketing video for the Woof Washer even
went viral and has been seen over 70 million times! Ryan continues to
develop product ideas and has even joined the inventRight team as a coach
to give back to the inventing community.
Stephen: Ryan, what makes a successful product developer?
Ryan: You have to be realistic. You have to look at your product and
think of it as though you’re sitting in the shoes of the person you’re pitching
to. It may be a good idea in your head, but let’s be honest. Are other people
going to want it? Are other people going to invest in it?
Stephen: How do most inventors struggle?
Ryan: Everyone comes to us and they say, “I want to make this a career.
I want passive income and I want to do this full time.” In order to do that,
you have to dedicate yourself to it. In theory, everything we do is very
simple, but it takes an incredible amount of dedication. We all love
inventing; that’s why we’re here. But where most of us struggle is the
marketing. That’s where inventors everywhere need that extra guidance and
push to get the product in to the hands of people that want to buy it.
Stephen: What are your tips for marketing your product ideas?
Ryan: Go the extra mile to create stellar marketing material. I’ve
learned that a potential licensee will quickly test your idea if they’re
interested. If they don’t like your marketing copy, they will use their own
marketing material to test your idea! And often, they won’t invest the time to
create a great video or sell sheet. You won’t have any control over the pitch!
That’s why I go the extra mile to provide a potential licensee with a great
one-minute video that they can use to test my product. This will give you the
best chances of success.
You can watch our full interview, as well as other great content with
Ryan Diez, on inventRightTV!
Ryan also regularly publishes articles with helpful advice for inventors
on the inventRight blog.
7. REACHING OUT TO
POTENTIAL LICENSEES
Y ears ago, when I started reaching out to potential licensees, I didn’t

have the internet. I had to take what I call the direct approach—I just
called corporate phone numbers and typically got a receptionist. They
didn’t really know who to connect me to when I said I was a product
developer wanting to submit ideas. So, I would just ask for someone in the
marketing department. Back then that was the approach. It was rather
straightforward, and people regularly picked up their phone.
Things have changed a lot over the years. People are increasingly
reluctant to talk on the phone and email is now the most common way to
communicate. Most people want to qualify you and your interest in them
before they take the time to actually speak with you.
When you start to reach out to potential licensees to pitch your product
ideas, you’re truly in the game. To find success, you’re going to have to
learn to effectively communicate with your potential licensees. The direct
approach is still necessary sometimes, but there are other approaches you
should be familiar with. There are basically four ways to reach out to
potential licensees today:
The direct approach: Call their corporate number directly.
LinkedIn: Contact someone in their sales or marketing department
through LinkedIn.
Online invention submission forms: Directly submit your product idea
to a company online.
Trade shows: Go to a trade show and meet your potential licensees in
person.
In this chapter, I’ll cover each approach in great detail. But first, some
general strategies for reaching out to potential licensees.
General tips for reaching out
You should have a list of companies in mind that could be a great fit for
your idea. You’ve done enough research to know the companies that really
embrace open innovation. You know their product lines very well. You’ve
taken the time to create fantastic marketing material. How do you make
contact? What’s the best strategy?
Don’t pitch your idea on initial contact. Remember, you’re just trying
to identify the right person to consider your idea. It could be a product
manager at a large company or the CEO of a small company. You should
have the mindset that you’re just trying to “get in,” not sell your idea the
first chance you get.
You don’t have to be a salesperson. You’re just trying to “drop off a
package,” which is your marketing material—your sell sheet and one-
minute video, to the right person. You don’t have to sell. In fact, during
your first contact, you shouldn’t sell! Let your marketing materials sell for
you!
Look for product managers. Product managers are responsible for
projects from start to finish so they’re one of the best people to talk to about
your product idea. Also, they generally don’t care about where ideas come
from, they just want good ones! Just remember that product managers are
usually very busy. You may have to be very persistent to get through. Don’t
give up too quickly.
What if you can’t reach a product manager?
Try someone in sales. People in sales are always on the phone reaching
out to potential clients. If you approach them correctly, they’ll get back to
you quickly. ftink about it, their job is to sell. If a salesperson likes your
idea, there’s a decent chance they’ll help you get it to the right person.
Don’t look for shortcuts. Too often, inventors mistakenly think that the best approach is to find
someone who’s high up – maybe a CEO or vice- president. This is the wrong approach because they
will typically hand off a good idea to a product manager. Your idea just becomes an assignment. If
you reach out to a product manager and they like your idea, they will take ownership of it. Don’t be
so singularly focused on selling your idea that you bark up the wrong tree. You have to communicate
like a professional product developer!
Please note, if you’re trying to get in to a very small company, the
president may be the right person to reach out to.
Don’t avoid the gatekeeper. The gatekeeper might be the receptionist.
Make friends! Make sure to get his or her name. ftink about it, this person
knows everyone. They can help you reach the right person and that’s more
than half the battle. I’ve even heard a story about a receptionist who loved a
new product idea so much, she shared it with her entire company. You
should not see this person as an obstacle, rather someone you should
befriend. In some situations, this person will not know where to send you.
You can suggest someone in sales or marketing, or product development at
a large company.
Make sure you keep very good notes. Because you’ll reach out to
many people, taking detailed notes is a very useful way to stay organized.
Keep track of who you’ve talked to and when. Your goal is to cultivate
relationships with the right people.
Resist the urge to procrastinate. Inventors hesitate to start pitching
their ideas because they fear rejection. I get it, until you start pitching, you
haven’t been rejected. But don’t forget that licensing ideas is a numbers
game. The aggressiveness of inventors in working to reach out to potential
licensees separates those who succeed from those who fail.
The Four Approaches in Detail
1. The direct approach
Because of the internet, calling a potential licensee’s corporate number
is not as effective a strategy as it used to be; however it is still the fastest
way. Also, reaching out directly isn’t always as easy as simply submitting
your idea on an online submission form. Sometimes, the right person won’t
be on LinkedIn. You might have to break ground by making a cold call.
Just like everyone else, I’m not wild about making cold calls. It can be
very difficult to summon the energy and enthusiasm to talk to someone who
you have never met in person, especially when you are asking them to do
something. Over time I have developed a different point of view about this.
I don’t look at the process of reaching out to potential licensees as cold
calling. I’m not selling, I’m trying to find a home for my product idea.
You should start by putting together a list of 20 to 30 potential licensees.
For the tenth time, make sure they’re the right ones, do your homework! I
pick four or five companies I’m going to contact and that’s my goal for the
day. I never start with my favorites because I know that I’ll be much better
after practicing on companies that are lower on my list.
I never call on Mondays or Fridays. Monday can be a busy catch up day
after the weekend and people are trying to get out of the office on Fridays. I
always make sure to practice my script until I really have it down. I always
stand up while I make the call and am dressed appropriately. Yes, even on a
phone call. It typically sounds something like this:
“Hi, my name is Stephen Key. I’m a product developer and I’d like to
submit a product idea to your company. Who’s the correct person or
department to reach out to?”
In this initial contact, I’m not trying to sell. I’m just trying to get my
marketing material to the right person. If you have solid marketing material,
it should do the selling. I just try to be polite and enthusiastic. Don’t forget
to smile, even on a phone call.
There’s a good chance you’ll have to do this quite a bit. The first call is
always the hardest and you’ll eventually be surprised at how good you’ll
get at this. Once you start to reach out, it gets much easier. Nine out of ten
times, the person you are speaking to is very nice. Keep things fun and light
hearted. You’re just trying to get your foot in the door so be polite and
respectful.
I always reward myself after making calls. For me, after calling
companies in the morning, I work on creative projects in the afternoon. I try
to separate these two jobs. I wear two different hats. Wearing the business
hat, I’m calling companies. And separate from that is the creative hat – the
role I’m really passionate about. Don’t mix those up.
2. LinkedIn
LinkedIn can be a powerful resource when trying to connect with
potential licensees. Through LinkedIn, you may be able to identify someone
specific to call. And because you’re going to use LinkedIn to find the right
person, make sure your LinkedIn page is your personal sell sheet. It needs
to be professional and polished.
From my experience, finding the right person within a company takes
some time. Companies vary in size and structure. The right person won’t
always have the same title or be in the same department. It could be
someone in new product development in one company and someone in
charge of inventor relations in another. Reaching out to potential licensees
on LinkedIn is quite simple, but it has to be done the right way. You can’t
rush the process.
Benjamin Harrison is an expert at using LinkedIn to get in touch with
potential licensees to pitch product ideas. He was a student of mine at
inventRight who was working on an extremely complex project that had the
potential to be licensed by very large music companies. When he started
pitching to large record labels, he wasn’t getting in. Understandable after
all, the music industry has some of the toughest gatekeepers anywhere.
They’re constantly getting solicited. After figuring out that he had to
change his profile and pitching strategy on LinkedIn, he found success.
Through the experience, he developed effective strategies to get in to any
company. At inventRight, Benjamin’s course about connecting with the
right people at companies using LinkedIn, which is called Smart Pitch, has
helped many product developers.
LinkedIn Tips from Benjamin Harrison
I don’t want to be called by people who are trying to sell me something.
It’s tired, it’s worn out, it’s ineffective, and in today’s digital age it’s quickly
becoming antiquated and unnecessary. Thanks to LinkedIn, product
developers have another option that provides powerful strategical
advantages over conventional methods of reaching out to potential
licensees, but many still struggle to get responses due to a lack of
understanding and execution.
Most people still look at LinkedIn as a job search site. They use lifeless
resumes and pictures cropped out of 10-year-old wedding photos for their
profiles. They then proceed to reach out by blasting out a copy and paste
“spray and pray” marketing campaign to all their connections, hoping
something sticks. Their “getting in” message consists of a tower of text that
is, more often than not, way longer than any sane professional will be
willing to read through. It contains pictures, links, and keyword filled rants
that leave people wondering what the call to action is, and more importantly
- why they just wasted their time. After sending out their long-winded
message with their flat profile, they blame LinkedIn for lack of success and
rant about how the platform doesn’t work.
Truth is, if that’s your approach, you have no one to blame but yourself.
Like with all forms of communication nowadays, LinkedIn direct message
(DM) boxes are packed full of spam. You can’t expect to get responses if
your message and profile look like spam too.
Setting yourself up for success on LinkedIn takes having a well-crafted
profile, reaching out to the right connections, and sending a message that
sparks engagement rather than overwhelming the recipient. Let’s take a
closer look:
Get your profile right
Having a killer profile is critical in having success when reaching out on
LinkedIn. More often than not, direct message and connection request
recipients view your profile to qualify you as a professional. ftose who
don’t look at your profile still see both your picture and headline when
receiving a connection request or message. These brief qualifications can
have long lasting results.
How you present yourself either boosts the perceived value of your
marketing material or it shoots it in the foot before it ever gets a chance to
sell for you. Having a polished, complete profile, with platform activity,
social proof, and a narrative built in is a good place to start. It’s important
that connections feel comfortable with you as a professional, especially if
they are going to introduce you to coworkers and superiors. They know that
their coworkers will qualify your profile as well, so they typically want to
see it first. LinkedIn profile qualifications frequently happen in under 20
seconds, so you need to have a concise profile that showcases you as a
professional product developer, not a mountain of information.
Having a profile attached to your LinkedIn direct messages provides
you with an opportunity to control what the message recipient sees when
they go to qualify you, which isn’t normally the case when cold calling or
emailing. Someone would hang up if you tried to explain your personal
brand, work experience, and mission statement over the phone, but on
LinkedIn they almost instinctively check your profile for this info after
being messaged. This provides a big opportunity to set yourself apart and
set the tone for your professional relationship.
Find the right connections
Maybe it comes from being obsessed with their own ideas, but for some
reason inventors think they need to go right to the CEO or Vice President
when reaching out. It’s seldom the best plan. There are some presidents and
CEOs that have a hands-on approach on LinkedIn, but as a rule of thumb,
they are the wrong tree to bark up.
I’ll connect with anyone in a company, but I target sales, marketing, and
new product development when reaching out. As a rule of thumb, Sales is
the quickest to respond, Marketing is a little more helpful but not active as
sales professionals, and Product Development can be hit and miss
depending on the size of the company.
Targeting users who are active is a smart approach. Active users tend to
not only respond more often, they also typically respond faster. A user’s
activity can be seen by viewing their profile. It’s a good time to consider
what the activity on your profile says about you, when you’re qualifying
other user’s profiles.
Not every user is going to connect and not everyone will respond to
messages. Some users respond quickly, some a month later, some not at all.
Don’t go into this process expecting a 100% response rate, you’ll just end
up disappointed. However, if you get in the practice of consistently and
properly reaching out, you can get many timely responses to your request to
submit your ideas.
Spark engagement by reaching out the right way
Another qualification process on LinkedIn that happens even quicker
than a profile qualification occurs when someone initially receives a
message. I call this qualification process the “initial internal spam filter.”
This filter is what allows you to quickly separate the email from the Saudi
prince that just needs 3k to help free up his fortune from the important
email from your mom or boss.
To send messages that pass the initial internal spam filter, drumroll…
don’t send a message that looks like spam! Especially from a profile that
looks suspect. In order to pass this qualification, you’ll need to take a
realistic look at your message and make sure it’s short and to the point, asks
a pertinent question that sparks engagement, avoids spammy sounding
greetings, and doesn’t include any pictures, videos, or links to your product.
Sorry to break the bad news, there is no “magic bullet script” for
reaching out. There is no magic string of words that’s going to work every
time. I use a few different scripts when reaching out. Having a high “pitch
IQ” on LinkedIn means having multiple scripts that fit varying scenarios.
Scripts should be as short as possible but there are times, such as when
dealing with very large companies, when it’s important to include pertinent
information about the type of product you’re submitting.
When reaching out to contacts on LinkedIn, the main strategy is simply
to ask permission to send your hopefully killer marketing material over.
Hard linear sales pitches don’t work on LinkedIn, you have to let your
marketing material do the selling for you. Short and to-the-point scripts that
ask a reasonable question are infinitely more likely to spark engagement
and earn a response than long winded rants:
“Hey Jane, is there someone at business x that takes care of open
innovation submissions?” or “Hello Tom, does business y take open
innovation submissions? I’d love to be able to send you guys product ideas
for consideration.”
It’s an important show of respect to ask if you can send your marketing
material over for consideration, rather than sending it over as part of your
initial message. It’s also a huge no-no to send over a message as soon as
someone accepts a connection request. This is a major complaint, so fight
the urge, and wait a few days after connecting to reach out. This type of
etiquette can be well received and can help lay a solid professional
foundation with a connection.
A more recent addition to the LinkedIn messaging repertoire that’s
becoming popular is the ability to send an audio message, similar to a
voicemail. While standard phone voicemails are an antiquated
inconvenience, LinkedIn audio messages are more novel, so they almost
demand to be played. Since very few spammers are using personalized
audio messages in their strategies, you are less likely to be immediately
dismissed as spam using this method. While it may seem old school to
record an audio message, they can come across as personal (like a hand
written note) when compared to normal LinkedIn messaging. You can use
scripts similar to what you would use in a LinkedIn dm when leaving an
audio message:
“Hey Susan, I’m curious if business x takes open innovation
submissions, and if so, who they’re sent to? I appreciate your time and hope
you’re having a good day Susan”.
Note: Hearing the sound of their own name makes a message feel
personal.
When I start the “pitching” stage of product development, I will
commonly send out around 10 messages in the morning before starting my
day. Depending on the day, I usually get anywhere from 2-5 responses.
Don’t get me wrong, starting out, there was a long streak of 0 for 10
response days, and I occasionally still have them, but they’re rare. There are
days when I’m struggling to field 7 product submissions followed by 4
connections where someone immediately asks questions about
manufacturing or sales or even requests a prototype. I’ve had users respond
in under 5 minutes and others respond 4 months later. I heard that an
inventor in Europe got a response in under 30 seconds from a US based
business. Manage your expectations by knowing that there are going to be
slow days and days where you don’t have time to get back to everyone.
It’s important to remember that LinkedIn is not an IP pitching platform,
and of the multiple reasons that users sign up, I think it’s safe to say that
none do in hopes of adding more spam to their day. People sign up on
LinkedIn to work on their professional online presence, to actively pursue
networking, and occasionally to look for a job. You should try to make
connections and ask relevant questions about business, not blast spam.
Remember that it takes the combination of having a killer profile,
reaching out to the right connections, and sending messages that spark
engagement in order to have a high response rate on LinkedIn. Having the
perfect script isn’t going to matter if you’re only reaching out to CEOs and
your profile makes you look like a hot mess. However, once you’ve
established a good balance of all three, making a cold call to reach out will
become a tactic you seldom visit.
I know it’s not sexy, but there’s no magic bullet when it comes to
getting into companies. It takes persistence. Don’t expect red carpets and
champagne every time you reach out. Through persistence and flexibility,
you’ll eventually find the right connection, the right company, and the right
home for your product idea.
One of my students recently reached out to me because she wasn’t getting many responses. The
first thing I did was look at her LinkedIn profile. Her graphic backdrop was generic. Her description
said, "Hair and makeup" for a well-known entertainment brand. Her profile picture was casual. I
don’t think her hair or makeup were done for it. She changed her description to “Creative
development at X / Product developer.” She updated her picture with a professional head shot. Hair
and makeup were impeccable. Lastly, she changed her backdrop to a scene of one of her work events.
She leveraged the brand and created a very professional LinkedIn profile. That profile was her sell
sheet, and it created a powerful impression. After the changes, she submitted ideas to the same
companies she had reached out to before and guess what? They started to respond.
I also asked Woof Washer 360 inventor and inventRight coach Ryan
Diez to weigh in. The Woof Washer 360 was a viral hit on social media as
well as an As Seen on TV sensation. Ryan was kindly willing to share some
of his insights and scripts on using LinkedIn.
LinkedIn Tips from Coach Ryan Diez
LinkedIn is an incredibly powerful tool that I use on a daily basis. If you
want to put yourself in the absolute best position to license a product you
must not only be a LinkedIn member, but also have a thorough
understanding of how to manage its massive database of industry
professionals. I no longer make cold calls and in fact believe that cold calls
are becoming an old and tired concept.
My product the Woof Washer 360, which ultimately became a major hit
and was licensed to a company in the DRTV space, started with a LinkedIn
message to the president of my licensee. I asked for permission to send him
my sell sheet. He responded very shortly after and was receptive to my
request.
The rest is history as they say. Simply put, there is no easier way to
identify and communicate with the decision makers who can make your
product a reality!
I suggest you use a combination of cold call, email, and LinkedIn. I love
the three-headed approach. With that said, cold calling is nearly dead. We
are in an environment where people prefer communication via text and
emails and have, frankly, lost their social skills.
The below scripts work for LinkedIn and email. My students are
successful when they do not deviate much from these and certainly don't
add much more.
The reason myself and so many students find these scripts successful is
because they are short and to the point. We are essentially saying, "Hey,
I’ve got a great new product that will benefit your business. If you give me
2 minutes, I'd like to send it over."
We are not selling and we are not wasting anyone’s time using these
scripts.
Subject: Greetings Mr. question re: Ergodyne Open Innovation? "Good
Morning Mr. ,
My name is Ryan Diez. I am a product developer from Los Angeles,
CA. I have developed a patented heat stress reducer which I believe would
be an absolute perfect fit in the line. Obviously, your company is
on the forefront of innovation in the cooling category so I was hoping
would be open to outside submissions. If so, I have a sell sheet
which will quickly highlight the benefits of this product to your company.
Please let me know whom I may send more information to… perhaps that
person is you?
Thank you for your time, Ryan Diez"
Subject: Pacific World Open Innovation? “Good Afternoon
Ms. ,
My name is Ryan Diez, I am a product developer from Los Angeles,
CA. Is Pacific World on board with open innovation? I have developed an
extremely unique yet simple nail care product which I believe would benefit
Pacific World and fit wonderfully in your product line. Are you or someone
within the company available to review my material?
Hope all is well, Ryan Diez”
Some additional things to consider:
Subject is important. Notice my subject line is neither a sales call nor
a pitch. The words “Open Innovation” are interesting, because people
generally don't know that term. I believe this makes the recipient open the
message.
I don't ask for their process. I ask to be directed to the right person
and go as far as to say, "Maybe that person is you?"
It is important to say you have a professional presentation that will
highlight the benefits to their company or their customers. Assuring
them we have a professional presentation tells them we are not an amateur
inventor with merely an "idea."
Do not waste your time on someone whose profile is not active,
current, or otherwise indicates they are not into connecting. (In other
words, if their profile shows they have only 20 connections, don't send.)
This person doesn't care about LinkedIn.
If the contact allows you to send them your material, follow their
lead. If they provide an email, then email it to them. If not, upload the sell
sheet to the LinkedIn Message. Grab them by the horns and get that sell
sheet to them while you have their interest piqued. There is no point in
going around and around on messages before you send it.
Should you send the same message to more than one person at the same
company? Yes. We do this with the understanding that most people will
never get back to you. All you need is one person to respond with, “Sure,
send me your sell sheet.”
With that said, there is the possibility that John from company A
responds with permission to send the sell sheet on Monday and then on
Wednesday, Joe from company A also grants you permission to send him
your sell sheet.
So that neither party thinks you are playing one off the other, I always
recommend keeping everyone in the know, such as the following.
“Joe, thank you for the quick response. For full disclosure, John agreed
to look at my sell sheet on Monday. Two eyes are better than one however,
and I welcome your feedback too. Please see attached.”
If you do not make it known that an additional party is also reviewing
the sell sheet, you risk the chance of highly agitating one or both of them.
this strategy is extremely beneficial, because John may hate the item,
but Joe may love it. You have now effectively pitched two people at one
company without causing strife!
I think Ryan’s approach works for companies that do not have a
dedicated person or department for receiving new product ideas. You’re just
trying to find a champion or someone who will fight for you and your
product idea.
3. Online invention submission forms
I think there are two primary reasons why companies use invention
submission forms. The first is that a company may be receiving many
invention submissions and uses an online process to manage them. These
companies are generally friendly to inventors. This method is becoming
more and more popular among companies because it offers a built-in
tracking system. The other reason that a company will use an online
submission form is that they’re actually not very serious about licensing
ideas. In this case, online submission forms are just a public relations
mechanism more than anything else - trying to keep people happy but not
seriously interested.
As we mentioned in Chapter 3, some online submission forms contain
ridiculous language that’s obviously unfriendly to outside inventors. And
remember, if it’s not fair and balanced that’s a red flag that the company
isn’t actually inventor-friendly. There are forms out there that commit
inventors to giving up the rights to their ideas! Remember, some companies
are just not friendly to inventors. The big takeaway here is that you must
read the fine print carefully! Do your homework and know who you’re
submitting to. What else can you do? Here are some strategies to make the
most of online submission forms:
For one, follow their instructions. Invention submission forms allow
companies to screen your product submission. At this point, they do not
want to establish a relationship or have any dialogue with you. This is their
process and I would highly recommend following it. If you don’t hear back
from a company within a month, I would try to follow up through their
corporate number or someone on LinkedIn. Remember, some companies
will not get back to you if they’re not interested. I always like to get some
confirmation that they actually rejected my product idea, so I have a paper
trail.
Ask what the company’s submission procedure is. When you’re told to
fill out their form online, you can ask, “Can you give me the email address
of the person who receives the form?” that way you have someone’s contact
information. You can also ask, “How long do you typically take to respond
to product submissions?” When it comes to online submission forms, what
you don’t want to do is submit your idea into a black hole. So, when you fill
out the form, type out the following statement in the comments section.
“Hi, my name is _____. I’m a product developer with [name of your
company]. I’m wondering if someone is actually reading these forms. If so,
could you please email me to let me know? My email address is .”
One of our coaches has had great success doing this. Most of the time,
he says, someone does email him back to confirm that his submission was
received. You now know that someone has actually received your
submission and you have a contact to follow up with. If the company is
receiving a lot of submissions, it’s important that you stand out. Doing this
is one way of accomplishing that. Again, this also creates a paper trail,
which helps protect you.
You could also decide to call the company after you’ve submitted your
idea online, particularly if the form you sign doesn’t ask you not to. When
an employee tells you, “Oh, we only accept ideas through our website,” you
can tell them that you have submitted your idea using the company’s form
and quickly ask, “When can I expect a response?” Remember, you’re trying
to get a dialogue going. You are trying to create a connection with a human
being who can give you some feedback.
It’s very helpful to know what kind of timeframe you’re working with.
They could review new ideas bi-yearly! It’s totally fair of you to ask what
to expect. Don’t simply submit your idea and wait for something to come of
it. You need to touch base and follow up with an actual person.
“Our product submissions mean everything to us and we have a very
organized formulaic process. Internally we are looking at hundreds of
products every week. I would say our process is what allows us to get back
to people in a timely manner.”
4. Trade shows
One of the fastest ways to get a licensing deal these days is to work a
trade show.
“Inventors have to do their homework. And the easiest way for them
to do it is by walking the trade shows to see what's out there. Not only
does it help eliminate duplication, it also gives them inspiration for fresh,
new ideas and to pick up on trends. So, we think it's very valuable. The
professional inventors who we have worked with who have been the most
successful have been the ones who took the time and made the effort to go
to shows and really get a feel for what's happening in the industry.”
— Jonathan Zelinger, President of Ethical Products, one of the most
highly respected larger brands in the industry.
Years ago, it was hard to make appointments to get into trade booths to
see the products. There was always a gatekeeper. Things have changed and
you definitely should attend trade shows if you’re serious about licensing
your product idea. Most of the booths don’t have walls anymore and are
very open and inviting.
The biggest change we see today is that companies are there not so
much to take orders from buyers, but to show new products and meet
inventors. I interviewed Hyde Tools and they told me that they set aside a
day where they schedule appointments with inventors and take Shark Tank
style pitches.
One of the biggest advantages of attending a trade show is that you get
to meet all of your potential licensees in one place and time. This can save
you time and money. You get to see new products, feel the excitement, and
meet everyone personally with no gatekeepers in the way. There will be
people from marketing, sales, CEOs even. There are people at trade shows
you would have a remarkably difficult time reaching otherwise! Just don’t
forget to be respectful of their time. They’re there to sell, promote, and
introduce new products.
“For new clients, I do try to set up appointments. I try to meet with the
president, CEO, or vice president of new products, but those people are
very busy and they’re at the show to sell, not buy, so it’s hard to nail them
down for appointments. A lot of times, they’ll just say to come by the
booth.”
— Amanda Hutton, Professional pet and toy inventor who has
licensed more than 50 products.
I attend many trade shows with my team at inventRight. It helps me and
my students stay current on what’s going on. It’s like a mini reunion for all
of us. Check out the Trade Show News Network (TSNN) for a complete list
of trade shows for many different industries. Here are some tips for working
a trade show as an inventor:
Don’t bother getting a booth. It’s not as if a buyer is going to find you
out of nowhere and offer you the deal of your life. A booth won’t be cheap.
When I ran a booth for my guitar pick company at NAMM, the largest
musical products trade show in North America, I never walked away having
spent less than $10,000. I had the smallest booth you could possibly have.
The best strategy is to work the floor. If you want to rock a trade
show, you must walk the room. The people walking the floor tend to be
buyers. There are also R&D guys checking out their competition. It can be
confusing who is buying and who is selling. But you can’t wait for them to
come to you. You have to walk the floor to work the trade show.
Make sure you attend the right trade show. If you’re thinking about
attending a trade show, visit its website. What companies are going to be
there? Are any of them potential licensees? Cross reference your list of
potential licensees with the list of attendees.
Register in advance if you can. Shows have different policies and
pricing structures. Some shows only want qualified buyers, media
representatives, or experts. Others simply require that you register online,
and then you’re in. Do your homework to find out what’s required to get in.
If the trade show is only open to retailers, there are still ways of getting in,
because retailers tend to have extra passes. Inventors have gotten in by
going to a local retailer that belongs to the trade association and asking for a
pass. When it comes to these types of trade shows, it’s a better use of your
time to try to get added to a retailer’s list than getting in on your own.
Make a plan. The worst way to go to a trade show is unprepared. You
need a goal and objectives! Before you get there, find the floorplan online
and identify all the potential licensees you want to see. Map out what
companies you’re going to hit and in what order. This will save you
valuable time. Some trade shows are as massive as four football fields! You
can’t afford to needlessly tire yourself out. I start by walking the floor as
soon as possible. Once you’ve hit the companies you planned on hitting,
you can wander the floor at your leisure. If you have a one-minute video,
make sure it’s loaded on your phone or tablet. When I go to a show, I’m
working. I go to bed early the night before and I get up early the day of the
show. You are not there to party. I don’t want to waste my time. I make the
most of it.
Dress the part. If the trade show is about sporting equipment and
fitness, you don’t need a three-piece suit. For other industries, a sport coat
is more appropriate. People will take you more seriously if you dress
appropriately. Bring two pairs of shoes and wear them on alternate days.
Walking the floor can be exhausting.
“I always dress business casual with sneakers, which are very key for
trade shows. People say, hey you’re wearing sneakers. And I always say,
if someone’s looking at my feet, I’m not doing a very good job.”
Bring business cards and copies of your sell sheet and carry them
both with you wherever you go. Understand that you could meet an
important contact anywhere—in the lobby, in the bar, or even the elevator.
You just never know. So be prepared!
“I bring with me the best possible prototypes and sell sheets.
I’ll try to do a little research on possible costs as well.”
Avoid approaching booths when they are packed. If you approach when it's busy, it won’t be
easy to get in with the right person. For that reason, I plan on hitting most booths on the second day
of the show. Just don't wait until the third day, because some companies will be gone by then.
Wait for salespeople to engage you. Approaching a booth can be
intimidating, because it feels a bit like you're walking into someone else's
living room. Don’t arrive when it’s very busy. Just observe what's going on
around you and wait for a salesperson to come to you. They will.
When someone approaches you, begin by complementing them on the
company's products and ask questions like, "Can you show me how this
works?" Be genuine in trying to get a dialogue going. Eventually, the
salesperson will ask you what you do. Tell them you’re a product developer.
Ask if they take product submissions.
Your main goal is to connect to the right person who takes outside
product submissions. Remember, you’re talking to a sales guy. He’s going
to try to get you to the most appropriate person as quickly as he can. Make
sure to get his card first though; he’ll remember you. In my experience, a
representative from the company will want to see what you have right there.
That’s when you pull out your sell sheet. Make sure you get his
card. Congratulations! That’s a real connection. If you work a trade show
hard, you could walk away with dozens of connections. Pro tip: if you call
ahead of time, you may be able to schedule an appointment with a company
that’s attending a trade show.
Make sure you follow up with your connections. Once you have
someone’s card, you have to follow up and try to build a dialogue. I
recommend waiting at least a week after the conference to do so.
The best approach? Build a relationship.
The most successful product developers have stayed in an industry long
enough to build important relationships. They invest time in one industry,
so they get to know all the players. The players get to know them. And
because of that investment, these inventors have a way in.
You truly become a pro when companies start to tell you what they’re
looking for because they trust you. Once you have a good relationship with
a company, they’ll give you a target to hit. Designing for specific
companies and their needs is much easier than just coming up with ideas
and trying to fit them into the marketplace. Even if an idea gets rejected, if
you have the right relationship, you can submit many more.
I remember one student who really struggled. I wondered if he would
ever license an idea. He was extremely hard working but was jumping
around among different industries. After countless rejections, he finally
landed a licensing deal. I asked, “What’s different now?”
He said, “I finally figured it out. I’m staying in one industry where I
know everyone, and they know me. And somehow, it’s easier for me to
design for them now. I know the product line and I know the industry.”
By staying in one industry, he made relationships. Through those
relationships, he learned what those companies were looking for. He was
able to target his creativity to those companies and succeeded in licensing
his first idea. His attitude completely changed. That’s when he went from
amateur inventor to professional product developer.
Another student of mine has licensed over 40 product ideas in two
industries - the toy and DRTV industries. One night in Chicago, I was
having dinner with an executive from a DRTV company the student had
licensed some ideas to. I mentioned that student of mine and the executive
immediately told me that they always take his call. Why? That student
really studied the DRTV industry. He knew exactly what they were looking
for. I remember seeing one of his one-minute videos—it looked just like the
videos they use in that industry to market products. The executive told me
that he had to pause the video to show everyone at the company. They still
talk about it; probably because they ended up licensing that idea and selling
millions of units.
this is a perfect example of an inventor who stays in an industry long
enough to know it well and build relationships. He’s a pro so they take his
calls. He’s treated like an asset. The executive also told me that he now
regularly goes out to dinner with that student and his wife. Talk about a
personal relationship.
“It’s important to know that online portals are fine. But personal
relationships matter the most.”
“It’s about the idea. But if you decide to go pro one day, it’s all about
relationships.”
What happens next.
Why aren’t they getting back to me?
What happens when you’re reaching out to potential licensees and
you’re not getting any responses back? Time to give up? I don’t think so!
Please remember, you have to receive a lot of no’s to find that yes. In the
next chapter I will spend even more time on this but here are a few things
you need to ask yourself if you’re not getting any responses:
Have you reached out to everyone in your particular product category?
Have you missed any retailers that are online sellers? Does your subject line
convey your request? Sometimes your subject line needs to be re-written.
Are you asking for too much time? Sometimes your copy can be too long.
Make it short, sweet, and to the point. Remember, you’re just looking for
the right person to submit your idea to. You’re not selling.
How many companies have you submitted your idea to? If you’ve
submitted to 20 to 30 companies and got zero feedback, you have a
problem. You need to revisit your communication strategy.
It’s very important to have your marketing material look like your
potential licensee. Companies spend a lot of time and money building their
brand. The way their brand looks and feels is how they market to their
customers. You need to clearly communicate the benefit of your product
and have a point of difference, but you also need to fit in.
Sometimes, you can be very thorough, do all the right things, have a
great sell sheet and video, and still not get any responses. Please be flexible.
Be willing to change things up if something’s not working.
“We don’t do automatic responses because it’s impossible! The
product has to be reviewed and sometimes we are so swamped that we
might not get back to the inventor and we apologize for that.”
One of my students had a great sell sheet and video. He was reaching
out to many companies on LinkedIn but wasn’t getting the response he was
looking for. I asked him to send over the subject line and verbiage he was
using when reaching out to people on LinkedIn. The subject line sounded
too much like spam. We changed it to be less generic and got some
responses. Also, the verbiage in the request was way too long. Remember,
companies are reluctant to respond to someone on LinkedIn who’s asking
for too much. We shortened the request and got more responses.
We even tried attaching a link for a video. He got even more responses
and sure enough found a licensee. Yes, I generally recommend that you
don’t include any links at this stage of reaching out, but sometimes you
need to be flexible and even run a little test. For some reason, in this case, it
worked.
Following up
Whether you pitched an idea through an online form or found a contact
through other means like LinkedIn or a trade show, you cannot just submit
your idea to a potential licensee and wait. You should never assume that a
potential licensee has looked at your sell sheet. Don’t assume that they’re
all going to get back to you. You have to take control of the process and act
as your own project manager. Remember, you are your product idea’s
number one advocate! Following up is an important part of that.
Most companies will need to see an idea several times before
expressing interest. Unless you can submit to someone explicitly in charge
of new projects, the employees you contact have other priorities. Also, it
can take time to get your idea to the right person. Following up
demonstrates that you are a professional. When you follow up, you send a
clear message that you’re serious and committed. This attitude will set you
apart from amateur inventors and people will respect your persistence. Even
if you get a no, you might get some extremely helpful feedback. Also, given
that open innovation is relatively new, and being the professional product
developer that you are, there's a good chance you'll know more about how
this works than some employees you speak to.
You really can't follow up enough. If you don't follow up, all your
efforts will have been for nothing. In my experience, people rarely follow
up as often as they should. It makes all the difference. In order to move on,
you need to know if the companies you pitched to are interested or not.
I get it, no one likes being told no, but not knowing is unprofessional.
You need to be able to scratch a potential licensee off your list so that you
can move on. In other words, you need closure. It’s worth repeating: In
order to move on, you need a “no” or a “maybe” from every company that
you submitted your idea to. I’ll talk about the question of giving up on an
idea in chapter 9. Here are some tips for following up:
You should begin following up 7-10 days after you send your sell
sheet . As I said earlier, do not send your sell sheet to an employee without
getting permission from them first. When I say follow up, I mean follow up
with the person who gave you permission to send your sell sheet. Use
specific dates when following up. For example: “When we spoke on June
6th....” This is why it’s important to take good notes on your
communication.
Never send an email that asks, “Did you get my other email?”
Reattach everything, every time. Don’t make an employee dig through their
inbox to find a past email. Remember, your job is to make working with
you easy. Also, you should never pass up an opportunity to restate your
benefit statement.
Follow up with a phone call if you can. If your contact answers, tell
them who you are and explain that you are calling to follow up about the
sell sheet you submitted.
If you get their voicemail, great! Leave a short voicemail, speak slowly,
and enunciate. State your phone number at the beginning of the call as well
as at the end. Explain who you are and why you’re calling. Conclude by
stating that you’re going to email your sell sheet again after you get off the
line. Request your contact to simply reply back, “not a right match” if your
product idea isn’t a good fit. After you get off the phone, email that sell
sheet immediately. Here is an example of an effective follow up email:
Hello , thank you for agreeing to look at my [product name] on [date]
when we spoke on the phone. I just left you a voicemail as a follow up to
the email I sent you on [date you submitted your idea – the same date you
first talked on the phone]. I know you are busy, so I have attached my sell
sheet for [product name] to this email. There is also a link to a video of the
product in the sell sheet that you may find helpful. I’m looking to license
this product to your company. If you don’t think this idea is right for your
product line, simply reply to this email, “Not a good fit.” If you think this
idea is a good fit for your product line, please email or call me at [your
telephone number].
this strategy works because you’re suggesting an easy way to respond.
If your contact doesn’t feel awkward about saying no, they will be more
likely to respond to you. When you make someone’s life easy, you keep the
door open for a future relationship. It’s also an effective strategy because
leaving a voicemail and sending an email together demonstrates that you’re
persistent.
Keep calling until they pick up. This strategy works well when you
have a direct line. This strategy makes it very clear that you are not going to
give up. Some people do not respond to their voicemails and others will
eventually pick up the phone after you call them five or six times. When
you do get someone on the line, ask if you can send your sell sheet again.
Better yet, ask if they can look at it with you over the phone right then. If
you employ this technique, don’t leave a voicemail every time.
Surprise your contact with real mail. This requires some effort, but
not much. To succeed with this method, you have to ensure that everything
you send looks very professional—right down to how you address the front
of the envelope. Don’t use your own handwriting. Include a cover letter that
has a company letterhead along with your sell sheet, which should be in full
color. Use a full-sized envelope. The reason this method works is because
no one gets mail anymore. A professional package can catch someone’s
attention. This strategy is best used with an important potential licensee
that’s a really great fit for your idea. Otherwise, don’t waste your time.
Sometimes, look for a different contact. If the person you sent your
sell sheet to is not responding, and you’ve been emailing and calling them
every week for months, it’s time to find a different contact in the same
company. Maybe the person you’ve been trying to communicate with has
been fired or was promoted. It’s worth calling the operator to ask if the
person is still employed by the company. It’s okay to have relationships
with different employees in the same company. Try not to let following up
drag on and on. The bottom line is that if you’re not getting the response
you need, you must find out why.
Reaching out to potential licensees seems to be a tough task for many
inventors. I get it, it wasn’t easy for me until I had some practice. These
days, I’m constantly being asked for access to companies. Unfortunately,
you can’t shortcut your way to communicating like a professional product
developer.
Follow the guidelines in this chapter and don’t let the fear of rejection
prevent you from taking action. In a nutshell, when reaching out, you want
to be short and concise. Don’t sell. Don’t pitch. Don’t provide any links.
Tell them you’re a product developer and ask about the right person to send
a product submission to. You’re just looking to connect with the right
person. ftink of it as building professional relationships. Be thoughtful and
take your time.
And I’ll say it again, manage your expectations. Most companies will
want to qualify you and your product idea before there’s a phone call. You
may not be actually speaking to someone for a while. If you’re really
getting no responses, definitely revisit your approach. You have to be
flexible. Some strategies will work better with certain industries or
individuals.
Also, please remember that many companies have a policy to be closed
to solicitation from anyone. That’s why when you reach out to companies
on a social media platform like LinkedIn, your goal is to find out if they
take outside submissions.
Lastly, be prepared for when you do get that call back! When a
company calls you back about your invention, negotiations have begun.
Don’t get caught off-guard! We’ll talk about fielding the hard questions and
successfully negotiating a licensing agreement in Chapters 10 and 11.
PART FOUR
What Went Wrong
8. THE DREADED
SILENCE
Y ouyou’re
have submitted your product idea to multiple companies and now
waiting to hear back. But as my partner says, occasionally all
you hear is “crickets.” This is the dreaded silence.
You’re probably feeling impatient. I can relate. Once my idea is sent, I
want to call them the same day to ask them what they think! But that’s not
appropriate. You know that, so you wait. After about two weeks you start to
think, what’s going on? The imagination starts to go wild! Did they get it?
Did I give them everything they need? Did I leave anything out? Do they
understand the benefit of my product idea? And eventually, you start to
think, are they stealing my product idea? You need to take a deep breath.
Let’s go through our checklist.
You found the right potential licensee that welcomes new product ideas.
You looked at their webpage, product line, and mission statement. You did
your homework, so you know your idea is a very good fit for their product
line. Check.
You provided a professional one-page sell sheet that clearly
demonstrates the benefit of your idea. It looks and feels like something
straight from their company. Check.
You read through their invention submission process and filled the form
out correctly. Check. Maybe you even provided a great one-minute video.
Check.
Great! So now you need to follow up. You need to be a polite pest.
Waiting two weeks to confirm that they received your idea is
appropriate. It can be frustrating when companies don’t specify how long
their evaluation process takes. You’ll have to be persistent and find out. I
would call the corporate number and ask for someone in their invention
submission department.
You might even ask for someone in their marketing department if they
don’t have an invention submission department. Basically, you want to
speak to someone who handles outside product submissions.
One thing I’ve noticed over the years is that if a smaller company loves
your idea, they will contact you fairly quickly, especially in a very
competitive industry. For the larger companies it generally takes more time.
“Oh, it could be minutes. Quite often it’s that quick when you see
something you like. I mean, the only thing that stops us from going yes
immediately is that we have to do a Google search first and see if it
already exists. I probably print it off and stand up and walk around the
office and go, “What do you guys think?” But otherwise, you know, we
tend to have a design review meeting with new ideas every couple of
weeks.”
—Sam Hurt, Cofounder SUCK UK (Novelty gifts)
When you’re not getting any responses or feedback after submitting
product ideas, there’s a problem. Often times, you have to reevaluate your
marketing material which includes your sell sheet or your sell video, and of
course your subject line and any marketing copy. There’s a very good
chance you might have to re-tweak, redesign or rethink your approach.
I have not included quotes from industry professionals in this chapter
because they’ve really already told you all these things – but I am asking
you to do a bit of soul searching.
ftese are a few questions you need to ask yourself:
Is my product really new? If someone can do a Google search and turn
up your product in a few minutes then you have not done your homework
and you have just shown the company that you are an amateur.
Did I go around the company’s submission process? If you sent your idea to someone other
than who you were supposed to or didn’t follow the procedures outlined on their website, there’s a
good chance you won’t hear anything back. And, you’ve just proven yourself to be difficult to work
with.
Does my one-page sell sheet clearly communicate the benefit of my
product? One way to test this is to give it to someone you don’t know and
look at their reaction. Do they get it? Do they understand it? If it takes more
than one minute for them to respond or “get it,” you have a problem.
Remember, your one-line benefit statement should be short, concise and
emotional. Why should anyone care about your product?
Does my sell sheet look like the companies to which I’m submitting
my product? Does it look like they could take your sell sheet and put it in
their catalog?
I recently spoke with one of our students who had invented a training
aid for the golf industry. His training aid was an extremely fun way to learn
how to swing the golf club better. He wasn’t getting any responses from any
of the companies in the sporting goods industry that sell golfing aids. The
websites of all the companies he was submitting his product to looked very
serious. There were many golf training aids to look at and it turns out that
golf is a pretty serious sport. Golfers take improving their swing pretty
seriously. But his sell sheet was fun. It almost looked like it should be for
the toy industry. Because his training aid had extremely bright colors, it
didn’t look like a serious training aid. The layout of his sell sheet didn’t
match the seriousness of the problem his product was solving. The colors
and the fonts were playful. Not a great match.
So, he re-designed his sell sheet to be more serious and to fit into the
category of similar products and guess what? Sporting goods companies are
responding now and he is in discussion with a few. What’s even better is
that he submitted the playful and colorful version to some toy companies,
and they like it too!
Companies spend a lot of time and money building a brand. You must
look like their brand. Go to your potential licensee’s website and notice the
colors they use, their layout, fonts. And of course, look at their marketing
copy. OXO is a great example. They use a lot of white. Their products are
displayed with a white background in a very clean and modern style. Their
copy is very simple and concisely highlights benefits and features.
Have they watched my video? Video is now the number one tool that
is being used to license product ideas. In some situations, it’s not needed,
and a one-page sell sheet will suffice. But for most ideas, it’s a great way to
show the features and benefits of your product. So, you absolutely have to
make sure that your potential licensees are watching your video. We highly
recommend that you embed it in your sell sheet.
I would always follow up with an email with a link to your video. Ask
them if they’ve watched it. Just the other day one of our coaches was
submitting his product idea to a DRTV company. He got a response within
an hour telling him they were not interested in his product submission. Way
too fast! He knew something was off. The response was too quick. He
found out through YouTube Analytics that no one had watched his video.
So, he reached out to someone else on LinkedIn and they loved it! The
product is now being tested.
Does my subject line look like spam? Quite often, you’ll be able to
use your one-line benefit statement in the subject line of an email. Your
subject line should be direct and informational. Don’t use words or phrases
like the best, solves, free, safe, 100%, urgent, be amazed, all new, hello,
open, now, great, don’t, #1, the best, huge opportunity, or $$$. Don’t use all
caps or exclamation marks. Avoid spelling mistakes and don’t use a one-
word subject line. These are just a few basic tips to not land in their spam
folder. Also, people tend to not even open emails with this kind of language
in the subject line, even on your LinkedIn. Never say you have a $1 million
idea. This just shows that your expectations are too high. It’s a
rookie mistake and will raise a red flag. They know you’re not going to be
reasonable, so they won’t bother working with you.
Is my marketing copy the appropriate length? I often see marketing
copy over email or LinkedIn that is way too long. It’s not a reasonable
move to ask for a lot of someone’s time if you don’t know them very well.
People often connect with me and send me little novels. They’re stealing
my time and I don’t even know them. It turns me off. I never engage.
Make sure to keep it short. Don’t pitch or sell at the very beginning.
You’re basically asking for directions to the right person to submit your
product idea to. In most situations, do not provide a link to your product.
Most companies have a strict policy for their employees regarding links and
emails.
Is the person I reached out to active on social media like LinkedIn?
Please know that there are many people who are not active or check their
LinkedIn page very often. A good sign that someone is not active is when
they don’t even have a profile picture. If you’re not getting a response from
someone like this, find someone else at the company. Consider if the person
you’re reaching out to still works at the company. People change jobs all
the time. Sometimes, all you need to do is call the company’s headquarters
and ask for the person.
Does the potential licensee have a process for reviewing product
submissions? It’s common that a company is not set up to be able to
respond to your submission in a timely fashion. This actually happens quite
regularly. In this situation you’re going to have to be persistent. But realize
that there’s a good chance it’s going to take more time and patience on your
part because of their lack of experience with licensing. You’re going to
have to educate them.
How’s my timing? Companies can be extremely busy, so manage your
expectations. Sometimes, companies are getting ready for a trade show.
They may not be responding to anyone in a timely fashion. Always look at
their trade show schedule. For example, the National Hardware Show in
Las Vegas is always in May, the International Home + Housewares Show is
always in Chicago in March. Sometimes, a company is going through
changes. Sometimes, companies are merging, and everything is put on hold.
Also consider changes in management. Companies can shift in completely
new directions. Once again, everything is put on hold. Sometimes it just
takes a company a little bit of time to respond. That’s why you need to be
patient. When possible, ask a potential licensee about their timing and
invention review process upfront.
Remember, if a company loves your pitch, you’ll generally get a
response fairly quickly. Especially from small companies. If they don’t get
back to you, they just might not be interested. Not every company is going
to give you feedback. Many companies won’t even respond. What if they
do respond and reject your idea? In the next chapter, I’ll talk about the
possible reasons for rejection.
9. REASONS WHY YOUR
PRODUCT IDEA WAS
REJECTED
Y ouprovisional
came up with a great idea, put together a wonderful sell sheet, filed a
patent application, and now you’re reaching out to
companies to see if you can license it. Wonderful news, you’re getting
in, but something’s not quite right.
You’re getting rejected by everyone.
“With professional inventors, though, they'll usually come in and
show us 20, 30 items in a clip. We'll probably dedicate at least a half a day
to review all of their products. We'll tell them pretty much at the get go
what we like and what we don't like. One thing we tell inventors is if
you're going to be in this business, you have to have a thick skin and
you're going to get some rejection; don't take it personally. There could
be a multitude of reasons why we're rejecting it. It could be that the price
point won't work for us, it could be that it’s too difficult to manufacture.
It could be that it's a duplicate of something else that's out there.”
When you’re an inventor who’s licensing ideas, you’re basically in the
rejection game. It’s not easy, but you have to learn why your product ideas
are getting rejected. You have to step back and see if you’ve done
everything correctly.
Here are some of the most common reasons why your product idea
could have been rejected:
Your idea was submitted to the wrong company. In my opinion, this
is the most common mistake people make. Inventors come up with great
ideas and pitch them to companies that don’t sell similar products. They
might be good inventions, but they’re not right for the companies they’re
pitched to.
Pro tip: Study the product lines of your potential licensees carefully.
Look at the type of products they’re currently selling. Look at the price
point and the materials that they’re using. Make sure your product could fit
in to their existing product line. Don’t show a potential licensee something
that’s too far off from what they’re currently selling. Smaller companies
will look at a broader range of products submissions. They’re willing to
take a little more risk to find that next big hit. Larger companies stay in a
certain lane. They’re more risk-adverse.
Also, some industries are not inventor-friendly. Some companies are
just too large, and they don’t know what has been developed within their
own company. So, there’s too much risk working with outside product
developers. Trust me, I’ve experienced this first-hand. If a company
requires an issued patent before looking at an idea – basically, they’re
telling you they’re not interested.
Your sell sheet is not selling for you. It doesn’t clearly communicate
the benefit of your product. It may be too long. Maybe it doesn’t look
anything like the company you’re submitting to. This is common. Many
inventors without graphic design skills try to create their own sell sheets. I
think this is a bad idea. Your sell sheet is one of the most important tools
you have to market your idea. Make sure it’s polished! Getting some
professional help with graphic design shouldn’t break the bank.
Pro tip: Test your sell sheet by showing it to a friend. If they don’t
understand your product within a few moments, you need to get back to the
drawing board.
Some industries are not friendly to inventors. Not every company has
embraced open innovation. They don’t all work with independent product
developers or take idea submissions. Some large companies require patents
before looking at ideas. And some industries only have 2 to 3 very large
players—think of Coleman and Igloo, they dominated the cooler industry
for years.
Pro tip: Reach out to companies that have licensed ideas from
independent inventors. Go after midsize companies that need new ideas.
Focus on competitive industries with many players; companies will be
actively looking for great ideas to best their rivals.
The industry is crowded with too many similar products. In other
words, there’s too much competition.
Pro tip: Plenty of competition does not mean you can’t be successful,
but your product is going to have to have a big point of difference. You’ll
need that much more of a wow factor to stand out.
Bad timing. Most industries have a selling cycle. Generally, they start
to develop new products for the following year. If you miss a cycle, you
might have to wait a year before your product is looked at.
Pro tip: Look at trade show dates and work backwards nine months. If
they like your idea, they’ll have enough time to get it ready for the trade
show. Ask potential licensees about the best time of year to submit product
ideas.
Sometimes, a company has just launched a similar product and that
really is just bad timing.
Pro tip: Try to make improvements to that product. When products do
well, there will usually be subsequent versions with improvements. Design
the next improvement to that product.
Your product idea is overdesigned. Often, overdesigned products have
too many bells and whistles and are too expensive. An overdesigned
product might not fit into the price category of similar products at retail.
Pro tip: Tweak your design and make it a little simpler. Have a U.S.
based contract manufacturer give you a quote after signing an NDA. Being
able to discuss a real manufacturing quote can be helpful when discussing
your idea with a potential licensee.
Your idea is not original. Yes, a few companies require you to have a
patent filed before looking at your product idea, but there shouldn’t be
much reason for them to suspect that your idea is not original. If a search
for similar prior art (patents) brings up too many results, you probably don’t
have a point of difference and your idea will likely get rejected. Please
make sure to do a Google image search. Make sure your idea has a point of
difference and is new. I’ve been told many times from companies that they
can find ideas that have been submitted to them within minutes on Google.
Don’t let that happen to you. If your idea is too similar to one of their
products or another product on the market, they will walk away.
Pro tip: Make sure you do your own prior art search; you can learn
how to do this at USPTO.gov. Make sure your product idea has a clear
point of difference from other similar products. And make sure you file a
well-written provisional patent application that gives you perceived
ownership of the idea.
Your product has a bad sales record. Sometimes, selling your product
online before submitting it to a company to license can hurt your chances of
getting a licensing deal. Especially if the sales were poor.
Pro tip: If you’re going to sell your own product, make sure you keep a
record of your sales data and customer testimonials for your product. A
positive sales record and good reviews of your product could be helpful to
land a licensing deal. Showing that there’s already demand and positive
feedback for your product can function to take away some risk for a
company to license that idea and bring it to market.
Your product requires new manufacturing equipment. Your idea is
so new that a licensee is going to have to invest money in new
manufacturing equipment to produce it. Again, an idea that requires
significant financial investment poses significant risk and is unlikely to get
licensed.
Pro tip: Start with simple ideas that make small variations and
improvements on products that are already being manufactured. Don’t
propose product ideas that pose too much risk for companies. Try to take
the risk away!
You’re being unreasonable. Companies want to work with people who
are helpful, courteous, and professional. If you’re sending potential
licensees too many emails with too many questions, you’re being a high-
maintenanceinventor. If you tell them at the very beginning that you have a
“million-dollar idea,” they will avoid you at all costs.
Pro tip: Be patient, be helpful, and don’t argue. It’s okay to state your
opinion but please realize that you want to make their job a little easier. Ask
for feedback and be a team player. If you leave a bad taste in their mouth,
they’ll put you on the amateur inventor list.
Your potential licensee doesn’t have the resources. You reached out
to a company that’s a startup or just too small. They may not have the
resources to review product idea submissions from the outside.
Pro tip: Find established companies that are midsize. Generally, they
have resources and are looking for ideas to get ahead.
You reached out to market leaders. Yes, every inventor wants to
license to the major players. In most cases, these companies are not that
innovative. They can afford to buy ideas after smaller companies test them
in the market. They already have their products on shelves and aren’t
compelled to take much risk.
Pro tip: It’s ok to reach out to the big boys, your favorite companies, but
realize that midsize companies will typically be more helpful.
Your idea hasn’t reached the right person. People change jobs, they
get promoted, their roles change. This happens quite regularly, and no one
is going to tell you. Your idea could be rejected because the person
reviewing it does not want to take on new projects. You may have to start
again with somebody else.
Pro tip: Try to get to know the project manager who's handling your
product submission. Ask them if they need any help. Be an asset.
Your product was sent out for a price quote and it came back too
high. Actually, this happens quite regularly. I’ve been told more than one
occasion that engineers don’t have the time to re-design for manufacturing.
They send out for a quote exactly what you sent to them. So, of course, if
this is not your specialty you might get bad news.
Pro tip: When things start to get serious and you know they’re looking
for a price quote I would try to find either a mechanical or electrical
engineer and spend some time with them so they can put together a “spec”
- a list of potential components that can be used in manufacturing. This type
of knowledge is priceless. You might even have a contract manufacturer
quote it for you. That way you have some type of control and knowledge of
what’s been quoted.
Getting rejected is just part of the business. Don’t be discouraged! Remember, pitching ideas is a
numbers game. Even if you get rejected, conduct yourself professionally so you build a relationship
for future efforts. As a product developer, you have to be persistent and willing to make
improvements. It’s crucial to find out why your idea was rejected so you can make effective changes.
I have seen many ideas that are first rejected, then accepted after the
inventor resubmits the same idea in 6 months. Why? It could be timing.
Your idea was submitted to a company at the wrong time. Perhaps they had
a trade show coming up, maybe personnel changes, or a bad sales quarter, it
could be anything. A no just means no now, not necessarily later.
People ask me all the time about when you should give up on an idea.
It’s a great question.
Obviously, there’s no black and white answer to that question. Here are
some important things to consider. Have you completely exhausted all the
possibilities? Have you made a list of at least 30 companies and reached out
to every one? Have you received any feedback? And have you considered
the feedback and tweaked your design, your marketing materials or your
pitch?
Learn from inventRight student Michelle Morrison. When she
submitted her idea to many companies, she received rejections from all but
one. That one company suggested that she make a change. So, she
redesigned her sell sheet and video to be more versatile and resubmitted to
three companies. All three companies got back to her saying they were
interested.
Getting feedback is incredibly important. More often than not,
additional creativity comes after you get some specific feedback on your
product idea. Companies are industry experts. Take their comments very
seriously. Don’t be too stubborn to make a change.
Sometimes, you keep pushing and there comes a point where you want
to move on. Listen to your instincts. At that point, just put the project down
and move on to another one. You don’t need to completely give up, but
sometimes you need to move on for your sanity! You can always come back
to an idea later with a fresh perspective. Many students take this approach
and eventually get a licensing deal.
In summary, there are many reasons why your product idea could have
been rejected. Sometimes you just need to put it down when you’re
emotionally beat up. Bring it back out when you’re ready. Having a fresh
pair of eyes to look at it can actually be a great opportunity. Try to get
feedback to see if you need to make some adjustments.
Whenever you do get rejected, have a positive attitude. They will
remember that and want to work with you again. Don’t forget that you’re in
the rejection game. You’re a “no” collector. Don’t take it personally when
you get rejected. Keep submitting and work to build relationships.
“Don’t get discouraged. Try not to be discouraged. Your product
might not be right for direct-response, but you may have a great item. So,
just study the market - know what is out there and how your item
compares to it.”
Being a professional product developer means that you’ll keep coming
back with new ideas after you’ve been rejected. That’s when you’re truly in
the game. That’s when you start to build relationships with those
companies. The most successful inventors I know get many rejections.
They’re successful, not because they don’t get rejections, but because they
do! They have built relationships with companies in specific industries.
Even when they get rejections, they often get helpful feedback, and the door
to submitting more ideas in the future isn’t closed because they’ve
conducted themselves like professionals. Remember, “no” just means “not
now.”
“A professional inventor has objectivity. What a professional inventor
is able to do is look at this as a business. The more you do it, the more of
a process it becomes. You have to look at the numbers and if they don’t
add up, move on.”
Reasons Why Your Idea Was Rejected Interview
Inventor: Courtney
Products licensed: Keyboard Desk, Wombat Joey Chair Pouch, Trunk
Pocket, Yak About It Entry Organizer
At the young age of 22, Courtney has successfully licensed four
different product ideas to DormCo! Courtney’s first idea was rejected many
times but that didn’t discourage her. After submitting her product idea to 80
different companies without success, she moved on for a while. Five
months later, Courtney had a gut feeling that she should contact one of the
companies again. She reached out politely and reminded them that her
product was still available. And they took it! They said it was the perfect
time. They even asked her if she had more ideas! Here are some insights
from Courtney’s experience:
Stephen: 80 rejections – that’s a lot! Why not just walk away?
Courtney: I believe that you miss 100% of the shots that you don't take.
I think it’s really important to have persistence and to keep going. I felt like
this product just had to be out there. I knew there was a home for it. I didn’t
want to give up because I had enough passion to bring this product to
market.
If you have a feeling that your product is big, and it’s going to be good,
there is a home for it. You're going to find it if you have persistence. Do not
give up.
Stephen: It took Courtney a lot of time and energy to reach out to those
80 companies. But she gained confidence throughout the process as she
worked on her approach. She made many improvements to her sell sheet.
She got better at reaching out with practice. Eventually, she listened to her
gut, reached out again, and found success. Timing can be everything. Don’t
forget, you won’t be around at the right time if you don’t play the long
game.
Watch my full interviews with Courtney on inventRightTV.
PART FIVE
You’re In!
They’re Interested.
10.
PREPARING TO ANSWER
THE HARD QUESTIONS
C ongratulations! You’re getting responses from potential licensees. Now

for the tricky part. They are going to ask you many questions.
And some of these questions have to do with evaluating you –
meaning they are trying to assess if you are going to be reasonable and
rational during the process. I have seen deals die because inventors did not
handle themselves professionally after interest was expressed!
So right from the start, let’s talk about a few things you simply must do:
1) be on time for phone calls or meetings, 2) know their product line and
their business well enough to make conversation, 3) end every discussion
with a list of agreed-upon next steps and know who is responsible for each,
4) spell check any email or document you send, 5) if on a Skype call – dress
professionally, and finally 6) if you get asked a question and don’t know the
answer – say so and let them know you’ll get back to them.
I also make it a point, if possible, to find out who I am going to be
meeting with or working with. I ask for names and titles. Use LinkedIn to
research the responsibilities and backgrounds of the people with whom you
will be interacting. Just as you researched the company, so should you
research the people.
As you get to know your contact, it’s perfectly fine to make some small
talk about sports, weather, or current news (stay away from politics!). You
are not going to become best friends with this person but having a personal
relationship is a good idea. Also, when you are on a phone call or in a
meeting, make sure that someone introduces everyone at the start of the
call. Make sure you write down names and titles – it’s important to know
the players involved. If need be, ask your contact to send over a list of the
people with the correct spelling of their name and title, and possibly their
email address as well. It’s likely that you will have further interaction with
these people so making sure you get it right is important.
Sometimes you’ll have to explain to them that you’re looking to license
your product idea – that you’re not a manufacturer. Sometimes they will
quickly ask to see a prototype and any intellectual property you have.
That’s pretty standard.
Understand that just because they ask for something does not mean you
should give it to them, yet. Realize that your first conversation with a
potential licensee is really an interview. You’re interviewing them, and
they’re interviewing you. Sometimes, you should slow it down and ask a
few questions yourself.
You cannot speed this process up. At first, they will ask questions to
evaluate your product submission. Do not jump ahead and start to
negotiate. The re’s a sequence of events that happens!
• You created a marketable product idea.
• You identified a company that is selling similar products.
• You created strong marketing material.
• You created perceived ownership with intellectual property
(usually a PPA).
• You submitted your product idea to this potential licensee.
• Th ey evaluated your product submission.
• Th ey determined they’re interested. That’s where you are - now,
what’s next?
• You start with a basic term sheet.
• After terms are agreed upon, you proceed to a licensing
agreement. I try to avoid some of the more difficult questions at the
very beginning.
I prefer to negotiate the contentious issues later in the licensing
agreement. It’s a little bit like dating – you don’t really want to talk about
tough issues on the first date, do you? Get to know one another first and
establish some common interests and goals. Then, later, if things continue
to go well, you can tackle the tougher issues.
The beginning of the dialogue is a great time for you to ask them some
questions. The conversation will help them determine that they’re really
interested. At the very beginning, they are trying to sell you too. Ask them
what’s important to them. What do they need to be successful? Ask about
their process.
It’s also the perfect time to ask questions about their distribution. Ask
them how large their distribution is (meaning how many stores they are in
and what countries/territories). At this point, it’s likely that they will
volunteer this information. They are less likely to answer these questions
later during the negotiating process, especially questions about distribution.
Asking these types of questions early will help you later.
At first, your goal is to give them enough information for them to want
to license your product idea from you. You’re not trying to negotiate any of
the licensing terms at this point. That should come much later. When you
start to answer the initial questions, just try to be as helpful as possible.
You’re trying to move the project forward to a point where it’s clear that
they’re interested in working with you. That’s when you can ask for
a licensing agreement.
Once you start a dialogue with a potential licensee, it can take many
twists and turns. You don’t want to lose interest from a potential licensee by
asking the wrong questions or acting like an amateur inventor. You cannot
rush this.
Sometimes the hard questions can be asked through email. But
sometimes you’ll have to have a conference call. When I do, I always
provide a conference line or set up a Skype call.
Realize that many companies see product ideas every day. They’re only
going to work with product developers who make it easy for them to do
their job. So, always take the time to read each request carefully. You want
to be timely, but don’t rush yourself. Have fun and be reasonable. Your
attitude must always be positive. Be an asset to them.
Examples of common questions and how to respond Can you send us a
working prototype?
this is one of the first things they are going to want to see after viewing
your sell sheet. Everyone wants to see a prototype, of course! But if you
were to build a prototype for every idea you had, you’re never going to win
the numbers game. My philosophy has always been to spend very little
money on each of my product ideas. Filing a provisional patent application
and using some smart marketing material such as a sell sheet and video is
all you need at the very beginning.
Remember, don’t make the mistake of thinking it’s all about patents or
prototypes. Prototypes can be costly for some projects. You want to confirm
that there’s genuine interest in your idea before you spend the effort to build
a prototype. You want to test your ideas and spend as little money and time
as possible. This approach will increase your chances of success.
So, how do you gauge whether there’s genuine interest? Engage with
them and ask them about their interest level. Ask them about how they see
this idea fitting in their product line. What is it about the product that
appeals to them or their customers? Just because a company asks to see a
prototype doesn’t mean I would send one right away. I always qualify their
interest level first. This will save you resources in the long run.
So, the question is not whether to build a prototype, but when? If you
determine that they really are interested in your product idea, it’s time to
spend a little money and build them a prototype. You need to reach out to
someone who can help you. Be very careful about who you hire for help.
By that I mean, make sure they have experience or are knowledgeable
about manufacturing processes. Many inventors pay for an expensive
prototype only to find out later that the way the product has been built is not
manufacturable. This means you will have to head back to the drawing
board. And if you base your patent application on a prototype that is not
manufacturable, you may need to file for another patent later on.
3-D printing has made building small prototypes fairly easy and
affordable. You could find someone locally to provide the right
programming and print out your prototype. Today there are Maker spaces in
most cities that will allow you to find someone local to help you.
In some situations, it’s going to be more complicated than that. You
might need a company that specializes in prototypes to help. Of course, this
can get expensive. That’s why it’s important to gauge the interest of your
potential licensee before spending a lot of money on a complex prototype.
A working prototype that looks exactly like the finished product might
require hundreds of hours of engineering. This kind of prototype can run
anywhere between $1,000 - $20,000! Don’t spend this type of money unless
you know that there’s serious interest!
There are also multiple types of prototypes. You should clarify which
one they are asking for. A “works-like” prototype may not look like a
finished product, but will prove your product concept. A “looks-like”
prototype might be used for a photo shoot or advertisement to buyers but
isn’t actually functioning. Sometimes you can get by with a computer-
generated drawing of your product that looks like a finished product along
with a rough “works-like” prototype that proves your idea actually works.
A “works-like” prototype can be pretty rough and made with cannibalized
parts from other products. Remember, you are just trying to show that your
concept is functional.
It’s important to remember that prototypes break very easily. I’ve seen
this play out many times. You send a prototype to a company and they’re
not quite sure how to use it. They end up breaking it or determining that the
product is not right for them because they don’t know how to use it
correctly. I highly recommend that you provide written instructions or even
a video for using your prototype. Better yet, if they are close by, deliver it
yourself and do the demo. This way you control the pitch. If they have any
questions, doubts, or objections during your demonstration, you can address
them accordingly.
Some industries, such as the DRTV industry, require prototypes. I
would still send a sell sheet and video first to gauge interest. Even knowing
that they’re going to ask for a prototype if they like the idea, it still doesn’t
make sense to build a prototype in the beginning. It’s worth repeating: The
first thing you should do is sell the benefits of your idea.
Overall, having a working prototype at the right time may be very
beneficial, especially to speed up the manufacturing process. But again, I
think it’s all about timing and assessing the return on any money and time
spent.
Do you have any rights to your intellectual property?
Basically, they’re asking, why should we pay you? Do not be afraid of
this question. In fact, I love this question. It allows you to sell your point of
difference. And the most often asked question is, “Do you have a patent?”
If a potential licensee demands a patent, they are a dinosaur but some
still do. The smart ones don’t wait for a patent because they don’t want to
miss a window of opportunity. Because products have short lifespans these
days, patents are not that important for most product ideas. I actually hear
quite often from inventors that they just want to sell their patent to a
company. I get it, it sounds easy. But companies will not ask to buy your
patent. Buyouts are extremely rare. Companies like the concept of “pay as
you go,” because there’s no risk.
Know that there’s some prior art on just about every invention. When
companies question my ownership of my idea because there’s prior art
that’s similar (meaning prior patents), I always tell them: “Yes of course
there’s prior art. The important point is that my invention is not on the
market. And because of my strong point of difference, I’m very confident I
will be granted intellectual property rights on my invention.”
Your point of difference could be the design, the manufacturing process,
or even a new material. The point you’re making is that your product solves
a problem in a specific way that is not yet on the market. You must state
this with confidence. This puts the ball in their court. Your idea is unique,
they haven’t found it on the market, and they’re interested!
You could line up 10 patent attorneys and show them your invention
and your well-written provisional patent application and you’ll get 10
different opinions as to whether your idea can be patented. No one, and I
mean no one, can tell you with 100% certainty that you’re going to get a
patent – and that’s very useful, because it creates a gray area.
Truth be told, it’s not about patents anymore, it’s about selling first and
great customer service. I love this gray area. It leaves room for independent
product developers to succeed. Smart companies come to the conclusion
that it’s not about ownership, but it’s about selling. They know as well as
we do that most products have a short lifespan - I’ve heard as short as 18
months. Most likely a product will sell for three to four years. In three
years, there’s a very good chance a patent wouldn’t even be issued. Given
there’s many workarounds and variations for any product, it’s truly hard to
protect anything, even with multiple patents. That said, some products last
as long as 10 years in industries like tools. That’s why companies in those
industries like patents.
Basically, the new patent laws have made it extremely difficult to
litigate. For these reasons, licensees don’t particularly care about patents
these days. It’s not about protection, it’s about selling, great customer
service, and being first!
If you get asked about your intellectual property and want to provide
confidential information such as a provisional patent application or trade
secrets as discussed in Chapter 5, you could ask them for a mutual NDA.
Make sure to read about those later in this chapter.
Do you have any market data about your product idea?
I always smile when I hear this. They’re the experts in a particular
category so why are they asking you? If you can create or show some type
of market demand, it definitely takes away some risk for your potential
licensee. Sometimes you can show market demand by showing your idea to
a buyer and getting good feedback. Reference Chapter 6 for more
information about creating market demand for your product idea.
What do you estimate manufacturing costs will be for this product?
Ultimately, they’re going to have to investigate this themselves. They
may ask you just to test the waters quickly. If you reach out to a U.S.
contract manufacturer for a quote, this can make the process go a little
faster. In most situations your product will be manufactured overseas, so the
company knows that the real cost at full production scale will be lower than
your quote.
Another possible response to this question is to tell your potential
licensee that you do have a few contract manufacturers that would love to
meet to discuss how this product could be produced and what it would cost.
Having a contract manufacture in a meeting with a potential licensee
can be very powerful. It can give confidence that your product can be
produced at a price that works for them. If they love your idea, the question
of licensing just comes down to cost.
If your idea is similar to another idea, you could do a guesstimate. If
you have the retail price of a similar idea, you could tell them that your
product is similar to an existing idea that’s currently on the market. That
would give them the retail price point and they would be able to estimate
wholesale price and manufacturing cost.
In most situations, it won’t really be on you to provide an accurate
manufacturing cost.
How much do you anticipate the retail price will be?
ftey’re looking for an acceptable profit margin, not an exuberant retail
price. Sometimes they ask this question to see how flexible you can be with
features like size and materials.
You might get this question from someone in marketing since your sell
sheet and video didn’t mention the retail price. You can offer a number
based on a manufacturing quote but be sure to explain that it could change
based on certain criteria such as the final size or materials used in the
product.
What royalty do you want?
this is very hard to answer at the very beginning. In fact, don’t rush to
answer this question. It’s way too early to start negotiating the royalty
because there are many issues that will impact what that royalty rate will
be. I always let them know that I can get back to them with a reasonable
royalty rate once I get some additional information. First, ask them about
their company. Try to figure out how many stores in which they currently
sell products.
The point is, you shouldn’t try to answer this question without having
enough information. Yes, you want to get a high royalty rate. But it really
comes down to how many units they’re going to sell. In some situations,
5% is a very fair royalty rate. But if they’re going to sell a huge volume, a
lower royalty rate might be just fine.
There are many other topics to discuss, such as exclusivity, territory,
and improvement clauses. I will discuss further in the next chapter so you
can appropriately answer these questions and keep the momentum going.
Here’s an example of a dialogue between an inventRight student and
potential licensee:
Jon,
Do you have a patent on this idea or is there an application on file with
the USPTO? Also, have you ever built a proof-of-concept model and is
there any user test data with the model?
Do you have a manufacturer lined up to produce your product?
Thanks Ray
Ray,
I have filed a provisional patent application at the USPTO and am
confident that I will receive a patent on this invention.
I do have a working prototype. Concerning your question about user
testing: I am currently a wrestling coach at the local high school, and I’ve
been involved in fitness my whole career. I have tested this product
personally. The results have been fantastic.
I am looking to license this product. I am not a manufacturer. I can
reach out to a contract manufacturer for quotes if this would be helpful.
Is there anything else you need?
Thank you very much for your interest. Jon
Notice that at the very beginning the conversation’s pretty basic. They
want to know if your product works. They want to know if there’s any
intellectual property. They also want to know if you’re a reasonable person
they could work with.
What if you don’t have the answer?
If you get a question you don’t have the answer to, tell them you’ll get
back to them. Don’t ever fake it. Don’t ever feel forced to answer a question
too quickly. Always give yourself some time to think about how to answer
it correctly. If you’re having a conversation over the phone or through
Skype, don’t agree to anything on the spot. You can always tell them that
you have to consult with your team.
You should have the tone that you’re excited to be working with them.
Make it clear that you’re willing to work together to come up with solutions
to any problems they have. And once again, always create a paper trail.
After each call, always follow up with next steps.
NDAs
They’re really interested, what’s next? When a company asks you for
confidential information such as intellectual property or trade secrets, it
might be a good time to ask them to sign an NDA. Know that they will not
sign your NDA. In most situations, you will have to sign theirs. It’s
important that you understand it very well. Consult legal help if you don’t.
Many inventors fail at this. Once you get to NDAs, it’s important to have
the help of someone experienced in the matter.
You should not ask a potential licensee to sign an NDA before you
show them your marketing material. As I stated earlier, most of the
companies you pitch to are not going to keep your product submission
confidential. It states this very clearly on most invention submission forms.
They may want to share it with suppliers, buyers, or manufacturers. That’s
why you start with your marketing material. Marketing material sells the
benefit of your product but should not disclose any intellectual property.
Once a potential licensee sees your sell sheet or video, they’re going to
want to know more information. And that’s the perfect time to ask for an
NDA.
In my opinion — and please note that I’m not an attorney and I’m not
giving legal advice — if you have filed a well-written provisional patent
application, I'm not sure an NDA is even needed. NDAs are not federal,
meaning they’re different from state to state. Also, if you publicly disclose
your invention prior to securing patent pending status (meaning filed at
least a provisional patent application) you run the risk of having to prove
your ownership in court. NDAs can slow down the overall process. But you
need to know that every company and every industry is different.
“We usually don’t sign non-disclosure agreements and will direct an
inventor to do a patent search, file a non-provisional patent application,
and then resubmit.”
“NDAs gladly signed and enforced.”
— Hog Wild Toys website
“We don't sign NDAs, as a policy. I encourage inventors to protect
themselves to an extent they feel comfortable with, so they can actually
share the idea. NDAs don’t work the way most people think they do.”
accessories.
Final Thoughts
I recently spoke with an inventRight student who was about to have a
call with a very large manufacturer. I asked him who was going to be on the
call and he said the product manager, which makes perfect sense. But also,
he expected a technical person to join the conversation. This individual did
his homework on who he was speaking with which I think is a very smart
idea.
I wasn’t so worried about the product manager because their job is to
evaluate the marketability of the idea. They don’t care where great ideas
come from. What did concern me was the technical person. Engineers
cannot stop reverse engineering. They’re always looking for ways around
intellectual property. It’s in their nature. So, be prepared for this. If you
anticipate that they will ask for confidential technical information, you must
have an NDA in place prior to the meeting. And don’t forget to file a well-
written provisional patent application before you sign an NDA!
Also, if you’re considering filing for a patent internationally at some
point, you’re going to have to have your potential partners sign NDAs so
there’s no disclosure issues. Public disclosure issues can be extremely
tricky. I would highly recommend speaking with a patent attorney on the
strategy to prevent any public disclosures, so you don’t lose any rights.
I have provided four examples of non-disclosure agreements in the
appendix of this book, including two supplied by patent attorneys Richard
Bennett Salles of Foundation Patents and Damon Kali of Kali Law Group.
11.
FROM INITIAL INTEREST
TO A DEAL:
NEGOTIATING
LICENSING
AGREEMENTS
F orexciting,
most inventors, negotiating a licensing agreement is incredibly
but also very stressful. By the time you arrive at the negotiating
stage, you’ve worked extremely hard to come up with a great idea, reach
out to potential licensees, work through prototypes, and file intellectual
property. You have a potential licensee that’s interested, but ultimately your
success will be defined by the details of your licensing agreement and what
happens in the market.
I’m here to tell you, you can do this, but you’re going to need some
help. And by help, I don’t mean an attorney. Don’t get me wrong, you will
need a licensing attorney to review the contract towards the end of the
negotiating process. Attorneys can provide a very valuable service, but you
must bring them in at the right time. Something very important I’ve learned
over the years is that you must negotiate the business terms yourself. You -
and only you. Please understand, there is a difference between the business
terms of a licensing agreements and the legal terms.
Having a licensing or patent attorney negotiating on your behalf is not a
good idea. Their involvement can kill a deal. Attorneys get paid for their
time, not the outcome at the end. They will argue over details that don’t
make a difference. They will argue to protect you - so much protection that
you will find yourself without a deal. They can literally protect you and
your idea to death. And if you take a combative approach by having an
attorney with you at the negotiating table, your potential licensee will bring
in their own legal counsel. They’ll have no choice. And in this case, time is
money.
That’s why you must negotiate the business terms yourself. As I talked
about before, the best approach is relationship building. You’re trying to be
reasonable and work with your potential licensee. You shouldn’t set
yourself up to go to war.
Negotiating is a complex process. You’re going to want to get through it
as fast as you can, but it often ends up taking longer than you might expect.
Good licensing agreements generally take time. Bad ones get done quickly.
Trust me, not only have I negotiated my own licensing deals - I’ve been
helping other inventors negotiate their contracts for decades. Every now
and then, we even get inventors who sign up for inventRight after they sign
a licensing agreement. Why? Because they left money on the table.
Negotiating is definitely one of the most complicated parts of the process.
So, if you’re new to this, you do need help. You need a mentor. You
need someone who’s been in your shoes and has experience negotiating
licensing agreements - attorneys don’t necessarily fit the bill. This chapter
is no substitution for expert advice from someone who has done this before.
The negotiating process will take many twists and turns and could be quite
different depending on your product and what industry or company you’re
licensing to. The main takeaway from this chapter is that you need to be in
control of the process. Here are some general guidelines and strategies to
get you started on the right foot.
First, let’s recap.
How to set yourself up for success
Negotiations start earlier than you might think. They actually start the
minute you come up with an idea. How? Who you work with, and how you
work with them, will set the stage for negotiations. You want to play your
cards right from the start if you want to get the best deal possible. Let’s
review the steps you should take to optimize your chances of getting a great
licensing agreement and if this sounds a bit repetitive, well it is. There are
certain things that you need to do from the very beginning to create
conditions for success.
Carefully study the marketplace. Companies will have different
attitudes and expectations when working with inventors. Some industries
and even individual product categories will have different processes and
requirements for licensing. Doing a little homework on the company you’re
going to be submitting your ideas to will give you some advance notice
about their attitude towards negotiating with an independent product
developer. Starting with the right companies is an easy way to set yourself
up for success.
I’m here to tell you that working with a company that has already
licensed ideas is going to be 10 times easier than trying to educate a
company new to this business. Companies already licensing ideas
understand that an agreement needs to be fair and balanced. They’re
familiar with licensing agreements and they value independent inventors.
The ideal company is one that has an entrepreneurial spirit. They
welcome open innovation and regard creativity as a high priority to be
competitive. Usually, you see this kind of attitude in midsize companies. A
midsize company can still be a $100 million company with great
distribution. It just depends on the industry. Also, companies that have
licensed product ideas from outside their walls are just easier to work with.
On the flipside, working with a company that has not licensed anything will
require your patience. You’ll have to educate them along the way. I have
found that negotiating with market leaders and very large companies is
more time-consuming and difficult than dealing with smaller players.
Market leaders are extremely risk-averse. Because market leaders operate at
the biggest scales, your idea will require more capital investment, which
means more risk.
Study your potential licensees. Check their past. Have they licensed
ideas? Are they inventor-friendly? How many lawsuits have they been in
with product developers? This type of information will help you prepare an
appropriate strategy for your intellectual property. Most of this information
can be found by searching online. Just search a potential licensees name,
followed by “lawsuit or complaint.” Also, look to see if they have prior
patents. Look them up with the USPTO or just search online. You’ll be able
to tell how important intellectual property is to them.
For example, if you have an invention that you want to license in the
packaging industry, you will need intellectual property filed such as a
provisional patent application that has manufacturing “know how.” In the
packaging industry, without this type knowledge, the chance of negotiating
and getting a licensing agreement is very low. If you don’t have this
knowledge, you should find an engineer that can help you understand your
potential licensee’s manufacturing process to help you understand how they
can implement your invention in their production line. Make sure your
consultant/engineer signs an NDA with work-for-hire language. This will
help you maintain ownership over any developments in your intellectual
property. For most consumer product ideas, having firsthand knowledge in
the manufacturing process is probably not that important. In 99% of the
licensing agreements we help negotiate behind the scenes at inventRight,
this isn’t required.
Create effective marketing materials. Strong marketing material can
be a great benefit in future negotiations. Remember to design your
marketing sell sheet with the customer in mind. Present your idea in a way
that allows your potential licensee to quickly understand the benefits to
their customers. Highlighting the big benefit—the one-line benefit
statement, as well as the various features of your product, is extremely
important. For your marketing material to be effective, you have to
understand your potential licensee’s product line and mission statement.
You want your product submission to easily fit in with their current product
line.
Create market demand early. Over the years, I have learned that
creating market demand can be a powerful strategy to get you the best deal.
In fact, it’s probably the number one thing you can do to move your
licensing agreement along quickly. Companies will be hesitant to invest in
large projects that require a lot of time unless you can show some market
demand for the product. Being able to show market demand will take away
risk for your potential licensee and give you leverage in negotiations.
Market demand can be created by showing your product to a buyer for a
major retailer. Their approval can be huge because they are ready to buy.
When there’s business to be had, a potential licensee is far less likely to be
picky about minimum guarantees, royalty rates, and improvement clauses.
I learned this firsthand with my SpinLabel idea. It was extremely
difficult to get manufacturers to license my technology until I found a
customer that wanted to order this technology. This customer wanted to
order 50 million labels! After showing my potential licensee this market
demand, they quickly wanted to sign a contract. And because of their
excitement, negotiating the licensing agreement in my favor became much
easier. I had leverage.
Have an idea of manufacturing costs. To move your negotiations
along, having an idea of the manufacturing costs can be helpful. For this
information, you can reach out to a US based contract manufacturer.
Always have them sign an NDA. Remember that their estimated cost will
be higher than the actual cost because manufacturing will probably take
place overseas. Also, design and file your intellectual property to reflect the
lowest cost variation of your idea.
File a well-written provisional patent application. Having a well-
written provisional patent application is one of the best tools when
negotiating with a company of any size. Yes, a provisional patent
application is an optional first step toward a patent, and there are substantial
benefits to filing one. The United States abandoned its historic first to
invent system in favor of a first to file system with the America Invents Act
of 2011. Filing a well-written provisional patent application that sufficiently
describes your idea will establish priority for a future patent by satisfying
the need ‘to act swiftly’ under these new rules. A PPA will take less time to
write compared to a standard non-provisional patent application.
Your first step should be doing a Google image search, so you know
your product’s point of difference. This is critical information for your PPA.
And of course, these points of difference should be highlighted in your
marketing material.
Next, do a prior art search. This will help you understand your point of
difference when your potential licensee asks about prior patents. You’re
trying to learn as much as you can about the context of your idea. At a
minimum, you have to make sure you don’t find your invention! Submitting
a product idea with no point of difference is an amateur mistake. Frankly, if
you are in any way unsure or uncomfortable about doing a prior art search
yourself, I would definitely recommend hiring an independent search firm
to do the job for you.
Yes, it’s very likely you will find prior patents. If you do find prior
patents that are similar to your idea, find out why these ideas haven’t made
it to market. This is an important step you shouldn’t take lightly because
your provisional patent application should include workarounds and
variations. For this reason, your search can be very time consuming. You
can get help to do this as I mentioned before. However, having the
knowledge to do this yourself is an incredibly powerful skill for any
professional product developer. For an extensive guide on writing an
effective PPA, please consult my last book, Sell Your Ideas With or Without
a Patent.
Filing intellectual property is one of the first steps to negotiations. If
you understand the product category your idea falls into, you’ll be able to
craft the right intellectual property strategy for future negotiations. Patents
and provisional patent applications give you perceived ownership of your
inventions and take away fear from your potential licensee. This gives you
strength and leverage when negotiating.
There are other tools to create perceived ownership such as trademarks,
copyrights, trade secrets and design patents. All these tools work in your
favor during negotiations.
There are quite a few companies, especially in the kitchen product
category, that absolutely require design patents. Also, companies that
exclusively sell online highly value copyrights, design patents, and
trademarks to help them combat copycats and infringers.
One other note on provisional patent applications. Sometimes inventors
tell me that a potential licensee is asking for their provisional patent
application number and wonder if they should be concerned about sharing
it. I asked patent attorney Damon Kali, whom I’ve known for many years,
“Should you ever give out your provisional patent application number?” He
said that it’s perfectly fine, the only consequence/downside being that the
person with whom you share the number knows when you filed and when
you have to a file a non-provisional patent application. No one can go in
and make changes or alter the application just because they have the
number.
Build a proof-of-concept prototype. I’ve given you many reasons why
I don’t build prototypes at the beginning of my product submission process,
namely the relatively high cost. But once you have solid interest from a
potential licensee, I think the cost and time to build one is probably
warranted. If you work out some of the details and resolve potential issues
which means less for your licensee to do – and makes getting accurate
manufacturing costs estimates more likely.
Before negotiating a contract, agree to basic terms. Before you
negotiate the more difficult details of your licensing contract, it's standard
practice to agree to some basic terms. You do that with a term sheet—a one-
page document that outlines the business terms of your relationship. ftink
broad strokes here. You’re establishing how you’re going to work together.
If you don't share the same perspective on big-picture issues, or can’t work
together to get there, why bother spending time and money thinking about a
contract?
The difficult issues in most contracts are things like royalty rates,
minimum guarantees, improvement clauses, and paying for intellectual
property. These issues are better negotiated later. Why? If you bring up
contentious issues early on, you may dissuade a potential partner from
working with you. When I craft a term sheet, I make sure to bring up
important issues, but never the most difficult ones. Bringing up difficult
issues at the very beginning is like going on your first date and exposing all
the baggage in your life. There’s a good chance you won’t have a second
date.
Also, timing matters. They may become more invested as they test your
idea, making it work to your advantage. A potential licensee will show your
product idea to buyers, they will ask their manufacturers for quotes, and
they will run it by their sales team. Positive feedback from any of these
players will better your hand at the negotiating table. It’s preferable to
tackle more difficult issues once both parties have become emotionally and
financially involved, once there’s some momentum in the project.
Term sheets are really just the very start of a negotiation. With the right
attitude, you can always come to some sort of compromise. At the very
beginning, you want to send a clear message that you’re reasonable. Tell
them how pleased you are to be working with them. You can ask
pointblank, "What do you need to be successful?" That's really what it's all
about, isn't it? Then I ask the following big-picture questions:
Do you need an exclusive? I know everyone wants an exclusive.
They’re going to say yes.
In which territories would you like the exclusive? Most companies
want a worldwide exclusive. Who doesn’t want to own the world?
In which distribution channels would you like the exclusive? Some
companies only sell in certain types of stores. Disney is a great example of
carve-out retail licenses. They have different contracts for products sold
exclusively in theme parks versus those you can buy in a mass retailer. Your
licensee might not sell to convenience stores or big box stores, so you may
want to “carve out” ahead of time where it is that they want to sell your
product.
How long would you like the exclusive? You’re asking about the term
or length of the licensing agreement. From past experience, companies want
the exclusive for as long as the product sells, maybe for the lifetime of the
patent if there is one.
At this point, I don’t even bring up the royalty rate. If they ask, you can
ask them about their standard royalty rate. Again, you want to come across
as reasonable. In my opinion, it’s too early to negotiate a royalty rate
without working through some important issues such as minimum
guarantees.
Remember, you should start with broad questions so you can easily get
to a licensing agreement. If you ask for too much at the very beginning, like
a licensing fee, that may be perceived as a red flag.
One of the biggest mistakes I see inventors make when working on a
term sheet is asking for too much too soon. Don’t rush to ask for a large
advance payment, ownership of all improvements made to the concept, or a
large minimum guarantee. Don't get me wrong. I think you do need to own
all improvements in order to preserve your perceived ownership. And
without minimum guarantees, your contract isn't worth much. My point is,
after the company has expressed sincere interest in your idea and has begun
working with you, they'll be more likely to agree to your requests.
Especially after you've showed that you’re willing to give them what they
need to be successful, such as an exclusive, specific territories, and the right
term length. Timing is everything.
If you have a good relationship with your potential licensee, I would
discuss the terms of your term sheet and licensing agreement over the
phone. And as I mentioned, if you’ve haven’t done this before, having
someone coaching you behind the scenes is a must. Always approach the
conversation with a sense of humor. This can be a great relationship
building experience.
Listen carefully to their arguments, be polite, courteous, and of course,
reasonable. Never agree to any terms over the phone. You need to give
yourself time to think about it. And always follow up in a written form by
confirming what was discussed and the next steps you agreed to take.
Having a paper trail can be extremely important, especially when the final
licensing agreement comes over to you. Sometimes people forget on what
they agreed on. If you’re not comfortable with negotiations, which is the
case for most people, do this through email. Just don’t be too long-winded.
Be short and to the point.
The term sheet will probably go back and forth several times. Once the
term sheet is agreed upon, you can proceed to the contract draft stage.
Please see an example of a very basic term sheet in the appendix.
Inventors who have been licensing products for years may have a far more
sophisticated term sheet – this example covers just the basics and again is
the start of conversation.
The licensing agreement: First steps
Over the course of many years, I’ve seen thousands of licensing
agreements. Some have been as short as two pages and others have been as
thick as two inches. Most typical licensing agreements follow a very simple
format. I believe this is so they’re easy to understand, especially if there are
any type of litigation issues. Clearly defining each term — making things as
clear as possible — in the agreement is very helpful, especially when
there’s a dispute.
But in the end, it’s important to know that anything can be argued. And
sometimes it doesn’t matter how well a term is spelled out; issues can arise
anyway. That’s why we have lawyers.
What’s interesting to me is that many of the contracts I see today don’t
even have definitions of some of the business terms. That surprises me. The
best strategy is a 1-2 punch. First, work with someone who understands and
is familiar with the business terms. Then have a licensing attorney review
all of the technical details.
Before we get started, here are some basic things I have observed.
The licensing agreement should come from the company, not the
inventor. The licensee is in the driver seat; they know what they need to be
successful so let them take the lead. This way, they also pay for it. Please
know that the first boilerplate licensing agreement they send over will be
ugly and you will need to negotiate better terms. Sure, the agreement may
be strongly biased in their favor, but you can move forward and negotiate
the business terms yourself. What’s important at first is getting the licensing
agreement. Once you come to terms about the more difficult points, you can
work with a licensing attorney to sort out any remaining legal issues. This
strategy will save you time and money and give you the best chance of
coming to an agreement.
I remember one inventRight student who didn’t take this advice. He
opted to draft his own licensing agreement with his licensing attorney. Of
course, it was completely one-sided. The potential licensee looked at their
agreement and realized it was not going to work for them. There were too
many issues to negotiate through, so they ended up walking away from the
deal altogether.
In fact, I wouldn’t even bring an attorney to the negotiation table. Don’t
bring a patent attorney. Don’t even bring a licensing attorney, who’s more
specialized in negotiations. The minute you “lawyer up,” so will your
potential licensee. It’s your attorney’s job to protect you, that’s what they’re
paid for. In practice, they can overprotect you and kill a potential deal. Over
the years, I’ve seen many licensing attorneys take a boilerplate licensing
agreement and mark it up until it bleeds red—so much so that the potential
licensee walks away from the deal. Just the other day, one of our students
sent a licensing agreement over to his licensing attorney after the first round
of negotiations. The attorney made so many changes, it actually became a
problem for the licensee. It looked like they would be starting from scratch.
And some of the issues were not even that important.
The best strategy is to try to negotiate the business terms yourself. If
you’re new to the process, I highly recommend you enlist the help of
someone who is experienced in negotiating the business terms of a
licensing agreement. People with experience in the matter are incredibly
valuable assets. Later, when you’re comfortable with the process, you’ll be
able to do more of it yourself.
When your potential licensee first sends over the licensing agreement, it
will be boilerplate—much of it will be standard language. It could also be
pretty ugly. Don’t freak out. Sometimes they’re just testing you to see how
much you actually understand and are willing to agree to. They will
underestimate you. It’s a good position to be in. Know that everything is
negotiable. It will just take some time and patience. Over the years, I’ve
seen some very one-sided licensing agreements turn quite fair by the end of
negotiations.
The best approach is to work on the easier points first to build some
momentum. Definitely look at their agreement line by line, but don’t feel
compelled to argue every issue from the beginning. Start with the less
contentious issues. I’m sure you want to get this over with as quickly as
possible, but it doesn’t work that way. You have to play the long game.
Sometimes you do need to bring your licensing attorney in to
negotiations if you cannot work through some of the issues. This happened
to me when negotiating with Coca-Cola for one of my technologies. I did
most of the negotiating myself, but we did get stuck in a disagreement over
a few points at the end. That was a perfect time to bring in my licensing
attorney for help. The bigger the deal, the more experience you’re going to
need. I’ve realized that working with attorneys that specialize in licensing
agreements might be a little bit more expensive than business attorneys that
don’t, but their knowledge is definitely worth the extra cost. If there’s
something in negotiations that I don’t understand, I’ll always ask my
licensing attorney for advice. Also, I have never signed a licensing
agreement before my licensing attorney has reviewed it. Never.
Negotiating with multiple companies
Occasionally you have submitted your product to multiple companies
and two or even three of them will be interested. If the overall strategy is to
build relationships within an entire industry, how do you navigate those
early discussions so you don’t burn bridges when you ultimately choose one
company to license your idea to?
For one, understand that just because there’s interest from a company, it
doesn’t guarantee that you will sign a licensing agreement with that
company. Typically, one company’s interest level will rise above the rest
and the situation will become much easier to handle. Don’t be more
aggressive than you need to by trying to leverage one company’s interest
versus another. Remember, the best approach is relationship building.
If any of the interested parties asks you if you’re showing your product
to other companies, that’s a great opportunity to tell them yes. You might
mention that there’s interest from other companies but make sure to do this
in a very subtle way. If they ask you who’s interested, please tell them
you’re under an NDA. They will appreciate your commitment to
confidentiality and that will build trust.
If you start negotiations with two or more companies, it would be a
good idea to tell all parties involved. It’s a warning that they need to step it
up if they’re really interested or they might lose out. If you can walk away
from a deal, you very well might be able to cut a better one. The power of,
"No thanks, I'll pass" is huge.
Giving your potential licensee the opportunity to move a little faster is
doing the right thing. This way you’ve given them a fair warning and it will
be easier to deny one company and choose another. If you’re transparent,
it’s less likely that one company will feel a little disappointed or even
burned. You have to realize that it takes time and money to go down the
path of negotiations. In most situations, by the time a company is
negotiating for a product, they have shown it to their buyers, sales team,
and of course marketing. And for them to lose out at the very end without
being notified that there’s another contender could give them reason to not
work with you in the future. So be polite. Keep your potential licensees
informed but don’t try to leverage one against another.
Basic licensing terms
As I said before, negotiating a licensing agreement is a complex
process. Each negotiation will be different depending on the players, the
product, and the industry involved. In the end, there’s no substitute for
experience, so I recommend that you consult an expert for your first
licensing deals. Ultimately, your goal is a win-win agreement for both
parties. That’s how the pros operate. Real professional product developers
don’t give their licensees any reason to work around them. They are
considered assets. Here are some basic licensing terms that every aspiring
professional developer should be familiar with:
Royalty rate
this is what you’ll be paid by your licensee. Royalties are payments
made by the licensee to the licensor in exchange for the right to use
intellectual property or physical assets owned by the licensor. In 99% of all
licensing deals I’ve seen, the licensee has no asset (think patent), only
perceived ownership. A well-written provisional patent application, design
patent, copyright, trademark, or trade secret can all contribute to perceived
ownership.
Product licensing royalty rates are typically a percentage of net
wholesale sales of each sale of the product. Royalty rates differ across
industries. Occasionally, a royalty might be a fixed amount per unit sold.
Knowing what's typical in your industry can be extremely helpful when
negotiating, so get familiar with the specifics. In my experience, royalty
rates for high- volume products are about three percent. Five percent is
pretty average. It's not out of the ordinary to see seven percent. These
figures are typical for simple consumer product ideas.
I tell everyone that to in order to really understand what a “fair” royalty
rate is, it’s best to do the math. People are always trying to get the highest
royalty rate. But the way I see it, what’s more important is doing the math.
this is how you do it. First, estimate how many stores the licensee is
currently selling in. You can ask them directly for this information. Assume
each store will sell one unit of the item a week. If not, it will get kicked to
the curb to make room for something else. Now you have an idea of what
the minimum number of products sold would be.
Next, estimate what the wholesale price of the product will be. And then
play around with your royalty rate, which is likely to be between 3-7%.
This allows you to have a much clearer idea of what your royalty will be.
For me, without doing these calculations and therefore understanding
your potential revenue, it’s hard to ask for a specific royalty rate. If the
company is in a great volume of stores, you might be happy with 3%. On
the other hand, if they have limited distribution, you might be able to
negotiate a higher royalty rate. In my experience working with inventRight
students, 5% is very standard.
The more you bring to the table, the higher the royalty rate can be. That
could include everything from patents, CAD drawings, pre-production
samples, and so on. Once again, everything is negotiable. But, typically
speaking, the more you do and the more risk you take away the higher a
royalty rate you can obtain.
Please note that in some situations, your royalty may be a set dollar
amount. I don’t see this very often. But if there are any issues determining
how to set up the potential net revenue, approaching your royalty this way
can simplify the situation. For example, some companies will try to include
the cost of marketing, samples, promotions, and then calculate the net
revenue from the gross. This can get very complicated. Basically, they’re
trying to throw in the kitchen sink to deduct from gross sales — leaving a
smaller net revenue from which your royalty is derived from.
Here are a few things that could affect your royalty rate:
Upfront fees. If you happen to be paid an upfront fee that is non-
recoupable, (you get to keep it no matter what) you might receive a lower
royalty rate. On the other hand, not receiving any licensing fee at all might
be a good argument for a higher royalty rate.
Company standard rates. Companies that have licensed ideas in the past
sometimes have standard royalty rates. But your royalty rate can still be
negotiated. I have found that it’s very hard to negotiate your royalty rate
with successful companies. It doesn’t mean you’ll get a fantastic deal just
because they’re successful. They’re probably successful because they’re
tight fisted.
Commercialization. The closer you are to commercialization, the less
risk the licensee will face, and the higher the royalty rate will be. As I’ve
said before, anytime you have market demand, you may get a higher royalty
rate.
Intellectual property. If you already have patents issued for your idea,
that could warrant a higher royalty rate. A well-written provisional patent
application can also have value. If it includes a lot of variations, it can stop
potential work-around opportunities.
Step-up rates. This allows the licensee to pay a lower royalty rate early
on and a higher rate later; triggered by certain events like trade shows,
orders, production, etc. This structure acknowledges the reality of startup
costs and benefits your licensee while their startup costs are ramping up.
Step-down rates. Step-down rates allow the licensee to pay a declining
royalty rate as they ramp up production of products that incorporate the
licensed technology. As sales volumes increase, you can make more money,
even with a lower rate. This can be a huge incentive for them to market and
get behind your product.
Richard Levy is a famous inventor who has licensed over 100 product
ideas. He is the creator of Furby. I asked him how he gets the best royalty
rate. He said two words. “Just ask.” You never know. If there’s a reason
why the royalty rate should be lower than what you want, they will explain
it to you. Also, if negotiations are stalling out at say, four percent, you could
ask to receive a specific amount, like 40 cents a unit, instead. It doesn't
always work, but it can change the conversation. And as a result, you could
end up with closer to a six percent royalty.
The most effective negotiators don’t get tunnel vision trying to get the
highest royalty rate or a quick signature on their agreement. Instead, they
try to build a lucrative long-term relationship by being a reasonable partner.
So, big-picture wise, don't obsess about your royalty rate. There are other
more important considerations, like making sure your contract includes
some kind of performance clause.
Advance against royalties
Asking for a big lump-sum payment upfront is the number-one way that
entrepreneurs and independent product developers kill a deal. This is called
“top-loading” a licensing agreement, and it’s a not a good way to build a
long-term relationship. It does not take into consideration the
manufacturer’s situation, signaling to a potential licensee that you are
looking out only for yourself. The company may argue that they need to
spend that money on marketing. I get that recouping some of your costs is
important. But if you try to top load a deal, most companies will walk.
In my experience, the toy industry is more open to paying advances,
although they are not that large in size. Maybe $5,000-$10,000. Typically,
this is deducted from future royalties. Also possible in the toy industry is a
“holding fee,” which is paid to you to give the company an agreed-upon
amount of time to evaluate your product exclusively (meaning you aren’t
showing it to anyone else).
Most potential licensees will agree to pay a small advance. However,
they will not offer it, so you will need to ask for it.
Here is what I like to do: In lieu of a big advance, I ask the
manufacturer to pay for my patents. In fact, that is how I’ve paid for many
of my patents. My attorneys filed them and I own them, but my licensees
paid for them. While an advance is a gesture of goodwill, having a
company pay for your patents is good business. It protects the company’s
interests as well as yours, and it helps incentivize and motivate the licensee
to bring your idea to market so they can recoup the patent costs. If they say
no to a lump sum for your intellectual property, ask them if they’re willing
to make that payment recoupable against future royalties. That way, the cost
is spread throughout the year. Who would say no to that? You’re looking
out for both of your interests. A lot of deals are signed using variations of
this concept.
Sometimes, the licensee will be willing to pay a small cash advance in
addition to paying for your patents. It all depends on how big your idea is
and how much money they stand to make.
Minimum guarantees
The minimum guarantee is the minimum the licensee guarantees to pay
you regardless of sales. Whether the licensee sells one unit or 500,000, this
minimum guarantee must be paid to the licensor. This is an essential point
in licensing agreements and a difficult matter for licensing partners to
negotiate.
A minimum guarantee is essentially a performance clause. When you
grant a license to a company, you need to make sure they’re going to
perform. If they can’t bring your product to market, they should lose the
opportunity to sell your invention. Without a performance clause, they
would be able to sit on your idea forever without consequence. You don’t
make even one dollar in royalties if your product never sells in the
marketplace.
Performance clauses can also come in other forms. You can include
certain provisions in the licensing agreement that your licensee has to
achieve, such as showing your product at a specific trade show. You can
also require a manufacturing deadline and ship date. But in my opinion,
having your performance clause tied to sales is the best strategy. Sales can
be tracked, so a minimum guarantee based on sales can work as a great
motivator for your licensee.
Most companies are not wild about this. It’s understandable. They don’t
want to lose the chance to sell your product after investing time and money.
That’s why it’s important to give them the time they need to be successful.
It takes time to develop a product, test it, design packaging, ship it, get it
ready for trade shows, and take orders. So, you must give them enough time
to complete these tasks. But you can’t be a pushover. You should agree to a
certain deadline. Typically, a year to a year and a half.
One common sense way to come to a number for the minimum
guarantee is to ask your potential licensee how low sales have to be for
them to give up on the product. Use that number as the minimum guarantee.
If a company would give up if they don’t sell more than 2000 units, the
minimum guarantee would be the royalty from 2000 units.
You can ask your potential licensee about their estimated sales for your
product. Of course, they will give you a low number because they will
anticipate that you will ask for a minimum guarantee. For that reason, it’s
important to ask your potential licensee about distribution early in your
relationship. As mentioned before, at the early stages, they’re trying to sell
you as much as you’re trying to sell them, so they’re more willing to
provide this kind of information. If they give you a number that’s too low,
there won’t be much reason for you to grant them an exclusive, so you’ll be
playing a cat and mouse game. Regardless of what they tell you, you should
do some math on your own.
First, count how many stores are selling products from your potential
licensee. Assume every store will sell one unit per week. Assume your
royalty rate will be 5% on the wholesale price. And realize that it will take
time for them to get your product to market through mass distribution.
A reasonable proposition is your minimum guarantee would be lowest
for the first year. It could be a little higher for the second year. It would be
reasonable to assume that they will have full distribution in place by year
three. Your minimum guarantee would be in terms of percentage of the
expected royalty, which is calculated by generating an annual sales forecast.
I’ve been in situations where there was a flat fee, but that’s hard to estimate
when you’re projecting sales, so I prefer percentages.
A fair minimum guarantee in my opinion could be 25% of the expected
royalty in the first year, 50% in the second year, and the 75% in the third
year. Because the minimum guarantee in the first year is so low, they will
not be intimidated by it. It’s a reasonable strategy. With a low minimum
guarantee the first year, they will face less risk. Once they’re selling the
product, they’re less likely to pull out.
Like I said, overall, most companies do not want to pay for minimum
guarantees. But there has to be some type of performance clause so in the
event that they don’t hit a certain sales number, you get your
technology/product back. In some industries, like DRTV, I’ve seen
contracts that included minimum guarantees as high as $250,000! Most
common is anywhere from $20-$50,000. Typically, minimum guarantees
start about a year and a half after the contract is signed; sometimes as short
as a year. They have to start selling something in order to produce revenue
for you, and that does take time. Don’t be alarmed when that runway is
built in your contract.
Grant of License
All licensing agreements have a “grant of license” section. This section
spells out, in very specific language, what it is that you are licensing to the
company. Essentially it answers the question, “What are they paying me
for?”
Many companies want this section to include your PPA or, if you have
one, your patent. I like to expand it to include all intellectual property such
as trademarks, copyrights, trade secrets, design patents, and improvements.
But I recommend taking it one step further and literally including your
product itself. If the company agrees that it is licensing your product, then
your contract will continue whether or not a patent or any other intellectual
property even issues. Meaning, you still get paid. For more strategies like
this, see my book Sell Your Ideas With or Without a Patent.
So, make sure the grant of license includes any applications you have,
as well as future improvements and other types of intellectual property.
Improvements clauses
Negotiating an improvements clause in your product licensing
agreement is crucial to your success. This clause should include
improvements, variations, updates, modifications, and enhancements made
solely by the licensee or any sublicensee of the license relating to the
technology. Trust me, you must own the rights to these improvements or
else things can get messy.
Improvements will be made. For example, your product might need to
be adapted and improved for high speed manufacturing equipment. If you
don't own the improvements made, you may end up in the bizarre
predicament of having to license the technology from your former licensee.
The truth is, protecting the technology benefits both of you. You had the
idea and you're giving them the exclusive right to market and sell it, not
own it. Having multiple people filing intellectual property can be very
expensive and confusing. In some situations, you would have to pay them a
royalty if you wanted to license any of those improvements.
It’s actually not that difficult to negotiate these terms. You can tell your
licensee that you are continuing the development of your intellectual
property and must have full ownership for them to have exclusive access to
it. Licensees generally seem to be satisfied with that argument.
You can include such a clause when you have a potential licensee sign
an NDA. Require that there will be no reverse engineering and that any
improvements they make must be assigned to you. It’s all about creating
leverage. No need to let improvements be made to your concept before
you’ve signed a contract. Another tactic would be to slide in an
improvement clause later on during negotiations.
A different position to take would be joint ownership. This can become
very messy if you both terminate the license agreement. Sure, it’s
understandable that they want to own any improvements that they make but
realize that they will be able to license and collect a revenue stream from
that improvement, which might compete with your original idea. At the
least, try to negotiate the contract so if it’s terminated, you have rights to
any improvements that have been made, without being on the hook to pay
royalties for those improvements.
Audits
The last thing you’ll want to request is the right to audit the licensee’s
accounting records if you suspect you are not being paid what you’re
supposed to. Auditing a company’s books does not foster trust, and
licensees do not like this.
So how do you get an audit clause into your contract? Well, like every
other aspect of negotiating a deal, you make it fair to both you and the
licensee. Here is how you do that: You ask for the right to audit the licensee
if you suspect a discrepancy between how much of your product is being
manufactured and sold and the royalty checks you are receiving. Then—
and this is where the fair part comes in and why the company will likely
agree to this clause—you agree to pay for the certified public accountant
(CPA) if no significant discrepancy is found. If the CPA finds a serious
error that resulted in a loss of, say, five percent or more in paid-out
royalties, then the licensee will have to pay for the CPA’s audit. If there is a
discrepancy, ask your licensee to pay not only the difference, but also
interest on the difference—that’s what is fair.
As I mentioned earlier, negotiating a licensing agreement is incredibly
complex and difficult, even for the most experienced inventors. In fact, I
think negotiating is the most complicated part of the entire process, so I’m
currently writing an entire book about it.
Different industries have unique approaches and standards for licensing
agreements. For this reason, this chapter should give you a general
overview of the process. When negotiating your contract, I highly
recommend you find someone who’s experienced in negotiating licensing
agreements to help you with the business terms of your deal.
In the back of this book, you’ll find a simple licensing agreement for
you to review. It is not to be used.
Breach of Contract
There’s a very good chance your licensee will breach their contract.
Don’t be alarmed by this. Contracts are living, breathing documents. This
actually gives you a chance to renegotiate. You may possibly walk away.
But if you give them a chance and they can improve their performance, it’s
better to build a working relationship. Success in the marketplace is
definitely a team effort. Try to understand what some of the problems are
and make sure they’re still interested in going forward. Always, be
reasonable.
Negotiating a Licensing Deal
Interview
Inventor: Paul Tomita
Products licensed: Running Light, by FlipBelt
Paul’s first career was in design engineering, but he eventually
transitioned to patent law and has been practicing as a patent attorney for
over 20 years. Paul has lectured at Cal Poly San Luis Obispo’s Center for
Innovation and Entrepreneurship and is currently an adjunct professor at the
University of San Francisco’s School of Law. Paul designed a light for
runners that’s more functional than commonly used headlamps. His
experience in looking for a potential licensee was atypical in that he
targeted just one specific company. His idea was a modification of an
existing successful product in their line. Paul told me that reaching out to
this company wasn’t difficult. They were interested in his product and even
contacted him for extra samples. The tough part of Paul’s experience was
negotiating the licensing agreement:
Paul: The negotiation was not particularly easy. At one point it broke
down…. As an engineer, I’m constantly improving my product. What I
licensed to this company was the first generation of my design. Since then,
I’ve come up with the second version, which is favored by ultra-
marathoners. The issue that we had was that the licensee wanted exclusivity
to all my patents. I could not make my own product if I was giving them an
exclusive license. I’m interested in continuing to develop my product… and
it would have been a situation where I would not have been able to work on
or manufacture this product.
So, things broke down and they said, “No exclusivity no deal.” And that
lasted for a couple of months. And then they came back to the table and we
were able to negotiate better terms.
Stephen: Was it nerve-wracking?
Paul: It was initially. But then you just need to say this is a business
transaction. It’s nothing personal. Don’t get upset. My attitude was, “If you
don’t want to do this deal, that’s fine.” But that’s what worked for me.
Stephen: If you have the power to say no, that’s pretty powerful. Often
times, if you can walk away from a deal, eventually you’ll be able to cut a
better one, even with the same company.
Check out my full interview with Paul on inventRightTV.
PART SIX
Taking Your Ideas to the Next Level
12.
WHERE'S THE MONEY?
T
ime and time again people have asked me how much money I’ve made
through licensing or how much money a typical inventor makes once
they’ve licensed a product idea. People also want to know how much
an inventRight student might make on a successful licensing agreement.
These are all very reasonable questions, however, for most people these
questions step over the line of confidentiality.`
Recently, a woman from Australia who licensed her idea following the
process I teach in my book One Simple Idea and on inventRightTV was
willing to disclose the size of her first royalty check. It was for $11,000. To
my surprise, she was willing to share this information on camera! She
shared other information that many others don’t, like the name of her
licensee and how much they paid for her patents. It was unusual. You can
find the video on my YouTube channel.
But in general, inventors are very reluctant to share how much money
they make. It’s like being asked to disclose your salary. In many situations,
inventors have signed an NDA that explicitly prohibits them from sharing
financial information. One inventRight student agreed to sell a patented
technology to the auto industry. It was an extremely large buyout, which is
quite uncommon. The inventor had to sign a very strict NDA that prohibited
him from publicly disclosing the amount of money he received. He also had
to agree to not discuss the deal with the press. I was involved with the
negotiations and cannot discuss them to this day.
As far as my personal experiences with licensing, I’m happy to be an
“open book.” So, in this chapter, I’ll try to answer all of these questions. I
will also give you my perspective on the potential for profit in various
industries.
But before I begin, I have an important disclaimer: If you’re doing this
just for money, you should do something else. Licensing isn’t a get rich
quick scheme. Just as in any business there are many ups and downs. It’s
going to take you longer than you think. It’s going to be very stressful. And
you need to be motivated and passionate.
ftat being said, with licensing, there’s very little risk compared to
venturing or manufacturing a product. You could spend as little as $500 per
idea with licensing whereas if you were venturing, $100,000 would be at
the low end of the spectrum. Venturing will take much more of your time as
well.
My approach maximizes your chance of licensing success. I think you
should come up with many ideas, but not spend much money on all of
them. You should test the marketability of your ideas by pitching to
inventor-friendly companies. I’ve seen many successes using this method,
but the bottom line is, it takes time. I like to tell everybody, “you’re a no
collector.” Licensing is a business of rejection.
So, if you don’t love the art of creation and sharing your creativity with
others, you should stop right here and do something else. That’s just the
truth about licensing.
Before we leap into the numbers, I need to offer a disclaimer. The
information below was collected on the internet in the year 2019 and may
not be accurate. Meaning some of the numbers may be high, some may be
low. I have done my best to rely on reputable trade organizations. They are
intended to give you an idea of the size of the opportunity.
“I have never done anything in my life for money. I’ve done it because
of the love, the passion, the challenge of it. The money comes or the
money doesn’t.”
Doing the Math
It does not matter what industry you’re in, it all comes down to math.
How many products are being sold?
Here’s an example. Most products will be discontinued if they don’t sell
at least one per week because retail shelf space is extremely valuable. So,
estimate how many stores your product will be in, assume each will sell one
a week, estimate the wholesale price, and multiply by the royalty rate,
which is typically 5%.
Example:
If your product is in 10,000 stores,
where the estimated wholesale price of your product is $10, and your
average royalty is 5%,
you’re making $.50 on every item sold. That’s $5,000 a week.
Times 52 weeks in a year.
Is $260,000 in royalties a year.
Now, take a product like Coca Cola which sells about a billion sodas a
day. You do the math. Even if you received a fraction of a penny per unit,
it’s a lot of money. It’s important to remember that large companies don’t
typically license ideas. When they do want an idea, they'll buy it outright. It
would be less expensive for them to pay an inventor a one-time large
buyout than a royalty per unit. It’s very rare to find this.
It’s the midsize companies that are looking for ideas from outside their
company. They’re more willing to take risk. Large companies already have
shelf-space and products that are selling and so are relatively risk-averse. I
have seen large companies license ideas, but it usually takes longer and they
are more difficult to negotiate with. That’s why I highly recommend
working with midsize or even small businesses.
In my opinion, consumables are where the largest volume of royalties
are found. I’ll share my personal experiences, as well as what I’ve learned
from coaching many students at inventRight over 20 years.
Novelty gifts
this was the industry where I first licensed an idea. In 2019, the novelty
gift industry was $17 billion in retail sales with 23,000 stores just in the
United States.
I grew up in Los Gatos, CA and we had a famous local entrepreneur
named Gary Dahl that created a product called the “Pet Rock.” In 1975, the
Pet Rock sold 1.5 million units in six months! Like everyone else, I was
impressed and thought I could do the same thing. I liked the Pet Rock
because it was very simple, whimsical, and put a smile on your face. I must
have been influenced by Gary because after college, I started selling
whimsical soft sculptures with smiling faces.
I particularly liked this industry because it wasn’t about new
"inventions." They sold products just to put a smile on someone’s face.
That’s what I was doing before I started inventing. I wasn’t solving any
problems, I just wanted to entertain people with my products. So, I started
creating ideas in the novelty gift industry by observing products that were
selling in drugstores and gift stores at the mall. These days there are entire
stores, such as Spencer’s Gifts or Hallmark Cards, dedicated to this
category. Also, because of the high markup of novelty gifts, (meaning the
large profit margin) there are many other retailers that carry a selection of
novelty gifts as well (airports, grocery stores, and mass merchandise stores
to name a few).
Over a few years, I licensed at least 20 product ideas in the novelty gift
industry. Seeing my ideas go from a simple sketch to store shelves was
remarkable. I loved every one of those ideas, even the hundreds that got
rejected. Was it profitable? Yes and no.
In the novelty gift industry, the main goal is to produce items for
seasonal holidays—graduation, Valentines’ Day, Mother’s Day, etc. And
that’s the major problem. These products have very short selling seasons.
Companies do not want to overproduce, so they manage their inventory
very carefully. They produce just enough to fill their pipeline of distribution
because the extra inventory can sink the company.
The average income for me was about $10,000 per item. You’re not
going to get rich unless you license a lot of ideas and come up with new
ones all the time.
For me, it felt like a job. But I got a lot out of the experience. The
experience of successfully licensing ideas was a huge confidence builder. It
taught me that I could compete. I built a portfolio of products that were
licensed in my name and I got to see my creations in retail stores. I got to
understand different companies’ innovation process by working with in-
house designers. I even did some freelance work for Applause, a company
that I licensed many ideas to. (this company was eventually bought out by
Russ Berrie.) Go to the ‘About Stephen’ page at inventRight.com to check
out specific products that I licensed over the years.
Novelty gifts is an extremely fun industry that needs lots of ideas. If I
were to do this again, I would come up with product ideas that are not tied
to seasonal holidays but rather purchased year-round, such as products for
birthdays and anniversaries. I didn’t know this when I was inventing for this
industry. There are actually many novelty gift companies selling products
designed for year-round purchase. One such company is SUCK UK. It takes
functional products and adds a little humor to each one. With that type of
strategy, those products sell every single day.
“Not a day goes by without someone sending us an idea of some kind,
and quite often it’s literally a barrage of ideas.”
Pro tip: Along with SUCK UK, Kikkerland Design and Fred are
companies that love working with independent product developers.
Benefits:
• This is a fun industry that’s constantly looking for ideas.
• Most companies don’t require prototypes. A simple drawing will
do.
• Intellectual property is not required.
• Many companies have a very simple invention submission
process.
• They are very inventor-friendly. You can build relationships with
these companies.
Downsides:
• I don’t think there are any. However, if you want to save the world I
wouldn’t design in this particular category.
Toys
Global retail sales for the toy industry are over $90 billion. In the U.S.
alone, it’s a little bit over $27 billion. The projected global retail sales for
toys by the year 2023 is $120 billion. Toy Fair in New York is the “can’t
miss” trade show. Toy Fair welcomes an estimated 30,000 global
professionals. There are buyers from up to 100 countries connecting with
1,000 exhibitors!
My first real job was at a startup toy company called Worlds of Wonder
—WOW. I was 29 years old and it was my first real job. I think I was
employee number 20 and my title was Manager of Design. Among others,
we brought two hit toys to market—Teddy Ruxpin and Laser Tag. It was an
incredible experience. WOW generated $93 million in sales in its first year
and $327 million in its second! I met some remarkable people that changed
my life forever including my wife Janice.
I was at WOW for a couple years but left because I wanted to license
my own ideas. I remember pitching my ideas straight to the CEO, Don
Kingsborough (much to the dismay of my immediate supervisors)! To tell
you the truth, the company was not open to the idea of licensing an idea
from an employee, so deep down I knew I had to leave if I wanted to
license my own ideas. I believe truly creative people struggle to work for
anyone else. They create for the love of seeing their ideas in the world, not
for the paycheck.
My big take-away from working with WOW and freelancing for other
toy companies was knowledge about the product submission and evaluation
process. I got a real “behind the scenes” experience. At WOW I was able to
participate in the product review process so I was able to see all the
products that were submitted from outside inventors and watch how the
company reviewed them and selected ones to license. From prototypes to
storyboards, I got to see it all. That’s when I learned that many, many
people have to evaluate a product submission in order for it to be accepted.
From Sales and Marketing to Manufacturing and Engineering, it was a team
effort.
I left WOW to start my own company, Stephen Key Design LLC, and
started submitting ideas to Worlds of Wonder and other toy companies as
well. WOW ended up asking me to do some freelance work for them which
was to reduce the manufacturing cost of Teddy Ruxpin. I was also able to
freelance for other companies such as Leapfrog and Mattel. I was able to be
part of toy history. I worked with wonderful people at Disney and Henson
and got to travel the world. I even got to see my product being used by
Michael Jordan on TV. The takeaway? Build relationships with companies.
I submitted over 30 ideas to WOW. They took just one idea called
Hattie Surprise and gave me a holding fee of $15,000. Holding fees are
somewhat typical in the toy industry. A holding fee gives a company time
to evaluate a product during which you agree not to submit it to any other
toy company. Ultimately, WOW decided not to license the idea.
I licensed a basketball game to Ohio Art called the Michael Jordan
Wall- ball with just a paper prototype. I had no intellectual property
whatsoever (and looking back, my marketing copy was absolutely awful).
They later extended the product line by adding other basketball stars such
as Penny Hardaway and Grant Hill. The Michael Jordan Wall-ball and
another wall- balls sold for over ten years. I shared the royalty with one of
my first partners, Russell Hicks. Royalties from the first year were about
$100,000. After I licensed the Michael Jordan Wall-ball I submitted many
more ideas to Ohio Art and they were all turned down. It’s always a
numbers game. I also submitted many ideas to Hasbro and Mattel with no
luck.
“A lot of ideas are clever combinations of new ways to play or
matching ideas and presenting them in a new format.”
In my opinion, the toy industry is difficult. You have to love it. For me,
I had to find a different industry with less competition. I recognized that I
wasn’t in love with the toy industry. The main problem is that the industry
has been working with independent toy inventors forever, so there’s plenty
of competition. It’s not easy to break ground if you’re new.
The toy industry has changed over the years. Because of my past
employment with WOW, I could make contact with the people there and
other companies (I used the fact that I had worked in the industry to get me
in the door.). But most inventors used to have to go through toy brokers if
they were new to the industry. The toy brokers would take a cut and act as
the screening mechanism for the large players.
“Toy brokers offered two benefits traditionally. One was access – a
broker was able to “jump the line” for some folks. But the other thing
that brokers did was handle the business side of things. Most inventors
didn’t (and don’t) want to be out schlepping stuff to 50 meetings a year,
negotiating contracts, or hiring lawyers. It was a partnership matching
ingenuity with business savvy. For some inventors, they (brokers) are a
necessity, for others, not.”
Today, you can get in directly to just about everyone. Because of social
media and open innovation, most toy companies have opened their doors to
all of us.
The New York Toy Fair is not inventor-friendly if you don’t have a
reputation already developed in the industry. As an independent inventor,
it’s hard to get into the show and quite expensive. Once you get in however,
you can pretty much see everyone in the industry in one place! In 2020, Toy
Fair invited inventors to apply to pitch their toy and game ideas to inventor
relations teams in person. Besides the New York Toy Fair, there are other
trade shows such as ChiTAG (Chicago Toy and Game) Week, that are great
places to start. I know of a new toy inventor that went to ChiTag and was
able to meet toy companies and ultimately license his toy idea. If there’s
any downside, it is another expensive trade show to attend.
“Thursday and Friday are inventor conferences. And we have four
tracks for those: 1) new inventors, 2) professional inventors,
3) design students, and 4) product acquisition executives. Last year
we had close to 100 product acquisition executives from almost 70
companies there looking for ideas.”
— Mary Couzin, Founder ChiTAG
“ChiTAG is an exceptional event for new toy and game inventors and
professionals alike! The education, networking, and relationships built
during the show are key contributors to inventors’ success. It’s a great
opportunity to meet with companies and pitch concepts, gaining essential
feedback that benefits current as well as future concepts. Attending
ChiTAG gave me the very best chance of licensing my toy invention
without the need of having to resort to using a toy broker and having to
share royalties with them or submit to toy companies through online
portals and being forced to sign a lopsided NDA. I would recommend that
novice toy inventors attend ChiTAG first if they have a guaranteed hit on
their hands!”
— April Mitchell, inventRight Coach and Toy and Game Inventor
If you want to meet specialty retailers and toy companies, you can go to
the ASTRA (American Specialty Toy Retailing Association) trade show.
This is a traveling trade show. It’s also a great way to start if you’re just
beginning. Everyone will be very friendly. The downside to specialty toys
is that there are only about 3,000 retailers. The distribution is much smaller
compared to toys that retail in big box stores. I’m actually on ASTRA’s
advisory board to help inventors this year. ASTRA is actively looking for
ways to help inventors that become members. I think it’s wonderful that
they are discussing what they can do at their conventions to educate
inventors.
Benefits:
• You get to play and see the world through the eyes of a child.
• It’s a very creative environment.
• In most situations, intellectual property is not required.
• A 5% royalty rate with a performance clause is fairly standard.
Downsides:
• The industry has a lot of competition.
• Because of the competition, it takes some time to get to know the
industry.
• There are about 3,500 independent toys stores. The upside to this
is that many of the big retailers (Costco, Target. Walmart) have
picked up the slack since Toys R US began struggling to stay in
business. For now, it looks like it’s coming back.
• The royalties are lower with very large toy companies. But of
course, they have the largest distribution.
• this is one industry that requires prototypes in addition to sell
sheets and videos.
• Toys can have a very short lifespan.
Kitchen and housewares
this is one large industry! Retail sales in the kitchen and housewares
industry are $75 billion in the U.S. alone. The International Home +
Housewares Show in Chicago has 2,200 exhibitions and is one of the top 20
largest trade shows in the U.S. Each year, a group of the inventRight staff
attends this show. We usually have over 50 inventRight students attend this
show to pitch their ideas to potential licensees. We see more signed
licensing deals in this industry than any other.
“Every year we work with a different inventor.”
— Jenna Sellers Miller, President of Architec Brands, a woman-run
kitchen products brand using the fundamentals of architecture to
design better products.
For kitchen gadgets, the lifespan is fairly short. But if you make
improvements on existing items the lifespan can be ten years. Royalty rates
are fairly standard at about 5%.
When you’re working with kitchen companies that don’t sell brand new
gadgets but products that have small improvements on existing items, look
and feel is very important. These companies license a lot of outside
products, but mostly from professional design firms. Submitting to these
companies will take time and you will have to be qualified—they will want
to see a portfolio of beautifully designed products. Generally, you see this
from developers that have gone to design school. Joseph Joseph, from the
UK, is an example of a company that prefers to work exclusively with
design firms.
“We design really functional useful products that are used every day.
And that happens to be in the home, around the kitchen, trash, sink, and
cleaning organization. We work with external product designers – if you
are a designer and want to get in touch with us, please do so.”
— Richard Joseph, Cofounder, Joseph Joseph, one of the fastest
growing companies in the worldwide housewares market; sells in more
than 100 countries.
this information applies to consumer kitchen and houseware products.
There is also great opportunity for licensing in the commercial kitchen
(think restaurants) space. I’ll talk more about restaurants and hotels in the
hospitality section later in this chapter.
Benefits:
• This industry has a wide range of product offerings. Small
appliances, cookie cutters, kitchen tools, beverage dispensers, pots
and pans, kitchen storage, cups and plates, and many more.
• There are many open innovation companies that are easy to reach
out to.
• Companies generally require simple prototypes in addition to sell
sheets and videos.
• Most of the time, patents are not required. A well-written PPA will
do the job. A simple, low-cost design patent can be of great benefit.
• Distribution points are fairly large.
Downside:
• Royalty rates for individual inventors are a little lower from
companies that typically work with design firms.
Packaging
this another large industry. Globally, I believe it’s over $500 billion.
This includes flexible packaging, corrugated cardboard, and more. The
2019 PACK EXPO trade show in Las Vegas had over 2,000 exhibitions
with companies from over 40 industries ranging from food to
pharmaceuticals and drew 30,000 attendees. The PACK EXPO
International in Chicago in 2018 was the largest packing trade show in
history and had over 50,000 attendees.
Total royalties can be quite substantial because of the volumes of
consumables. Think about earning a small royalty on every Coke sold or
bottle of Vitamin E. A great example is the “Upside-down Bottle” invented
by Paul Brown. He was able to license his invention to Heinz (for use on
ketchup) and several shampoo manufacturers. Eventually he sold the rights
to his design and his company for over $14 million dollars! That being said,
this is not an easy industry to license products in if you don’t have some
prior knowledge of supply chains and machinery.
“Pricing is critical because we are not talking small volumes. Some of
the projects could be at 45 million pieces a year, so they are not small.”
— Barron McKillip, Research Scientist at Multi- Color Corp and
Former VP of R&D at CCL Label, two of the largest packaging firms
in the world.
Also, know that this a very slow-moving industry. Equipment in the
packaging industry ranges anywhere from $250,000-$1 million per
machine. Because capital costs are so high to implement new innovations,
things move slowly. As an example, Coca-Cola is produced in over 900
manufacturing facilities worldwide because most of its products are not
shipped more than 500 miles from the point of manufacturing.
Implementing a new packaging innovation for Coke, even within one
specific territory, would require lots of new machines! Obviously, this can
get quite expensive so these changes will not happen quickly.
I stumbled into this industry by accident! I was reading an article in a
local paper, the Modesto Bee which discussed the need for more space on
labels for drug facts—important information that would stay on the
container and not get thrown away with the box. I had previously licensed a
rotating canteen and cup to a Canadian company called Trudeau that was
selling in all Disney theme parks and Disney stores worldwide. I took the
concept from the rotating canteen and cup and turned it into a double- label
system that would deliver extra space with a spin of the outer label. I had to
learn a great deal about how labels are manufactured and applied to
containers to make this idea actually manufacturable, and along the way I
was able to file and receive many patents. It took me many years to
understand all the machinery required to execute this idea.
The “SpinLabel” was, by far, my biggest licensed product. It was
licensed to a large manufacturer, CCL Label, and sold tens of millions of
labels through U.S. brands such as Rexall Sundown vitamins and
supplements and Jim Beam distilled spirits, and was also licensed to
Nescafé coffee in Japan. The SpinLabel won Best of Show at the Packaging
Expo in Chicago and was on the covers of multiple packaging magazines. It
received two “Edison” awards for innovation within the packaging industry.
I stayed in the packaging industry for over 20 years because of the
royalties it was producing. The SpinLabel portfolio was eventually
acquired. Between the royalty payments and the patent portfolio buyout, I
was paid several million dollars.
I am currently working with Fishbone Packaging, a start-up company, to
help with intellectual property and licensing agreements. “Fishbone” is a
packaging innovation that eliminates the plastic rings on six-packs of
drinks.
Benefits:
• With consumables, the volume and the distribution can be
massive, so the potential revenue is quite large.
• Companies can be inventor-friendly.
Downsides:
• It’s one tough industry. You’re dealing with extremely large
companies and they move very slowly.
• Decisions about large scale projects require more time so the
industry is slow to innovate.
• Ideas are extremely difficult to implement. Without some type of
prior knowledge of machinery, it’s almost impossible.
• Intellectual property, such as patents, is required in most
situations.
For these reasons, I try to talk people out of this industry. The best
opportunity for a packaging innovation is a small improvement that can be
implemented on existing equipment that does not impact the cost of
production. If your idea impacts cost or reduces manufacturing line speeds,
it will be very difficult for anyone to implement. On the other hand, if you
can create demand for a packaging idea, almost everyone in the industry
will want to talk to you. Market demand in this industry can move
mountains.
Remember that this is a very competitive industry. Please use NDAs
and file intellectual property to keep everyone honest. If you have an idea in
packaging, always work with an industry expert and make sure it’s an
actual innovation.
Hardware
Hardware industry sales are almost $400 billion. In 2019, the National
Hardware Show in Las Vegas had home improvement, lawn, garden and
outdoor products to name a few with 2,600 exhibitors representing 15 major
product categories showing 250,000 products. Over 30,000 hardware
industry professionals attended the show.
Many inventRight students have licensed ideas in this industry. This is
an industry that needs new ideas often because of short product lifespans.
More and more companies are embracing open innovation and are willing
to work with inventors. A 5% royalty rate with a performance cause is
fairly common.
Hyde Tools provides a good example of an inventor-friendly company
in this industry. They have a great invention submission portal. One of their
executives told me that they value inventors and treat them as individuals,
not numbers, which is one way that Hyde stands apart from larger
companies. He also said that they get many ideas through trade shows.
Trade shows are not about selling and taking orders as much as they used to
be, they’re about new ideas and advertising.
Please note, some trade shows have an area for inventors with new
products where you can buy a booth. I don’t recommend this strategy if
you’re trying to license your idea. I’ve already given you some tips on how
to work a trade show in Chapter 6.
Benefits:
• Easy-to-work with companies. Open innovation is growing in this
industry.
• Fairly standard royalty rates at 5%. Minimum guarantees are also
standard.
• Intellectual property is nice to have but not required.
• Creating a new tool typically will result in a long lifespan.
Downside:
• Prototypes are required. Filing at least a provisional patent
application is a good idea. When working with large hardware
companies, the majority will want to have intellectual property on
tools that will have a long lifespan.
• Some of the larger companies do not take outside product
submissions. Black & Decker changed their policy in 2019 to not
accept outside submissions. Please note, these policy changes
happen all the time. If a company is not open to outside product
submissions, make sure to check back later.
DRTV
Direct response TV or As Seen on TV was about a $300 billion industry
in 2019. It is a very unique industry in which product lifespans are
incredibly short but there is potential for big money. Naturally, that attracts
a lot of people. These companies only need a couple of big hits a year so
“Sell first and sell fast” is truly the name of the game. Because of that,
intellectual property is really not important. Being new or first to market
with a product with a big wow factor is much more important here than
patent protection. This is why DRTV companies are constantly looking for
new products.
One caveat for this industry: Because of the rush to get to market, you
don’t want to be working with two DRTV companies at the same time.
Submit your idea to one, wait until you get a firm “yes” or “no” before
moving on to the next. And, you should know too that this industry has had
issues in the past with copycats and infringement. Don’t be fearful but do
be cautious. Make sure to research any company (from any industry) by
typing the company name and “complaints and lawsuits” into your internet
search bar. Know who you are working with!
Over the years this industry has changed. In my opinion, the products
used to be a little “cheesy.” You will remember commercials on late night
TV. Most DRTV products now are sold on the shelves of major retailers
with the “As Seen on TV” logo. DRTV companies still run television
commercials, but digital marketing has become the more frequent
marketing medium. DRTV now sells a wider range of products at a wider
range of retail price points and targets their marketing to specific
consumers. I also think that the industry is producing better quality products
since retailers don’t want to deal with returns.
Great examples of successful DRTV products are fairly easy to find.
There’s the George Foreman Grill which has sold over 100 million units
since 1994. And who doesn’t love the “Snuggie” created by Scott Boilen
and sold by Allstar Innovations? More than 30 million of the body blankets
have been sold, grossing Allstar over $500 million in sales.
There are quite a few DRTV companies. Take a look around and make
sure you do your homework on each one. Also, there are “feeder”
companies that will look at your product submission, test it, and then
submit it on your behalf to the larger DRTV companies. Realize that anyone
can be a feeder company. Yes, anyone can become a feeder company.
DRTV companies will pay you for submitting the product to them. Please
note, these fees range depending on the amount of work you’ve done.
A great DRTV product has the following elements: 1) it solves a big
problem that many people can relate to which means it has a large target
market, 2) the product has a significant “wow” factor that can be
demonstrated, and 3) the price of manufacturing allows for a 5 to 1 retail
price to manufacturing cost ratio which means if a product costs $5 to
manufacture you will be able to sell it for $25. And, DRTV companies will
want to sell a lot. Typically, a company will actually run a test of your idea
to see how many will sell before they actually commit to manufacturing.
The strategy of making simple improvements on existing products does not
work in this particular category. Your product must be new and have a
wow factor.
The most popular price point is $19.95 but because of targeted ads on
social media, the industry is now looking for products at different, even
higher price points. You no longer have to have the “major” hits to make
money in this industry. With the new digital marketing platforms there are
more opportunities than before.
If you’re submitting ideas to this industry, a one-minute video is an
absolute must. If there is interest, you will need a prototype. Make sure you
research existing marketing videos and adopt their format. Your product
must have a large audience and a big wow factor. Don’t just send them
anything; they already get a lot of junk ideas and it’s a waste of everyone’s
time. If you understand their goals, you can be an asset to them, and they
will work with you.
Benefits:
• 3% standard royalty rate with high minimum guarantees.
• In general, high volumes.
• Quick turnover. This industry is always looking for the next idea.
• It’s very easy to submit ideas and companies will get back to you
very quickly because they do product reviews every week.
• this industry is opening up to larger markets because of digital
marketing. They are looking for a wider range of products at
different price points.
Downsides:
• You will need good marketing videos and prototypes are typically
required.
• You should only submit to one at a time. Because intellectual
property is less important in this industry, if a company tests your
idea and likes it, they may proceed without your approval.
• Ideally your product should not be similar to anything else on the
market.
• Copycats and infringement issues are always a problem. Always
do some research on companies you’re submitting ideas to. Make
sure to check for lawsuits involving any potential licensee.
• In general, this industry does not sell as many products when the
economy is doing well.
• The holding time period to evaluate or test your idea in this
industry is about 120 days.
Music
I absolutely love this industry. Generally, people in this industry are
musicians or just love music and as a result, people are extremely
welcoming. It’s one of those industries where people really love what they
do. From the big players to small players, it’s one happy industry.
Even though I never licensed an idea in this industry, I know many of
the companies who are always looking for new innovations. This is one
industry where you should absolutely go to trade shows. In my experience,
I was able to meet just about everyone. Even publications such as Guitar
World and Revolver Magazine were extremely helpful.
I started a company called “Hot Picks” which designed “lifestyle” guitar
picks. My biggest hit was called “Grave Picker,” a guitar pick in the shape
of a skull. My company became one of the largest producers of guitar picks
in the world with thousands of designs. By becoming a Disney licensee and
using 3-D lenticular lens, a flick of a guitar pick would show 13 frames of a
Disney movie. We also became a Taylor Swift licensee. Hot Picks won
“Best of Show” in the small musical accessories category for two years in a
row at the National Association of Music Merchants (NAMM) in Anaheim,
California. It was quite an accomplishment for a company built around a
small piece of plastic.
Basically, I took my creativity from the novelty gift industry and
applied it to guitar picks! But I didn’t license my ideas, I elected to start a
company and ultimately learned that I didn’t really enjoy the stress of
managing all the day-to-day operations!
Benefits:
• this industry is open to working with inventors. Companies are
generally quite friendly and welcoming.
• You can reach out to the major players as easily as the smaller
ones.
Downsides:
• Prototypes are always preferred. Please file for copyrights and/or
trademarks. Also, a provisional patent applications never hurts.
• It’s not a particularly large industry, unless you can get your
products sold at concert venues and mass retailers.
• There are many independent music stores but only a few big
chains, so distribution is somewhat limited.
Pet
The pet industry was a $72 billion industry in 2018 in the U.S. This
industry has been on fire for years and it doesn’t look like it’s slowing
down. 70% of all households own a pet which translates into over 84
million households. Who doesn’t love their pets? People are always looking
for new pet toys, which means companies want to offer them! I have
attended the SuperZoo, the pet expo in Las Vegas, and found that this is a
very open industry for inventors.
At inventRight we have had many students license multiple ideas in the
pet industry. We’ve even had a trademark licensed—VetMD. These
successful inventors have all told me similar things about the industry -
namely, build relationships so you get your ideas in to the right people. Just
as with any industry, you can expect plenty of rejections, but the better you
understand a specific company’s product line you can develop and submit
ideas that really fit. Also, understanding costing can be very helpful in
designing products that can be manufactured at an attractive price point.
this is another industry that’s been watching social media for product
ideas. ftree great companies that work with inventors are Ethical Pets,
Petrageous Designs, and Hyper Pet.
Benefits:
• This is a very inventor-friendly industry.
• Average royalty rates are about 5%.
• If you are a pet lover, it’s a fun industry in which to create.
Downsides:
• Distribution is somewhat limited because there are many
independent pet stores and only a few big box stores.
Women’s and girls’ apparel/Jewelry/Men’s and Boy’s apparel
The fashion industry is a $348 billion industry in the U.S. and
worldwide closer to 2 trillion.
This is a difficult industry in which to license products. In most
situations, your product idea should have some type of functionality or
utility. It’s hard to protect fashion because most products in this industry
don’t have any kind of new utility. If your idea does not have any utility or
intellectual property protection, you only have a trade secret, trademark, or
concept, and have to navigate very carefully.
We have an inventRight student named Candice F. who licensed a
product called Bikini Bands. I believe she was able to license her product
because she already had a brand that was selling, meaning she had proven
market demand. Unless your fashion product has some type of utility,
creating a brand around it like Candice did might be a good option. If you
go this route, trademarks for your brand will be very important.
I recently interviewed Mike Fisher, an independent inventor, who was
able to license a men’s accessory. His idea is a small improvement on an
existing idea—collar stays. He created a buttonhook. It makes it very easy
to get to those hard-to-reach buttons to push through. It’s especially great
for people who have difficulty buttoning their shirts. He licensed his
patented buttonhook to Wurkin Stiffs.
The more common path in this business is to start your own company
(which as a rule you know I don’t recommend). Sara Blakely had an idea
for women’s shapewear and started Spanx – which is now estimated to have
$400 million in sales. “Shark” Daymond John grew his clothing line
FUBU from a few sewing machines in his mother’s house into a $350
million company.
If you have a product idea in this industry (and you don’t want to start a
company), reach out to a potential licensee and check their policy about
working with inventors. If the benefit of your idea is very attractive, some
companies will consider signing an NDA. NDAs with very strict “no
reverse engineering” language or improvement clauses can protect you if
there is no end date to the NDA. Basically, you’re giving them is a trade
secret and it needs to be handled as such. I highly recommended working
with a licensing attorney to craft an NDA for your purposes.
Benefits:
• this is an extremely large industry.
• Easy to build prototypes and start to manufacture.
• Quick to market.
Downsides:
• This industry is not for the inexperienced inventor.
• There is very little intellectual property involved in this industry.
Because patents are granted for the utility in an innovation, you
might have to take a different approach such as building a brand to
establish any perceived ownership.
Cannabis
The global market for legal marijuana products is projected to exceed
$146 billion by 2025. Holy smokes this is one big industry and it’s
exploding. The industry is seeing many creative innovations from
marijuana entrepreneurs. The recreational cannabis market is driving sales
not just for marijuana, but for lifestyle products and smoking accessories as
well.
Many innovations are unique to marijuana consumption. Products
related to packaging, dispensing, pipes, grinders, rolling papers, edibles,
and marijuana infused beverages are examples. The hottest category and
biggest growth area in the market is vaporizers and everything that goes
with them.
We have a couple of inventRight students actively submitting products
in this new industry. Their experience is that companies are very open to
outside product submissions. Paul Lin’s experience is somewhat typical:
Out of 25 companies he contacted only one did not want to see his product
idea. He received responses to his sell sheet very quickly and is currently in
negotiation for a licensing deal. Paul made a great observation – since this
industry is so new there is very little prior art (prior patents) which makes
licensing new ideas really easy!
“The cannabis industry is very easy to get into because everyone is
growing so rapidly.”
— Arkady G., inventRight student who licensed to a global
cannabis packaging company
“It’s very open – they know where this is going, millions will turn into
billions.”
— Chad D., inventRight student, Palm Beach FL
There are also plenty of innovations that are cannabis-related but
actually sell in different categories. Here are some examples of innovation
within cannabis-related products.
1. The greeting card industry. This is a $7 billion industry and creative
marijuana entrepreneurs are quickly stealing market share. There is a
company called KushKards that sells marijuana themed greeting cards that
include a pre-rolled joint affixed to each card.
2. Cost cutting. In most industries cost cutting innovations are a
important. Turbo Trimmerz is a good example. They enable marijuana users
to trim faster with less physical stress. Automation is another way to reduce
costs and a company called Bloom Automation has developed a robot that
can trim cannabis buds. The robot uses computer vision and machine
learning do a job that’s currently done by human trimmers.
3. Cultivation. There will be opportunities to make products to assist
with cultivation, facilities will see many changes.
4. Marijuana infused beverages. Almost all of the major alcoholic
beverage companies are researching and developing new products with
THC and CBD infused formulations that are meant to offer an alternative to
current alcoholic drinks.
Many entrepreneurs are filing patents to protect their inventions. In 2018, the USPTO issued 39
patents containing the word “cannabis.”
Recently, a patent was issued for an oral care composition with
cannabinoids. Michael Brubaker, patent attorney with Cannapatents, says
“(the cannabis industry) has these areas where you can grab broad patents
and license them to companies that will hopefully come into the market in
the next few years,” he said. “The broader the patent, the better the patent.”
Here are some examples of broad, large scale innovations in the
industry: formulations for hemp to be used in household goods, such as
sunscreen and make up, a method for making coffee products containing
cannabis ingredients, single serve beverage pods that contain cannabis.
I don’t have real data yet about how many products are being licensed at
this time, but it is a very new and exciting space. I would reach out to a
potential licensee and ask what their policies are on outside submissions.
Also, there are many trade shows for cannabis! Check out the Cannabis
Business Times for a pretty comprehensive list.
Benefits:
• The industry is growing by leaps and bounds.
• There is a need and desire for new products.
• Right now, most companies are inventor-friendly.
Downsides:
• New companies require education on licensing.
• Government regulations, which are likely, are unknown.
• As companies continue to consolidate and get larger, they will be
hard to get into as in any other industry.
Hospitality
The hospitality industry is a broad industry that encompasses a variety
of fields within the service industry and includes food and beverage service,
hotels, event planning, transportation, and tourism. The global food service
equipment market alone was $31 billion in 2018.
In general, most inventors come up with ideas for the consumer market.
There are not that many independent inventors who are designing
commercial products, but I think there are huge opportunities here because
of the scope of this industry. Three inventRight coaches have licensed
product ideas that are being utilized in different areas of hospitality. All
three inventions have in common the benefit of saving time for employees.
Paul Sorenson, currently a senior coach at inventRight, licensed a large
spatula that can empty large (number 10) tomato paste cans with just one
twist. David Fedewa, a former inventRight coach, was able to license a
pitcher that allows you to fill it quickly with beer without a lot of foam.
Karen Steinbock, another former inventRight coach, licensed a pillowcase
that allows for faster pillowcase changes by hotel staff. All three inventions
save time and therefore labor costs. I think there are many opportunities for
inventions that can save time in this industry.
You have to be very price conscious when designing for the hospitality
industry. This industry is about volume and works on very low margins.
Whatever you’re designing has to have a cost that’s very similar to or less
than the product you’re replacing. There is a need for products that improve
efficiency, reduce costs, and reduce the environmental footprint.
“Hotels are looking for ways to reduce costs! Another goal is to make
the workplace safer for their staff and their guests.”
— David Middleberg, Director of Global Sourcing and Purchasing,
Star Linen US and UK
Karen’s alternative to regular pillowcases had to utilize preexisting
supply chains be manufactured with the same materials, and cost the same -
no higher than the old pillowcases. It took her some time to learn enough
about the manufacturing process to be able to get her product down to the
right price point. When you’re working with any industry at this large of
scale, know that the process will take that much longer. Often, the extra
time will pay off due to the higher revenue potential.
Sometimes commercial product ideas for the hospitality industry can be
licensed for consumer use as well. Paul has licensed different sized versions
of his spatula for the consumer market and Karen plans to license her
pillowcase to consumers as well. The reverse can also be true. Companies
involved in consumer goods can sell their products commercially. If you’re
attending industry trade shows, it might be wise to look beyond
commercially specific trade shows such as the National Restaurant
Association Show and consider shows like the International Home +
Housewares Show in Chicago as well.
Benefits:
• Large industry.
• Relatively untapped by inventors at this time.
• Once you get a product licensed, the volumes will be large.
Drawbacks:
• Finding companies is harder, their presence on the internet is a bit
less obvious.
• Price points are crucial – you need to have knowledge about
manufacturing.
• Because not all of the industry will be used to the idea of
licensing, companies will need education.
• Probably helpful to know someone on the “inside”.
Consumer technology
In 2020, this industry will be $1.1 trillion! CES (Consumer Electronics
Show) is one of the largest trade shows I’ve ever attended with over
175,000 people and 4,500 companies attending last year. There are products
in 33 categories including 3-D printing, gaming, artificial intelligence and
robotics, baby tech, drones, fitness, smart home, home cinema, wearables,
self-driving cars, music, digital health, and many more. If you attend this
trade show in Las Vegas it will blow your mind. There’s over two million
square feet of exhibit space with 24 marketplaces.
Eureka Park is an area at CES for start-ups. 1,200 startups from over 40
countries display their latest products and many investors come to Eureka
Park to find their next “unicorn.” Global media comes to look for the next
story, companies come to look for partnerships and acquisitions.
I believe many potential ideas in these categories are big in scale,
meaning product ideas that require an entire team to work out functionality
and proof of demand—big ideas that require a wall of intellectual property.
Basically, ideas that are more appropriate for start-ups companies, not
for licensing. These ideas require more than a sell sheet and a video!
If you are an independent inventor with ideas in this field, you are going
to need more than I have suggested for other categories! You are going to
need: Proof of concept, a working prototype, CAD drawings and a
complete understanding of mechanical and electrical parts. You must use
strongly worded NDAs when sharing confidential information. Being an
insider in this industry is definitely a plus. You’re going to need skills to
navigate the corporate system. You must have up-to-date knowledge of all
the technologies in your particular field. If you haven’t, I would highly
recommend attending CES. The people you will meet can help you
determine what path to take.
Benefit:
• this is a huge global industry!
Downsides:
• You probably need to be a startup company not an independent
inventor. That means you have to build a team, raise money, and
have a proof of concept. Showing proof of demand can also be
extremely helpful.
• This is not for the beginner inventor. I don’t know many
independent inventors playing in this field.
• Intellectual property will play a big part in this industry. Become
an expert and always know your point of difference, you’d be
surprised at how many start-ups don’t.
Promotional products
You’ve seen these products. Every time you go to a trade show,
someone’s trying to hand you a promotional item with their name on it.
They’re everywhere, even dentist offices hand out promotional items. Just
last month, I received a jacket with the logo of an organization I’m part of.
This is a $23 billion industry. PPAI Expo features over 13,000
distributors and 4,000 companies for a five-day conference and trade show.
It has more than 1,200 exhibiting companies showcasing tens of thousands
of promotional products.
This is not an easy industry in which to license. Most of the products in
the promotional product industry are everyday products like pens, pencils,
umbrellas, notepads, binders, and clothes. They are all personalized with
brand logos. Product ideas that are new and novel are not particularly
desirable. Small variations on existing product ideas that people are familiar
have better chances of success. Copycats are rampant in this industry so
please do a good background check on anyone you want to work with.
Benefits:
• Huge industry.
• Simple improvements on existing products is all that is really
needed.
Downsides:
• Industry is full of copycats.
• Difficult to introduce something new and unique.
Sporting goods
The U.S. sporting goods industry was more than $47 billion in 2019.
This includes footwear, exercise equipment, licensed sports merchandise,
and athletic apparel. Based on our inventRight students’ past experiences,
this is not the most inventor-friendly industry in my opinion. There are a
few major players that have bought out many smaller companies. Because
of this, there aren’t many companies to reach out to license products in
some smaller categories. You can get in to these bigger companies, but it
takes more time.
Many fitness products do extremely well in the DRTV format. If you’re
having a hard time getting into fitness companies, try reaching out to a
company in the DRTV space.
Benefits:
• This is an industry that is personal for many people so holds high
interest.
• There has been a shift away from gyms to working out at home,
thus meaning a growth in home products.
• An ageing population means there will be need for new gear and
equipment.
Downsides:
• It’s not a particularly big industry – major players tend to buy up
new products and companies.
• Proof-of-concept is a must.
• Testimonials are almost a requirement.
Software
The good news: Worldwide revenue for mobile apps in 2018 was $365
billion. The bad news: The industry is notorious for stealing technology.
The industry is extremely fast moving, and products become outdated very
quickly, so infringement is rampant and protection is difficult.
Protecting software ideas is not the easiest thing to do. In some
countries they won’t even grant software patents because software is too
abstract. In the United States, they do grant software patents, but they are
very difficult to obtain at best. One of our inventRight students sold his
software to a company for $10 million before he came to us. He was a
software engineer and had coded the program. I asked him why he became
an inventRight student. After all – he had just sold his company for a rather
nice sum! He said he didn’t know enough to include sharing in the sub-
licensing rights. He left millions of dollars on the table.
Another inventRight student licensed software to one of the largest car
companies in the United States. He did have a prototype and patents on his
idea. Copyrighting code can be a fast way to protect software, but
workarounds are very common. You just have to change a little bit of the
code!
Licensing software is somewhat tricky. You can do it but it’s going to
require more work compared to licensing in other industries. You’ll need
more than a sell sheet and video to make a pitch to a company.
Traditionally, people have started a company to produce a prototype or beta
version of software. Once they work out all the bugs, they look for a
partnership, buyer, startup funding, or an IPO exit.
What about some of us that just have a new app idea? To bring that idea
to market through licensing, you will absolutely need a working prototype
(a beta test version). Many inventors want a software engineer to develop
their app on a speculative (or “spec”) basis – meaning the engineer will get
their money after the app is licensed. Not too many programmers will work
this way. If you have to pay someone upfront you will spend considerably
more time and money to develop your idea than a “sell sheet” so the entire
approach is different from typical consumer product licensing.
Intellectual property will be very important. I highly recommend having
a software patent attorney help you draft your provisional patent
application. For the do’s and don’ts on software patents, you can find great
information on Gene Quinn‘s IPWatchdog website. Also, don’t forget that
potential licensees will want to see some type of user engagement or proof
of demand.
If you can find the right company to which your software is a perfect fit
with their current product line, a well-written PPA with a good storyboard
might work. I would absolutely have an NDA in place before disclosing
important information. But know that the best protection you can have in
this situation is finding a company that has a good history of working with
independent developers. Even if you don’t work out a licensing deal
immediately, you may get some feedback. Feedback can be very valuable,
whether you end up developing your idea with them or with someone else.
Just don’t forget, this industry moves extremely fast and ideas get
“borrowed” all the time.
Benefits:
• Big potential payoffs.
Downsides:
• You will need a working prototype. Engineers will want to be paid
upfront.
• You will need intellectual property.
• Even with intellectual property, workarounds are common.
Clearly you can license ideas in many different industries. Frankly, I
continue to learn that there are opportunities in industries I didn’t think
were possible. A great example of that is the food industry. Typically,
recipes cannot be protected so it’s very difficult to license an innovative
food – you typically have to start a business, build a brand, and then hope to
sell it to a larger company. Sometimes you can treat a recipe as a trade
secret (think Coca Cola) and that can be of value. But, if your food product
has a unique manufacturing process or delivery system, you might be able
to license that. For example, we just had an inventRight student license a
process for cold smoking raw eggs. In her case, she licensed a
manufacturing process. It’s probably one of the biggest licensing
agreements I’ve ever seen. It turns out, there’s a huge worldwide market for
cold smoked eggs!
The novelty candy industry is a fun one – if you think about it there are
a lot of candy products that are combined with toys or very clever
packaging. For a while I tried to create and license products in this industry,
but I had no luck. Having said that, my contacts were quite open to outside
submissions and very easy to work with. And, the volumes can be quite
large.
There is also the promotional premium business (toys that are given
away in the fast food industry as an example) – which is also very fun. The
issue here is that you have to create products that can be manufactured and
packaged for under $.50 which is quite challenging. And of course, there is
a tremendous emphasis on licensed characters nowadays. The industry is
looking to reduce its environmental footprint, so they are looking for non-
plastic items. It might make for a really great challenge for an inventor –
and the volumes are huge!
As far as where the money is, it really comes down to how many
distribution outlets your potential licensee has. You should always do the
math. The numbers will be different for every product, potential licensee,
and industry. Typically, if you make $50,000 to $100,000 per product,
you’re doing pretty well. I’ve seen many products where royalties are in the
millions.
But understand that doing the math is just a way to get a ballpark idea
of the numbers for a given idea. You should be aware of the numbers, but
your payday should not be your top priority. This is my advice because the
goal of this book is to give you a long-term model for licensing success. I
very much believe that the key to success as a professional product
developer is to immerse yourself in an industry that you really care about,
to get to understand all the ins and outs, and build relationships with the
relevant players. As I mentioned before, licensing is a numbers game.
You’re a “no collector.” So, I want you to chase your passion, not the
dollars. This way, you’ll be resilient through all the ups and downs of the
process and find success in the long run.
If you’re looking to strike it rich, I would try something else. If you
want to be creative, licensing your product ideas is a wonderful avenue. Just
test the marketability of your ideas, don’t spend a lot of money on any one
idea, reach out to inventor-friendly companies, and always do the math.
“It’s really about building relationships over years before you really
get some solid traction. And that’s gonna take a little patience, tenacity,
and some pain. It’s going to be a journey.”
13.
FIGHTING TO GET PAID
I nprofessional
this chapter, I want to go over some important aspects of becoming a
inventor.
First, I want to introduce you to the concept of fighting to get paid.
Okay, maybe fighting is the wrong word. But if you want to become a
professional inventor, you need to plan ahead so people end up paying you.
Once, when speaking to a group of startups in Australia, someone
asked, “How do you know so much about intellectual property given that
you’re not a patent attorney?”
Very simple! It’s called Survival 101. When I finally had a big idea that
was producing a lot of income, I concentrated on how I was going to
protect it so that I would keep getting paid. That’s why I ended up with a
portfolio of more than 20 patents related to the same packaging innovation.
The packaging industry is cutthroat. People will go to war over half a
penny! And they’ll do whatever they can to work around you. So, I taught
myself how to protect myself with intellectual property, including non-
disclosure agreements and trade secrets.
Another priceless experience was suing one of the largest toy
companies in the world, Lego, for patent infringement. After three long
years, I watched our attorneys duel over just two words in federal court in
San Francisco. Two words! For a patent to truly have value in the market, I
discovered, it must include manufacturing knowledge and workaround
language. Perhaps even more importantly, I realized I had let my emotions
get the best of me — and that moving forward, I would do everything in my
power to avoid getting into the same costly situation.
So, what is the key to getting paid as an inventor/entrepreneur/product
developer? Perceived ownership. I don’t believe any of us ever really own
anything. That said, absolutely there are things you can do to ensure you
profit from your creativity.
It all starts with doing your homework and making preparing for pitfalls
part of your go-to-market strategy.
If you’re pursuing a licensing agreement for your invention, get ready to
answer hard questions from potential licensees about why they should pay
you. To help you navigate selling at retail and online, it’s critical that you
make sense of the current laws and practices governing intellectual
property. (Negotiating a licensing agreement with an inventor-friendly
company isn’t much of a battle; rather, you’re just working out some of the
details.)
If your product is successful, copycats won’t be far behind. The way I
see it, it’s pointless to view copycats in terms of right or wrong or fairness.
It’s called competition. With intellectual property, it is wise to keep in mind
that here are no black and whites and no guarantees. I cannot stress enough
that these are tools, not strategies in and of themselves.
The good news? There are more places to sell products than ever before
and more resources available to help creative people than have existed at
any other time on the planet. Open innovation — the phenomenon in which
intellectual property flows in and out of companies — is the dominant
paradigm.
With that in mind, these are my tips for you to fight the good fight —
and get paid regardless of whether you have any intellectual property. And
if this sounds like a lot? Well, it is. Choose not to be intimidated. Education
is key to your success.
Do your homework. Know your point of difference in the marketplace.
Study the landscape of similar products closely so you are able to explain
how your product is different and needed. Creating something new,
different, or even just an improvement on a simple idea is important. Don’t
waste your time on product ideas that are not marketable.
Familiarize yourself with the prior art, aka patents that describe
similar inventions. Prior art exists for everything. What’s important isn’t
whether or not there is prior art; it’s how well you understand it and are able
to use that knowledge to your advantage. Because when you understand the
landscape of prior patents and are able to clearly identify your point of
difference, it’s easier to convince potential licensees why they should
license your invention from you. When someone inevitably asks you about
the prior art, you can respond confidently: “Yes, this patent will issue, and
this is why.”
In reality, no one knows for sure. Don’t dread or fear this line of inquiry.
Instead, turn it into a selling point. People will always question your
intellectual property. Expect this!
File a provisional patent application that truly has value in the
marketplace. This requires that you understand potential issues regarding
manufacturing, which is often extremely valuable. You need this
information to get your product to market! Include the most efficient way of
making your technology in your application.
To help you come up with variations, try stealing your invention from
yourself.
For a simple improvement to an existing product, a well-written
provisional patent application gives you enough perceived ownership to get
a licensing agreement. You and/or your licensee have the option of filing a
non-provisional patent application moving forward.
Consider filing a design patent to beef out your portfolio. If your
product has to look a certain way, and copycats will copy you exactly, a
design patent (which is relatively affordable compared to a utility patent)
could have big value.
Create marketing material that is enticing. The most effective sell
sheets grab the viewer’s attention by focusing on the benefit of the item.
Hire a professional to help you design yours; this is money well-spent. It’s
not easy coming up with a one-line benefit statement/value proposition that
is crystal clear and impactful.
Your marketing material will be shared with retail buyers and other
employees. When executed correctly, it creates its own demand.
License to an inventor-friendly company that has a history of
working with independent inventors. This is the best protection you can
have to get paid because speed to market is still paramount. These
companies need and value your contribution. And if by chance you are able
to license to a market leader, they will be able to police copycats based on
their relationships with retailers.
Focus on companies that have the right distribution channels. Make sure
you understand how and where their products are sold. This allows you to
potentially carve out areas for other licensing opportunities based on where
they’re weak.
Negotiate a strong licensing agreement, meaning one that has
minimum guarantees and other types of performance clauses. If they
don’t live up to their side of the contract, you need to able to get out. That’s
where performance clauses come into play. Do not negotiate your own
licensing agreement, especially the first time. Instead, work with someone
who has negotiated many licensing agreements and truly understands the
business terms.
ften, at the very end, bring in a licensing attorney to make sure you
haven’t missed any of the fine details. This way, you control the negotiation
process and are able to begin building a strong relationship with your
licensee.
Here are some additional examples of how to make your licensing
agreement stronger.
Grant of license. I’ve mentioned this before. They’re going to want the
grant of license section of the agreement to be narrow in scope. You want
the opposite, meaning for it to include everything from copyrights,
trademarks, design patents, and any and all future improvements. Here’s a
pro tip: Make sure you include your product as well. That way, if no
intellectual property ever issues, you still get paid.
Line extensions. It is in your best interests to come up with line
extensions. Line extensions extends the life of your original product. In
many situations, your licensee will come up with line extensions
themselves. In your licensing agreement, make sure it is stated that you own
any line extensions.
Trademarks. Sooner or later, your product will have a name and need
to be protected. If online sellers decide to copy you, they will most likely
copy the name of your product. If you own the trademark, it will help you
stop them.
Copyright. This is such an affordable and powerful tool (along with the
trademarks) to stop online sellers stealing your images and imitating your
brand.
Use non-disclosure agreements (NDAs) when appropriate. It’s not
appropriate to ask a potential licensee to sign a non-disclosure agreement
right away; in fact, I recommend against doing so. When they start to ask
you for confidential information, that’s when you ask to sign their NDA.
They won’t be signing yours! Please read it over very carefully and make
sure it’s a mutual NDA and fair and balanced.
NDAs are a great tool when you don’t have any type of intellectual
property yet. I don’t believe NDAs protect people the way they think they
do; they’re not so much a protection tool, as a tool for setting the right
professional tone.
Build an army of raging fans. Today, it’s not about suing people. The
patent system is broken; to a certain degree I think it always has been. What
I mean by that is, patents are just words — words that can be interpreted
differently by a patent examiner, a judge, and a jury. To me, pursuing
infringement in court is a losing battle. Your time and effort will be better
spent shouting your story from the rooftops. Let everyone know: This is
your creation! Telling your story well requires planning. Document your
journey with imagery and words and approach podcasts, television, radio,
YouTube channels, and more about your achievement. You have a voice —
use it. Consider creating a custom hashtag and encouraging your
community of fans to use it on social media. In this way, hashtags can act
like a mini sell sheet for your company!
I also recommend making customer service a priority. When a knockoff
appears, your fans will let you know. Some of them will even come to your
defense.
Knocking off an inventor gives companies a black eye. A retailer’s
brand is damaged by carrying a copycat.
Create demand. The easiest way to license an idea with or without
intellectual property is by creating demand. You can create demand by
showing your sell sheet to retailer buyers and distributors. Would they carry
your product? A yes demonstrates that there is business to be had. Smart
companies know it’s not about protection, it’s all about selling. So, sell first
and fast.
Trade secrets. The y can be very powerful. All the little details about
manufacturing your product you discover along the way add up to trade
secrets. Don’t disclose any of this information before there is a strong non-
disclosure agreement (NDA) in place.
Manufacturing quotes. Understand how your product can be
manufactured, the cost, and pricing structures within different industries.
This information gives you leverage to cut better licensing deals.
Proof of concept. Building a prototype that works and demonstrates
your product is a powerful tool that you can use to leverage a higher royalty
rate and convince the company to move forward. It also helps you file
stronger intellectual property because you know what works and what
doesn’t work.
Know your competition. In any fight or sport, knowing your
competitor’s strengths and weaknesses is always valuable. For example,
before you approach a company to inquire about licensing your product, do
a prior art search on them. Is intellectual property important to the
company? Familiarize yourself with the company’s history and culture as
well. Is being first to market important? Before you speak with anyone
about your invention, look up their profile on LinkedIn for background.
What is their area of expertise?
Insights like these allow you to design your product more strategically.
For example, maybe you can alter your product so that it can be made more
efficiently, possibly using technology their competitor doesn’t have.
The more you know about their business the better.
Build relationships with all major retailers. To prevent a retailer from
carrying a copycat product, reach out early on and be the first to introduce
your product and its story. Make sure they know you are the creator and
your product, the original.
Police trade shows. Verify that your product is being displayed
appropriately at trade events. Can passerby see it? Do they grasp its
benefit? Visiting trade shows in person is also a great opportunity to stay
abreast of the competition.
Keep innovating. The best way of staying ahead of the competition is
by continuing to innovate. Improve your product and file additional
intellectual property on those improvements. Look for line extensions. Your
small size means you can be quick. You can outthink them.
It’s not the size of a company that gives it strength, it’s actually
knowledge. Following these tips and strategies will create leverage for you
to get a better licensing deal, work with the right company, and stop
copycats when you do become successful selling your product. It’s all about
becoming a professional inventor.
This year, I shared the above information in a presentation I made to
intellectual property professionals in Atlanta. This is what intellectual
property attorney, Pete Wellborn, had to share in response. Wellborn is one
of the most well-known attorneys in the United States, whose legal victories
have been featured on the cover of the Wall Street Journal and featured on
Good Morning America.
“I am an attorney with a practice that includes intellectual property and
commercial litigation, but no patent work whatsoever. I nonetheless ended
up at one of Stephen Key’s patent-related presentations and – somewhat to
my surprise – found his ideas and advice to be of immense value in both my
trademark/copyright work and, even more important, in every other area in
which I practice and advise clients.
We live in a day and age when, for an inventor faced with virtually any
issue or challenge during the life of his product or idea, the ‘expert advice’
almost always involves lawyering-up. Regardless of the outcome, this
results far too often in a business-killing bill for legal services several
magnitudes greater than expected. In that scenario, the lawyers on both
sides win. Not so, however, for the inventor.
The overarching theme of Stephen’s message was brilliant in its
simplicity – a combination of common sense, novel thinking, self-help, and
realization that the ‘nice’ approach is often the best. These strategies
frequently fall by the wayside as the inventor’s attorney, as have
generations of attorneys before, skips straight to the sternest and most
threatening demand letter that he or she can pen. This guarantees that the
courtroom will be the sole venue for – most likely – a lengthy and costly
legal war.
The particular patent-specific concepts that Stephen discussed were
pure gold to the inventors, IP owners, and patent attorneys in the audience.
Even more so, however, the underlying principles were invaluable to every
businessperson and legal professional lucky enough to hear Stephen,
regardless of their fields or disciplines. Stephen has the closest thing to a
‘blueprint for success’ that I have ever seen.” — Paul F. (“Pete”) Wellborn
III
Why you shouldn’t rely on a middleman
To become a professional inventor, you need to be in control of your
own destiny. I cannot stress this enough.
If your goal is to license your product ideas, you must educate yourself
to the point that you are able to communicate with companies directly and
like a professional. This takes time -- time that is exceptionally well-spent,
I’d argue, if you’re serious about this. Yes, absolutely, there is a learning
curve. I would never recommend negotiating your own licensing agreement
as a first-time inventor, for example. Without knowing the ins and outs of
business terms typically included in licensing agreements, you’re far too
likely to end up leaving money on the table.
Many people think that inventing success is a matter of access. That if
they had the name, contact information, and in with the right person, they’d
find a home for their product. If only it were that easy! There are product
scouts, feeder companies, third-party invention submission portals, toy
brokers, and licensing agents all trying to help inventors by presenting their
ideas to potential licensees on their behalf.
But I’m here to tell you that if you educate yourself, you don’t need a
middleman. You don’t need anyone to submit your product ideas for you.
Middlemen will tell you, “I can spot a winning idea when I see one.”
And that’s the issue. Maybe yes, maybe no. No one has a crystal ball,
regardless of how long they’ve been in an industry. When it comes to
licensing, there’s only one opinion that matters, which is that of the
company you’re submitting to. Not gatekeepers. Ideally, you want a team of
people, including representatives from manufacturing, sales, marketing, and
legal, to review your submission. Everyone has a difference of opinion, and
all of those perspectives are important to get a product to market and
succeed there.
You need to get their feedback. You need to hear what the issues are
directly. You need to look at the facial expressions of the people in the
room, understand who they are, and their concerns. That’s when you
become a professional inventor, and why you must be in control of the
process yourself.
Because most of the time, this is the moment your creativity is really
gets called upon. It’s where it begins. What I mean by that is, very rarely
are product ideas licensed as is. There are almost always changes —
oftentimes significant changes — made to an initial submission. You need
to hear what they have to say, so you can come back with solutions. You
can’t count on anyone else to solve the issues for you, because they’ve got
other tasks on their to-do list. You’re the inventor, you’ll actually work hard
and long enough to make sure what needs to be fixed gets done. You care!
An important disclaimer: If you’re inventing in the toy industry,
working with a toy broker offers many benefits. The toy industry has a long
and rich history of embracing outside product developers. Competition is
high, and as a result, it’s one of the most difficult industries to achieve
success in. Hiring a toy broker to show you the ropes can help you become
familiar with the industry much more quickly. Toy brokers charge
differently, so be sure to ask for clarification. Most will ask for part of your
royalty. Some charge a fee to review submissions. (If you have just one idea
for a toy, I would submit it to the appropriate toy companies directly.)
Broadly speaking, if you’re developing new product ideas for a specific
field, working with an industry expert can be extremely helpful.
You should always kick the tires on anyone you’re considering working
with. Ask a lot of questions. Understand how people charge for their
services, then do the math. Are they willing to pass on their connections
and relationships to you?
There might be huge value in this.
If not, I believe you should do the work yourself. To become successful
at inventing and licensing new products, there are no quick results. It just
takes time and effort. Be professional. Be reasonable. You can do this.
The bottom line is this: At the end of the day, you’re going to have to
establish your own relationships with the companies you want to invent for.
You need to receive feedback from the people reviewing your concept, so
you can re-present it with improvements and continue submitting other,
better new ideas.
The open innovation companies I interviewed for this book all told me
the same thing, which is that they want to build a relationship. Specifically,
they want to build a relationship with product developers who care about
their business and take the time to understand it. They’re looking to make
the right people part of their team. For creative people, this is a huge
opportunity. Be willing to invest in yourself!
Displaying your invention at a trade show is like asking to get
ripped off
And finally, I want to explain why you should never display a prototype
of your invention at a trade show.
One of the best ways to gain an understanding of any marketplace is by
attending the industry’s trade shows. This is true if you’re attempting to
license your idea or venture it yourself.
Over the years, I’ve been to many different trade shows and to my
dismay, I always encounter inventors who have purchased a booth to
display their invention. Typically, what they’re displaying is only a
prototype, meaning the item is not in production yet. This is a huge mistake.
These inventors stay locked in their booth all trade show long, waiting for
someone to come and discover them. That’s what they’ve been sold on:
That the right people will walk on by, that there will be pitching
opportunities.
But commercializing a product just doesn’t work like that. It never has.
For one, the people you need to talk to about licensing your invention are
staffing their own booths! They’re not out walking the show. Suppliers and
retail buyers are the ones walking the show.
When approached correctly, trade shows can be enormously beneficial
for independent inventors. In fact, I highly encourage product developers
who are serious about commercializing their inventions to attend the trade
show their concepts pertain to.
ftat said, there are significant risks in sharing your invention for all the
world to see before the timing is right. If your invention is in the prototype
stage, I strongly advise against displaying it at a trade show. The same goes
for products that have been manufactured, but aren’t quite ready for retail or
have limited distribution.
The experts I interviewed agreed: It’s an amateur, rookie move -- one
that can have disastrous consequences.
Simply put, it’s dangerous from a protection standpoint to publicly
display a prototype of your invention at a trade show. It’s like asking
someone to rip you off.
Sara Farber’s company Galactic Squeeze invents toys and games. ftree
party games she licensed to Kikkerland Design — Goat Yoga, Maskarades,
and Clock Block — hit the market this fall.
A former director of content design for Fisher-Price, she’s also brought
three games to market on her own. In a phone interview, she pointed out
that it’s not only risky because there are bad actors, but also because people
are inevitably inspired by what they see -- whether they realize it or not.
“No, I wouldn't recommend just sitting at a booth with all your ideas.
There probably are people who would intentionally rip stuff off, but there
are also people who wouldn't intentionally rip stuff off, but sometimes you
don't know where you see something, it gets into your head, it's in the ether,
and then you come up with something similar, and you might not even
know that you got it from seeing this other item,” she explained.
She continued: “The whole point of having an inventor relations person
is so that an inventor is not going in and pitching to all the actual designers;
they’re pitching to a person who's the gatekeeper. It's the gatekeeper’s job
to weed out some things and bring others to very specific people internally,
with the understanding that it’s an external concept and that if they do this
concept or something similar to this concept, then they will need to work
with the inventor or give them a royalty.”
Good point.
George Michaels has been in the packaging industry for 40 years.
Currently he’s a sales executive at Accraply, a global provider of label
application equipment that was acquired by Barry-Wehmiller. At his
industry’s trade shows, companies typically show only equipment that is
available for purchase, he said. Was there was any danger in showing a
prototype that was not in production yet, I asked?
“Yes,” he replied. “Someone’s going to take the idea and run with it. If
you have a prototype, you wouldn’t share that at a trade show, you’d do so
privately.”
His company only brings items to shows that it’s ready to sell because
protection at trade shows is impossible. “The whole idea is that we want as
many people as possible to see our new innovations,” he added. Even when
taking photos and recording videos is unauthorized, it happens all the time.
Michael Weinstein, president of digital at Bluewater Media, has
attended more than 100 trade shows. As the former chief marketing officer
for DRTV company Allstar Innovations, he was responsible for launching
one of the most successful products in the history of As Seen on TV.
Unfortunately, he has “absolutely seen examples where inventors have
presented prototypes to people at shows and then magically seen the same
item called something else make its way to the market six months later. So
yes, there is risk. If you don’t have a patent and you’re not ready for the
market, I would very much agree it should be shown privately.”
Before he cofounded Grand Fusion Housewares four years ago,
Brendan Bauer worked in the kitchen industry for more than two decades.
He estimated he’s attended more than 200 trade shows. Does his company
bring prototypes to trade shows, I wondered?
Sometimes, he said. When they have a prototype, they generally keep it
hidden, bringing it out from under the table only when engaging with
customers that they already have a good relationship with.
“I wouldn’t literally put it out for the whole world to see, because you
really shouldn’t do that until you’re ready to sell,” he said. “You have to
move an item to market quickly before the imitators start to follow.” He just
got back from a trade show in China, he added, where he saw items that his
company had launched this year.
Back in the late ‘80s, when I was in charge of product design at the toy
startup Worlds of Wonder (which launched Teddy Ruxpin and Lazer Tag,
two number-one hit toys) I remember building prototypes for Toy Fair in
New York. How could I forget gluing the eyelashes on our talking Pamela
doll at the last minute? Boy was that stressful. We built prototypes to test
the market to see if there was interest, but we only let buyers see what we
had; we never let the public. That strategy was smart 30 years ago and it
holds true today.
Exhibitors large and small don’t display prototypes at trade shows. They
keep what they’re working on confidential and private until they’re ready to
launch. Why would you risk the exposure, when copycats are able to move
faster than ever? A trade show is not the place to test the waters or practice
pitching your product. It’s true that you need good feedback about your
invention. The place to get it is privately. If you’re seeking a licensing deal
for your invention, I recommend approaching potential partners (aka
licensees) at trade shows booth by booth to introduce yourself and begin
forging a relationship.
Here are a few tips.
1. Do not purchase a booth to present a prototype or limited production
run of your invention, regardless of whether your aim is to venture or
license. Until you’re truly ready to ship product on a wide scale, this is to
be avoided.
2. Before you plan to attend a show, verify the companies you’re
interested in licensing your invention to will be in attendance. Trade
associations maintain lists of exhibitors.
3. Bring a sell sheet and be ready to show it privately. A video or small
prototype could be extremely helpful. But please realize that obtaining the
contact information of the right person at the companies you want to work
with is a win too.
4. File intellectual property protection first. Filing a provisional patent
application, trademark, or copyright is easy and relatively inexpensive.
5. Approach companies cautiously. Ask them if they work with outside
inventors. If not, move on.
PART SEVEN
Learn From the Best
14.
28 INTERVIEWS WITH
INDUSTRY INSIDERS
A fter interviewing 28 experts across 17 industries, I can say with

confidence that open innovation is thriving. This presents a huge
opportunity for inventive people!
Across industries, the principles that govern submitting product ideas
for licensing potential are the same, basically — regardless of what is
actually being sold. The toy industry is the furthest along because they’ve
been practicing open innovation the longest.
Still, overall, the same principles stand. There are a few small
differences to be aware of, so please read the following interviews carefully.
At the end of each interview, I summarize the main takeaways and my
advice.
Patent licensing dates back to the 19th century. One of the earliest
inventors to license his patents out was none other than ftomas Edison. One
of the first industries to widely embrace licensing inventions and product
ideas was the toy industry. When I interviewed leading toy companies like
Hasbro and Spin Master, they all told me it’s extremely important to them
to build relationships with toy inventors — because it’s extremely important
for their business!
Because of this, they have built online submission portals and even have
a division within their companies just for handling outside product
submissions from independent toy inventors. Because it’s been like this for
so many years, toy and game companies are more sophisticated in the way
they handle working with independent inventors. To me, they’re clearly the
best at this.
More and more industries are embracing the benefits of working with
independent inventors. But many haven’t developed well-defined policies
and practices for online product submissions.
I want to make you aware of another form of licensing referred to as
“licensing in.” This is when manufacturers license or rent well-known
brands to help sell their products. This is also known as brand licensing, and
it’s an absolutely enormous business —$300 billion to be exact! I have
licensed in as well as licensed out. Specifically, when I had the guitar pick
business Hot Picks, I became a Disney licensee. That story can be found in
my red book, One Simple Idea For Startups and Entrepreneurs .
After interviewing companies that practice open innovation today and
realizing that so many of the same principles hold true, I started to reflect
back on my personal experience with licensing. My first job was at a toy
startup called Worlds of Wonder back in the late 80s in Fremont, California.
We had two major number-one hits toys, and that put us on the map.
Our first monster hit — the world’s first talking teddy bear, Teddy
Ruxpin — was licensed from toy inventor Ken Forsse. This toy definitely
had magic. Everyone could see it; it was extremely obvious. Still, there
were so many decisions that had to be made about how to bring it to
market. The prototype was extremely rough. (I have one of original
prototypes in my office, which I’m very proud of.) But besides that, the
engineering department had to take this prototype and re-engineer it for
production. In fact, it took an entire team of people to evaluate its potential.
Could it be redesigned so that it looked cuter and could be produced at a
price point that people would purchase? We knew we could we market the
magic.
At most companies, a team of people — typically consisting of
engineers, marketers, designers, and salespeople — evaluate outside
product submissions. Regardless of what category your idea is in, doing this
evaluation requires a tremendous amount of work.
When I asked toy companies how important outside toy inventors are to
their success, they were emphatic. They all said, “ftey’re critical!”
Like I said, Worlds of Wonder was a startup back then. If it wasn’t for
this outside product submission from a talented inventor, there’s a very
good chance the company would’ve never made it. That’s how important
this product was to WOW.
During my employment at WOW, I was able to sit in on many of the
meetings that were held to discuss outside product submission from
inventors. It was truly fascinating.
When they saw something they liked, they quickly offered the inventor
a holding fee. This is very typical; they know toy inventors are shopping
their products to everyone in the industry.
Many of the ideas that I evaluated looked extremely polished.
Prototypes were beautiful and functioned extremely well. A few of
submissions had storyboards to accompany the prototypes. Some showed
the packaging and even line extensions.
Outside product submissions that were made out of materials like plush
landed in my department. I would look at the product and pull a pattern to
send over to China for a price quote. Costing was and is a big factor when
determining whether to take on an outside product submission. When the
submitter had experience with building a prototype, meaning laying out the
fabric correctly and providing a spec sheet for the material, that was
extremely helpful in getting the quote from China. You can’t always rely on
an engineer in the company’s department to do this for you, because
everyone is so busy. I was also responsible for taking approved samples to
China to be manufactured and work with the factories there.
When prototypes came in, the engineering and marketing teams would
play with them outside their offices. Having a prototype, proof of concept,
is in many situations critical. We were testing to see if they were fun to play
and if the prototypes worked. At Toy Fair, we had prototypes that looked
very good and worked to show to buyers before we committed to going into
full production. We never displayed these prototypes, we only shared them
privately.
The evaluation process is pretty much the same today. You have to
evaluate the product. Do a cost analysis. And test for proof of concept. It
was wonderful experiencing that process firsthand, and it no doubt
informed my strategy moving forward whether I realized it at the time or
not.
Does your product have a wow factor and a point of difference in the
marketplace?
Can it be manufactured at a price point people will purchase? Will the
retailers buy it?
Does it fit into our product line and support our brand promise?
These are things you need to consider. Once you realize how important
these things are, you can craft your pitch to achieve licensing success —
like making sure your product actually fits into the company’s product line.
You can do some cost-analysis yourself to make sure the item fits the
appropriate pricing structure. Having some type of market demand/proof of
concept can be extremely important. That’s why I wrote this book — to
give you the insider perspective you need to submit your product ideas
correctly.
After watching everything unfold at WOW, I was hooked. I mean, we
launched products that became number-one hit toys! Working behind the
scenes to take rough prototypes and make them look presentable was
priceless. I made sure the manufacturing process in China worked correctly,
and then I saw the same toys I had seen on factory lines on store shelves
and commercials on TV. It was wild.
After I left WOW to begin licensing my ideas for products, I consulted
for a few other toy companies including Mattel and also continued working
in Asia on manufacturing. One of the first companies I licensed to was a toy
company called Ohio Art. Without the experience I had already had
working in the industry, I believe it would have taken me much longer.
First, I studied their product line extremely carefully. I had a passion for
basketball and they had a basketball line that included a license of the
basketball player Michael Jordan’s image. I changed the shape of one of
their Nerf indoor basketball game backboards into the image of Michael
Jordan, and they loved it. They called it the Michael Jordan Wall-Ball. The
change I suggested (from plastic to paper) made it easier to manufacture at
a lower price point while better leveraging the image of Michael Jordan.
That’s a win! It was better for marketing and easier to ship.
Maybe that’s why it sold for over 10 years.
As an inventor, there are many things for you to consider when
presenting your ideas to companies. When I came up with the concept of
the rotating label, Spinformation, there were two major things I had to do to
license it. First, I had to figure out how to manufacture it. In most situations
you will not have to do this. But that was one obstacle I had to overcome,
because it had never been made before! And it also had to be manufactured
at a price point that people would purchase. And finally, I had to figure out
the right way to market it to the right companies — companies that would
be willing to pay a little more for a little more space.
There will always be obstacles for all of us inventors to overcome.
That’s what we do!
But again, without having had some prior knowledge of manufacturing
processes and working with engineers and marketers, it would have been
more difficult. Listen carefully to the engineers and marketers that describe
how they evaluate ideas in this section of the book. Yes, every product and
every licensing deal will be a little different.
But fundamentally you must understand how companies are looking at
your product and the difficulties they must overcome to say yes to a deal.
With this type of insight, you can present your ideas in such a way that they
take away risk. That’s the key.
INTERVIEWS
Interviews With 28 Experts in 17
Industries
TOYS
BRIAN CHAPMAN
President and Head of Global
Design and Development for Toy,
Game, and Consumer Products at
Hasbro Toys
Founded in 1923, Hasbro is currently one of the biggest toy companies
in the world in terms of revenue and stock market value. Among its
products are Monopoly, G.I. Joe, Furby, Nerf, Transformers, Twister, and
the Power Rangers franchise. Hasbro is an industry leader that relies on its
network of professional inventors to stay ahead of the competition.
How important are independent inventors to Hasbro?
Brian: The y're extremely important. I look at them as a big part of our
lifeblood. At Hasbro we're really about finding the best ideas. We do that in
two ways. We have a lot of processes and techniques for nurturing and
growing ideas internally. We focus just as much on ideas outside of Hasbro.
We look all around the world to find inventors who can bring us ideas as
well as solicit ideas from our consumers. We run a lot of different idea
forums where we bring in divergent thinkers who think differently than our
internal teams.
What is required to qualify as a professional toy inventor? Is it the
quality of work? The relationship?
Brian: It's kind of a repeated history of successful ideas that we either
option or take to market. If you look at our portfolio at any given time, we
bring in about 10 to 15 percent of our revenue through brand new ideas in a
year. ftose ideas accumulate over time, you know? Some of those ideas
become big brands for us and bring in a much greater percentage. It's
probably closer to 50 to 60 percent of our portfolio that started as an idea
from the outside.
Will you shed a little light on what happens after you receive a new
submission?
Brian: Typically, an idea will come in through our Global Product
Acquisitions Team. That idea first and foremost has to be logged and
documented so there's no confusion about the source of the idea. Once it's
logged and documented by the global product acquisitions team they are
asking, where is the best fit for that concept?
For example, if it's something related to Nerf or if it's something that's
more of a game-based play, they will assemble the appropriate internal
decision makers and stakeholders to review that idea. They will either pitch
it or they will ask the inventor to come in and pitch it.
Basically, that team is reviewing that outside idea against all the
existing ideas that we have today and they are saying, "Is that idea better
than what we have, or is it not?" If it's better, we option it for a period of
time (usually about three to four months) so we can really explore things
like feasibility, manufacturing, costs, and gameplay mechanics if it's a
game. If it passes all those tests, then we go to a contract and we produce
the item.
As far as timeline, it happens as quickly as we take items from scratch
to market —which can be anywhere from 55 weeks to being able to turn
things around in 10 weeks. If it's the right idea, we need to get it into the
hands of consumers.
How important is intellectual property?
Brian: I'm not going to say it's not important because I think that if you
have a protectable idea it just gives you a little bit of an advantage. It means
that it will be harder for people to either knock it off or try to do something
similar but at Hasbro we're just looking for great ideas as well. A lot of
ideas are clever combinations of new ways to play or are mashing ideas and
presenting them together in a new format. So, while some of those types of
play experiences aren't protectable legally through patents, we're still
interested in them.
What could inventors be doing better?
Brian: Don’t bypass the submission process because that can really
stall an idea. If you know someone who works at Hasbro don't send them
your idea. Send it in to the Global Product Acquisitions Team instead. It's
that balance of being true to your idea but also understanding the business
and commercial needs. Typically, with our top inventors we give them live
feedback on their idea and they'll say, "Hey look, I get it. Let me take it
back. Let me shape it into a little bit more of what you're expecting and
come back and re-present it.
Inventors who have the capability of taking an early idea and altering it
to meet the needs of our business have a very high likelihood, when they
come back in and re-pitch that idea, of that item going into the line and
being produced. I would also say, listen to people who have a different
view, more of the business view of what is needed with an item, and help to
solve those problems. those are the kinds of inventors that we love to work
with.
How important is it that inventors attend trade shows and other
events?
Brian: Extremely important. I think especially as you become an
established inventor. Because the more touch points you have with our
teams here, the better you'll understand the business, which will give you a
higher likelihood of converting your ideas into feasible products.
We will meet with some of our top inventors four or five, even six times
a year, depending on the projects that we're working on. We'll bring them
in-house to work side by side with our development teams to shape those
ideas. A lot of them have their own model making facilities and they will
shape them outside and we will go and visit them in their studios. That
relationship is critically important.
Once you establish it, you want to continue to work it. We love our
inventors who are like an extended part of our team and I think that's when
we have the most success. We love the ideas we receive from the outside
because they truly give us a different perspective. They make us think
about our business in a different way!
I want to emphasize the importance of relationships. Getting to know
the people at these companies is critical for your success. This is one
reason why you need to stay in one industry long enough to know the
products, people, and anything else that is unique to that industry.
The doors are open in the toy industry. A very large part of Hasbro’s
success has to do with outside inventors. Toy brokers used to be the
industry standard but they’re no longer required. I’ve noticed a big shift
from when I visited Toy Fair a couple years ago. The industry is much more
open. Companies are looking for a wider variety of ideas from more
sources than ever before because of online retail and social media,
This is a very competitive industry. Professional toy inventors do
everything from making models to building great prototypes. You’re going
to have to up your game to be successful in this industry.
BEN DERMER
Senior Vice President of Creative
Development at Toy and Game
company Spin Master
Spin Master is a global children’s toy and entertainment company
originating from Canada known for the degree to which it nurtures its
relationships with inventors. Founded in 1994, it has been nominated for
Innovative Toy of the Year more times than any of its competitors and
created six television series, including two international hits.
Tell me about your invention submission process. Where do the best
new ideas come from?
Ben: Ninety five percent of the ideas for new products that we deal
with come through personal relationships. It's actually pretty rare that a
cold submission — meaning one sent through the portal we host on our
website
— gets that far.
Typically, professional inventors contact us and share what they're
doing. People who are invested in the space either know us or know how to
get to us at the right venues and shows.
The portal exists as an opportunity for people that we don't have a
relationship with to connect with us. It's also a way to keep things
organized, because we get quite a few submissions. So, it's fair at least
standardize the procedure.
What happens after you receive a submission? How do you evaluate
it? Who's in the room? How long does it take?
Ben: I'd like to preface the following by saying we're probably the top
inventor company in the toy industry in terms of sheer number of
submissions and number of meetings we take with inventors. And we
produce products in almost every category imaginable, so we're searching
for new ideas in every category as well. It's very senior people in the
company who participate in this process.
After we receive a submission in one form or another (typically in a
video or a prototype), we then do an internal review with the Inventor
Relations team which is largely organizational. We make sure we
understand the idea and that we have all of the pieces and parts.
Then we conduct biweekly meetings with each of our different business
groups. Our company is divided up into business units based primarily on
category; robotics, activities, preschool, etc. Approximately every two
weeks, we have a full review meeting with each of the business and design
leads from all of those units where we look at new products and get updates
on where in the process other ideas that we have looked at during previous
meetings are.
It's a fairly involved process. There is quite a bit of conversation among
the designers and business leaders in the company. Every two weeks we're
doing at least eight to 10 hours of product review.
Is there a best time to submit ideas?
Ben: We always have an open mindset, so we receive stuff at all times.
That said, it's a push-pull. The toy business is obviously very seasonal and
you have to be somewhat proactive. It's difficult to get a product in this
year if you show it too late.
In terms of an ideal time for toy inventors to show products to us, mid-
August to mid-November is really the sweet spot for products that are
aimed at the following Christmas. In other words, we're looking for
products to launch in the fall of 2021 in the fall of 2019. That's not to say
that if we see something at Toy Fair in New York (which occurs in
February) or some other time that we wouldn't jump on it, but I do think it's
good for professional inventors to embrace the seasonality of this business
and try and sync up with company timelines.
How important is intellectual property? Copyrights, trademarks,
patents. Are those important?
Ben: I think it can be. I don't think it's the best lens by which to look at
things though. Patents are certainly valuable to the extent that they're
useful. If you can come up with something that's truly unique and exciting
and has a lot of potential and you can patent it, that's certainly worthwhile.
But I would estimate that 95% of things that we see aren't patented and
never will be partially just because of the turnaround times in the toy
industry and partially because invention in the toy industry has as much to
do with style and marketing and other aspects. So, utility protection is not
always essential. Then again, if you're a technical inventor who's just
developed an amazing mechanism and you believe it's got 50 potential
applications, then a patent is certainly worthwhile.
Once again, building relationships is extremely important. You must
take your time! Do not rush. Companies in many industries will tell you
they look at products all year long, but in reality, there's always a window
of opportunity. Timing is extremely important, especially in this industry.
Again, a patent is a tool to be used when appropriate.
You can learn a lot from the toy industry. Toy inventors have been at the
licensing game for a long time. If you can swing it in the toy industry, you
can be a professional in any industry.
DAVID SMALL
Professional Toy Inventor
David co-founded Shoot the Moon, a company that has licensed more
than 100 products creating $4 billion in retail sales. It also designed some
of the most sought after toys of 2018 including: Nerf Laser Ops from
Hasbro, Wrapples from Moose Toys, Barbie Dancin’ Fun Horse from
Mattel, Hatchimals HatchiBabies from Spin Master and Scribbles
Scrubbies from Crayola.
this interview was taken back in 2008 when David had the number- one
hit toy, Live Elmo. In 2019 David and his partner Paul Rago were
recognized with a Lifetime Achievement Award at ChiTAG.
ftey’re considered some of the best toy inventors today! Also, Dave was
my boss at Worlds of Wonder! He’s the smartest guy I've ever met.
David, I know your background. Of course, it's engineering but
how much… I know you have a lot of knowledge in manufacturing
because once you build your prototype you show it to a client then
you've got to produce it overseas… How much does that play a part
when you're building a prototype, that knowledge of what can be done
overseas?
David: Well, I think that knowledge of manufacturing dramatically
helped Shoot the Moon's ability to license products. We are unique in our
space, in the inventing space, in that we have a good understanding of
operations and manufacturing and cost structures, and the processes that
happen in the East. Because I used to do this, I mean, that was my job to
make sure that things could be engineered and manufactured in the East.
So, I've spent a lot of time there setting up manufacturing and having
products go through that process.
So, when we present an item to our clients, we present not only just the
idea but also a lot of background as to how it's going to be manufactured.
What the cost is going to be and the best way to manufacture it and the best
components to use. So, our team is well versed in all of those elements and
I really think that helps us when we develop a product and we show it to a
client. They can hit the ground running and take this product into their
processes much easier than if we just were to present them a kernel of an
idea. We not only present the idea, we present a physical model and then
we usually back that up with cost, data, etc.
I've known you for a long time, more than 20 years, and time and
time again you create number one hits. How have you stayed on top for
all these years? What can you pass on to everyone else? What can you
leave us with so that we understand? This is what I need to do to be at
the top of my game.
David: Well, wow. That's a big question and I don't know if you can
really answer it accurately. Some of it's, I'm sure, some degree of luck and
some of it is the people that you surround yourself with. Some of it is
knowing that your ideas are not necessarily going to be recognized by your
clients; therefore, you need to come up with many, many ideas, fine tune
them to a reasonable degree so that you can show them to whoever your
target is. I think that the problem that a lot of fledging ventures have and
this goes for almost anything that you're doing in a marketplace that's
fashion is you have to present a lot of ideas and a lot of concepts. So, don't
necessarily get stuck on one. If that concept or that product is not coming to
life the way you expect it to come to life, move on. Do the next one and the
next one and the next one.
You need to have very thick skin, because a lot of your ideas well... we
have some ideas around here that we just really love but we can't get the
client to appreciate it as much as we appreciate it and then you just have to
move on and do something else. If you do enough of them and you can
maintain that creativity and I believe creativity breeds creativity. So, you do
one product and you finish it and your creative juices are flowing, you can
immediately go to the next one and then immediately go to the next one.
For me, I'm kind of ADD, so I need to do a whole lot of things at the same
time. As you recall, Steve, I was all over the place. I like doing a little here,
a little there, a little here, a little there, a little here, a little there. Our
company does that. We can move from one product to the next really, really
quickly.
I think that surrounding yourself with the right creative people — which
we have here; our staff is very, very good — and not getting too caught up
in any one idea are the key elements to making sure that you can stay on the
top of your game.
The advice David gave is extremely practical and it is coming from the
best! Achieving success in this industry takes time. Don't quit your day job.
If you’re just starting out he recommends taking a job at a traditional toy
company to learn as much as you can and get your feet wet. You need to be
very realistic. Remember you’re going to need a lot of ideas and concepts!
It will take time to generate revenue. So, you have to have another way to
pay for food, clothing, and housing during that time.
He also states you need to study this business. You could be working on
something for years only to find out it was done two years ago and it failed
in the marketplace. Study the history! This is a competitive industry given
the high volume of submissions,
Costing is mentioned once again. You need to have someone on your
team that understands the process of manufacturing in this industry. You
can hire people on the outside to help with this. Giving your potential
licensee this type of information can speed up the process. David was able
to gain this type of information when he worked at Worlds of Wonder as
head of engineering and manufacturing. It gave him an advantage.
SARA FARBER
Professional Inventor Toy and Game
Industry
Sara Farber’s background is in the toy and game industry developing
content for toys. She worked at Sesame Workshop, the producer of Sesame
Street, and VTech, the global supplier of electronic learning products,
before heading up the content design department at Fisher-Price for almost
6 years. At Fisher-Price she developed content for characters from Sesame
Street, Nickelodeon, and Disney — think Elmo, Winnie the Pooh, Mickey
Mouse, SpongeBob, and Dora the Explorer.
When she left, she began doing consulting work. Companies like Spin
Master and Gund would reach out to her to get help developing intellectual
properties based on inventions. After someone would present a toy
company with, "Here's this gadget that does this thing," she would then
work on developing what the play pattern could be for different ages
including what intellectual property or brand could be created around it and
the characters and world of that toy.
Eventually she thought, “Well, why don't I just invent stuff? If I'm
doing all this creative work, maybe I should try.” At that point she had
worked on hundreds of toys! She teamed up with her husband Bryan,
whose background was in advertising, to start their own company, Galactic
Sneeze. Galactic Sneeze has since licensed numerous games and ventured
three products of their own.
I’d love to learn more about what it was like developing intellectual
properties. Were you looking at it from a branding or trademark or
copyright standpoint? Was there any type of functionality in these
games? I mean, how were you looking at that?
Sara: I was looking at it really from a storytelling perspective creating a
brand and characters in a world. So, for example, if there was a toy gadget
that did a certain thing or moved in a certain way, they would tell me,
"Maybe this is good for a line of toys or a line of fairies. Can you help us
figure out what that line might be?" I would go back and think, here's the
backstory of that world of fairies — taking fairies for example — here's the
backstory of this world. And I'd start off by giving them a bunch of options,
like “Here are five different takes on what a backstory and a world could be
for these fairies.”
And then they'd come back to me and say, “We really like this one or
these two. Can you kind of develop them further?” And then I'd say, “Okay,
great. Here's the backstory blown out a little bit more. Here are some of
names of the different characters in that world and the conflicts that they
might have, and here's what some features of the toy could be that relate
back to this world.”
It's almost like pitching a TV series, really. The same sort of thought is
being put into developing the world of a character but it involves a little
more emphasis on play patterns.
this was back when I was focused more on toys than games. Many of
these products never saw the light of day because they were inventions that
someone had brought to the company and the company was evaluating and
asking, "What do we do with it?"
So, I would work on creating the story behind it, what the world was,
how it could be blown out into different SKUs, and what potential names
could be for the characters. For example, sometimes I would write the little
blurb if it were a collectible plush line that goes on the hang tag.
this was when I worked in-house as the Director of Content Design at
Fisher-Price. I oversaw a team of content producers who would write and
produce all of the content that went into the toys. When you squeeze Elmo
or you press a button on an electronic toy and it says something or sings
something or there's some sort of educational content or gameplay; that was
our responsibility to create. So, we wrote the songs and produced the music
and recorded the voice talent. If there was a specific educational aspect,
we'd work with an expert.
Why did you leave?
Sara: I got laid off! It was 2008. Whenever the market crashes, I get
laid off. Yeah, it was 2008 and they had massive lay-offs at Fisher-Price.
Was that a great thing for you looking back? Probably not at the time
but now looking back?
Sara: At the time, it was extremely upsetting because I very much
enjoyed what I was doing and I was overseeing a department. I really liked
the people that I was working with. When I sat in interviews for other
positions, I’d think to myself, you know, “I kind of just want to be working
on my own stuff.” So, actually, the timing was really good. I wasn't
interested in pursuing another fulltime position right after that and I ended
up starting Galactic Sneeze with my husband pretty soon after that.
Let's talk about developing your own brand and coming up with
ideas. Every time I ask people this question, they always stumble.
When I was doing a lot of creating for companies and coming up my
own ideas I had a systematic approach because I knew if I was really
going to be successful I was going to have to come up with a lot of ideas
and I was going to have to have a process where I could pull ideas from
every single day. When I ask people who are not inventing fulltime,
they always say they're kind of waiting for inspiration to strike. So,
how do you do it?
Sara: I agree with you. I often think about how some people will say,
“Oh, I came up with this idea in the shower, or I was brushing my teeth.”
Sure, that happens sometimes. But for me, creativity is a very deliberate
process and the process has a structure. It involves a lot of research,
knowledge, and years of experience of knowing what goes into creating a
toy or game; what's on the market currently, where the openings are, who's
making what kinds of games or toys, what didn’t work, and trying to figure
out what might not have been done yet. Then, once I get to that space, I
actually have a few different ways that I approach creativity from especially
from the game perspective.
With games, I have three favorites that we use. Because my background
is in content and I really like wordplay, we often start with a name that's
either a silly word or a play on words or a portmanteau or something or a
pun, and we come up with a game from there. So, for example, one of the
games we licensed to Kikkerland is called Maskarades. It’s essentially
charades with a mask. We actually started with the name on that one. We
were just kind of brainstorming charades kind of games and we said,
"Maskarades," and I'm like, "Oh, my gosh, it has a mask!" So, sometimes
we get to a game through starting with the name.
Another approach we take is looking at popular trends, so really sitting
down and researching and saying, "Okay, what are the trends? What are
people doing on YouTube? What's popular on social media? What could be
a big blockbuster game on the shelf that will relate to the people who are
into these trends?” And that's how we came up with the Goat Yoga Party
Game because we started seeing goat yoga. At first it seemed like this
weird thing we'd sometimes see on the morning news. Then we noticed it
on Instagram, then we saw celebrities were doing it, and then it was in, I
think, a Hotels.com commercial. Now there's an Instant Pot commercial
with goat yoga in it! When it hit the mainstream we were like, “Okay, it's
time for a game. Let's be the ones to do it first.”
The third thing that we do to come up with game ideas is start with the
mechanic. So, we'll start with a type of gameplay and then try to come up
with something that's a twist on that. For example, our adult party game
Spank the Yeti is a twist on a classic kind of spoken parlor game that's kind
of adult which is called “Fuck, Marry, Kill.”
You know, the game where you list three people like your first-grade
teacher, Tilda Swinton, and Jennifer Lopez, and then say, “Which would
you sleep with? Which would you marry? Which would you kill?” There
are all different names for it.
Right around the time we came up with that, HedBanz was a really
popular game from Spin Master, which was essentially a party game that
people would play where you'd put a name on your back and then walk
around asking questions to try to figure out who you were. They did a
really smart thing by putting the name on a headband.
So, we thought, “What other popular parlor games could we take and
then fit into a box?” So, we took that game, which is really fun, and we
thought, well, “Why should it only be these three options every time? What
if it's a whole deck of cards that are activities or actions that you could do
to or with someone?” Like, spend a night in Bangkok with, tongue bathe,
elect as President, three-legged race with, whatever! All different actions
and verbs essentially and then a stack of cards that are all the people or
things you could do that to or with, everyone from your mother to Abe
Lincoln, to Jeff Goldblum, to mild salsa, to a squirrel who's all up in your
business.
We had a lot of fun with the content and then we essentially figured out
an interesting mechanic that matched with the gameplay. That’s where the
innovation came, in the gameplay, how you matched up these three things
across from each other in a clever way.
What is a typical day like for you? Is there such a thing?
Sara: I love this question because it's hilarious. I start out and I have
my to-do list and my little notebook which I never leave or go anywhere
without which includes little check boxes of the things I'm going to do. And
then immediately I get some email about some other thing that I have to
take care of that has nothing to do with anything on my list, like shipping
inventory to Amazon Canada, which is a new thing I'm dealing with right
now. So, I’ll have to sort out some sort of customs thing for our self-
manufactured games, Schmovie and Spank the Yeti, or get a contract for an
item that I then have to review with my lawyer. There are always logistics
to deal with regarding the backend of our company.
By the time I actually get to the things I set out to do it's a lot later than
I had hoped. Usually I have several projects in the mix at different points. I
might be at the very beginning of one thing. I might also have another
project where I'm writing a script and recording voiceover for a pitch video.
I might be physically working on a prototype.
How important is establishing relationships with the companies you
want to invent for and how do you do it?
Sara: Relationships are everything in any business and in life, I think. I
was fortunate in that since I came from the toy world. I was able to get in
the doors of a lot of companies. Because I was doing work for a lot of these
companies independently as a consultant or freelance, I was able to reach
out to my contacts and say, “Hey, who could I connect with in the inventor
relations group?”
One thing about the toy industry, and I don't know if this is true in other
industries, is the larger companies have a very structured process for taking
external submissions from inventors, and they actually have an inventor
relations division, or at least one person, if not a whole group, which is
amazing. So, there's a specific person you reach out to if you have a toy
concept, a specific person if you have a game concept, etc.
So, I slowly connected with those people through my existing
connections. I also used LinkedIn — which I still do sometimes — to figure
out who that person was. I would send them a note which has worked
successfully a few times. Sometimes, but rarely, I'll ask another inventor if
they can help make a connection and maybe I'll swap a connection with
them. I don't really like to ask for that because inventors have worked hard
for these relationships so I don't like to take advantage of that and ask
people to help connect me.
When you have established a relationship, do they give you any
direction? Will they say, "Hey, we’re looking for something like this."?
Sara: Certain companies make more of an effort to really create that
relationship with inventors than others do. And it's funny, because some of
the inventor relations people that I have the best relationships with aren't
even necessarily ones that I've licensed or optioned products to but these
people really make us feel like they believe in us and they want to work
with us. They’ll send us their wish list a couple times a year that says,
“Here are the categories in which we're looking.” Even more specifically
we've had companies reach out to us and say, “Hey, Galactic Sneeze, we're
looking for a party game with this sort of theme or in this area. We'd love
for you to take a pass at pitching us some stuff.”
And that is great when you get to that point because you're not just
throwing something at the wall! We’ve had this happen where we pitch
stuff and the response is, “Oh, we're already working on something really
similar, I wish we'd known that.” So, it's nice when you get to the point
where they can kind of tell you a little bit more of the types of things
they're looking for.
To keep those relationships going, you want to continue to meet with
them. You want to continue to try to come up with concepts a couple times
a year or more frequently and have some face-to-face time.
How important is pitching face-to-face?
Sara: I think it's the best because then you can have a conversation as
opposed to just getting an email that says, "Pass." or "Hold." or "Send in
prototype." If it's not the right fit you can gain insights as to why. If they
like it but there's something that they think maybe doesn't quite work, or
they only like a certain aspect of it they can convey that to you in a
conversation, and you can maybe figure out something that might be a
better fit for them.
I mean, now with Skype, you don't have to wait for New York Toy Fair
to pitch an idea; you can Skype with a company that's on the other side of
the country or in another country, so thank goodness for that.
Looking at their facial expressions probably is pretty helpful, right?
Getting that feedback allows you to come back and maybe re-design
and re-pitch which is critical.
Sara: Absolutely. There are still some companies we work with where
they just want us to upload a video; and honestly, I don't love that because
there's no conversation. There's no back-and-forth… I'm just uploading a
video and then I'm getting a yay or a nay or maybe two sentences as to why.
Usually something like, "Not the right fit." or "We went with something
else." And it doesn't really help me as an inventor bring them something
else in the future that's better.
Back in the day it used to be sell sheets and storyboards that were
used to pitch, but now it’s videos. Is that correct?
Sara: Correct. Correct. When we started, we were doing a lot of sell
sheets only. Well, that’s not quite true. We made the first edition of our first
game, Schmovie, in 2013. The reason we ended up making it ourselves was
because we had pitched it and there was a big company that almost was
going to make it. It got to the last round and then they passed and we were
so devastated.
It was that early phase where you have this one item and you're so
excited about it, and we had this beautiful prototype. I mean, it looked so
professional. When we had these meetings people would say, “Wow,
that's...you don't really have to…you don't have to build a prototype that
looks like that. You could just kind of come in with some index cards or a
sell sheet.”
So, after that, we started pitching things that were a little bit more
scaled back. You don't want to go too far with something; it's like putting
all your eggs in one basket. And if there's something they like about it but
they want a theme changed then what do you do with the prototype you've
made? So, you don't want to go too far down the road.
Well, if you build prototypes for every idea you have you're
probably going to waste a lot?
Sara: Yes.
How long are the videos you create for pitching?
Sara: We usually try to keep them to a minute or less.
Let’s talk about protection for a moment. Have you ever bought a
booth at a trade show to show your products in with the hope that
someone’s going to walk by and see you?
Sara: We have; however, it was after we were already planning on
bringing the product to market on our own. So, it was less of a, “Hey, look
at all of our ideas, and then do what you want with them.” When we had a
booth for Schmovie at New York Toy Fair, that was after we were already
manufacturing it and we were more looking for orders from buyers and for
press. We also have had booths at Chicago Toy and Game Fair, which I
highly recommend for any aspiring game and toy inventors out there. It is
fantastic and a great way to connect with the inventor relations folks at all
these different companies. So, we've had booths there for our games
Schmovie and Spank the Yeti, but not in a way of, “Hey, here's a thing we
invented. Rip it off or license it!” We haven't done that.
Right, because there’s too much exposure showing a prototype. It's
just too much, isn't it? And you don't know who's really walking by
sometimes either, do you?
Sara: Exactly. There probably are people who would intentionally rip
stuff off, but there are also people who wouldn't intentionally rip stuff off,
but you don't know where you see something sometimes. It gets into your
head and it gets into the ether and then you might come up with something
similar and you don’t even know that you got it from seeing this other item.
So, yeah. I wouldn't recommend just sitting at a booth with all your ideas.
I think you're absolutely right. In fact, I think you're more than right.
Sara: I mean, even when you pitch to a toy company, the whole point
of the inventor relations team is so that you're not going in and pitching to
all the actual designers. You're pitching to a person who's the gatekeeper.
It's their job to weed out some things and then bring others to very specific
people internally with the understanding that it’s an external concept and if
the company wants the concept or to do something similar then it will need
to work with the inventor or give them a royalty.
Remind me when you started Galactic Sneeze?
Sara: I think we technically started our company in 2011. During that
time, we also did freelance work and work for hire. For example, Bryan got
a freelance gig for a year doing some advertising work. I also write for
some children’s TV shows and do work for toy and game companies, as
well.
It's good to have a balance, isn’t it? I mean, to pay the bills…
Sara: Yes, being able to pay the bills is nice. I get excited about
creative projects period. So, whether it's my own thing that I'm working on,
or another creative project that I really like I'm excited.
And you get to meet a lot of people that way too, don't you?
Sara: Absolutely, yeah. There was a time when it was just the two of us
working and how our desks are situated in our apartment, which is where
Galactic Sneeze is headquartered, I was staring at the back of my husband’s
head all day. I remember meeting up with an old colleague of mine from
Sesame and when he asked how things were going, I was like, “You know,
I really love it, but I just kind of stare at the back of my husband's head all
day and I'd like more backs of heads, different backs of heads to stare at.”
He told me he was starting up a new studio and could use someone a couple
days a week to work on this thing. I ended up working there for a year and
a half just a few days a week and it worked out perfectly.
How many ideas have you licensed now?
Sara: So, we’ve brought three products to market on our own; the two
games are Schmovie and Spank the Yeti. We’ve optioned a bunch of things.
We licensed two games that never came to market. We've licensed three
games that just came to market and we've licensed two more games that are
coming to market in 2020.
Is there anything else that you would like to say about being a
Professional Inventor that will help someone else just starting out?
Sara: Yes. Don't quit your day job which we did and right as we had
our daughter. Starting Galactic Sneeze was great but also maybe not the
smartest timing. I had just gotten laid off and my husband had just left his
job at BBDO [the global advertising agency] and we had a newborn. People
say “Don't quit your day job” all the time — but really, don't quit your day
job!
Second, be open to feedback. We’ve helped a lot of other game
designers and inventors who have reached out to us locally here in New
York. We have good relationships with all the local game stores and game
cafés. Someone might tell them they're working on something and they
don't know what to do and they’ll encourage the inventor to call us. For a
while we were meeting with a lot of people. I've had to shorten how much
time I spend with people a little bit just because I don't have enough time in
the day. So, we might do a quick call now, as opposed to meeting for a
coffee somewhere.
When they’d show me this thing they're working on, I had notice that
sometimes people weren’t that open to feedback. I might say, “Have you
tried this?” or “this is great, but maybe this one aspect you might want to
rethink?” Sometimes I could tell that people weren’t that open to it
especially if they weren’t a professional creative and weren’t used to
dealing with a creative critique.
When you're meeting with an inventor relations person at a company,
listen and take notes. Even if they don't want the concept or you decide to
license it elsewhere, they have invaluable feedback! You're meeting with an
expert in the field who sees thousands of products a year so listen to what
they're saying, write it down, and ask questions. Especially if it's not the
right fit, ask questions.
My other piece of advice is always… well, I mean, I guess there are
people who put all their eggs in one basket and they have this one item and
they pitch it and pitch it until they sell it and then they sell millions, so I
guess it’s not fair for me to say, “Don't put all your eggs in one basket.” But
I think, if one of your ideas has been rejected, don't keep going back with
that same item. Don't be that person who's known as, “Oh, the bracelet guy,
he keeps pitching this thing.” You want to diversify a little bit.
We kind of felt like the Schmovie people for a while because we had
one game and we pitched it around and then we ended up making it on our
own. We were working on other stuff but people just knew us as the
Schmovie people because we just had this one game and we would show up
everywhere with this one game! And then finally we made another game
and we were no longer the Schmovie people.
How many ideas do you pitch a year?
Sara: Not enough. Recently? I want to say probably 20 to 30 ideas but
it used to be more. I'd say sometimes maybe 10 which doesn't feel like
enough. I know people who pitch hundreds which blows my mind.
When you go in to pitch, do you bring a couple of ideas with you?
How many do you bring?
Sara: I try not to have a meeting unless I have about three concepts to
share. Unless there's something that's a really great fit for that one company
and I already have a relationship and I just want to show them this thing
because of timing. But typically, I don't really schedule an in-person
meeting or Skype unless I have about three things. I have gone in with as
few as one and as many as probably 11 but those are rarer occasions.
Usually it's three.
There’s a lot to learn from people who have to be creative in their day-
to-day job. Sara is a very good example of such a person when you looking
at her past employment. She has taken the skills she honed forward when
developing games for licensing. There’s no doubt about it: To be a
professional inventor you have to stay current on not only what’s going on
in the industry but also daily life. Stay current! Develop a creative process!
She uses a process to challenge herself to come up with alternatives and
variations of existing products to come up with new ideas. Most
professional creative people have a process that’s extremely structured. I
loved playing games to come up with variations of existing products. Sara
loves playing with words. This is a sign of someone who can call upon their
creativity at any moment. She also looks at popular trends and designs
products around them. She’s truly a professional.
Sara also knows it’s a numbers game. She feels having a relationship
with companies and getting their feedback is critical. When pitching an
idea, she likes to look at facial expressions because they say it all. I have to
agree. You cannot rely on a middleman. The best way to present ideas is in
private and through acquisition departments within the toy companies. You
have to be open to criticism so you can make improvements.
She also agrees with me that you have to be careful not to develop a
product too far. It’s very expensive and time consuming. Anytime you can
get the point across quickly, that’s a benefit. You need a lot of eggs in your
basket, not just one, but don’t go too crazy either. You don’t want to submit
too many ideas at one time. You run the risk of confusing your clients. So,
be selective and don’t quit your day job just yet!
BOB RUGINIS
Former Director of Electrical
Engineering at Hasbro
Bob was the Director of Electrical Engineering at the toy and game
company Hasbro from 1991-2004. For the past 15 years he has offered
turnkey product development support from brainstorming concepts through
production in the consumer electronic and the electronic toy and game
industries.
Inventors can be impatient. What’s really going on behind the
scenes when an idea lands on your desk?
Bob: Yeah, it's tough. When I was running Hasbro's electronics group
for 13 years, we were busy. The inventor group would come to us and say,
"Cost this out." And the biggest thing that inventors need to know is, what
they submit is what gets costed most of the time, because the engineers
don't have time to redesign it. So, inventors need think about how their
prototype can be made more efficiently. For most electronic items that
came in it was clear that people didn’t know the type of electronics that are
used in the toy industry. There is a large number of companies, mainly in
Taiwan, that produce chips, microprocessors, and stuff that is specifically
made for toys and consumer electronics.
When an idea submission comes in, the inventor relations people send
information about the product to the different groups, like electronics and
mechanical. The costing group measures the item’s weight and figures out
the manufacturing costs. The labor and mechanical people will look at the
mechanism and say whether it's producible. And the electronics team will
take a look at the electronic designs.
Engineers are tasked with working on products that have already been
approved and are heading to market. So, let’s say you're using a Raspberry
Pi processor to control your prototype. The inventor relations people will
send the engineers a schematic, which they then cost out. If a Raspberry Pi
processor costs $1.20, that’s what they put in. They don't say, "Oh, this
might be able to use an Alpha Microelectronics 4-bit microprocessor that
cost six cents, or 10 cents." The micros in the industry go down to three and
a half cents and up.
Wow.
Bob: Tha t’s why inventors need to spend some time thinking about
costs because when things get costed out a lot of the time the people who
are doing the costing are approaching it as quickly and easily as they can.
They’re not thinking, “Oh wow, this is neat.” They just cost it as is.
So, when you’re submitting concepts, you really need to look and try
and figure out, is there a more cost-effective way? And include that in your
submission, especially if it’s a big company. The same is true for companies
that send your submission to China to be assessed for costs. The Chinese
guys will just look at what you’ve got and cost that. ftose engineers are
even busier than the engineers here in the United States because they're
dealing with factories.
I do work for Hasbro’s R&D group and in the past have done work for
Spin Master’s R&D group as well. Their engineers don’t have the time to
support them because they’re working on concepts that have been
approved. Usually outside groups are approached to build their prototypes,
to do the electronics and the mechanical design.
So, when something comes in and management goes, “Oh yeah, it looks
good.” and it gets thrown to an engineer, the engineer is usually trying to
complete that assignment as quickly and painlessly as possible. Sometimes
they’ll see a video or a prototype and go, "Oh, this is neat. They're using
this but they shouldn't. They should use this instead." But it's not too often.
Inventors shouldn’t count on that happening, then.
Bob: Yes. We would often just cost out what was presented. The
inventors and companies that are successful know the electronics and the
toy industry. Even if they use a different processor, for example, they
deliver a schematic to the inventor relations people saying what cheaper
chips can perform the product.
The inventor relations people will often tell an inventor, “We’re passing
because of the cost.” That’s all you get told! They don’t tell you how much
it costs. So, it’s really the inventor's job to figure out how to cost reduce the
item.
Should inventors consult with an electrical or mechanical engineer?
Do you need one or both?
Bob: It totally depends on your item. If you have a complex mechanism
you need both or someone who has experience in both. I have done a lot of
mechanical stuff but I always bring in an expert. The people I work with
are ex-Hasbro people who have retired. It’s best to get both. Different
people work differently. Some freelancers want a fee. Others will work and
partner with the inventor.
I think the big takeaway is that if you want to become a professional
inventor, having some type of knowledge of manufacturing cost can be
essential. If you do not have that knowledge then find someone who does.
Understanding how to manufacture your product cost effectively determines
whether a company takes it or not in many industries. Without this type of
insight there’s a good chance you might over design.
This is also why including manufacturing knowledge in a patent
application can have huge value.
JESSE FAUNCE
Mechanical Engineer and Consultant
Jesse’s company Faunce Enterprises offers affordable engineering,
product development, and prototype services for inventors, small
companies, entrepreneurs, and large companies as well. His services
include feasibility consultation, 3D design, 3D printing, CNC Machining,
Prototyping and Fixtures.
Tell me about what you do.
Jesse: I am a mechanical engineer and I own a small prototyping
product development type company. We specialize in taking an idea in the
form of a napkin sketch or just a verbal concept from entrepreneurs and
inventors, as well as companies that have established products in the
market, through to the process of realizing that idea. Sometimes that’s just
CAD drawings or 3D models that demonstrate a bunch of different ways to
accomplish what they're trying to do. We also prototype 3D models.
Sometimes it’s just a quick project that they can hold in their hand to
feel the ergonomics of something and sometimes it's as basic as working
out a mechanism. For example, a client wants to try to fit a mechanism in a
certain sized package. Can we do that? Can you work out something?
Things like that.
Other times, I work with someone who has a product similar to another
product, but they want to make it their own. They want to add their own
features and that sort of thing and I will take their ideas and put them on
paper and put them on the screen so that we can see how the different
components will work together. There are a million different things I've
done in the past!
I’ve worked for a couple of different product development companies.
Those products included juvenile sippy cups, utensils, bath slings, potties,
all kinds of interesting things like that. Also the toy industry, correct?
Jesse: Yes. At the previous company I was employed we worked
closely with Hasbro.
We were always doing games and some little robotic toys. We worked
with pretty much all the major toy companies actually, like Mattel.
If I just need to show proof of concept, that can be pretty ugly, right?
Do you help people with that and what would that look like?
Jesse: Yes. What I would try to do is model something in 3D. That’s
what I would call a “looks-like feels-like type of prototype.” That’s to give
the inventor a shape of the idea, something that they can hold in their
hands, something that they can look at for a few weeks and say, "Do I want
this, or do I want that?" Maybe it's something that, like I said, requires a
mechanism they want to see — how something works. Maybe the
mechanism isn't reminiscent of what the final product will be, but they can
test the feel of how something is spring loaded or if things are moving
correctly. It's important to get the physical aspect of a prototype down and
then narrow it down into how it looks or how it works. There are so many
different aspects of how a prototype interacts with its audience, so to speak.
So, let's say you do the first one and then they want to see a little bit
more? Maybe the invention has got moving parts or maybe it has some
electrical components to it. What’s that called?
Jesse: I would call that a working prototype which is something that
demonstrates a little more than how it looks and how it feels. A working
prototype is a little closer to the end result and something that might be
easily serviced. You can take it apart and change a few things inside, or
maybe there's a circuit board in there and the size of the circuit board needs
to be increased or something like that. You have a little wiggle room with it
in other words. It still might not be the refined end result but it's something
that you can work with.
I try to design in a little bit of wiggle room sometimes, not knowing
how things might change in the future. That way, you're not building six
prototypes every time. You have look hooks to be able to modify your
prototype, maybe get a little more value out of that prototype.
Let's say I want this thing to look like the real deal, maybe it’s even
ready for production. What is that called?
Jesse: I would probably say that's closer to maybe, not a final
prototype, but very close to a production quality prototype. That might be
something that has parts that are assembled together with standard
manufacturing processes, screws, snaps, and so on. It demonstrates a little
bit more than what the product actually is. It also partially demonstrates
how the parts are manufactured and how the product is manufactured.
How important is it to really know how your product is going to be
made?
Jesse: I think at the final stage when you're at the point where you're
ready to start production it's very important to have your final prototype be
as close to the manufactured good as possible. So, your plastic parts would
probably have draft in them. Your screw bosses would be where you want
them to be, aesthetically and that sort of thing, and you'd want to also be
looking at billing materials, costing, making sure that the things that you're
doing, maybe even have some of the plastic parts quoted for tooling just so
that you know where you stand with those things and also the feasibility of
some operations in plastic parts.
There are some things that you just can't do certain ways. There are
some parts that need to be molded and pulled from certain directions.
I've ran into cases where someone had a prototype made by another
company and brought it to us and said, "this is our prototype. It's
impossible to make this manufacturable in its current state and we want you
to take it to that next level and make it manufacturable." As a result,
sometimes the shape has to change and the inventor didn't want that. They
didn't want to change certain aspects of the product. There are things you
can do from the beginning to help morph your product into manufacturing
parts, like place hooks.
What do you mean by the word hooks? You’ve said that a couple of
times.
Jesse: A hook is a feature that will help you apply a manufacturing
strategy.
If you work with someone who’s building a prototype, you want to
make sure they have manufacturing knowledge. Is that correct?
Jesse: Yes. I think that's very important because you could run into
trouble later on in the prototyping stages and the inventor might not be
happy with the outcome of their product in its manufacturable state.
Do you have to build this prototype that's ready for production at
the very beginning, or is that a mistake?
Jesse: No, I think you want to make sure that you have the hooks for
production in your earlier prototypes but maybe not your first prototype.
The purpose of your first prototype is really is to prove your concept, to
make sure it looks the way you want it to look, to make sure it functions the
way you want it to function with the hooks in there for future
manufacturing. A lot of people can make you a prototype that may not be
able to be manufactured in that state.
What do you need to see to get started?
Jesse: To get started I really just need an idea. Maybe somebody comes
to me with just a verbal, "I'm looking for this. It does this and it has a
handle.” Maybe they spend a little time on a storyboard which includes
products that are similar or have a similar shape to what they're looking for.
The same goes for mechanisms. They might say, "I want it to kind of
operate like this mechanism."
Spend a little time looking at other people's products. Go to your local
store and take pictures of products and build a storyboard of how you want
this thing to be designed. Like, “I want it to have this shape. I want it to
have this look and this feel.”
Prototypes get made in stages. I would start with a works-like prototype
if a potential licensee wants to see proof of concept. Basically, you’re
showing how it works. It doesn't have to be pretty. This is the least
expensive prototype you can make. If your product is small enough, there's
a very good chance it can be 3D printed. The second stage would be to
make a looks-like prototype, which is going to get a little more expensive. Is
their interest level high enough to warrant the cost? Next would be a
prototype that's close to a production model. This will be very expensive
depending on the size, complexity, and moving parts.
If you're going to work with a prototype builder, make sure they have
manufacturing experience. Otherwise you may end up with a prototype that
is essentially worthless as you move forward. This is not uncommon.
HARDWARE
COREY TALBOT
Vice President of Marketing and
Product Development at Hyde Tools
Hyde Tools is a manufacturer and seller of painting, drywall, and home
improvement products that has wholeheartedly embraced open innovation.
Founded originally as a cutlery manufacturer in 1875, the company
produces more than 1,200 different products today.
So, Hyde Tools embraces the benefits of working with inventors,
also known as open innovation?
Corey: Very much so. Once you have a process in place for working
with inventors, it’s much easier. If you’re just doing it off the cuff without a
plan or process in place it can be very grueling and result in a lot of wasted
time for both the inventor and the company. I’ve been in product
development and marketing for over 25 years. The process and speed have
changed. These days we are taking in more information online. It’s easier
for us to collect it that way and easier for inventors to submit their
inventions.
We have found that working with inventors who are properly screened
and who have been briefed upfront about the process and expectations can
actually increase speed to market and cut down on development costs.
So, what happens after you receive a new product idea submission?
Corey: At stage zero, we’re just gathering enough info to decide
whether or not this product fits within a set of rudimentary criteria. Does it
match up with who we are and what we offer and who we serve? Does it
have a certain market size? Everyone on my product development team has
more than 10 years of experience in understanding how big something
might be based on how many consumers are in the marketplace. We have a
margin requirement, meaning we need to be able to make a certain amount
of money given the effort required to develop new products. These factors
help us make a fairly quick decision.
Help me understand your invention submission process.
Corey: It is a stage and gate process with the first stage being handled
through an online portal from our website. Our first question after you click
the link asks the inventor to select a category for their invention. These
categories aren’t broad, and sub-categories are included as well. We really
want inventors to understand what it is we’re looking into. From there, right
off the bat, we lay out terms and conditions, putting the legal piece out in
front of people right away.
We tend to work with products that have patent applications filed or
actual patents. We still receive a lot of product ideas that are not a good fit.
One of my favorite stories is about my first week working at Hyde is I
spent a couple of hours on the phone with a passionate gentleman who was
trying to get me to understand his invention. This person did not have a
patent or had filed a provisional patent application and wanted me to sign a
non- disclosure agreement (NDA). When we ran through our criteria with
him which, going back and forth, took the better part of a week everything
matched up! But then when this individual visited our office and handed me
his tool, I handed him one back that looked exactly like it.
I had wasted my time and his, so I quickly decided to streamline the
process. If he had an application filed, our phone conversation would have
lasted about a half a minute because I would have seen a photo or drawing
or video and that would have been the end of it.
There are many benefits to our online system. I can log in and give
feedback any time, day or night when I am able. It’s sped up the entire
process. I can let inventors know when we’ve reviewed their submission
and ask questions through the portal, creating a record. Many times, we ask
inventors to go and gather more information. Sometimes we get back to an
inventor within a day. Sometimes, if we’re interested but need more
information, it can take as long as a year before deciding to move forward.
It becomes very collaborative with the inventor taking an active role instead
of wondering what is happening inside the organization.
ftat whole first part of the process? Well, at big companies, it’s like
you’ve entered a black hole. No one wants to talk to you until they have
done some due diligence from a legal standpoint. And that legal person is
not a product manager and not connected to product in any way. Good ideas
die from lack of understanding and legal concerns. Our online process
allows people to see what’s happening, and the legal piece has already been
covered.
After we accept or decline the submission, there are phone calls and
sometimes, face-to-face visits. I think what sets us apart is that we’re more
forward-facing with inventors. We set expectations right away. During that
first phone call I lay out exactly what our process is including how long we
think it will take, the steps required, how much the inventor will be
involved, etc.
About how submissions do you receive a year?
Corey: We’ve received about 800 submissions since we set up our
online portal about six years ago. Not as many as you would think! To be
clear, that number is just what has come through the portal. Of the
submissions that have made it through to commercialization, half came
from trade shows. For example, a buyer at one of our retailers connects us
with an inventor who has a great product.
Do you check out new product ideas at trade shows or prefer to
follow up later?
Corey: Every year our process becomes more refined. Trade shows
have changed for suppliers and manufacturers. Fifteen to 20 years ago, we
were at shows primarily to sell to our customers, which are retailers. That's
not necessarily the case anymore, especially for national shows. Now they
are a way to launch new products from an advertising standpoint and share
product knowledge with representatives who sell for us. The first couple
days at a show I’m busy doing marketing. The last day of every show I
keep open to meet with inventors. We host a kind of mini Shark Tank. We
have a sign-up sheet. That way, inventors know they're going to have a
certain amount of time to pitch and have us look at their invention right
there.
Do you sign non-disclosure agreements (NDAs)?
Corey: This is a very fast-paced and competitive marketplace in which
we play. Unless the inventor claims a benefit of the product that is so
compelling, like it does the job in half the time or 10 times as many jobs as
before, we usually don’t sign NDAs and will direct the inventor to do a
patent search, file, and then resubmit.
We’re here to make good decisions and to make money and as well. It’s
a two-sided street. If you have a patent or provisional patent application,
you’re pretty much covered. It’s not worth your time to do an NDA at that
point. If someone tells me they have a drywall tool; well, I have 15 on the
drawing board!
I will sign an NDA if it’s worth it, but I need to be convinced of that.
What are some red flags when working with inventors?
Corey: “We’re going to sell millions of these things!” When I hear that,
I shut the conversation down. Because 99% of the time it’s not true. That
doesn’t mean your idea is bad. And it doesn’t mean you can’t make a lot of
money! Realistic fact based expectations are important.
What do you wish inventors understood better?
Corey: Tha t there are only so many hours in a day, for one. We’re all
people at the end of the day. We all have expectations of what we’re
supposed to get done and how we’re supposed to function. Spending an
hour on the phone with you means there is one hour less for proving out if
the idea is marketable. I’ve been involved in organizations that aren’t
thinking of the person behind the submission. It’s a number. The same is
true for inventors. The most successful, in my experience, value time and
fact based honesty as much as I do.
We’re small enough that we still have individual conversations with
inventors. It’s important to remember that companies are risk-averse. Space
at a retailer isn’t kept easily. Every year buyers and retailers need to show
gains in the right direction to stakeholders; more margin, more sales.
You’re constantly evaluating out of the 100 products on the wall, which is
the worst? What can I replace it with to hit the buyer’s goals? That’s how
we make sure we’re doing right by our customer and meeting their
expectations.
The hardware industry is becoming friendlier. Still, I believe you have to
find those midsize companies that value working with independent
inventors, like Hyde does. Some large companies change their policies
quite regularly. For example, in August of 2019, Black & Decker stopped
taking outside submissions. Always check back in because their policy
could change.
This industry leans on inventors that work in the trades because of their
experience. It’s a perfect opportunity for do-it-yourself types and
professional home builders. One of the big takeaways for me? I highly
recommend filing some form of intellectual property. And like Corey said,
once you file intellectual property, who cares about an NDA? They really
like a well-written provisional patent application. It separates you. It’s one
of those barriers to entry. So, I’d say it’s important to file.
Like other industry insiders have explained, your product clearly has to
have a point of difference. So please, search around on the internet. It’s
very interesting to me that trade shows are not so much about selling
products anymore, but introducing new products and working with
inventors.
Online portals are becoming more and more popular because it’s easier
to manage submissions that way including for inventors. I also love that on
their online portal they explain what they’re looking for.
They give you a target to hit.
And if you decide to submit to a hardware company whose process is
not so straightforward? I would call them to ask about their process and
expectations first. For you to be efficient and effective, this information is
extremely important.
HEALTH AND BEAUTY,
MASSAGE APPARATUS,
TRAVEL ACCESSORIES
LAWRENCE CRUZ
Chief Patent Counsel at Conair
Corporation and Inventor
Lawrence Cruz is Chief Patent Counsel at Conair Corporation, a $2
billion privately held household and personal products company, and has
worked at the company for 17 and a half years. He started his career at the
United States Patent & Trademark Office as a patent examiner in 1987
while attending evening law school. Before landing at Conair, he was in-
house counsel at FMC Corporation, a large multinational and publicly
traded company. He also has provided in-house counsel at a medical
startup, and worked at several boutique patent firms.
What is your role at Conair?
Lawrence: “My role at Conair is pretty broad. Because we work for a
privately-owned company, we tend to have a very lean corporate staff. So,
on the one hand it's a smaller environment and we're very busy, on the other
hand it's very enjoyable and interesting. I manage, direct, and handle
various matters related to patents and designs. This has quite a bit of
overlap with other things like trademarks, anti-counterfeiting, trade secrets,
trade dress. Also, things that have nothing to do with intellectual property
sometimes fall under my work plate.
It’s a great mixed bag in an exciting business. The business units in
Conair include household appliances (some related to hair grooming and
hair care and some related to personal convenience items like a massage
apparatus) as well as travel accessories like travel pillows and luggage
locks things like that.
We also own Cuisinart and Waring. Cuisinart is a consumer cooking
appliance brand. Waring’s cooking appliances supply restaurants and the
commercial kitchen industry. We also own a few other brands related to
beauty or appliances in different parts of the world, but in general, that's the
business. The company has been around for over 50 years. It's a healthy
company. It is global and we're leaders in most of our categories, if not all.
I was very fortunate early in my career to have had very good mentors,
and to have worked in two of very large publicly traded companies in a
more traditional in-house counsel role. I was lucky enough to have choices.
I have been approached by legal recruiters over the years to return to more
traditional roles in publicly traded companies, but I really like the variety
and the atmosphere of a privately-owned company. It’s unique in that it
does business on such a big scale.
So, does Conair work with independent inventors?
Lawrence: We do. We have an informal policy, which has largely been
shaped by me because I'd been given the autonomy to do it the way that I
think is best for the company. It’s very informal. I would say on average we
have more than a hundred a year of unsolicited cold calls from inventors.
Often, they're not engineers or research types because as you know, we sell
a lot of household goods that consumers use. So, you have people from all
walks of life, not just the end users of our products. For example,
hairstylists, people who work in salons, people who cook for a living or as a
hobby, or people who are familiar with our appliances. So, we get cold calls
from people who are not necessarily well-versed in intellectual property or
even licensing deals.
I receive all their calls and try to be as patient as I can, in a way that
makes them feel welcome and comfortable and at the same time keeps it
professional. So, we have a pretty, I would say active flow of ideas coming
in from people from the outside. And we do license rights, and on
occasions, we might buy the rights. It's very common, and it's welcomed.
As a company, we're thankful that people give us a chance to consider their
ideas. And we treat everyone with a lot of respect so that we have a good
reputation and we're trustworthy as a business partner.
How do you help inventors?
Lawrence: Well, obviously I can't spend a lot of time away from my
other chores at work, so I'm limited in how much time I can spend with
people, but I do like to at least have an initial conversation. And I have to,
of course, be mindful that I'm not giving legal advice to people who are not
my clients.
But sometimes they have a lot of questions and I can't really answer all
of them because of ethical and professional liability. Also, at the same time,
I don't want to have them inadvertently divulge their private information to
me or divulge the company's information. So, there are boundaries and
limits; at the same time, I try to make it simple and direct.
The philosophy in general is... I think it goes all the way up to the
people who are in the top of the company, including our late founder, Lee
Rizutto and the people who still run the company and still own the
company. They would be disappointed and he would have been
disappointed if anyone in the company was treating people, the customers
or the public or any outside party disrespectfully. So, that mentality, that
approach, I think is taken with everyone we do business with and that
means to me, when someone calls with an idea, I treat them as important as
the next person. Everyone’s important and everyone’s idea is a good one,
and that I think is the way you need to do business in general.
That's refreshing.
Lawrence: Tha nks. I might add, and I don't mean to toot my horn, but
I should add that heard from people who call, they say, "ftank you so
much." Because it's so hard to get a live person on the phone, much less
someone at a high position to actually give them the time, just even a one-
minute phone call. Some people, they never get past a letter, I think it's
rejected and they don't even know who looked at it and they tell me these
things, they tell me that they're pleased with Conair, that we give them that
attention.
What is your preferred way of having inventors submit an idea?
Lawrence: Well, I always prefer email because electronic is instant. It's
also easy for me to share certain portions of the information with the
relevant people who need to make a decision. Also, it's great for record
keeping as you know, we don't need to use paper. The responses are
instantaneous when I can acknowledge that I received it, and they’re not
wondering if I've got it yet.
The decision between whether or not they should send a prototype, or
their drawings, videos, text description, all the above — I leave that up to
the person submitting the idea. I tell them that, "We don't necessarily need
to see your patent application or when you filed it. Some of that is your
private information. Let's see how far we go downstream and if we need
that when we get to that point, great, We might ask for it." But I'd tell them,
"Just give me something that's initially trying to convey the product quickly
to a team of people, marketing people, sales people and the managers. What
the gist of the idea is that you think might be appealing."
I really don't lay down any particular criteria. The person should be
comfortable submitting something they're comfortable submitting.
Do you sign non-disclosure agreements?
Lawrence: We don't sign NDAs as a policy. When people cold call us
we don't know what they're going to show us. We don't know that we're
sitting on something like it already and we have people all over the globe
that are our employees and we also have business partners on the outside.
We have factories, people design for us.
So, I tell the inventor, "Look, if it's true, as they often say, that you filed
a patent application, let's wait for it to publish in 18 months. Or you have to
take a chance and show it to us and trust us but that's up to you and your
patent lawyer to talk about and decide what you're comfortable with."
More often than not, I'd say 90% are fine sending me something. And if
and when we need details, if and when we need specifics about a question
like, “When did you file your patent? If you filed it, can we see a copy of
it? Of your application? Or do you have some technical information?” Then
we can talk about signing an NDA and picking a more traditional route.
Also, sometimes there are people who are R&D types or people who
we've done business with in the past that would be an exception where we
do an NDA. Because it's not a cold call and it's not any lead to us but we're
very careful about it. We don't want anyone to have a misunderstanding.
I encourage inventors to protect themselves to an extent they feel
comfortable with so they can actually share the idea. NDAs don’t work
the way most people think they do.
Lawrence: Over the years as an attorney dealing with different clients
before Conair, you sometimes have to tell people, "The NDA isn't
necessarily an ironclad suit of armor. It's really just to have something to
talk about, if you have to go through the trouble of suing, which you don't
want to have to deal with. It's expensive and it's uncertain."
Now, the other thing with NDAs is, some of them are obtrusive in what
they say and they put you in a position where you're easy to sue. I worked
in litigation and I direct a lot of litigation and I've dealt with a lot of patent
trolls and deflected a lot of them. And to have a situation where you have
an NDA and a person who feels wronged… Unfortunately sometimes there
are attorneys who will take a case that really has no merit and they'll shake
you down for some nuisance money.
So, a private inventor who feels wronged by a large company? We don't
need to open that flood gate. I tell people, "Go talk to your lawyer. Make
sure you're comfortable sending this and then send it because we're not
going to do an NDA." And knock on wood, I can tell you that's worked
perfectly for all these years and we have no shortage of people sending
ideas. And it's honestly maybe two out of 100 that will say, "Well, I'm not
going to send it now." And I said, "Okay, well then don't." But, usually
people trust that and they can choose what they want to send and what they
don't want to send, and it's fine.
The ones who feel they really have something to protect, they're going
to make sure that their patent portfolio is buttoned up before they show it
anyway. So, I think that takes care of itself. So, yeah.
When you're reviewing an idea that lands on your desk, how
important is it that it's protected with intellectual property? Are you
looking for at least a provisional patent application? Do you want to
see a portfolio of patents like you just mentioned? Are you ever willing
to work with an inventor to apply for patent protection?
Lawrence: We don't have a strict requirement. In the event that you
have not yet filed an application, it's okay to show the idea to us, but if we
do decide we really like the product and we want to do business with you,
you're encouraged to file an application at some point soon, because the
whole idea is that we're paying you for your current or future patent rights.
Sometimes people call and bare their souls to me and say, "I don't have
the money to be filing patents unless I know I have a customer." and I can't
give them advice. I tell them very clearly, "I'm not your attorney. I'm not
giving you legal advice. You should consult your own attorney but after
you talk to your attorney, I’m telling you that we don't require you to file
patents before you show it to us. That's your decision."
I know I'm very clear. I don't want them to complain later on that I
didn't give someone's client the right advice because I shouldn't be giving
them advice. I don't want to give advice.
If things go well you're going to be maybe working together but
before you’re going to be on opposite sides of the negotiation table.
Yeah.
Lawrence: People understand that until they feel they've been wronged.
Then they have a litigation attorney talking and suddenly they're thinking,
"Yeah, he didn't tell me that." You don't want that to happen. So I take huge
cautionary steps.
But to answer the question, when people ask me, "Do I need to file a
patent application before I show it to you?" I say, "No, you don't."
But then I also tell them, “We're probably going to want to do a license
and your current or future patent rights are going to be the reason we're
paying you. So, if you don't have them after some time we might wonder
why we're paying you. So, not to hint, but you should do that if you
haven't."
I get that a lot of inventors don't have the resources and time to file a
patent application for everything they do so it must be a tough spot. And if
you read all the stories about the great successes in business, in innovation,
in entrepreneurship, they all had a few failures before they had a few
successes. So, you wonder how many are affordable failures you have
before you run out of money on your attempts at fame and fortune?
I get their dilemma.
What is the evaluation process like?
Lawrence: The re’s not really a formal structure. I do a little research
on my own before I waste the time of other people because sometimes the
idea been done before. Sometimes I end up sharing it with other people and
often because we’re in the same building, we'll sit and talk about it. As far
as how long they take to evaluate it, that's up to each individual, and also
what they do and what their criteria is.
Each department and each manager has their own sense of what
products are selling and aren't selling, and whether or not there's a need and
whether or not it's something that they want to take a chance on.
So, it's really informal, and it's really on a case-by-case basis, both by
subject matter and by the people involved, so there's no formal structure.
I've always said that, "There are more good ideas than there are
channels to sell them." And if you look at patents for a living like I do, you
see all these great things and very few of them ever make it to market.
There's a lot of factors and sometimes it's timing. Sometimes it has to
do with the conditions of competitive products or the willingness of people
to put money in and their personal reputations on the line to develop the
market and so on.
But yeah, there are definitely more good ideas than there are channels
to sell them, and some people get discouraged.
Do you give feedback?
Lawrence: I don't really like to do that, because doing so would
potentially reveal the company's private business strategies, but also it leads
to people wanting to have dialogues with me that I shouldn't be having with
them. They're not my clients and I really have other work to do and it's not
me being cold as much as, I've got business to take care of.
How important is the cost of the item when evaluating?
Lawrence: No surprise there. We need to make a profit off of it. It has
to be something that you don't want to make too cheap. It has to be good. It
has to be a good quality product but it has to fit within our model. And our
model is our business.
Tips and advice for inventors?
Lawrence: The re’s one thing that comes up, and it’s a common theme.
I see this not just from the part time inventors, I see it sometimes from
engineering firms. People have a tendency to over engineer. They over
design, making something that's just elaborate and wonderful. They don't
understand that it's going to cost so much more, and that the challenge
really is on the marketing people to convince the public that they need this
new product instead of the one they've been using. So, I would say there's a
tendency to over engineer stuff, yes.
I mean, there's a beauty and a skill to engineering something that is
efficient and cost effective. I mean, it doesn't sound as remarkable or as
impressive, like when you read Popular Mechanics or Popular Science, but
sometimes just taking a simple mundane everyday product and making it
stronger and lighter, cheaper, less manufacturing steps — those
improvements are brilliant. And there's a beauty to them and a finesse to
them, and that's what people should be more focused on.
How many licensing deals does Conair do a year?
Lawrence: Only a few. It's a small percentage of the ideas that come
our way.
Is there such a thing as a typical licensing deal at Conair?
Lawrence: I can say that it's pretty standard. Standard meaning, what
me and other people are familiar with; the same goes on in other
companies. We try to do what we think is fair and in that we fall in line
with what's typical.
I think some of the largest companies don’t have the same attitude
that you do about inventors.
Lawrence: No, they don't. I once sent an invention to a large company
and it was terrible.
They negotiated this NDA with me that was really slanted. They said,
"No thanks." and then about a year later I saw a published application
where they had basically followed my idea and stuck it into their own. I
would've made an issue of it, but the reason that I sent it to them was
because they were in litigation and they had settled the litigation. Once I
heard that they had settled I said, "Well, there's nearly no more market for
this because their battle is over."
So, I saw firsthand exactly what people tell me when they call me. Like,
"Oh, it's great that you guys are talking to us. I can't get through." and this
and that. I've been on the other side. I’ve noticed.
Do you have more patents?
Lawrence: At least one more. I might have even more than that, but the
one for sure, it's a tattoo removal thing. I'm feeling embarrassed…
Do you spend your time inventing these days?
Lawrence: No. When I was younger, before my kids were born and
when they were babies, I had more time to think about stuff like that. I even
started up a company at one point, but lately I've been so busy. When I have
my long commute I have a lot of great ideas popping in and out of my head.
I guess maybe I should put some of them on paper and make more of an
effort.
I do invent within our business here at Conair. We have a team
approach. We have the engineers, marketing people, the patent lawyer, all
of us sitting in the same room to talk about this new product or that. My
end of it is, "Here's the patents we need to stay clear of, here's what we can
do, here's what we can't do." And other people get their various feedback
and then we as a group sometimes arrive at some nice designs — so,
occasionally I have my hand in stuff. It's pretty cool!”
Over the years I’ve heard many stories about what working with Conair
is like — and to be honest, they haven’t been that great. But when I picked
up the phone and called Larry Cruz, the company’s chief patent counsel, he
picked up the phone right away and spoke with me informally. He was
extremely casual actually. No gatekeepers whatsoever! He was completely
available and forthright. I learned a very important lesson here, which is to
not go by hearsay.
Conair is a very large company that has a wide range of products,
including hair appliances, kitchen appliances, travel accessories, and
more. What have I noticed about large companies? Patents are important
and that’s true in this case with Conair. Like other very large companies
they don’t do a lot of licensing but they are willing to engage with
inventors, and I like that very much. They will treat you fairly. Get your
intellectual property filed!
The opinions expressed here by Mr. Cruz are his own, not those of Conair Corporation.
PETS
JONATHAN ZELINGER
President of Ethical Products
Ethical Products is a family owned company that has been in the pet
industry for 65 years. The business was started by Jonathan’s late father and
Jonathan’s son now works for him in the business. Ethical Products is one
of the more highly respected larger companies in the pet industry.
Do you work with outside inventors?
Jonathan: We do. A number of our products have come from both
professional outside inventors as well as what we call hobbyists – meaning
pet enthusiasts, typically pet owners who have ideas but are not necessarily
professional inventors.
Could you talk a little bit about how you licensed Amanda Hutton’s
product Push-N-Pop?
Jonathan: Sure. Amanda submitted an item to us about a year ago,
which she pretty much gave it to us in a rather raw form, not yet totally
finished. But we took it to our factories overseas and we created prototypes
and different variations and we called the product Push-N-Pop. It's a device
that holds pet treats. It’s about the size of a dinner plate, perhaps a little
smaller. When the dog pushes it on the floor the treats pop out randomly.
It’s spring loaded.
If you’re familiar with the toy industry, it's not too different from some
of the Fisher Price products that were on the market or still are on the
market. It works off the same concept. When the dog nudges it with their
paw or with their nose the treats pop out at random.
Believe it or not, it’s won three best new product awards from three
different pet associations. It’s actually highly unusual for any single product
to claim that many awards. Just winning a single award is in itself very
unique. That fact that we won three awards means that people really
noticed the innovation and the ingenuity and we've been able to place
Amanda's product in some of the biggest pet retailers in the United States,
Canada and Europe. So, it's been a very successful product for both our
company as well as for Amanda.
Congratulations! How did Amanda approach you? Was it a trade
show? Online? LinkedIn? How did you get to know her?
Jonathan: Well, we've known Amanda for many years. She’s submitted
many items to us. As you know, the number of products that come to
fruition versus what we look at, it's a small percentage. She's shown us
many products. Several of them we've turned down. Several of them we've
brought to market.
I believe our first instance of meeting was at a trade show where she
actually came to our booth and asked to meet with me and the Head of
Product Development. We actually sat down right then and there and she
took out her sample and her drawings and she introduced herself. We
always urge inventors, especially the professional inventors who we work
with, to come to the trade shows, to invest the money in an airline ticket
and hotel room — because they have to know what's going on! They have
to know what's on the market. I think the last thing you want to do is sit
down with a new product inventor and he or she will show you a product
and you have to turn to them and say, "You know what? This product has
been on the market already for three years."
Inventors have to do their homework and the easiest way for them to do
it is by walking the trade shows to see what's out there. Not only does it
help eliminate duplication it also gives them inspiration for fresh, new ideas
and to pick up on trends. So, we think it's very valuable. The professional
inventors who we have worked with who have been the most successful
have been the ones who took the time and made the effort to go to shows
and really get a feel for what's happening in the industry.
How important is it to have a prototype, meaning proof of concept?
Can an inventor submit a video or a drawing? What would you like to
see?
Jonathan: A video is great. At a very basic level we need a drawing. It
doesn't have to be a very fancy drawing. It could be a sketch. We don't need
blueprints or CAD drawings at the early stage. A lot of inventors now are
providing us with homemade videos showing their product in action with a
pet which is very helpful as well. The more an inventor can do to convey
the attributes of the product to us in a minimal amount of time the better.
So yes, a video is important and a drawing is important.
Could you talk a little bit about the submission process? When an
idea comes to you, how long does it take for you to review it and what
is that review process?
Jonathan: Typically, an inventor will call us. If they're new and don't
have experience, they'll reach out to our switchboard and they'll be directed
to our Head of New Product Development to submit their images. Usually
they will submit a non-disclosure agreement (NDA) which we'll sign. And
then once an NDA is signed, they'll submit their new item to us. If they're
local we invite them to come in and pitch it in person.
With professional inventors though they'll usually come in and show us
20 to 30 items in a clip. We will probably dedicate at least a half a day to
review all of their products. We will tell them pretty much at the get what
we like and what we don't like. One thing we tell inventors is if you're
going to be in this business you have to have a thick skin and you're going
to get some rejection. Don't take it personally. There could be a multitude
of reasons why we're rejecting it. It could be that the price point won't work
for us. It could be that it’s too difficult to manufacture. It could be that it's a
duplicate of something else that's out there.
So, you know, rather than having the inventor walking away and hoping
we like to give them initially some feedback and say, “Of the 30 ideas
you’ve shown me, these are the five or six that we like, that we really want
to digest.”
And the rest, they’re free to take them elsewhere. We have no interest.
And we can make that decision pretty quickly based upon the number of
years we've been in the business. It's fair to them. It's fair to us. Neither side
is being held up.
If we like a product we meet internally with marketing and sales to talk
about it. The next step is sending images overseas to obtain a price quote
from our factory to see if the product is going to be feasible. There are a lot
of great new products that have been brought to us over the years but the
cost to produce them is simply too expensive.
If it passes the price and the costing test then we will either go to the
inventor and ask them for CAD drawings. In some cases, our factories
overseas in Asia are able to provide us with CAD drawings.
Then, sometimes we'll get prototypes made up. 3D printing is being
utilized worldwide now and that's a very inexpensive way for us to get a
prototype into our hands.
Do you ever show it to a retail buyer to get a read?
Jonathan: Usually not. We’re better off showing them a finished
product rather than an unfinished product because they often don't have the
vision to see what it's going to look like; therefore, we'd prefer to show
them a finished product. We do have some employees who used to work in
retail environments in our industry who are pretty knowledgeable about
what would appeal to a retail buyer.
How important is intellectual property to you?
Jonathan: It's not super important. It's nice to have. If somebody gives
us a product and already has a patent on it, it's nice to have that. In most
cases that can command a slightly higher royalty rate. But it's not, you
know, totally necessary. If we have a product that we feel we can
manufacture and be first to market, we will move forward and we will work
on a royalty agreement even in the absence of a patent.
What are your tips and advice for inventors who want to work with
you?
Jonathan: First, know the market. If you're a children's toy inventor
coming from a children's market… well, the pet market is somewhat
related, but it's a different market. Become familiar with it. Go into pet
retail stores. Shop at the big box retailers, the Petcos and the PetSmarts. Go
online to Chewy.com and other online purveyors of product like Amazon,
etc. See what's out there. See what's selling. What's hot, what's popular,
what's trending?
That way, when you come in to make your presentation to a company
like ours, you have knowledge, the facts, and you’re educated. Our time is
valuable and your time is valuable. We want to make the most of these
meetings and the more homework an inventor can do upfront, the more
they can understand this industry and therefore the more they can
understand our company. It's beneficial. They should take the time to look
at our website to see the types of products that we're manufacturing and
understand what our price points are.
We deal in a very specific niche. I would call it mid-tier priced pet
products. If you come in and present the next new GPS tracker for dogs and
it's going to retail for $500, that's not what we do. The inventor should
know that before they come in so that they don't waste their time or our
time. You can do a lot of research online these days!
If you’re well-educated in advance, that makes meetings that much
more meaningful.
Once again, relationships are everything. Costing once again is very
important as well. This is a very inventor-friendly industry. You can bring
your product idea to a trade show and pitch it directly to these companies.
Study the websites of these companies before you submit your product. Get
to know their product line. Stay in the industry to familiarize yourself with
trends!
AMANDA HUTTON
Professional Inventor, Pet, Toy and
Game Industries
Amanda has invented and licensed products full time since 2002. She
has licensed more than 50 product ideas over the course of her career! She
specialized in the toy and game industry before exclusively focusing on the
pet industry. The Push-N-Pop treat dispenser for dogs and cats that she
licensed to Ethical Products has won three different awards from three
different pet associations.
So, you're a pet product inventor?
Amanda: Yes. I started out in the toy industry back in the early '90s
specializing in games and this magazine called Playthings that I read
frequently had an ad in the back and it was Ethical and it said, "Hey, All
you inventors/toy inventors out there, Have you thought about designing
toys for the pet industry?" And I answered the ad and licensed a couple of
plush products. I first met with them in, I think, late '03, early '04 and I had
a product on the market with them by early '05.
Do you have animals?
Amanda: I do. I mean, I never had kids. Even though it's grown, it's so
huge now, the pet industry still feels kind of small in a way. And I just
loved it. I always had dogs and cats. So, I just thought, why haven't I been
doing this from the beginning? I always loved playing games. So that's kind
of how I got started designing board games. After I licensed a few products
to Ethical Products, I kind of weaned myself off of the toy industry and
have stayed with pets ever since.
What are the differences and similarities between the toy and pet
industries?
Amanda: The re are probably more similarities than differences. The
whole process from ideation to licensing to getting the item on the market
- all of those steps are the same. The difference to me, like I said, is that
it just feels smaller. I have closer relationships with my clients in the pet
industry than I did in the toy industry. Submitting ideas is the same, for
example. I was lucky enough to have a mentor when I started in the toy
industry who is now in the pet industry himself. He initially worked for
Tyco Toys which was acquired by Mattel. He guided me to an agent and
also gave me a lot of very good advice.
I learned from him and my agent how to start presenting products. I did
not major in business or marketing or even minor in college. I was a
biology major.
So, this person showed you the ropes. Would you recommend to
someone starting out to maybe work with a toy broker or licensing
agent?
Amanda: I would, yes. Especially if they have no expertise in business,
marketing, licensing. If you're really a beginner, obviously I would say,
read some books on licensing. That definitely helped me but it always helps
to have an experienced mentor.
What do you use to present your ideas?
Amanda: Obviously, the more finished a product, the better. The better
it looks, the better it's going to be attractive to my client. I start out by
making notes. Even though I go to the shows I still run into pet stores all
the time to just see what's out there and also to give me ideas. I'm always
researching. I'll make a list of ideas which eventually comes down to,
"Yeah, that's not worth spending my time on." I'll kind of narrow it down to
a couple of ideas. Sometimes some just pop right in my head, no pun
intended.
ftat's how I came up with Push-N-Pop. I just loved it from the
beginning and I ran with it and I made a good working prototype. I did a
sell sheet. I don't have a dog currently. I have a cat but actually my cat was
able to use it so I had a video made of him using it. But I have friends who
have dogs so I sent it out to them and they would record video for me. My
husband actually is very good at taking videos and editing them, adding
music and all that. He's kind of my techie. So, I pass those resources on to
him to finalize it.
Do you build a prototype yourself?
Amanda: Yes. A lot of times I'll take something and cannibalize it just
to save some time. It depends on the product. If I can mold it myself, I will
do that. I use Friendly Plastic, a modeling material, quite often. It's hard to
get things perfect because it hardens quickly so you've got to sculpt very
fast. But a lot of times I'll do that or I'll do sketches and do a 3D model. I
use all of these different kinds of resources.
How important is keeping cost in mind when you're designing?
Amanda: Very important because that's the bottom line. In fact, with
Push-N-Pop everyone loved it but cost was definitely an issue. Ethical
loved it but they initially passed on it. Then all of a sudden six months later
I got an email from them saying that they worked out a deal with their
factory and we're moving ahead. It was the fastest deal I ever signed
actually.
They sent the contract to me within 24 hours and of course we've
worked together before so the contract was pretty much the same. So, I just
skimmed through it, signed it, they signed it, all done all in 24 hours! I've
never had a deal that fast.
I mean it was six months plus in the making but once they made the
decision it went very quickly.
Wonderful. Let's talk more about costs for just a minute. Is there
anything that you can do to determine how to design something that's
more cost effective? Do you have expertise in that? And if you don't, do
you lean on anyone else to help you with that?
Amanda: I do. I consult Chuck Lamprey, an inventRight alumni,
because he knows a little more about molding than I do. When you have to
mold a product you always have to take that into account because you
know it's not going to be cheap. Molds are not cheap. So, I'll often run
things by Chuck and say, "Do you think this is going to be way out there
expense-wise?” and I might have to conclude, "Nope, that's not going to
work for right now. It's just too expensive."
I invent all kinds of products so obviously when I do rubber toys or
plastic toys those are going to require molds. With plush, depending on the
number of materials I use, that's not as worrisome as far as cost goes unless
I have too much detail, facial detail, things like that. Plush toys are a little
easier. I don't have to worry so much about the cost.
When you come up with an idea, do you come up with the name of the
product, too?
Amanda: Yes, I always name it. I'm not always thrilled with the names.
Ethical changed the name. I had chosen Pop Treat initially but when they
came up with Push-N-Pop, I was like, "Oh my gosh, I love it. I love it. It's
wonderful." because it's the perfect name, it describes it. It’s catchy and
cute. Most of the time my clients change the name. There's only been one
product that was a game that I did years ago for the toy industry and I was
really stuck on the name. The name kind of tied the whole thing together.
Otherwise, I don't care if they change it or not but I always have a name for
it so that I have a title for my sell sheet.
Do you file intellectual property like a provisional patent
application, maybe a copyright, or even a trademark?
Amanda: Trademarks? Not so much. The only time I did was with that
game I just mentioned because I really felt that was the ideal name for it but
yes, I file provisional patent applications and copyrights. Sometimes my
clients will cover the cost of the patents, sometimes I do; it depends. And I
do both utility and design patents.
How do you build relationships with your clients? Is it at trade
shows?
Amanda: With Ethical, at every trade show, the President of the
company always says, "ftank you so much for coming.” Most of the time I
don't even speak with my clients on the phone. That’s very rare.
Everything’s over email which I like because then you have a record of all
of your conversations. But that's why it's also so important I think to go to
both the Global Pet Expo and SuperZoo, so you see each other at least
twice a year instead of just the cyber communication.
I've always felt face-to-face is best and especially for me because I like
to present my products in person. I want to see their faces because I can
usually tell if they really like something or something's not really grabbing
their attention. If I just send things in the mail to them or via PowerPoint
presentations, I have no idea how they're truly reacting to the item. I used to
send a lot of products throughout the year. Now I kind of just save them up
and do everything at the shows because I really want to have that face-to-
face.
Do you ever pitch at their corporate headquarters?
Amanda: Before I moved to Florida in late '06, sometimes yes, because
I was nearby in the Northeast but ever since then I just attend the shows.
How many inventions do you pitch at a time and how?
Amanda: Generally, I'll show four to five products. Obviously, not
every product is right for each company. So, I might show a couple more to
one company or just a couple to another. I'm getting into edibles now so I'm
trying to build relationships with new clients because that's a new category
for me but yeah, I always have a prototype for sure. I have a sell sheet.
Depending on if it's something that I've come up with recently, I may not
have had time to do a video, but I always try to do a video at some point.
I always follow up after the show and whether they are interested in the
product or not, I like to send a PowerPoint with all the products I've shown
them so I know and they know what they’ve seen. I have a record. Then I'll
generally follow up with a video or send prototypes and then follow up
with a video.
Do you consider the pet industry inventor-friendly?
Amanda: Yes, very. The only part that is becoming a little frustrating is
that it is getting to a little bit like the toy industry when I left. There used to
be a lot of small companies when I started out in the early '90s and then the
big boys, Mattel and Hasbro, began gobbling everyone up and I find that's
happening a lot now in the pet industry. You have fewer people to present
to when that happens.
How do you present yourself to new clients?
Amanda: Well, I try not be fly-by-night, as in I just have this one
product. I always tell them a little bit about my background, that I've been
in the industry for over 15 years. I have a number of products on the market
and I list the clients that I work with so they know that I'm established.
And if I have products on the market, which I usually do thankfully, I'll
tell them about the products that I have on the market. Or specifically if I
have one that's in the new product showcase I'll say, "Take a look at my
products that are in the new product showcase or at so-and-so's booth."
How important is it to stay in one industry and get to know everyone?
Amanda: Very. That's why I stay focused on the pet industry. I've found
that trying to go back and forth with toys and pets... you can have similar
products. I mean I'll see new fabric in the toy industry and all of a sudden it
starts popping up in the pet industry but again, I find that I really like to
have close relationships with the clients in the pet industry. And I just found
that concentrating on one gave me more of a leg up than trying to keep
track of doing both.
Are you ever afraid of someone stealing your ideas?
Amanda: Yes. Oh, yes. Unfortunately, it's happened. I think sometimes
it also happens by accident, quite frankly. You'll show someone something
and nothing comes of it. (And if they really had taken it, it would be out in
the next year or two.) But then, three or four years down the road, you
might see something very similar and think, "Oh, maybe back in their
subconscious, they saw something similar but they don't realize it." It’s
understandable because I’ve done the same thing; be inspired by a product,
and come up with a similar idea without realizing it.
It's amazing how all of a sudden there will be nothing out there like an
idea, and you're working on something and another company's working on
the same thing. That just happened. I went to a show and I opened up a
trade magazine and there's an example of something I had just designed
too. So, obviously we were thinking of it at the same time.
But you just do your best to protect yourself with provisional patent
applications and copyrights. I do worry about it but I have so much fun
designing and coming up with new products and seeing them come to
fruition. Having established very good relationships with my clients, I'm
worrying less and less.
It was more in the beginning when I wasn't sure quite what I was doing,
getting experience.
Are there any telltale signs of companies to avoid? I mean, can you
tell firsthand, “I don't think I should work with that company.”
Amanda: Yes. You'll always kind of get that feeling. I'm always
pleasant, so I just say, "Okay, No. I don't think that's a company I really
want to work with." It's just not worth the hassle and I have worked with
some companies that have been difficult in the past and we just went our
separate ways. I don't work with them anymore.
What do you mean by difficult?
Amanda: I don't think they were being honest in their royalty reports. I
was able to terminate the contract and luckily licensed that product
elsewhere.
We could spend a lot of time discussing licensing agreements. Is
there one really major thing that you just have to have in your favor?
Minimum guarantees, or what? What do you see in these licensing
agreements that's important to you?
Amanda: I actually have about six priorities for a licensing agreement.
Let's see, minimum guarantees are important to me, definitely. One of my
most important – besides how much of a percentage I can get, generally the
standard is five – is when the product has run its course or they are just not
interested because maybe sales are getting a little too low, I want the rights
to revert back to me always.
And if they want a patent, I want my name on it. Again, if they
terminate, the rights go to me. Line extensions, obviously, I definitely want
in there that I'm going to get royalties off of any kind of extension of the
product. Minimum guarantees, manufacturing liability, and insurance.
Those are important too.
What's the typical lifespan of a pet product on the market or is
there such a thing?
Amanda: Generally, with plush about five years. I would say rubber is
maybe a little bit longer. Plush is probably three to five years. Rubber might
be like five to seven. Again, it really depends on, obviously, if the product
is doing well. I have line extensions for several products.
Do you help with the line extensions or do they come up with them?
Amanda: The y usually come up with them but they will always ask
my opinion on say, characters or fabrics depending on the product but yeah
with colors they usually like to get input from the inventor. And sometimes
I'll email them, "Hey, I've just come up with some line extensions. Are you
interested?" I'm always trying to push line extensions if the product is doing
fairly well. I always try to present new characters. For example, the Arm &
Hammer Super Treadz, a dog dental product, is doing well on Chewy.com
and at Meijer stores. So, they’re coming out with mini versions of them.
Okay, let's talk about your product Push-N-Pop. Were you inspired
by Fisher-Price?
Amanda: I looked at that later. Honestly, I was researching treat
dispensers and it was really funny. I was making popcorn at the time, so I
was in my office but I could hear the popping going on in the background
and as I was just flipping through different treat dispensers, it literally, no
pun intended, popped into my head. And that was one that I just thought,
"Oh, my gosh, that is so cute." And then I did think later, you know with
the Fisher-Price product like, "Oh, yeah, because every kid had that so
maybe that would help with the tie-in." I immediately went to work on the
prototype. I just knew that it was going to be great but I was worried about
the cost. I knew the mold was not going to be cheap.
I think you created a whole new category, so congratulations. I love
it.
Amanda: Tha nk you. I'm working on trying to think of other ways to
dispense food. It’s just now out in Pet Supplies Plus and has been doing
well on Amazon.
This interview is one of my favorites. Amanda is definitely a
professional. I love that she calls her licensees clients. She took the time to
understand the industry first by working with a toy broker when she was
just getting started. Like anything else, becoming a professional requires
that you educate yourself.
I think a big takeaway here is that the pet industry is pretty much the
same as the toy industry in terms of presenting your ideas, protection,
building prototypes, establishing relationships, and attending trade shows.
After interviewing so many companies, I’m convinced the process is the
same throughout all industries. Build relationships and ultimately proof of
concept is needed to close a deal. Minimum guarantees are very important.
Stay in an industry long enough to know how the business works and
become part of their team.
WARD MYERS
Owner of Spunky Pup
Ward Myers has worked in the pet industry for two decades. Spunky
Pup is dedicated to producing high-quality, durable, innovative, and fun
dog toys directed at the pet-specialty market. Their product line has grown
in multiple categories, including Glow-in-the-Dark, Flashing, Tough,
Interactive, Launching and Flying, and Plush. Their goal is to continue to
expand their product offerings to meet the needs of their retail partners,
consumers, and spunky pups.
Could you please talk a little bit about yourself and your company,
Spunky Pup?
Ward: I've been in the pet industry for 20 years or so now. I purchased
Spunky Pup in 2017. Spunky Pup's primarily a dog toy company selling
into retail. We have a lot of innovative, unique products, I think, that
differentiate us from some of our competition. Our products vary from
100% organic plush toys, to interactive toys, to durable toys, to glow-in-
the-dark toys. So, we have a nice variety of products. It really allows a pet
store to go in and pick from our assortment and basically cover all the
gamut of pet toys. We're just not specific to one certain subsection of toys.
Wonderful. Do you work with inventors or outside product
developers?
Ward: We do. We've found some good products over the years working
with inventors. We're always inviting inventors to submit their ideas to us.
And if it makes sense for our business, we'll definitely work to set up a
royalty or licensing deal with those inventors.
How did you connect with inventor Josh Rifkin, the creator of the
Squeak & Throw Ball Launcher, now licensed by Spunky Pup?
Ward: Let me think here. Originally Josh approached me actually when
I owned another company earlier. We'd connected through, I think, a friend
of a friend. He had shown me the product. I was in the process of actually
selling that company, so I held off until I bought this new company. But it
was through a friend of a friend within the pet industry.
When he submitted that idea to you, was it a prototype? Was it a
real sample, a drawing, or a video?
Ward: He actually had a finished product that he was going to do with
another company, but that fell through. So, we took that and changed it a
bit, tweaking it, and ended up making our own tooling and creating our
own product very similar to the product that he had given us.
Typically, about how long does it take after an inventor submits an
idea to you, for you to say yes or no that you're interested?
Ward: A lot of it depends on the product, where it's being made, how
far along the inventor is in their process. But our goal is when we look at a
product to see if there's a place in the market that makes sense for that
product and makes sense within our line as well. And then from there, we
try to get an idea, a rough idea of the cost to manufacture it to make sure
that we're going to be price-competitive in the marketplace and able to
retail it at a price that we know it'll be successful.
It could be six weeks. It could be six months, quite frankly.
How important is intellectual property to you, such as patents?
Ward: We're more interested in stuff that is protected with intellectual
property and patents over stuff that is not. You come out with a successful
product that has no protections, you'll find that you get knocked off very
quickly. That's happened to us in the past. So, yeah, patents are important.
How important is it for inventors to attend trade shows?
Ward: I think it's really important. It helps you understand the industry,
basically how large of an industry the pet product industry is, and how
much competition is out there. You can determine if there are other similar
products on the market already. I get a lot of inventors who come to us, and
I have to say, "You know what? I saw a similar, very similar product on the
market 10 years ago. It didn't do well. Sorry for the bad news. We're not
interested."
Got it. What tips or advice do you have for inventors who are
submitting their ideas to you?
Ward: Do the homework. Make sure that what you have is unique and
isn't out in the market already. We get cartoon drawings of stuff. I
recommend taking your invention to a point where the person you’re
submitting to really knows what it does, how it does. Having CAD
drawings, even a prototype if possible, makes someone more apt to,
obviously, license it.
So, a video showing proof of concept and how it works is very
important to you?
Ward: Yes. A video would be good.
What products are you excited about that you’ve launched or are
about to launch?
Ward: Right now, we're in the process of introducing a line of 100%
certified organic plush toys. The market has gone from organic, all-natural
food and treats and so, we're the first people to bring in a 100% certified
organic toy. The fabric is organic. The fill is organic. The packaging is
organic. The dyes are organic. Everything is organic. So, that's kind of a
trend moving forward. Plus, another line that we're doing is made in the
USA. We're doing a full line of Made in the USA toys that seem to be very
hot right now, what with the state of importing from foreign countries.
It’s hard to design something different and unique in any industry.
We've been working on this organic line for a year trying to get something
that is truly organic and price-competitive. Someone doesn't want to go out
and spend $40 on a plush toy because it's organic. They'll spend $15, but
they won't spend $40.
The pet industry is booming and overall, inventor-friendly. This
company is looking for a point of difference and willing to be the first. I’m
not surprised. Midsized companies need ideas from us to stay competitive.
They're willing to take a chance!
CANNABIS
JONAS MATOSSIAN
Director of Strategic Development
for the new Cannabis Sector of GPA
Global
GPA is a global packaging company providing custom design,
engineering, and manufacturing all under one roof. Since its founding in
2007, GPA has worked with major brands all over the world. It has
manufacturing capabilities of over 600,000 square feet and the capacity to
“design, engineer, test, sample, manufacture, pack and distribute.”
I think the cannabis industry is going to explode, especially with
inventors.
Jonas: Absolutely. What's funny about that is, like you, I started my
career in toys and gifts and the collectible industry where I worked with
tons of inventors. We'd always cast nets out. Our philosophy was: we want
your invention ideas, so bring them to us first. If we thought it was a
marketable product, we would license it and put the inventor in business.
So, I kind of brought that philosophy with me when I began working in the
cannabis industry. That’s how GPA ended up licensing the RoachPack from
[inventRight student] Arkady Grigoryan.
We worked with Hasbro and Mattel over the years. I spent 11 years in
China doing manufacturing and product development from ground zero. I
wanted to change my focus when things began to shift. Like you said, I see
cannabis exploding. I find it very interesting. I like the people who are
involved in it. I like that it's finally legal to an extent where it's not
criminalized anymore, and people can really become innovative out in the
open without having to hide.
So, that grabbed my interest and I started developing my own child
resistant boxes, because that's where the packaging aspect of the industry is
going.
One thing led to another and I got in front of the CEO and President of
GPA and showed them my designs. I think they were impressed by my
spirit and that’s why they gave me this opportunity. I'm charged with
bringing new child resistant products to the table.
When I got the job at GPA they wanted new innovative ideas and the
first person I thought of was Arkady, having developed his prototype for
him at Paper Tube Co. I also genuinely believed in his product as a
solution. One thing led to another and I brought his product to the table at
GPA. They wanted to explore it further and we ended up licensing a
product from him. RoachPack is going to be launched under the GPA
banner.
Wonderful. So, you’ve worked with independent designers in the
past, and now your new position at GPA is to work with inventors and
look for new ideas.
Jonas: Absolutely. That's the most fun part of the job for me. When
you're trying to develop something new every day sometimes you lose
focus on what else is out there. I’ve always thought that working with
inventors would bring some fresh perspective, and it has so far. GPA prides
itself on being the inventor and inventing the right product for their clients,
but to get that secondary perspective on what the market needs as well, in
my opinion that’s invaluable.
So, I believe in creating relationships with new people so we can bring
new products to market that add to our offerings. I don't see this as a bad
thing whatsoever. I would actually like for us to be the first stop for
inventors if they have a new packaging solution to show to this company.
The worst we can say is, "No." and maybe point them in the right direction.
And the best-case scenario is that we license the product from them and
hopefully we're both successful with it.
What's a perfect submission? Do you like to see a prototype, a sell
sheet, a video? What do you prefer to see when someone is submitting
an idea?
Jonas: I always love to see a prototype or a works-like, looks-like type
of model, to truly convey the image of the product. But there's been
instances where I've worked with inventors in the past when their ideas
were just a sketch on a napkin. We would develop the product based on the
concept, invest in it to bring it to market, and do all the marketing behind it.
To answer your question, I prefer to see a physical, works-like, looks-
like model or prototype, but a video, a deck, anything will suffice as long as
it conveys the image and maintains alignment with where we're going as a
company as far as packaging. We're happy to work with whatever, see
whatever.
When a product comes in, how long does it take for you to get back
to that inventor with a yes or no? And what is your process of
evaluating it?
Jonas: Well, for the RoachPack, the licensing agreement was signed
within five weeks. So, not too terrible.
That's fast.
Jonas: Yeah. Tell that to the inventors though. They think it's really
slow.
Can you tell me how important cost is when you're evaluating an
idea?
Jonas: Cost is always crucial. But the good thing about the cannabis
industry and packaging is that the value of the product offsets a lot of the
packaging costs, in my experience. For example, when a package of pre-
rolled marijuana cigarettes sells for $40, you're not going to balk at a $1 or
a $2 price tag on a package that functions the way you want it to that has
the child resistant certification and is a functional product.
So, we've noticed in cannabis that there’s less resistance to cost, but as
the market's becoming more saturated people are getting more price-
oriented. At GPA we have solutions for every price point. We can make a
package as fancy as the client wants, or we can make it as low key and
simple as they want. Our primary concern is the child resistant function.
How do we make that better and keep expanding on it and taking it to the
next level? I think inventors will play a key role in that.
What do you feel the overall attitude in the industry is about
working with inventors? Your philosophy is to be very open. Do other
companies feel the same way you do?
Jonas: I would like to think so. I think they would be foolish if they
didn't want some outside perspective and to work with other people. I guess
it comes down to company culture to be honest with you. Spending 11
years in Asia, I've seen intellectual property get ripped off before a product
has even been launched, just after showing it to a manufacturer at a meeting
table. You know what I'm saying?
Yes.
Jonas: I would like to think that in America and in this market
companies value innovation and they'd like to honor that and commit to it
and reward it. I think it's too soon to tell. I can only speak for myself and
my company. I don't want to put words in other people's mouth but I would
like to think the industry has an open door policy. I just like vendors to
come to us first.
How important is intellectual property?
Jonas: Very. It's highly important to me. I’ve come up with products
that I shopped around to contract manufacturers and then they show up on a
store shelf. It’s highly frustrating. You know what I mean? And what can
you really do about it if you're not protected? Some of these inventors, they
can't invest tens of thousands of dollars to get patents and get child resistant
testing, and all of that. The good thing about GPA is that if we believe in
the product and it's a great item, we do have the backing to do that.
Meaning, we can protect the inventor and the company.
A big part of how Arkady got a licensing agreement signed for his
product, keeping in mind that this is kind of a new way of doing business
for the company, is because he did invest that money. He did get his patent
protection. He did get his name trademarked. He did invest in the initial
child resistant testing. That speaks volumes especially to a corner suite
executive who is kind of distant from what's happening on the ground.
They like to see that they're protected. That's less money for them to invest.
That’s less risk for them to take on.
So, from a corporate perspective, I think that if you're in the position
where you can invest more in your product do it. If you're not, it's not a no,
it's not a closed door. It just results in the company having to invest more
and it may take more time to get the item to market. Because we can't put a
child resistant package on the shelf before it's actually been tested.
It’s still such a new industry. A lot of things are still getting worked out.
There's a lot of misalignment in places and there's a lot of alignment in
places. I think it's going to constantly evolve until they really buckle it
down. So, at this point adapt, improvise, and overcome. That's just how I
see it.
How important is it for an inventor to realize that yes, it will take
some time, but it's really a relationship that you’re building? Because
you're going to be working together and there are probably going to be
some obstacles to overcome. How important is it for an inventor to
think of it that way? The attitude of, "Hey, we're doing this together as
a team."
Jonas: Tha t's how I think of it. I don't think of them as a licensee and
us as a licensor. I look at the inventor as a partner. Their success is our
success and vice-versa. If we're going to invest in patents and marketing
material and everything else — put all that backing behind it — we
absolutely want to see the product succeed. And when an inventor gets his
royalty check, seeing that smile on their face, is always a great thing. You
know what I mean? Who doesn't want more passive income?
Put another way, if an inventor comes to me with just a sketch of a
product and I have to develop that product, that inventor is not going to get
a higher royalty rate because the expense is higher. He will still get paid
fairly, of course.
I always tell them, "Look, the more you do, the more you walk in
the door with, the more you get. The more risk you take away, the
higher royalties are going to be."
Jonas: Exactly.
What are inventors doing wrong?
Jonas: Good question. I don't know how to answer that in a way that
won't hurt someone's feelings.
I don't like the word wrong. It's not wrong. Living in China, there was a
phrase that I learned there that is very common. What this saying means is,
it’s not wrong. It doesn’t mean it’s right either. You know what I mean?
Getting too attached to an idea, taking feedback the wrong way, is
something I see.
For example, if someone turns you down that doesn't mean your idea is
bad. It just means that maybe it's not a fit. Don’t be turned off by being
turned away. That just opens 100 more doors for you. You have got to keep
grinding and not take any rejection personally. I guess that’s the best advice
I have.
When you submit an idea there's going to be a lot of talk about it.
There could be changes and inventors must be open to changes.
Jonas: Absolutely. Yeah.
There's a lot of creativity that goes on beyond the initial submission.
Jonas: Packaging, toys, and electronics — they're all so different. But
again, like you said, I’ve observed lots of tweaks and lots of adjustments,
especially when products need to be child-certified. A lot of X factors
means there's lots of fine-tuning and adjusting.
That's why Arkady’s product progressed to a licensing deal so quickly.
He had already been through the process of getting child resistant certified
before we got him on board.
Anything you can do to help yourself or help the company expedite the
process in getting a license — or at least an answer — is to your benefit, in
my opinion. And if you're not in a position to do that, just be prepared to
sell your product. Get people to believe in it as much as you do.
In your opinion, because you've been in different industries, is the
creative process the same? Are there some similarities?
Jonas: Absolutely. Absolutely. Absolutely! I think the creative process
is the same. It’s just the materials we work with and the manufacturing
processes they fall under that is different. But we all have R&D
departments. We all have engineering departments.
As someone who had never worked with paper, I wondered that there
was such a thing as a paper engineer. I thought paper was paper. What
engineering is required? But the engineering is actually more intricate than
I realized, especially child resistant certifying these higher-end luxury
boxes. It's far more detailed than plastics.
And it's a lot cheaper product. I can sell a laser for $100 bucks, and I
sell a child resistant package for a dollar. But the R&D that went in that
child resistant package was more costly than the R&D that went into that
laser show! That's what I'm learning here at GPA as well.
It seems that the toy industry, because they've been working with
outside inventors for so long, is probably the best at working with
inventors. Professional inventors have been in that field for so long.
But still, there are similarities across all industries.
Jonas: I completely agree with you.
That's what I try and tell everyone. If you can create in one area,
there's a good chance you can probably create in another.
Jonas: I tend to agree with you. The processes are very similar as far as
the development side goes. Just the materials are different. When the
material is a little different there's a different manufacturing process. But on
the development side of things, what I see is very, very similar. It's almost
identical. We're just making different products out of different materials.
I think one of the big takeaways here is that many industries want to
have a new product concept conveyed to them in a way that they can
completely understand it quickly. That could be a prototype or even be a
sketch on a napkin — but they have to get it. So, making it easy for them to
understand your product is a big plus.
Filing intellectual property, including a trademark, building a
prototype, and understanding costs can all be a big plus. Are these
required? No. I know many of you are on tight budgets. Supplying them
with good information is still helpful.
This company recognizes the power of open innovation. I predict that
you’re going to find more and more companies in this particular category
that feel the same way. Why not? It’s the best way to find new and
innovative products and in this category, the door is wide open. Everything
from consumable packaging to different strains of cannabis, to lighting and
irrigation for growing operations — you can license ideas across so many
different categories.
I don’t know of any other industry where there are so many
opportunities. And because it’s basically new, you’re going to see a lot of
innovation. It’s also going to be very competitive for these same reasons.
These companies will treat you like part of their team. Getting to market
is a partnership. Act like a team member and be flexible. There will be lots
of re-designing.
Once again, licensing success is all about having a good idea that you
can convey easily and a prototype can help. Protection is always a good
idea.
ARKADY GRIGORYAN
Inventor and inventRight student
Arkady Grigoryan lives in Los Angeles, California. He is a Vice
President at Century Auto, an auto broker where he has worked for 16
years. He licensed his packaging invention for pre-rolled joints to a global
packaging company that recently entered the marijuana industry. Because it
concerns pre-rolled joints, he expects it to roll out to the two other major
markets for pre-rolls, which are cigars and cigarettes. The big benefits of
his invention are that it’s child resistant and allows a smoker to store what
is left of their joint in the same package.
Why this category?
Arkady: I was inspired by a problem I came across. I used to be a
smoker as far as tobacco and I don't want to say I'm OCD, but you could
say I'm a clean freak. When I quit cigarettes, I started smoking marijuana. I
realized that you don't really finish an entire marijuana joint, but there was
really no good way of storing it for later use. Hence my slogan actually,
store it for later. What I did is create a package that stores the item for later
use or disposal.
Did you build a prototype?
Arkady: Yes, absolutely. When I started out, I hadn't read your book
One Simple Idea and learned about the 10 steps yet. One crucial thing that
was missing from my first prototype was that it wasn’t manufacturable.
Until coming across inventRight, my product looked and functioned
differently. When I realized that it couldn't be manufactured after doing
more research online and reading your books, I hired a company to re-
engineer it and make a second prototype. We kept working on the prototype
to bring it to something that was user-friendly.
Was it easy to reach out to cannabis companies? Were they open?
How did they treat you?
Arkady: The y treated me great. The doors are open. The industry is
growing so rapidly and there's so much investment money coming in and so
many new products and so many new avenues of making money. So, yes,
the doors are open, but there are so many current projects that they're
working on, it's kind of hard to tell them to pause and have their team look
into your product instead.
I got through to a lot of companies, but most of them told me to contact
them six months later because they had so many projects on their hands.
They didn’t have time, but they didn't want to say no and skip out on an
item.
The industry is really exploding in all different directions from
lighting to irrigation to smoking devices. It's really kind of an amazing
opportunity for entrepreneurs. Did you file intellectual property?
Arkady: Before I came across inventRight and figured out the right
steps, of course I was that crazy inventor thinking everyone was out to get
me. So, I jumped the gun and I filed for a non-provisional patent on the first
prototype, the package that I learned later couldn't be manufactured. I filed
before I had the knowledge of what it would take to commercialize this
product from beginning to end.
With the company I hired to re-engineer my prototype, when we came
across something that was strong and good, that's when I filed another non-
provisional patent application. I secured patent protection because I knew I
was onto something. The first patent, that was a waste of money.
Well, that's not unusual. That happened to me as well. What was
the process of licensing your idea like?
Arkady: I'm humble and I'm nice to people. An engineer I worked with
to make my prototype manufacturable named Jonas Matossian ended up
leaving the company and going to work for a major global packaging
company, where he was promoted to strategic management. He contacted
me and said, “Hey, I remember that you had a great product. You were nice
to us and we would love to work with you. Is it okay if I introduce your
product to my company?”
So, Jonas introduced it to the company for me. After they loved it, we
sat down and had lunch. Ultimately, he helped me with all the steps. I don't
want to call him a golden goose, but he was a person on the inside who
loved the product, understood the problems it solves and the benefits it
offers, and helped me bring it to life.
Once they were interested the process moved fairly quickly. Within
about four weeks the deal was signed and done because Jonas was on the
inside helping me move the process along.
Looking back, how important was it to have that champion?
Arkady: Very. Very! Because the craziest thing about inventions is that
when you build something, you get so attached to it. I had to detach myself
when I realized my design wasn't manufacturable and take my emotions
away. What was difficult was when they re-engineered it because it looked
totally different. When I got that first call, it was like, "Oh my God." I just
wanted to hang up and say, "Screw this."
But then I thought, “Okay, this is it. They're the engineers. They know
what they're saying. If they're saying it's not going to work and be
manufacturable…" I started looking at the situation differently. I needed a
positive attitude and to say, "Thank you.” to sleep on it and look at what it
actually was versus feeling like, "Oh, it's not what I need exactly." You
have to put that aside.
So yeah, it’s very important to keep a smile, keep good contacts. That's
what helped me. If I hadn’t been nice to them, if I had rushed them, if I was
mean, the course would have been different. He would have never called
me back to work with me.
Would you agree that it's really about being part of their team? It
sounds like you were.
Arkady: Correct. When you’re open to making changes, you actually
start being able to improve your initial invention so much. My product had
two utilities, yes, but what we ended up adding to it was character. It’s
called the RoachPack. Roach meaning the leftover part of the pre-roll that
you don't finish. The inside piece where you put your joint, cigarette, or
cigar is called the roach rail. One thing led to another and we're joking like,
"Hey, the roach rail is a separate piece. It could look like Santa Claus. It
could look like a bunny. It could look like anything.”
When you work with the team and have an open mind, things improve
and progress in ways you didn't think they would.
Well, Arkady licensed in the cannabis industry. Here are the big
takeaways in my opinion. You never want to file a patent too early.
There’s always going to be some changes! And as you’ve learned from
this story, having input and knowing how your product is going to be
manufactured is critical for your patent application to truly have value.
Prototypes are wonderful to show a concept and learn what works and
what doesn’t work. But what’s always going to be important is that your
product can be manufactured using existing technologies so that the price
point is one that the public will purchase. Once again, you see how
important it is to build relationships in the industry you’re submitting your
ideas to. It’s truly a team effort.
JUVENILE AND BABY
DAVID CONTRACT
Head of Marketing for the Betesh
Group
The Betesh Group is a privately held consumer products company that
owns many of the most popular baby product brands in the United States. It
is the number one diaper bag manufacturer and the number two baby
bedding company in the United States. It’s also the number one baby
appliance manufacturer under the brand name Baby Brezza, which many
people have heard of and its up-and-coming sleep-and-soothing brand is
named Tranquilo.
Tell me a little bit about yourself.
David: I work for the baby division. We’re actually a pretty big baby
products company. I've been a consumer products marketer for over 20
years. I started my career at Kraft Foods working on cookies and crackers
of all things and then Milk-Bone dog snacks. It’s still my favorite brand. I
did that for three years and then I moved into over-the-counter marketing;
for example, Dr. Scholl's and Lotrimin. And then I've been in the baby
products industry for the last seven or eight years and I've been in my
current position for the last two years.
Do companies in the Betesh Group work with outside inventors?
David: We do. Several, actually. I'll give you examples of the two
different ways we work with outside inventors. The first way is actually the
genesis of us acquiring the Tranquilo brand. Inventor and entrepreneur,
Melissa Gerson, developed this incredible revolutionary soothing mat —
the first mat of its kind that mimics the womb to help calm babies. She
developed the product and launched it on Shark Tank two and a half years
ago and sold her business to the Betesh Group late last year. So, that's one
way we work with inventors. They develop the product. They bring it to
market and when they get to a point where they can't grow it they come to a
company like us because we have the infrastructure in place to take a small
brand and make it big. Right? We're selling to the majors: Walmart, Target,
and Amazon. We have customer service. We have research and
development (R&D).
We’re a full-service consumer products company so we can approach
inventors that way, that's Option A. Option B was the route that Lauren
Piccirillo took. Lauren is another amazing entrepreneur and inventor who
had this idea for the first ever baby massager to naturally calm babies. She
spent seven or eight years noodling the idea; developing it, coming up with
prototypes, validating it and ultimately, I think realized it's really hard to
launch your own product. It really is; it takes a lot of money, a lot of effort,
and a lot of time and most people don't have the ability to do that because
they have kids and work, etc.
I loved her product when it came on my radar last Spring. Why did I
love it? Because I know that sleep and soothing are major challenges for
new parents through our research and through my history in the baby
products industry. I love that she was doing something different and it was
very much on trend. Massage and natural approaches to health and wellness
are absolutely on trend today particularly with moms. So, I felt like we
could take her idea and then bring it to market effectively and create a
whole new product category.
So, we did some research to validate her idea and then we negotiated an
agreement with her to acquire the worldwide rights and then we actually
took her idea, her concept. We weren't starting from scratch. We were
starting with what she had created. We modified it, refined it, simplified it
and then we moved into the manufacturing and sales phase. I'm excited to
say that we launched it on September 1st so it's on the market.
There's actually a third way, which is closer to Option B. There are
groups of inventors who come to us with ideas periodically; for example,
we're the leading brand of food makers. That is where Baby Brezza got it’s
start. Baby Brezza is the only brand that makes a food maker that
automatically steams and blends baby food meaning, here's the bowl you
put fresh or frozen fruit in here. Push a button on the machine and it steams
it first and then automatically blends. It’s a patented process. There was an
inventor group that came to us seven or eight years ago with that concept
and they had not developed the whole product but we took the concept. We
developed the product behind it and then launched it.
How important is a prototype when someone submits an idea to you?
Do you need a drawing, a prototype, proof of concept? What do you need
to evaluate whether you want to go forward?
David: I think the most important thing is that there's a patent pending;
that there's protection associated with it. That’s for two reasons: to protect
the inventor and to protect us. So, if somebody comes to us with an idea
one of the first questions we ask is, "Hey, do you have any type of patent
status on it? Even patent pending?" We want to make sure that the area that
they're focusing on is unique and it's not going to step on what somebody
else has done. Two, that's going to help make that product more successful.
Rather than trying to enter a crowded field we want to create a new space
for ourselves so that's really the first question we ask.
In terms of do they need to have a prototype or things like that,
obviously, the more you have the better because it means that you've
actually invested more in it. You've developed it more fully. You've brought
it to life in some way, shape, or form so I can better, or we as a company,
can better understand it but it's not a necessity.
What's most important is that it's a really good idea that meets a really
important and major need state that nobody else has done before. Because
as a marketer and as a business person who's trying to drive incremental
growth I want to do it with a product that's unique, that's differentiated, and
that's going to deliver a meaningful benefit to consumers and they can't get
it anywhere else.
Anyone who comes to us with an idea that we have interest in we're
going to do research behind that. We're going to talk to hundreds of
consumers. We're going to do concept testing. We're going to do an attitude
and usage study. Often a great idea falls apart when you actually tell people
they have to buy it and it's not free.
How long does that whole review process take?
David: We move quickly so we typically take about a month. We're a
small company so we move really fast. I've worked at bigger companies
that would move a lot slower but if you come in and we have a good
introductory meeting and you've got what we think is a strong idea that
again meets our core principles of differentiated, unique patent protection
of some sorts; we'll move quickly. We'll do that research in a couple weeks.
How important is it in your opinion for inventors to go to trade shows
to really understand the industry?
David: I think it's important to understand the industry but I don't think
going to a trade show means you understand the industry. I think what's
more important is that you understand the consumers who would be
interested in your product. You understand their challenges, their pain
points if you will, and that your product delivers on them or addresses
them. I think talking to people, canvasing social media, reading, going to
retail, seeing what's out there is just as important. I think going to a trade
show is not bad. I mean you're not going to see everything at a trade show
and frankly some of the most innovative things out of a trade show are sort
of in the back or behind a cabinet door. So, I would not recommend to an
inventor that the first thing they do is go to a trade show.
When an inventor's going to submit an idea to your company, how
important is it for them to really look at your mission statement, to
look at your product line to make sure they submit an idea that really
fits into your product line? Is that important or not important to you?
David: Tha t's really important. Right? Because if you have an idea you
want to make sure it makes sense for the company you're talking to;
otherwise, it's sort of wasting your time and their time. Now, some
companies might be in category X, Y, and Z and your idea is off in left
field. I would say don't bother because they're really going to focus on
things that are close to what they're currently doing. If your idea is close to
what they're currently doing, so it's not a big leap for them, I would say go
after that.
For example, if you're going to go to a toy manufacturer and you give
them a baby bottle that's very far field. I probably wouldn't bother but if
you're going to go to, let's say, our company and come in with a backpack
for kids, alright. We're big into diaper bags. The next stage is backpacks,
right? That's not so crazy to think that we'd be interested. That’s maybe not
the best examples but the concept is called “adjacency”. So, if the idea is in
adjacency to the company’s existing line of business; I would say to go for
it. If it's not really a close end adjacency and it's very far away then I
probably wouldn't bother.
Great advice. Additional tips and advice for inventors?
David: I think the most important tip is don't give up. If you believe in
your idea go for it. You know what? There are going to probably be more
no's than yes's but you know what? Don't accept the no's if you believe in it.
You have to have more passion for your idea than anyone else in the world
and it will show.
I mean, Lauren is a woman who spent seven years of her life
developing Baby Soothe. I mean, she jokes but it's really not a joke; it was
her third baby. She has two real ones and then Baby Soothe. She put her
heart and soul into it and I'm sure there were plenty of ups and downs in her
seven years and she persevered. She found us and we found her, well
actually, she found us and we loved her. And now we're working together
and we launched it.
So, I would tell any inventor, if you really believe in what you're doing
and you believe that there's an important need that you're delivering, go for
it. Don't give up but be smart about what you put into it. Be upfront with
yourself with how much time and money you can afford. Go after partners.
I do think a tip would be, figure out if you're going to do it yourself or if
you are interested in a partnership because I think a lot of people probably
are like, you know what, I'm going to try to do this myself and then realize
it's really hard.
So, I think one tip would be to have that conversation with yourself on
the front end and not the back end. Come up with the idea. ftink about it
and then really just step back, maybe talk to someone who's in the industry
and say, "Can I really pull this off myself?" If you feel like you can't, then it
might be smarter to find a partner sooner than later because you'll save
yourself a lot of time and energy; and two, I think you're going to get to
your end point more quickly.
I forgot to ask. How did Lauren contact you?
David: She actually connected with our Global Sales Lead who's based
in Canada. I don't know how she found him but he is the one who referred
Lauren to me and then I immediately reached out to her but most often
inventors will reach out to us via our customer service. So, they'll just send
us an inquiry through our contact us form or call us and that's typically how
we hear from people.
More and more companies are opening their doors for us. Years ago,
the baby and juvenile products category was not that inventor-friendly in
my opinion but it’s changing! It’s very important that you take time to
understand the company's product line first. This company is also willing to
look at product ideas that are adjacent to its current line which is
interesting and I haven’t heard that before in an interview with an open
innovation company.
They like inventors who are passionate and if they see something they
like, they're going to move very quickly. It’s also worth noting that they
recently created a brand-new category of products (sleep-and- soothing) to
sell based on the strength of just two products from inventors.
Don’t be discouraged if an online portal hasn’t been set up yet because
many companies haven’t embraced portals yet. That doesn’t mean they’re
not interested in hearing from you. Sometimes reaching out to someone in
sales is the easiest path to get in because salespeople are usually very
available, willing to talk and if they see something they like, they're going
to send it to the right person.
DENTAL
MIKE PARLANTE
Director of Business Development at
DynaFlex
DynaFlex is a manufacturing company that competes in five dental
related markets including orthodontic products, orthodontic laboratory,
dental sleep medicine, clear aligners, and digital office solutions. The
company has been in business for over 50 years and strives to lead in
innovation of new products, industry advancements in technology, as well
as continue to implement improvements with its existing offerings.
Mike Parlante, Director of Business Development at DynaFlex, has
worked in the orthodontic industry for 18 years. He began his career in
outside sales and has been involved in taking many products to market.
Mike is also a successful inventor who licensed his patented orthodontic
invention.
Do you work with inventors, aka outside product developers?
Mike: Yes. Strategic partnerships are very important to bring product
ideas to market. Sometimes those can be difficult to find in our industry.
You’d think everyone would want to jump on new innovations, but the
industry is actually very disrupted and changing rapidly.
Aligners are becoming the primary form of tooth movement. There are
all these direct-to-consumer companies popping up. The biggest companies
are being much more affected by the changes and disruptions taking place.
Taking on a small new product idea is not going to move the needle that
much for them, not in the grand scheme of things.
The smaller and midsized companies are hungrier and more likely to
embrace niche items. For us, these kinds of items are a win-win. We like
being able to have some exclusive and proprietary. And since we have less
market share we’re hungrier, there’s less red tape, and so it’s easier to get
things done and we’re more likely to jump on something new.
What’s required to submit a product to you? Prototype, drawing, video?
Mike: We don’t have criteria for submissions. The idea can be early on
in its infancy, just a concept. There are lots of gadgets involved in making
teeth move. In general, doctors have a very creative side, so we’ve had
plenty of ideas thrown our way over the years. The structure of our
company is well-suited to take on new concepts and bring them to market.
We do some manufacturing ourselves and we have other contract
manufacturing partners we’ve worked with for a long time.
What makes you more likely to take action?
Mike: The level of complexity and how far along the inventor is in
protecting the idea. If a patent is secured, that’s a lot easier. What is
challenging is when there is a piece missing that the inventor is looking for
us to solve.
If solving that missing piece isn’t within our strengths, that’s an issue.
We need to stay in our lanes. If we don’t have the bandwidth to solve the
problem, that makes taking it on more challenging. We’ll still consider it
though; we appreciate at least having the opportunity to hear the idea and
possibly be a part of it.
We don’t drag our feet. We let the individual know whether it is
something we can participate in or not.
Can you explain a little bit about your review process?
Mike: Since I’ve been part of the team, there’s generally three people
involved. Even though we’re a larger company, the CEO is involved,
myself, and our director of regulatory affairs. He knows all about what is
required for developing products from a legal standpoint. He’s the one who
keeps us in check. As a sales and marketing guy, I might love an idea, but I
don’t get involved in the minutiae. If someone calls us, says they have an
idea, wants to sign an NDA, and hop on a call – getting back to that person
could take a few days to a few weeks depending on our availability and
whatever else is demanding our attention.
Mike: It’s very important. There’s more value when the item is
protected as much as it possibly can be. We assume that we’re going to be
ripped off eventually. We want to give ourselves the best chance of success
by being first to market and trying to prevent that threat as much as
possible.
Is it important for inventors to attend trade shows?
Mike: Very important. Being in the physical presence of new products
and people is something unique. At a trade show, you might discover your
idea is already out there, you might come up with a better way of designing
it, you might be inspired to come up with many more great ideas. I think
it’s also important for developing and continuing your personal
relationships as inundated as we are with different forms of digital
communication these days.
Any tips and advice for inventors?
Mike: I think the most important thing is to bounce your concept off of
some trusted colleagues. If you have a level of trust or can bounce the idea
off without revealing too much, that’s great.
Midsized companies are hungry. He just said it! There is not as much
red tape, and they can move very quickly. Midsized companies are always
looking for new innovative products. I’ve said this for many, many years
now.
At inventRight, we have many dentists who are students. I’ve always
wondered why, and thought they must have to be very creative at fixing
certain problems day in and day out.
Once again, this company is willing to take a look at any idea, even a
concept. I’ve noticed that smaller companies will take any type of idea.
Whether you send them concepts or drawings, it doesn’t matter because
they’re hungry. It’s the larger companies that require prototypes and
intellectual property. This makes sense because larger companies are the
only ones able to defend their patent portfolios. Yes, they all love
intellectual property but that doesn’t mean its required.
If you’re asking them to solve a problem for you, you’re asking for too
much. This is true regardless of the size of the company. I’ve observed that
large and midsized companies typically stay in their lane, like he said, and
it’s the genuinely small companies that are willing to look at a product
outside their lane.
Respect that each company has a process when reviewing ideas. In this
case, the CEO is involved in the review process. To me, this is another sign
that this is a midsize company.
NOVELTY GIFT
SAM HURT
Cofounder of SUCK UK, a novelty
gift company
SUCK UK creates what is describes as “the greatest gifts on earth.” Its
novelty gifts include products across many categories such as kitchen,
outdoor, party, stationery, pets, and gifts.
Can you tell me how many submissions you get in a year? Is it a lot
or few? Is it hundreds or thousands?
Sam: Several hundred yeah. Because I mean it's barely a day that goes
past without somebody sending us an idea of some kind and quite often in
fact, it’s almost always a barrage of ideas. Somebody will just sort of send
in 20 all at once. We seem to attract that kind of a person. I was just like
that, I had loads of ideas and I just needed to tell somebody.
And that's okay for them to send 10 at a time?
Sam: Yeah, it's okay, like we don't mind. I would say that it's not
necessarily a good way of catching someone’s attention. I guess maybe
that's what they think is like, "I'll get this person's attention by sending as
much as I possibly can.” and I think sometimes it's better to focus and grab
somebody's attention with maybe two or three really good ideas.
What's your preferred method for someone to send in an idea? Is
that a prototype, a drawing, a picture, a description?
Sam: What we prefer really is like a simple drawing, because the way
we work (and I speak for us and not anybody else) is that we quite often
like to deconstruct the idea and then put it back together with our own take
on it. Quite often we will take the seed of an idea, the bones of it, the joke if
you like, and we will apply design to it. The 3 D’s of design. So, we’re
talking about the size, material, and color. We quite often make things in a
completely different material from how the original designer envisioned.
We make things a different size or possibly for a different use. For example,
someone might send us a toothbrush and we will turn it into a scrubbing
brush, because it works that way, or turn it into a nail brush or some other
kind of thing.
It’s like a standup comic — he doesn’t go with the first draft of a
routine. So, sometimes you just sit back, hold on, and wonder if maybe it
would be better if we did it another way.
Is protection of an idea important to you?
Sam: Doesn’t matter to us. Our industry suffers badly from knockoffs
from competing companies to unscrupulous people as well as retailers, it’s
competitive. There’s obviously the China problem as well. It’s almost
impossible to protect things, you know?
Is there any category you just won’t touch?
Sam: We try to avoid things that are specifically targeted at very young
children. Because you know, everything’s a choking hazard and needs to be
triple tested. It’s just very difficult.
How many ideas do you see that you Google and in minutes you
find?
Sam: All the time. It happens and it’s so upsetting when you think that
you’ve just had an original idea. Then you Google it and about 95 times out
of 100, you find something similar.
How long does it take for you guys to pull the trigger on a product
submission? A week, a month?
Sam: Oh, it could be minutes. Quite often it’s that quick when you see
something you like. I mean, the only thing that stops us from going yes
immediately is that we have to do a Google search first and see if it already
exists. I probably print it off and stand up and walk around the office and
go, “What do you guys think?”
But otherwise, you know, we tend to have a design review meeting with
new ideas every couple of weeks.
SUCK UK…What a name! This is one inventor-friendly company
including their submission portal. Their mission is to take practical objects
and give them a novelty twist. If you look very closely at their product line,
you’ll see there’s a slight joke with each product. They receive at least
several hundred submissions a year.
I really love the novelty gift industry so very much. Since these ideas are
fairly whimsical, it’s all fun and quick! I love that you only need a drawing,
they help with the design process, and protection is not that important. I
appreciate that Sam has a very realistic approach to copycats. They want to
stay out in front by continuing to innovate. Make everyone aware that you
are the creator, and the original. This is smart and easy to do on social
media.
I think it’s important to only send three or four ideas that are really
good at a time. Don’t overwhelm them. I had a tendency to do that too. It’s
not the best way of making an impact, of catching someone’s attention.
Focus in on some really good ideas. That will be easier for them to
evaluate.
One big takeaway for me? In this industry, neither prototypes, sell
sheets, nor videos are required. They prefer a simple drawing, because they
prefer doing most of the designing themselves, including determining the
color, shape, and size. What they want to see from inventors is the joke.
This is very different from most companies! Both cofounders came from the
design world. No doubt that makes them very comfortable with this.
Again, relationships are important and it’s the inventors who keep
sending in their ideas that eventually get picked up.
When I asked Sam about hot categories or trends, he said there’s no
such thing. You never know where you can find a great idea! And indeed,
that’s what I experienced when I worked in the industry; smaller companies
were always looking for their next big hit, regardless of the category.
DRTV
TRISH DOWLING
Senior Vice President of
Merchandising for Allstar
Innovations
Allstar Innovations is a performance-driven marketing company. The
company does direct response marketing, which means direct to consumer.
They directly contact consumers in various ways. One way is through
television, also known as infomercials. Another is through Facebook and
Instagram. They also sell to all the major retailers direct to consumer. Trish
Dowling has been with the company for eight years now.
Can you give us an overall view of what type of products you are
looking for?
Trish: We are in all categories. I get asked all the time, "Well, what
category are you looking for?" And this is really an item business. This is
not a category business. We sell pet items. We sell electric items that plug
into your wall and that hold your cell phone and that you can put your USB
charger into. We sell kitchen items and we sell beauty items. So, it's more
about the wow factor, the excitement, the uniqueness of the item. The
wow…I mean, are people going to get off their couch and get on the phone
or get on the computer and order the item right away because we just
wowed them and we made them feel like, I need that that. It's not about a
category. It's about the emotion and impression that the product makes on
the public.
That’s interesting, I’ve never looked at it that way. Is that because
of how shelf space at retailers is organized? It seems like the As Seen
on TV products are all on this one particular shelf meaning that
products that would normally be in different parts of the store are
together.
Trish: Exactly. We have specific real estate in most retailers, not all, but
most of the major retailers that are dedicated to As Seen on TV. And that
means we actually share the retail space with our competitors.
When our competitor has a hit, that promotes and keeps that retail
space. And that's something totally unique. A lot of people would be like,
‘Don't you, you know, compete with your competitors?’ Yeah, we do in a
way. But when they have a hit, it's good for the entire industry. When any
of us have a hit, it keeps that retail space open.
The other positive point about retail space for As Seen on TV products
is that we get automatic placement. When we go in and see a buyer for the
retailers, we say, “this is working on TV.” There's no more sale to sell there.
We just automatically get it placed. Whereas if you're in an individual
category and you're selling a baking item you might have to compete and
try and again and again for that retail space.
Let's jump ahead and discuss the submission process. Sometimes, it
seems like it can take forever for a company to reply. Your review
process seems pretty darn quick. Whether it’s a response of yes, no,
let's take a look at it, maybe, let's test it or whatever. Why is that?
Trish: We're very organized at Allstar. You know product is King, is the
way we look at it. It doesn't matter what the marketing is like if the product
isn’t good. So, our product sources mean everything to us and we have a
very organized formulaic process internally for looking at hundreds of
products weekly. We try our best to get back to everybody in a timely
manner. Sometimes we do, sometimes we don't, but we try our best.
And then we have internal meetings set up and we have a very strict
survey to web test and TV test. We meet weekly to introduce new items and
then we survey 18 items a week.
this process has been in place for the last seven years; it works. It's kind
of a filter. So, I would say it's our organizational process that makes us get
back to people in a timely manner.
But it seems to me, and correct me if I'm wrong here, it's really fast.
So much faster than most companies. Trish: The evaluation of the
item? Yes.
Trish: We have meetings regularly and we have a very seasoned
merchandising team. For example, before I worked here, I was a buyer for
retail and also a buyer for catalog. I've gone on many trips to China. I
would say, as many as 45 trips to China. I know product; I've been to
thousands of trade shows around the world. So, I know when I see an item
if it's a good item or not. We present anywhere from 10 to 15 items to the
owners of the company a week. And from there, you know, we do over 150
web tests a year.
I’ve heard that this industry believes in selling first and selling fast,
and that's one reason why things move pretty quickly with your review
process. Is that accurate?
Trish: I would say that, yes. Yes, we have to quickly jump on things.
So, what are we doing wrong as inventors?
Trish: You know, just have a checklist first. Like doing your
homework. For example, when we present to the owners of the company
we just don't go in and say, ‘Here's an item.’ We go in with statistics, with
what's at Wal- Mart that would compete against it, what's at Bed, Bath &
Beyond that would compete against it, what's on Amazon. So, do your
homework! What else is out there that’s like your item? What makes your
item different?
Not to sound mean, but we don't really care what your friends think of
the item. If you’re serving 10 people in a room and everyone is your friend
or family, most people are going to say they like it.
And then a short video or a sell sheet. I also need a prototype. I can't
work off a drawing or anything like that. And, what is the selling point of
the item? What's the pitch?
If you had two minutes to present in front of the president of a major
company, how would you sell your item?
It's kind of negative, the rejection part of this business, but that’s just its
nature, the way it is. Some people get that right away and they say, ‘ftank
you very much for your time. Anything I can do differently?’ And some
people just don't get it.
So…Get to the point. Get to the pitch. And do your homework on what
else is out there.
So, let's talk about the best format for a video. On your website,
there are videos of how you’ve pitched previous products that you sell.
They are about a minute long and the format is the problem, and then
the solution. It's really about, what are you doing for me? They videos
convey that so quickly. Is that what you were talking about earlier —
what are you doing for me as a consumer, and how are you making my
life easier, better, faster? Is that what you’re looking for?
Trish: Definitely. I would call that the deluxe version. But you can just
show the function of the item, how the item works.
Here's the problem, here's the solution. That kind of thing. We get the
kinds of videos you’re describing, which are fantastic. But we don't even
need that much. We just want to see what the product is, how it functions.
Yeah. And that's about it.
If there's any homework as far as cost of goods or material done, any
information like that, okay, but a submission doesn't even need that.
A video with a wow factor does get a product moving along faster.
One of my students, Scott Baumann, liked to develop his videos and
marketing material further.
Trish: Oh, he did a great job. You know, when somebody brings us a
product and there's not a lot of creative assets, we give it to a producer and
then we do the test. So that takes longer. Whereas, with what Scott brought
in, we were able to test immediately because he had already done all the
work.
You know, it's funny. Someone once told me, “Yeah we'll just look
at a sketch on a napkin.” And I go, "No, now wait a minute." I think
that if you're going to do it, do it right meaning spend a little bit of
time. Make it easy for you, right? Because if you don't have to build
the assets or shoot it and you can take it and show it right then and
there, the entire process is just going to move faster. That's what I
believe and I think that's what you just said.
Trish: Yes, definitely.
How important is direct marketing on social media? Is that the
future of your industry?
Trish: It's definitely an addition. And what's so exciting about it is that
there are a lot more opportunities for a lot more items, because we can find
and target consumers who might be interested more easily. For example, a
cat owner and we're marketing a cat toy. We can find cat owners on
Facebook and Instagram and target those people with that cat toy.
Boy, that's pretty amazing, isn't it?
Trish: We think of it as a positive. And it's just exploded the last three
or four years.
Let's say a product comes in, you test it, and for some reason it
didn't sell well. And that leaves kind of a bad taste in your mouth.
When you see something similar, is that an automatic, no, we are not
interested?
Trish: We'd have to see how similar it is. Because for us to invest in an
item to begin with…you know it could have been timing. For example, a
lot of times there'll be an item that sold okay five years ago and now it's
huge.
ften there are items that sold well 20 years ago that we bring back and
now we can't sell one. So, yes, we'll definitely take a look to see how
similar it is. Maybe our pitch missed the mark. Timing is everything
though. For example, another direct response marketing company is selling
a lantern, and we’ve been looking at lanterns and don’t think it’s anything.
Then there’s a major storm and hurricane and that particular company has
their lantern on the shelf at the right time.
So, the answer your question is, we evaluate everything to see how
similar it is, or we would just say you know what we lost too much money
on that other program and we don't think this item is different enough —
we're going to pass.
You know, something that I think would help inventors is if
companies were clearer on their websites about what kinds of products
they are looking for. But they aren’t really. It's almost like you have to
read between the lines a little bit.
Trish: I think there is a little bit of, we don't want our competitors to
know what we're looking for. But I always say that I want to see everything
for the most part. We don't want to discourage people from sending in their
items. But with that being said, if they did their homework first and had
their checklist and had determined what else is out there, then we would
receive more qualified items.
So, you’re saying there’s no point of difference in much of what you
receive.
Trish: Exactly. Exactly! We get sent a lot of items that I look up on
Amazon and see 50 other sellers with a similar item. Or you go to Wal-
Mart and there's a whole aisle of that product. I see that a lot.
How big of a problem is that? Is that the biggest problem, in your
opinion?
Trish: No. Well, I think it's that and I think it's the development of an
item. For our particular needs, because we don't do product development
internally and because we're looking for the next best thing. So, we just run
through products. We're not going to take 10 products and work on them for
the next five years. We have a different model than other companies in that
respect.
You know, a lot of times inventors have no idea how much their product
is actually going to cost. They'll be like, ‘Well, it could be $19.99.” And
we're like, ‘The cost of goods is $14 dollars alone, so it has to be a $50
item!
Product development and not doing your homework to see what else is
out there are the two biggest things.
How important is attending trade shows?
Trish: Very important. That's how I learn everything. I just came back
from a show in Dallas. I went to another show in New York yesterday.
Trade shows are great, especially the International Home + Houseware
Show in Chicago every March. You see so much great product. You can
talk to the experts there who are pitching the items. You can watch people
pitching their items, product demonstrations, and just see what else is out
there. So that’s very, very important.
What about patents and trademarks? Are those important to you?
Trish: No, not to us. We will work on an item whether it has a patent or
not. And if we decide to go forward, we will help that inventor get their
patent and it will be a patent in the U.S. and in China because that benefits
us as well.
Okay, let me recap. Allstar is open, you want to see a lot of different
things, and you don't want to discourage us because you never know
what you're going to find. I need to make sure that I've done enough
homework and searched for similar products on the internet. I need to
make sure my product has a point of difference and there's not too
many similar ideas like it. And it needs a wow factor.
Trish: Yes.
And if I've done a little bit of homework in terms of costs, like
getting a quote from a manufacturer to make sure that it can be made
at the right price point, that’s helpful also.
Trish: Yes.
And I need a working prototype that establishes proof of concept.
So, you can see it. You can see it works.
Trish: Yes.
And a great video. One that explains, maybe shows the problem
that people identify with, but then quickly shows a clear benefit that
has a large market. Am I hitting these points correctly?
Trish: Yes. Definitely.
Is there anything else you can think of that inventors should not
do? That puts a bad taste in your mouth?
Trish: Don't get discouraged. Try not to be discouraged. It might not be
right for direct-response, but you may have a great item. Knowledge is
power. So just study the market. Know what else is out there and how your
item compares to it. That kind of thing. You really wrapped it up nicely.
What’s very unique about this industry is that they sell in all categories.
As Trish said, it’s an item business. And because these items have proven
success on TV or in digital marketing, they get placed in a certain
dedicated spot at retail. What’s also unusual about this industry is that
when a competitor is successful, they all benefit, because consumers are
driven to the retail spot where their products are sold too.
This industry completely relies on outside product submissions. They
don’t to do any internal product development. So indeed, product is King.
Privately, I’ve been told that most successful products don’t come in
through the portal. They come in through established relationships with
professional inventors. With online portals, it’s like finding a needle in a
haystack I’ve been told more than once.
I’ve also been told that employees have an obligation to bring in a
minimum number of new ideas to the table each week, like 10.
Please be aware, this is a very competitive industry. They don’t care
where they find an idea. It could be at a state fair, from crowdfunding, or
submitted by an individual who is not even the inventor.
A mantra is “sell first and sell fast.” The selling cycle is fairly short;
their distribution is excellent. Every once in a while, a product becomes an
evergreen, but it’s not common. Intellectual property is not important
because of the short selling cycle.
This is also a very small industry. I’ve been told on many occasions that
it’s wise not submit to multiple companies at once — it’s better to submit
your idea to one company at a time. They’re very familiar with their
competition. This is not an industry where you tell a company, “No,” and
they don’t proceed anyway.
I’d also like to point out that you can control more of how your product
is pitched if you provide them with all of the necessary assets to test your
product quickly. I highly recommend going a little bit further with your
product for that reason. Show off the wow factor. Get to the point quickly;
they’ll appreciate it.
Once again, digital marketing has opened up new opportunities for
inventors. They can target a specific kind of consumer — which is great
news for us, because no longer does every item they agree to license have
to have the potential to do huge volumes. There’s a greater range of
acceptable price points as a result as well; from $59.99 and down.
Basically, they’re looking at a wider range of products than they once did.
As you do your homework, develop an understanding of manufacturing
costs. That can be important. Remember the 5 to 1 ratio. If something costs
five dollars to make it will have to be priced $25 at retail.
HOSPITALITY
DAVID MIDDLEBERG
Director of Global Sourcing for Star
Linen USA and Star Linen UK
Star Linen USA and Star Linen UK are sister companies that service
both the hospitality and healthcare industries; specifically, hotels and
nursing homes. Their products are used by the full spectrum of hotel
groups, from lower-end motels all the way up to five and six-star
properties.
What do you do?
David: My job is to provide all of the products that we sell. We have
offices in India, Pakistan, China, Cambodia and Bangladesh. We have
associate sourcing in Portugal, Brazil, Mexico and Poland. We're constantly
on the lookout for what's new and what's different. Our industry is not one
that lends itself to fancy, if you will. Most of what I buy is white. White
sheets, white towels, white blankets and white pillows. When we go wild
and crazy, we buy some beige.
But there's a constant need for products that are more efficient, more
durable, and that can provide benefits to the property. Whether that’s in
terms of cost savings or being environmentally sound; lower carbon
footprints are becoming much, much more important. We're constantly
looking for products and innovators in those areas. Simple things because
it's about speed and ease. Two the things that hoteliers look for are ways to
reduce their labor costs and make the workplace safer for their staff and for
their guests.
Here's an example that came in from a suggestion from one of our
manufacturers: it was to center our product labels on our sheets. Everyone
used to put their labels in the corner but if you’re making a bed and put the
fitted sheet on the wrong way then you’ve got to switch it around. If the
label is in the dead center you know exactly where it is and you can put the
sheet on the bed the right way the first time. Same thing with the flat sheet.
When flat sheets have a label in their center, all you have to do is pull it to
one side and then the other to get it even. You can center the sheet very
easily.
It sounds like a simple thing but imagine for a moment that you're a
housekeeper and you're making hundreds of beds every day. That simple
label placement reduced labor costs by 37 and a half percent! Now making
a bed is that much quicker. There’s no more spinning of the fitted sheet. It’s
much quicker to make a bed if the sheet is centered. There's no more
spinning of a fitted sheet.
Nice. So, your company is inventor-friendly.
David: Oh yeah.
Has your company always looked to outside inventors for
innovation?
David: Absolutely. I spend most of my time traveling and in factories.
The truth is, with computers and all the internet technology available today,
you could do this job from your office desk. But when you're in a factory
and you're sitting in someone else’s office, you might see a little gadget on
their desk and go, "Wait a minute, what's that?" And you can’t see that
unless you're there.
For example, in Pakistan about two years ago, when I went into the
office of a factory owner there was another gentleman sitting there. We sat
down and began talking. Turns out the guy had developed a way to make a
biodegradable plastic packaging! Now, in our business, we don't do fancy
packaging like you see for retail on sheets and towels. We use a simple
polybag and put it in a carton and bulk pack it; there's no presentation.
Someone will call me and want to order 10,000 sheets or 50,000 towels.
But the volume of plastic required is huge. It’s a nightmare. This inventor
had developed a product that didn’t require the same degree of sun and
water to make and in a regular landfill it degrades within a year.
When someone comes to you with a new innovation that saves time,
which is money, how important are manufacturing costs?
David: Well, we're in a commodity business. When we get a green
product, the first thing the hotelier is going to ask me is, “How much is it?”
That's the first thing, because it's a tight market. Remember that people are
using the internet to book hotel rooms now. Consumers can easily compare
prices. The cost of a room is being pressed down constantly so these
businesses need to reduce their costs too.
And they want better products. They want more efficient products. At
the same time they have to very careful about their expenditures. In a
competitive marketplace you have to keep costs down. And that part of it I
consider my job. I love working with brilliant people who create an idea out
of nowhere like your student Karen. My job is to take that great idea and
make it into something that can be manufactured in mass production that is
economically viable.
What do you need to see? Is proof of concept needed?
David: Videos are cool. But people don’t have to invest to that degree.
We're not in the bells and whistles business. Time is limited. I don’t really
need presentation materials. I need to see the product.
The hospitality industry includes restaurants as well as hotels. Most
inventors are not focusing on this industry but the opportunity is huge!
Time is money. If you can show these companies how to save time without
increasing the price point of a product you have a hit on your hands. Be
very careful here. If your product requires education, that's going to
potentially be a problem. Basically, your invention needs to be simple and
easily demonstrable. I’ve had three students achieve success in this
particular category now. And every one of their products showed their
customer, either a hotel or restaurant, how they would save time.
SPORTS MEDICINE
DONALD BUSHBY
Inventor of FasciaDerm, inventRight
student, and Global Lead Electrical
Engineer for Exxon Mobil
FasciaDerm utilizes a combination of advanced materials and a
specialized no-slip adhesive to directly support the foot and reduce
damaging strain in the plantar fascia. “Say goodbye to heel pain.”
What is the category your product is in and what is it called?
Donald: The product is called FasciaDerm. It goes by two brand names
actually, FasciaDerm and PF Tape. It's in the foot care category.
Which trade shows does it fit in? Sports medicine? Medical?
Donald: Sports medicine is the trade show where you would find it. It’s
sold directly to sports medicine practitioners and over the counter in
Walgreens and Walmart — more than 15,000 stores in total.
Was it hard to license in this industry?
Donald: Yes, it was a real challenge. The whole thing was a challenge.
I think what helps in licensing is not just having a patent and not just even
having a prototype but having a finished, manufactured product and
particularly proof of sell-ability that lowers the barriers. What you're really
trying to do is de-risk the venture for whoever's going to take it.
Tips and advice for someone starting out?
Donald: Always design for the marketplace. In other words, solve a big
enough problem. Solve a big enough need in a unique enough way and
have some level of confidence that the problem is big enough that someone
will want to take it as a licensee.
It helps in the very beginning to think as you're inventing, "What
company could be a potential target for licensing this product? Is there a
company that this would fit with or a category of companies this would fit
with?" Start with that in the very beginning as you're solving your problem
and you're developing a product. Make sure there's a category it fits in and
companies in that category would be open to that type of thing.
How long did it take you to license it Donald?
Donald: Well, it’s a long story. I made the error of waiting for the
patents to issue. So, nine years. I fought with the Patent Office for nine
years. It’s a very troubled story that I waited that long and had to fight that
long to get the patents.
Would you have done it differently knowing what you know now?
Donald: Oh yeah, definitely. Definitely. You want to file for protection
and develop that sense of perceived ownership that you talk about and then
go and engage early.
There are important takeaways from this interview. You can have a
demanding fulltime job and still license a product. Don’t wait for your
patent to issue to take action; there’s no need. In this industry having some
kind of test results is an absolute must. The opportunity in sports medicine
is huge when you consider the distribution.
MUSIC
JUSTIN NORVELL
Executive Vice President of Product
at Fender Musical Instruments Corp.
Justin Norvell is a lifelong musician who has worked for Fender for a
quarter century. As Executive Vice President of Product at Fender, he's
tasked with a seemingly impossible challenge, which is how to keep
innovating a heritage product, one that consumers strongly identify with.
Fender's most famous electric guitar, the Stratocaster, debuted on the
market in 1954. Today it's essentially unchanged.
Norvell began working for Fender shortly after graduating from college
while pursuing music professionally as a guitarist. Eventually, what he once
considered a day job became his real job. He got emotional describing the
unique relationship between guitars and the musicians who play them.
He pointed out, "You sit behind a set of drums at a distance. You sit
behind a keyboard at distance. Even a laptop or sampler but a guitar you
wear, put on your body, and hold against yourself. It's a fashion decision.
It's a statement of who you are. It becomes more a part of you than any
other instrument... I think that's a magic thing that the guitar does."
How did Fender disrupt the guitar making industry?
Justin: He really looked at the guitar and thought, “I want something to
work, to be easy to manufacture, and easy to fix.” He famously said, “If I
have 100 bucks to make something, I'll spend $1.00 making it pretty, and
$99.00 making it work.” That was his ethos and literally he kind of
Henry Ford-ized the idea of the guitar-making process because until then it
was much more artisanal.
When guitarists saw the first Stratocaster they thought it looked like it
was from space because it had that futuristic, mid-century, auto-inspired
look. It was all curvy and contours and eventually it was produced in the
bright car colors of the day. To them it was such a different thing, so
different from what a guitar was supposed to be.
What is production like today?
Justin: No matter how much technology and laser cutters are used,
there's so much in guitar production that's ergonomic and feel-related. It's
all hand sanding, the things that you just have to eye, and as you fit the
guitar together it's such a system. Machinery helps keep things consistent.
But there's probably about 150 hand processes in every guitar that we
make.
Guitar making is a combination of art and science. And we also are still
using a lot of the machines, tools, and dyes that go back to the '50s and '60s.
The average guitar takes about a month, from beginning to end, not
including the time it takes to season wood.
How does Fender approach innovation?
Justin: We are blessed with iconic designs. So, we have to look at
everything that's great about the silhouettes and all the things that people
love, but then also ask, what else can we change inside of that? And as
technology improves and as tolerances improve, we can continue making
things better by using different materials. People use titanium on bridges
and there's different materials for the nuts, and new locking keys.
On our newer series, the Ultra Series, we have new noiseless pickups.
Fender pickups are known for emitting a 60-cycle hum when they play.
They're the best sounding pickups; however, because they're single-coil and
they're not hum-canceling they hum a little bit. So, we solved for that. And
a lot of what we do innovation-wise is solving for eliminating variables and
tolerances.
Really, we just break a guitar down into its simplest parts and we look
at the whole system and see how it works together and how we can make it
better. We don't change it for change's sake. It's got to matter. It's got to
affect the playability.
How important is player feedback?
Justin: It totally helps and to go back to the Leo stories of the '50s…
what kind of started him on his journey was he was a radio repair service
and then people with amplifiers would come and he would repair those. A
musician started hanging out at the shop. The Telecaster (the first Fender
guitar) became the Stratocaster because this guy, Bill Carson, that I had the
pleasure of knowing was an artist who hung out there. And he was like,
"Well, this guitar kind of digs in my ribs and I wish it had another pickup
and some more options." All of those pieces of very practical feedback led
to the evolution and the design.
We have our main offices right on Sunset Boulevard in L.A. where we
are within a couple hundred yards of probably five major studios. Bands
come running over to borrow amps when they need them. We go over there
and we check stuff out. People are always coming through. With the Ultra
Series that we just released, we brought a couple dozen artists through and
just got their natural feedback because our instruments have to work not
only in the isolation of our R&D shop. It has to be studio, stage, home, for
every practical usage and the artists are the Super User that gives it the
most testing.
The Ultra Series became a mission to take Fender into the future. We're
73 years old now and it's like, "What's the next 70 years look like?” We
don't want to become a company that just drives in the rearview mirror so
we're pushing the envelope forward.
And what about intellectual property?
Justin: I think it's super important and we continue to pursue it. When
we're able to come up with something that's useful and that has not been
done before and is ours, I think that that's a point of differentiation and a
hallmark for the brand as a company — trying to continue to develop new
ways, new sounds, new solutions.
Are you open to independent inventors? Can they submit their
ideas to you?
Justin: People on the outside do come to R&D. There's stuff we're
working on right now that's come from the outside that hasn't been released
yet that we're really excited about. Over the years there have been a ton of
things that we've had come through those types of channels. We've had
things come from artists as well, there are times when they have an idea or
part of an idea. So, yes. I think good ideas come from all kinds of different
places and we're always wide open on all of them.
Many people are under the impression you have to be an expert to come
up with a novel innovation. In reality, that could not be further from the
truth. Non-experts are able to see and envision what experts are often too
close to. For example, look no further than Fender's founding.
Leo Fender did not invent the first electric guitar, nor the first solid-
body electric guitar. At the time, hollow body electric guitars were favored
by jazz guitarists. He was the first to modernize electric guitars, ushering
guitar making into the 20th century. In other words, Fender created the
idea of the mass-produced electric guitar.
The fact that he was not a musician let alone a guitarist is no
coincidence. A radio repairman by trade, Fender disrupted the guitar
making industry by approaching everything from a serviceability
standpoint, and not that of a typical luthier. He attached the neck of the
guitar to the body with screws, defying conventional wisdom, and in the
process solved the problem of neck warping. The result was no less than
groundbreaking.
BOB KASHA
President of Ahead Products Inc. and
Owner of Big Bang Distribution
Bob has been in the music industry since 1976. He was a drum teacher
for 15 years and owned two retail music stores for another 16 years. Five
years after helping to develop a drumstick for a sporting goods company, he
founded his own music accessories company – Ahead Products Inc. – based
on that drumstick. Today Big Bang Distribution ships about 2,000 different
products (all drum related) to 1,500 stores in the United States, as well as
75 other countries. Bob is also an inventor who has half a dozen patents
issued in his name.
Do you work with inventors and outside product developers?
Bob: Yes. We do a lot of inventing here ourselves and I have also
licensed products from other outside inventors. During the year, anywhere
from 20 to 30 inventors approach us with their ideas. I will sign a non-
disclosure agreement (NDA) and tell them either that I’d like to help them
develop the idea or to not waste their money moving forward. I want to
help people make good decisions. If we want to develop the idea we sign a
licensing agreement.
What’s required to submit a product to you? Prototype, drawing,
video?
Bob: Any of those will work. When someone has a prototype – if
they’ve built something that functions – that really helps, even if it’s made
out of tinker toys. If we can get an idea of how it works, how it functions,
and it’s something useful, we proceed. Being in retail for so many years, I
know what customers want. I have a very good idea. I’ve been exhibiting at
NAMM, the music industry trade show, for more than 35 years. That’s
made me really familiar with the industry.
How long does your evaluation process take?
Bob: We’re pretty fast at what we do. I can usually tell immediately if
it’s a good fit or not. For this industry and our customers, the idea needs to
be really easy to understand right away. That’s important. I try to be blunt
with inventors. It takes guts to call me. If they have enough guts to do that,
I have enough guts to tell them how I really feel. We have developed quite
a few innovative products that have done really well. We try to be as
creative as possible here by expanding our product line. Over the years,
I’ve probably been approached with 200 ideas and ended up licensing
seven.
We’re in a niche market. Everyone in the industry sends ideas my way,
including the magazines and Guitar Center. Our main focus was drum
accessories when we started but now that’s evolved.
Can you explain more about your review process?
Bob: I’m the gatekeeper. I will sign an NDA and I won’t show the idea
to anyone else here without permission from the inventor. Then I might say,
“I’m very interested in doing this, can I show this to my team?” We have
five full time drummers on staff. If the idea is already protected, I might
send it to them for their take.
Bob: It really depends. You have to look at the product and the
numbers. If we’re only going to make 50 cents per unit on this item and sell
about a thousand of them, is it worth it to file a patent? That’s the way I
look at it. I’ve been in patent infringement lawsuits. I know what they cost.
No one wins except the attorneys who you’re paying $700-$800 an hour.
I know how many units I’m going to sell. In our industry there aren’t
products that explode overnight. So, is it worth it? Sometimes you have to
draw a line.
I like innovative ideas. Sometimes just one new innovative idea can
bring a higher level of class to your entire product assortment. What I mean
by that is, product association is powerful. That plays into my consideration
when licensing an idea.
ften again, some ideas I’ve come across that I thought were the dumbest
thing ever, people love. You never know.
Is it important for inventors to attend trade shows?
Bob: I recommend communicating with music industry magazines,
going to the shows, and talking to people who have been in industry for
long time, to people who have seen it all. This is a niche industry. You see
the same people at the shows every year. The badges may change, but the
names don’t. It’s a small community and a lot of fun.
What are your tips and advice for inventors?
Bob: Don’t invent to invent. Focus on needs, on fixes. A new product
should enhance something, make life better, result in better sound, make it
so a drummer can play faster, or their stick rebounds better. And so on. I
see ideas that are copies of other things all the time. I’m not going to sell
something someone else is selling. I see a lot of that.
What are inventors doing wrong in your opinion?
Bob: The y’re too emotionally attached to their ideas. They don’t step
back and make sense out of them. They need to be more of a business
person about their ideas.
Looking back, I had a blast in this industry. Everyone was extremely
kind.
Once again, your product idea needs to be extremely easy to understand
and demonstratable. If the benefit is great enough and easy to understand,
a homemade prototype and even a sketch on a napkin will be enough. I like
Bob’s attitude. He’s going to give you feedback which is exactly what you
need.
What I’ve learned is that the smaller the company the more willing they
are to sign an NDA. But please realize that NDAs are not federal, meaning
there are different rules governing NDAs state by state. In most situations,
if you file intellectual property, I think you’re going to be okay. This is a
good time to remind you that this is not legal advice, it’s business advice —
I am not an attorney.
Each company has its own perspective on intellectual property.
Everyone believes that if you have a product idea that’s going to generate
huge volumes of revenue intellectual property is probably a pretty good
thing. To be on the safe side, I would always file a provisional patent
application (PPA). I would also always ask at the very beginning, “How
important is intellectual property?” This should supply you with enough
information to decide how to proceed.
Trade shows are important. Like Richard Levy says, it’s what you know
and who you know. The music industry is very small. Don’t burn any
bridges. Make as many friends as you can!
Always be willing to take feedback so you create products people need.
Make sure to do your homework on similar products.
KITCHEN
BRENDAN BAUER AND
HILTON BLIEDEN
Co-Founders Grand Fusion
Housewares, Inc.
Grand Fusion Housewares was founded by a small group of housewares
industry veterans with the goal of bringing a combination of innovation,
design, and quality to product categories they are passionate about. The
“Our Story” section of their website reads, “Our team searches the globe to
bring our customers innovative products of the highest quality at an
affordable price. Our passion is finding products that will help make your
life better. We also work with a talented group of product designers and we
welcome innovative new ideas from inventors who are looking for a partner
to help bring their products to market.”
How quickly are you able to get back to inventors?
Brendan: One thing that we will try to do is we try to get feedback
from customers quickly. If an item, if for some reason we don't feel like it's
going to get traction it's not going to work, or we can't figure out the
costing we try to very quickly let the inventor know and give it back. I
think the worst thing that you can do as a company is tie someone’s idea up
for a long time and not really be doing anything with it. We're trying to
walk a fine line right now in terms of not taking on more products than we
can launch at one time because we are still a small company.
As inventors, we really appreciate that.
Brendan: I try to be honest with people and let them know why it's not
working for us for whatever reason. Usually, it's not a surprise. Usually,
they're pretty involved in the back and forth when we're trying to do the
initial vetting. We can talk about that process a little bit more as well. We've
got a rhythm that we've established.
We try to do a lot of vetting before we even put an agreement in place
just because there's so much work involved with doing the deal. You might
as well do your due diligence first and make sure that it's going to be a
good marriage.
Is that code for don't act like a crazy inventor?
Brendan: We do often get an idea that we all as a group look at and say,
"Hey, that's a really clever idea but, candidly, I don't know where to go with
it." Or it's in the wrong department. Or someone says, "I don't know the
buyers." Maybe it's too big, whatever. Sometimes there's just things that for
whatever reason don't fit with our product line that we think are awesome
ideas. They just don't work out.
Hilton: Just to put it in perspective, I think sometimes these things can
literally take a year to two years before it develops and it just depends on
the timing of when the buyers need stuff. It can really take a long time. We
could literally set up a company account this month and they may buy from
us next July.
Sometimes even when a buyer loves a product it may take a long time
before they actually commit. That's very important to understand.
It just takes time to get it out there depending on our customer. Some
customers take a lot longer than others. It's just something inventors really
need to understand.
Brendan: Tha t also comes into play when we talk about seasonality
and what we look for in an item as well. We're taking on some items from
inventors that are really more spring and summer type items. Those are
very challenging. They can be successful but it's always nice when you
have something like a spatula. It's an everyday item. You call it evergreen.
People use it year-round. They buy it year-round. When you get that item
in, if it sells well, it becomes an annuity.
Let me pull back the curtain. That’s literally where we’re at with a
spatula we licensed from Paul Sorenson, inventRight Senior Coach and
Chief Negotiator. We've got some early movers that are putting it into the
stores and making commitments. Now we're waiting on the sell-through. If
we get some good sell-through we start to get reorders and the buyers say,
"Hey, yeah. This item's great. It's selling." Give me another year or two and
we'll have that everywhere.
ftat's the process that it goes through. Then on the negative side if you
get an item placed in five or six chains and everywhere it goes it doesn't
sell, that's probably when we're going to make that hard phone call, come
back to you and say, "Hey, look. We're doing something wrong. Either
we've got the packaging wrong, the price point, or this item is just not
resonating." We can try to tweak it and save it or if we think that it's just
beyond repair then we'll give it back at that point.
There is a misconception that you sign an agreement and you can
quit your job. That's just, even with a home run, it doesn't happen that
fast.
Brendan: Yeah. I mean, candidly, the home runs are the ones that you
really get into everywhere. That's one of the criteria that we look for when
we get an item submitted to us. When you evaluate your idea think a little
bit about “Can this item be sold in all these kinds of stores?” Speaking from
our perspective, if the item can be sold in a bunch of different types of
chains and different channels then you've got a lot of people you can go to.
It's a math game. Whereas, if the item is something that can only be sold to
Bed, Bath, & Beyond and a couple of other people on our account list, well,
if we get one or two no’s then we're going to be out — we've already tried
and failed. We know it's just not going to go.
A lot of times if you sell it to Bed, Bath & Beyond then you really can't
sell it to Wal-Mart because Bed, Bath & Beyond gets upset that Wal-Mart's
at a lower price. You have to channel differentiate. There are all these
nuances that we have to work through on our end in terms of, "Hey, if I sell
this guy, I can't sell that guy because this guy's bigger and he's going to get
upset." There's a lot of subtleties involved. The more people on our list that
we can take an item to the better chance that we have of not only getting it
tested but of turning it into a really high-velocity item. That's going to be
one of the questions that we're asking when we're evaluating the item to
begin with.
I appreciate your approach to working with inventors.
Brendan: Well, we need to appreciate what they bring us too because I
can't emphasize enough how important the innovation is. To build a
company that people want to do business with, one of the most important
things is to bring the buyers things that they haven't seen before, and a
steady flow at that! If you keep doing that items are going to start to stick.
They're going to start to sell through. You're going to get more face time
and the business will grow. We're really excited about the number of ideas
that we're getting sent to us. We feel really fortunate to be on the list.
Sometimes you're going to get a slow response from us because we're
getting busy and we're growing. But we really do welcome the ideas.
There's a certain amount of trust that's involved. When someone brings
us an idea, if we like it, a lot of times we'll explain to them how we work
and how the royalty works and everything else. Then we'll ask them, "If
you don't mind, can we take it to a factory that we trust?" Or get an NDA
signed or something to take it out and get some quotes. If the tooling comes
back or the unit cost comes back we do our market analysis and we just
think we can't compete then that's often the situation where we just say,
"Hey, look. We really like this but we're struggling. We can't make it work.
We're happy to share any intel or anything else that we've developed in the
process. It's just not a fit for us.”
This is a seasoned team of industry experts who have started a new
business and are willing to pull back the curtain on their process for all of
us because they're starting out. They’re willing to look at products in many
different categories. Costing once again is always important. Establishing a
good relationship is critical as well.
I’ve enjoyed getting to know Grand Fusion Housewares over the past
couple of years. They’re very inventor-friendly and they know what they’re
doing. I like that they include a photo of the inventor next to the product on
their website and posts on social media.
This interview clearly explains why we as inventors are very important
to companies. Companies must keep innovating to stay competitive.
AUTOMOTIVE
ATUL H. PATEL
Former Product Development
Manager with 15 years of experience
in the auto industry at Bosch,
General Motors, and Daimler, three
of the largest companies in the
industry!
Atul has 15 years of experience mostly related to the automotive
industry including working at Fortune 500 companies where he was
responsible for hundreds of products. First, he was a mechanical engineer;
then he migrated over to marketing, sales, and product management.
The Bosch Group established a regional presence in 1906 in North
America and employs 35,000 associates in more than 100 locations as of
2018. According to preliminary figures in 2018, Bosch generated sales of
$14.5 billion in the U.S., Canada and Mexico.
General Motors, commonly referred to as GM, is an American multi-
national corporation headquartered in Detroit. The company is the largest
American automobile manufacturer and one the world’s largest. As of
2018, General Motors is ranked number 10 on the Fortune 500 ranking of
the largest US corporations by total revenue.
Daimler is a German multinational automobile corporation generating
about $200 billion dollars a year.
What is the role of a Product Development Manager?
Atul: The part of marketing no one knows about! It varies widely and
can include everything from making sure a shipment has reached its
destination, hounding the manufacturing team to get stuff built, doing
market research, working trade shows, pricing to advertising budgets. It's
all over the place basically and it's one of the more stressful positions
because responsibility for a product has to end somewhere but there's only
so much you can personally do.
How often did new product ideas land on your desk? How did they
get there?
Atul: On average I'd see something about once a month. Sometimes
inventors found my email from business cards I gave out at trade shows.
Product Specialists reviewed idea submissions from our online portal and
brought good leads to Product Development Managers.
What happened next when you liked a new product idea?
Atul: If I believed in an idea, I'd run it by our salespeople, other product
managers, and engineers. Their feedback would help me determine whether
to pitch a project on it or not. Then I'd begin building a business case
around it including prototyping and pricing. I'd also run it by some of our
big customers as a sneak peek in presentations.
How much of an investment we would have to make was a big
consideration. If I could operate under the radar especially with testing that
helped. The design process is iterative: re-design and repeat. Some
prototypes can be made for hundreds of dollars by bending steel and
making use of existing materials. If a new product idea required new tools
to be made that could cost tens of thousands of dollars. So, the amount of
engineering time needed was part of the equation.
Product development managers constantly have to put out fires with
production or quality issues and are often forced by management to
prioritize other projects. That takes time away from inventions.
How did you analyze a new product idea submission?
Atul: If the invention was risky and different it was a more difficult sell.
We probably wouldn't invest early. An improvement to an existing product
was a no-brainer. If you're already selling 300,000 units a year of this
product and the improvement could boost that number boost by 30 percent;
well, that's worth spending another $50,000.
Why do large companies move so slowly even when they're
interested?
Atul: The re are lots of times when you're stuck waiting on someone
else or some other part of the product development process. You may want
to give all your attention to this great idea; but in the meantime, you don't
know what to tell the inventor even an inventor you like and respect.
Depending on who leaves and who is hired to replace them, reviewing
and supporting outside submissions can fall by the wayside.
What mistakes do inventors make when submitting their inventions
in your experience?
Atul: Some don't even do basic research. Nowadays, it is so easy to
search for prior art. If I can find the exact same thing in a patent quickly,
that doesn't show well.
How can inventors help their chances of success?
Atul: By being reasonable. Try to understand what it takes to develop
the product you're pitching and then you'll understand more of what is
going on. For example, make sure you have some basic knowledge of how
to make the product and your competition.
Inventors should also pay attention to costs. There are hidden costs of
doing business at large companies which is one reason why they are so
risk- averse. Learn more about their cost structure and cost structures in the
industry at large. It could be the best product in the world but it will be
cancelled if everyone involved cannot make enough money.
Do a really good job of building up a case for your product. For
example, an inventor I worked with supplied me with quotes and
testimonials about how useful and needed his invention was. I used those in
my presentation to management. Consider how the Product Development
Manager will sell your invention. If you can make their job easier, that's
going to make a big difference. If the inventor hadn't had such good
marketing materials, I most likely would not have moved forward.
Please take this interview to heart! Product Managers are the most
important people for moving your product from point A to point B.
They are responsible for all of it and that typically means they are
extremely busy and very hard to get a hold of. If you do find a Product
Manager who’s willing to champion your idea, Congratulations! You must
provide them with the right tools to sell your product submission to
management and that definitely includes a great sell sheet and video. Any
proof of demand can be also extremely helpful and of course costing will
play a big part again.
We’ve heard multiple times how important it is to have well thought out
marketing materials and something that separates you from the amateurs.
The goal here is to make their job as easy as you can and provide
something that they can show to retail buyers, engineers, sales people etc.
Most very large automotive companies are very hard to get to but in this
particular case they do have an invention submission form that’s easy to
find. Amazing!
I’ve also been told when you’re reaching out to some of the big players
one of the best ways to get in contact is not through their online portal but
in person at trade shows.
These large companies move extremely slowly so you need to be patient.
Also, intellectual property is an absolute must with these giants.
GOLF
SIMON TOUMA
Attorney and Inventor
Simon Touma is an inventor and a 35-year-old attorney who owns his
own practice. He currently lives outside of Phoenix, Arizona, and he started
developing products a few years ago. After taking advantage of the
educational resources created by inventRight, he licensed his simple
improvement on the golf brush.
So far, he’s successfully brought one product to market, but he intends
to work on some others and bring those to market, if time permits, because
it's something that he really enjoys doing. Simon has a solo law practice
where he practices general law and he enjoys that challenge as well.
Tell us a little bit about how you invented your first product.
Simon: Really what started the process was when I read an article that
you wrote and became intrigued with the product licensing field, you could
say. So, I looked at some industries that I might be interested in and I
looked at the different types of products, different product lines, where
companies had been in the past, and where their innovation had brought
them to in the present.
I started off in hardware. I tried to redesign a hammer. Then I looked at
some other industries like kitchen and sporting goods. I just tried to mess
with various products and change them and make them better; products like
toothpaste tubes, floss, dust pans, and brooms. I tried to make little changes
to them.
I enjoy playing golf as I mentioned. When I came across a golf brush, I
thought to myself, these bristles are really sharp. The brush just hangs off
of your bag. It can catch onto your clothes, tear your clothes, and scratch
you. I said, “Why not have a folding golf brush? Why not hide the
bristles?" I sketched out a little design where it was essentially a pocket
knife type of design and I had the head of the brush fold into the handle and
that's sort of how I came up with my idea.
It's called the Flip 'N' Pure Brush. Nice.
Simon: I had some other names for it, but it turns out that some of those
names were trademarked in other industries. I was advised that it was
probably best to steer away from those; to not cause any issues. So that's
what I did, I changed the name.
Well, your product is very easy to find. Congratulations.
Simon: Tha nk you very much.
When did you license this idea and who did you license it to?
Simon: I licensed it sometime in 2018 to a manufacturer based out of
Wisconsin called Golf Gifts and Gallery. They were actually a company
that I found by way of speaking to another potential licensee. They were a
recommendation, or a referral, if you will. They were not a company that I
found on my own. So, it actually worked out to my benefit to call the
plethora of different companies and talk to these companies and get their
opinion about things and the product and if there were other companies that
might be interested if they themselves were not interested. That's how it
worked out.
How did companies treat you when you reached out to them?
Simon: I thought they treated me pretty well, actually. For the most
part, a lot of companies that liked the product or didn't like it were still
willing to talk to me. There were very few companies who were, I'd say,
short. Maybe they were busy. They just weren't interested.
But I'd say, for the most part, companies treated me pretty well. A lot of
the folks that were not interested gave me invaluable information on how to
proceed. In fact, some of the companies I called gave me recommendations
about how I could make the product better and they actually suggested
other companies that I could contact for more insight on prototyping or
design services. A lot of the companies I'd say were very helpful.
That's very nice to hear. How did you find these companies? Did
you go down to the golf store? Did you look on the internet?
Simon: I did both of those things. I looked on the internet. I certainly
went to a bunch of different golf shops. I looked at the back of packaging.
I looked at who the distributors were. I asked questions when I called
companies. I got on the internet and I went to ftomas.net and I started
looking up golf accessory manufacturers, golf manufacturers, and accessory
manufacturers. I looked up contract manufacturers. I called anyone who
basically came remotely close to manufacturing a brush or a plastic item.
Did you file any intellectual property?
Simon: I did. I ended up filing a design patent, which issued this year
back in August, I believe. So yes, the golf brush is fully patented.
You had mentioned you did a sketch. Did you actually build a
prototype or not?
Simon: I did not personally build a prototype. I had a sell sheet and I
sent that sell sheet to companies. The company that I was working with
built several prototypes for me.
We went back and forth. Each prototype probably took anywhere
between 30 and 45 days, give or take. We refined the prototype over a
year’s period of time. Then, even when they had market samples ready to
go, we still refined the spring on the inside of the handle. They probably
sent me five or six prototypes. After that I think we refined the market
samples two times.
So yes, they created the mold. They pretty much did everything. We
worked together to refine it. We had some issues initially with having the
brush fold all the way down into the handle. We made the cavity a little
deeper and shortened up the bristles, which also helped with keeping them
stiff and lasting longer as opposed to bending and folding over and not
getting into the groove.
Just for clarification, what does the Flip 'N' Pure clean?
Simon: Its main purpose is to clean the grooves on the club. I think you
could probably clean the ball with the nylon or synthetic bristle side. But
it's mainly for the clubs. The stiffer sides are for irons and the nylon
side/synthetic side is for your fairway woods, hybrids, stuff like that.
So was your experience with licensing pretty positive? Yes or no?
Simon: Oh, absolutely, very positive.
What a great story.
Simon: No problem, Stephen. I appreciate all the insight that you've
shared with people, whether that be through your articles, your books, and
your videos on YouTube, which are invaluable. These resources certainly
guided my entire process. It's just a matter of really going out there and
doing it, talking to people, and asking questions. You'll find that the vast
majority of the time, people are more than happy to help you out.
Once you start gaining some momentum, the sky's the limit. It's just a
matter of doing it. I'd like to thank you for providing all the information
that you've obtained over the years and sharing that with folks.
Well, thank you very much. One question, did you ever attend a
trade show in the golf industry?
Simon: No, I did not. I’ve wanted to attend the PGA Merchandise
Show that happens at the end of January actually for two years in a row
now. I just haven't made it down there yet.
Simon broke all the rules. No prototype, no utility patent. He didn’t even
attend a trade show. He just saw a problem and came up with a very simple
solution. He made a small improvement on an existing idea.
With licensing, every situation is a little bit different. Every company
has different requirements. This story illustrates the bare minimum to
license an idea. Nice work Simon!
ED HOLDA
Vice President of Sales and
Marketing at Golf Gifts & Gallery
Ed has nearly four decades of experience in the golf industry, mainly
related to sales. The company he current works for sells an assortment of
golf products including accessories, carts, travel covers, golf bags, golf sets,
and golf balls. He answered my questions in an email.
You work with outside inventors?
Ed: On occasion. We will look at many products throughout the year. I
am sorry to say that what most inventors think will sell, won’t sell. A golfer
friend, local pro or someone at a golf store thought it was a good idea and
right away the person thinks they have the best thing since sliced bread.
We had an inventor stop by the PGA show one time and said he had the
greatest idea for determining the wind direction on the golf course. He
asked if we wanted to see a presentation. We had time so we asked him to
show us. He took a bottle out of his pocket, dipped a wand into the solution,
and proceeded to blow bubbles. He was dead serious!
What is the best way to present a product to your company?
Ed: Send in a sample or prototype.
And how important is intellectual property, such as patents?
Ed: Depends on the product. If it is a golf tee, not important. If it is
very unique and has a special use, very important if actually in place.
And how important is it for inventors to attend trade shows?
Ed: To be honest, when we exhibit at trade shows, we want to speak to
customers. So, I feel it is a waste of time. Some companies with larger
staffs of product development people that are in attendance might think
differently.
Why did you license the Flip-N-Pure brush?
Ed: It is a unique brush, very functional and versatile.
ORGANIZATION
JEFF GAWRONSKI
Founder of Dorm Company
Corporation and Byourbed.com
Jeff Gawronski is an inventor and the founder of Dorm Company
Corporation, which is on track to do $12 million in revenue this year. He
started the company in 2010 selling college dorm room supplies and has
since expanded out to bedding of all sizes. Today DormCo products are
sold on its own website as well as pretty much every other third-party site
out there! Jeff licensed four products from Courtney Laschkewitsch, an
inventRight student and Managing Director of Inventors Groups of
America.
Let's talk a little bit about your industry. What category are you in?
What types of trade show do you go to?
Jeff: You know, we really don't fit in a category. There is no trade show
for college dorm supplies. There is a college bookstore trade show but we
haven't attended that in a decade. A lot of college bookstores got swallowed
up by big players so there aren’t a ton of independent stores left and that’s
who this show was for.
Beyond that, there really isn't a trade show that we've attended. We’ve
been selling all direct to consumer online. We don't even do wholesale
typically any more other than on minimal case by case basis. Back in the
day we sold to Bed Bath & Beyond, Container Stores, and others
wholesalers, but not so much anymore. It's all direct to consumer online.
Do you work with inventors?
Jeff: Yes. I love working with inventors. I mean, that’s how I started
with one product, one idea. I was in a college dorm room and I needed a
place to put my alarm clock and so I built a bedpost shelf out of wood and
made extra. I sold them and got chased off campus for soliciting and the
rest is history, as they say. With that one product I ordered 10,000 units
from China and had to drive around the entire country until I sold them all.
I basically lived out of my car doing that.
After getting my breaks and making my way to launch thousands and
thousands of items, I have a very soft spot for people starting off with one
niche idea or one good idea. Really all it takes is one idea to get someone to
follow what they love to do and make new products that help people.
Wonderful. What is the best way for someone to present an idea to
you? Is it a prototype, a video, a sell sheet? What do you need to make
a good evaluation?
Jeff: It doesn't need to be fancy. Just an email saying what the item is
and if they have rough sketches or even more. Back when I started, I had to
hire an engineer and invest all this time and money. You can go that route
now but it's not needed as much. The factories will do a lot of the work for
you if you present an idea.
I know for inventors it's hard because how do you trust the factory?
And how does the factory even believe that you're going to make it? Where
DormCo is now, we've been fortunate to develop relationships to the point
where we can literally present a napkin sketch and have an item turned out
into a sample to see if it's going to be cost effective and if consumers want
it and even test a small quantity on the market, if that's where we want to
go.
That’s really good to hear, because sometimes a prototype is a
barrier to entry for some people.
Jeff: Of course. If the item is made of injection molded plastic or
something else where you're going to have to invest in tooling— yes, those
hurdles are there. My first item ended up being out of plastic and not wood
and that ended up being a costly endeavor to start with the tooling.
There are still different ways to try to get around that or see if you can
test it out of a different material first. For example, your student Courtney
Laschkewitsch, the inventor. One of the items she had made, which was the
keyboard desk drawing, she wanted it out of plastic to start. And I said,
"Well, let's see if consumers want it. Let's make it out of wood first. And
then we don't have to invest all this in tooling. And if they like it, well then
yeah, we can get fancy and invest in tooling."
But why would you at first if you don't have to… Don't do it. Play it
safe and test, test, test!
That's smart advice.
Jeff: A lot of people think of the big boys, you know the big brick and
mortar stores, like, "Oh, if I just get in there, they're going to take a
million." And really, they don't! I mean, they're kings of testing. They make
sure they're not going to put an item on the shelf until they've had the
science behind it, until they know that it’s going to sell. They would want to
start with a very small quantity even if they took an item.
I mean… you have to be sure. You can't get in over your head. And you
know, perhaps I did get in a little over my head when I started, so it's maybe
strange advice because it worked for me. But there were a lot of stressful,
stressful years that I wonder if I could have worked around.
How important is protection to you? Patents? Are they important
or not?
Jeff: I believe in trademarks. I've seen a lot of businesses thrive on a
name. There's no arguing if someone's using your name. Like, you're using
my name or you're not, you know what I mean? But with a patent,
unfortunately there's just so many ways around it and I've seen that happen
and they're so expensive to obtain.
Unless you really have the next home run to the masses, and not a niche
item… If your item is quite niche and you get a patent — well every
inventor thinks everyone's going to steal their idea. And it's fine to be
paranoid but if it's a niche item? Not to say that nobody will want to steal it
but you’d be better off spending that money to make the product better or
on marketing or something else.
When is a good time to submit to you?
Jeff: The busiest time of the year for me is summer because of the
college dorm season. It's intense. Even with a team of employees and
everything, there's always something that needs my attention. It gets intense
around Christmas holiday sales too. So, those are times I guess to avoid.
During the fall season and winter, like January, February, March, and April
— those are seasons when I'm excited to look at new things and see what
new items we can work on or assist individuals with.
Let's talk about what happens when an idea comes to you. Do you
evaluate it? Do you have a team to look at it?
Jeff: If there's one thing that I really haven't outsourced, it's the creation
of the products. I mean, that's solely me, either myself working on the item
or maybe working with another individual if it's their product idea. It's me
working with the factories and whatnot. So, I look at the item to see if it
works. I’m honest with the inventor as to what level it can work and if we
can make it and license it.
If it's not going to work for us we're pretty honest in saying, "Hey, this
doesn't work for us." I'm not evaluating whether it's a good or bad idea. It’s
more so, we’re not going to be necessarily happy with the sales we'll get
because it's just not quite within a channel where our customer is going to
notice it, if you will.
Do you just go with your gut? Will you ever put a prototype up on
our website to see if there's interest?
Jeff: I typically go with my gut now. Of course, we make mistakes. But
the first business I started in this industry was in 2004. So, after all these
years of seeing what sells you kind of make educated guesses. Like, oh
wow, that type of item sold well. This item is in that same family. So, you
know consumers are seeking these types of items.
And then you can search, is there an item that exists already? If there is,
what's the price point? If oh wow, this would fall under a lower price point
than that and it's actually even a better item — okay. So yes, you can do
research into whether it’s going to move besides your gut.
Our relationships with our partner factories allow us to order small
quantities. We have winners and losers but when we have a loser, we’re not
looking at thousands of units of that item and wondering, “What were we
thinking?" We might stare at a hundred and be like, okay, well hey that
hundred didn't work, but others do. The factories know that some items are
going to win and some are going to lose. So, they're willing at this point to
work with us on that.
It's tough for an inventor because if you try to get a factory to make a
hundred units, they're going to give you a price that's through the roof.
They're not going to give you pricing as if it were in bulk and that's the
hardest part. When I started out, I had to order like 10,000 units and take a
ridiculous leap.
What advice do you have for inventors?
Jeff: When people are too guarded, it’s hard. I get it. I was guarded too.
I was so paranoid. I really was. I get it because it's your one idea and you
believe that once it gets out there it's going to blow up and do great. Maybe
it will but a lot of times it's usually a gateway to your next idea which is
really how things evolve.
Sometimes being so guarded just blocks everything. For example, I've
been in conversations that have gotten far with an inventor and I think we're
going to start having the factory work on stuff. Then they want an NDA
signed by me, by the factory, or something else done and it's like, "What
happened?" And they say, "Well, I talked to my lawyer friend. I don't
know."
I've never in all my orders with every factory I've ever worked with —
no matter how big the order, whether they have an order for $100,000 or
$500,000, whatever it is — I've never had them sign a contract. I've never
had anyone get wrapped up legally.
Business isn’t fun when it's all stuck in there and I get leery of it too. It's
too much too soon. "You want me to do all this? I don't even know if we're
going to make the item." It’s like they want to stop doing business before it
can even start.
Everyone has to start with that one idea whether it's super niche or
people think it's crazy. If you get yourself in the game of business you have
an opportunity. I think that's the thing, a lot of people sit on their idea and
overthink it. But once you get in the game a lot of different doors open.
Where I am now started based on a plastic shelf! I love helping people out.
It's crazy to me — this year our total revenue should hit 12 million.
We're continuing to grow. It's been a great journey. I never would have
fathomed! I just didn't listen to the naysayers who were like, "A plastic
shelf for a bunk bed? How big is your market?"
I love this interview because Jeff is one of us. He started out as an
inventor and made many mistakes along the way. Because he’s one of us,
he’s made it very simple for us to work with him. Patents are aren’t
required. “Just show me an idea and I can test it.”
I love that he has a relationship with manufacturers so he doesn’t have
to produce large volumes to test the market. And because he sells online
only, he controls all of it. He also knows that it’s hard to pick the winners so
you truly have to just let the public decide. He’s willing to test ideas. After
all, he took a simple idea that he created and transformed that into a $12
million company!
PACKAGING
BARRY MCKILLIP
Research Scientist at Multi-Color
Corporation and former VP of R&D
at CCL Label, two of the largest
packaging firms in the world.
Barry worked at CCL Label from 1987-2000 and departed as Vice
President of Research and Development. CCL Label is the global supply
chain leader of innovative premium packaging, promotional vehicles, and
comprehensive label solutions for the world’s largest consumer,
agricultural, and healthcare corporations. With 22,000 employees and 168
production facilities, CCL Label’s presence is felt all over the world.
Barry has spent his entire career in the printing industry and is an
inventor himself!
Is the packaging industry inventor-friendly?
Barry: Yes, it is.
How important are prototypes, intellectual property, market
demand, and costing?
Barry: All four are critically important. I’ve got three products that are
patent pending right now. They all solve a problem. They all need to be
profitable too — and new to the industry. So, anytime I look at a project, it
has to be something that is very novel. Something that has a strong market
potential, very little competition, and good profitability.
This is a very specialized industry. How do you find new inventions?
Barry: Generally, it’s interacting with our customers. We talk with the
sales group. Customers visit our facility and describe a problem they need
solving. I love it when someone says, “You can’t do that.” because that just
gets me going but I also love looking for issues people have and trying to
solve problems.
For example, we had a technology day with the brewing company
Anheuser-Busch. They told us they wanted to see all the unique things we
could do, and also put together a presentation that described what they were
looking for and reports from consumers. One of the biggest complaints they
were getting was bottle breakage. Was there a way to stop it?
If you take a beer bottle and drop it 32 inches, the likelihood is that it’s
going to explode. So, I had a material engineered out of Brazil. With this
material, you wrap 11% of the bottom of the wall of the bottle, and you can
drop it six feet and it bounces.
That’s awesome. So, you’re an in-house inventor, basically.
Barry: Yes, that’s correct.
I’ve been inventing and bringing products to market in the packaging
industry for more than 20 years. I can tell you it’s a difficult industry. You
need to understand the equipment and materials involved in order to solve
problems. It’s not surprising that new innovation typically comes from in-
house designers, engineers, and inventors such as Barry. Consider the
volumes! There’s no margin because these are consumable products.
Costing is extremely important and the kiss of death for packaging.
Without prior knowledge of how these high-speed machines work and
the materials used, you’re at a very big disadvantage. It can be done but
please realize that you’re going to need to consult with someone who has
experience in this industry. The good news? This is one industry where the
revenue potential is enormous.
PRODUCT
DEVELOPMENT
LOUIS FOREMAN
Founder and Chief Executive at
Enventys Partners; founder of
Edison Nation; creator of the TV
show “Everyday Edisons” and
publisher of Inventors Digest.
Louis Foreman is the Founder and Chief Executive of Enventys, an
integrated product design and engineering firm that has helped file more
than 700 patents, launched hundreds of products, built dozens of companies
from the ground up, and raised over $150 million through crowdfunding.
He is also the founder of Edison Nation and Edison National Medical.
Louis was the creator of the Emmy award winning PBS TV show Everyday
Edisons and served as the Lead Judge. He currently serves as Chairman of
the Board of Directors for the James Dyson Foundation. Louis Foreman is a
prolific inventor. He is the inventor of 10 registered US patents and his firm
is responsible for the development of filing well over 700 more patents.
What are some of the common mistakes that you see from an
everyday inventor?
Louis: We obviously work with thousands of inventors, ten to
thousands, if not hundreds of thousands. Many inventors fall in love with
their idea way too early. It solves a problem that they may personally have,
but they don't do the research to determine whether or not it's really
feasible. And so, what I typically tell inventors to do is, they've got to look
at the market realistically and first and foremost figure out what is it about
their product that is unique because pretty much everything that we need
today already exists. Our basic core needs are being met by other products
and services. So, as an inventor what they have to figure out is what is it
about their product or service that is different than what's already out there
and why would someone not buy something else to buy their products?
Louis, how can they determine if they have a marketable idea?
Possibly testing using a crowdfunding campaign? Is there anything else
they can do to kind of test that idea, to see if they have that uniqueness
that you're looking for?
Louis: Yes. Market research is definitely critical when determining the
feasibility of an idea. Crowdfunding is just another form of market research
and we use crowdfunding as a way to get market validation. In the old days,
you know, you and I are old enough to remember, focus groups and one-
on-one intercepts and we used that to get an intent to purchase. We sat
down with people or we sent out surveys and we tried to determine whether
or not someone intended to purchase a product or service at a given price
point.
But the problem was that there was a disconnect between that level of
intent and actual purchasing. Sometime a product could test really well in a
focus group but then when it launched at retail it didn't perform well at all.
Crowdfunding is probably the closest thing we have to real intent to
purchase because the customer is literally buying something before it even
is made. We use crowdfunding in some ways as an opportunity to bootstrap
the idea. So, for the inventor who has limited resources, they can use
crowdfunding to test a product. But more importantly, it's a way to get that
market validation that customers are willing to give a credit card number
today for something that won't even be delivered for months, if not a year
or longer. And that's probably the truest form of market research.
I know proof of concept is really important, but building
prototypes, even if they are just works-like versions, can get expensive
at times especially if you're generating a lot of ideas. Is there something
else they can do before that, maybe a sell sheet to say, "Look, is this
something that's even of interest? And if it is, I'll build a prototype." Is
that something you'll even consider?
Louis: Well, it depends on the product, right? Or the service for that
matter. If it's an app or something like that, a prototype is great because a
picture is worth a thousand words. So, if you can demonstrate how the
product functions, it's a lot easier for the person that you're explaining the
product to, to comprehend it. But in many cases just renderings of a
product, drawings of a product are sufficient to at least get early interest.
Now obviously for crowdfunding, that's no longer an option. In the
early days of crowdfunding, you could just throw in some renderings up on
the screen and that was enough to crow fund a product off of. Now,
Kickstarter and Indiegogo require a functional prototype, so you've got to
be further along in the development process to be able to raise capital on a
crowdfunding platform. But it doesn't have to be an expensive prototype. I
mean, James Dyson built his first vacuum cleaner out of cereal boxes and
duct tape. You just have to be able to demonstrate that the concept that
you've developed actually works.
How important are patents today?
Louis: Well, it depends. It depends on what the product is and it
depends on the industry that you're playing in. It depends on the price point
of the product and it depends on kind of the long-term goal. If you've got
significant investment in a product and you believe there's a long market
opportunity of selling the product, then obviously a patent is going to be
important because it prevents others from making, using, or selling what
you've created.
But today products evolve so quickly that another approach is to
innovate, be first to market, sell as much as you possibly can, and then
when all the imitators come in you get out and transition to the next
product. I mean there are many products that the life of that product is
shorter than the time it takes to examine and issue the patent. So, if you just
sit on the sidelines waiting for your patent to issue or if you're determined
to get a patent before you launch a product, that might not be the right
approach.
I would say of the products we work on, 90% of them have patent
protection because we still believe that having a strong IP portfolio is the
deterrent to infringement. But I think what patents do is keep honest people
honest and you're always going to run the risk that there's going to be
people who exhibit bad behavior and take the shortcut and copy a product
versus investing the time and resources to develop it on their own.
Great. Last question. What are some of the traits of a professional
inventor, in your opinion?
Louis: I think a professional inventor has objectivity. What they're able
to do is very quickly identify the ones that have potential to grow and the
ones that they need to just kind of cut loose and give up on. And that's
tough sometimes because again, people look at their inventions like their
babies and they want to give it every effort to grow and mature. But
sometimes you're just throwing good money after bad. So, what a
professional inventor is able to do is look at it as a business and the more
they do it, the more of a process it becomes and you just have to look at the
numbers and if they don't add up, move on.”
Louis is well-aware of the difficulties of commercializing inventions.
His practical advice is based on his years of experience. His crowdfunding
experience is current and valuable. In other words, his insights and
experiences are absolutely priceless!
15.
INCREASING YOUR
CHANCES OF SUCCESS
W hen writing this book, the thought dawned on me: How did I become a
professional inventor? I really hadn’t given it much thought.
Somehow, I had figured it out. After interviewing so many companies
and talking to other professional inventors, a light went on.
The information the industry provided me with I had happened to
follow myself. I just didn’t really recognize it until now.
You see, I’m not very creative. To land a winner, I needed companies to
tell me what to do, what to create. Typically, inventors see problems and
create solutions. In that way, their inventiveness is always jumping around.
That’s not what motivated me to come up with products.
You see, I started out creating soft sculptures that were completely
whimsical. There was nothing serious or even functional about them. They
were just intended to put a smile on your face. I took nylon, stuffed it with
fiberfill polyester filling, and stitched on a smiling face. I took everyday
objects and created characters out of them, from vegetables to stars to
chocolate candy kisses.
Soon afterwards, I started working for Worlds of Wonder, where I
learned all about the toy industry. When I left WOW to start my own
company, I went back to creating products in the novelty gift industry,
because that’s what I was very comfortable with — using fabric to design
whimsical products. These were easy to make, because I was using fabric
and a sowing machine. I wasn’t really inventing; I was studying the
marketplace and coming up with something new or a variation on an
existing idea. As my confidence grew, I started submitting toy ideas to toy
companies. After all, I had developed a lot of relationships at WOW!
ftose two industries have been working with independent product
developers/inventors for many years. So, they welcomed me with open
arms. I stayed in those two industries long enough to know who the players
were and build relationships. I submitted many ideas to a company called
Applause. A woman named Leslie Gross headed up product submissions
there. We became good friends. She would invite me down to their facility
in Southern California to learn more about their business.
Because we had a relationship, she told me what they were looking for.
She gave me a target to hit. And I sent her ideas weekly. It was directly
because of her feedback and our relationship that I was able to license many
ideas.
When I look back at the experience of licensing the Michael Jordan
Wall-Ball, it all makes perfect sense. I loved basketball and had been
playing it all my life, so I knew the product. I was able to play some simple
fun creative games to help me come up with variations, which I describe
below. And sure enough, the idea to change the shape of the backboard into
Michael Jordan just popped out. Working on a product that I was passionate
about made it fun and easy.
And as for the Spinformation rotating label? That was based on an
earlier idea I had licensed for a rotating cup and canteen that were selling in
Disney theme parks and stores. To turn that into a packaging innovation, I
had to start from scratch in the sense that I had to learn who all the players
were, build relationships, and study the label industry inside and out. Only
once I understood the industry and the players was I able to license my
package innovation, from which I collected royalties for many, many years.
All of a sudden, it hit me like a ton of bricks! I had been following their
suggestions all along.
I stayed in industries long enough to get to know the players and
introduce myself. I built relationships. And because of those relationships, I
received the feedback I needed to improve my product submissions. I
studied their product lines and knew their business inside and out. And I
was always successful in industries I was genuinely passionate about. You
can be too.
Every once in a while, someone will ask me, “I get the process, but how
can I increase my chances of success? How can I speed this up?”
HOW TO BE A PRO: A
CASE STUDY
The following is a case study about what it takes to become a
professional inventor featuring past inventRight student and now
professional inventor Scott Baumann.
Scott shared the following story about one of his inventions on an
inventRight webinar that was also attended by John Hurley, a former
marketing executive with Allstar Innovations. The product Scott licensed to
Allstar Innovations was called Gripgo. It was amazing having them on a
webinar together to discuss what happened with Gripgo.
Scott explained that it all began when he watched a webinar featuring
John in which John explained what DRTV companies like Allstar are
looking for in terms of products. Specifically, John identified seven criteria
that a product must meet for them to be interested. John called these criteria
“the seven divine qualities” of a successful DRTV item.
At the time, Scott had successfully licensed a few products. One of the
products he had licensed was a phone mount system for your car, but it
wasn’t selling very well at retail. The product had this unique gel material
that held your phone in place and also allowed you to easily remove it.
When Scott heard what was required for a successful DRTV product, he
thought his phone mount system would be perfect for the industry. It hit all
of John’s criteria! This moment of insight is extremely important. When
you understand how certain businesses and industries work, it is much
easier to hit a target. And that’s exactly what Scott did. He created a video
that addressed the seven criteria directly. It was also very personal. At the
beginning of the video, Scott says, “Hi John.” John mentioned that he loved
that.
Everything from volume, customer demand, and cost to solving the
problem at hand — there was nothing Scott did not address in this video!
To create the wow factor that he knew DRTV needed, he connected an
Apple phone to his phone mount system and then dangled it outside a car
window while going 60 miles an hour! The phone stayed glued! This bit
was so effective, they used it in a television commercial that was launched
later.
John said that Scott’s video was so good, they didn’t even have any
questions for him. He had answered each and every one. Saying yes and
getting straight to a licensing agreement was easy from there. It was a no
brainer. Scott’s efforts made it simple for Allstar to say yes, we want this
product.
Next, he worked with their team to produce another video to be tested.
Ultimately, 4 million Gripgo were sold!
Scott made it easy for Allstar to take this product to market. He did
everything a professional inventor should. He knew what this company was
looking for. He knew the cost of his product aligned with what they needed
to be successful. He produced strong marketing material that answered their
every question. He built and maintained a close relationship all the way
through, which was critical to the product’s ultimate success.
This is a case study of being a pro.
I said earlier that licensing is a numbers game. How do you better your
chances? Well, you know the process now. Filing provisional patent
applications, producing sell sheets and building prototypes is time-
consuming. In fact, it’s not very practical to go through the entire process
every time if you have a lot of ideas. And I very much believe that you need
a lot of ideas to be successful, so you need to find another method.
For me it always comes down to math. The more doors you knock on
the greater the chance one will open. Pretty simple. I learned this lesson
when I was 18 years old and did door-to-door sales for a central air
conditioning company for a summer. For most people this would have been
very difficult. But I enjoyed it and made friends along the way. I knocked
on as many doors as I could, and once in a while I got a sale. More doors,
more sales. It was simply a numbers game.
“The reason you are not successful is that you’re not failing fast
enough. You need to step up your failure rate.”
— Robert Kiyosaki, author Rich Dad Poor Dad , the best-selling
personal finance book of all time.
So I knew to be successful at licensing products I needed to be an idea
factory. For me, coming up with ideas was not a natural talent. I had to
teach myself how to be creative. Many people in creative industries have to
come up with ideas every single day. That’s their job - they can’t just wait
around for inspiration to strike. They have a process by which to increase
their chances of success.
I created my own process that would help stimulate new ideas. I have
three “games” to come up with different ideas. You don’t have to reinvent
the wheel. If you make a small improvement on an existing idea, the chance
of getting a licensing agreement is far better compared than coming up with
something completely new. These are the games I play to come up with
variations and improvements on existing ideas:
Mix and match - Combine two ideas together to create something new.
this is very common. Example: flashlight and screwdriver. When you
combine them, it’s easier to work on things in a dark area. I presented Mix
and Match to a class of second grade students once and one young man
immediately called out – skateboard with a headlight!
How about a plate that also holds your cup for use in buffet lines? That
was dreamed up by Rick Kellow, the inventor-entrepreneur behind the
GreatPlate. All these “mix and match” products are on the market today!
What if? - Dream the impossible.
What if I could throw a frisbee the length of a football field? Sure
enough, someone created a product that could do that called Aerobie.
What if I could hang a picture without any tools required? There’s the
Push and Hang for that, licensed by inventRight student Michael Van Horst.
Solve it - Come up with solutions to problems that people have!
One of my favorite examples is a product named Cocoon that one of my
students named Dario created to help people organize their stuff better.
He noticed his wife was always rifling through her purse, unable to find
what she needed. He developed a bag insert with adjustable elastic bands
that hold items in place so that they're easy to find.
Cleaning hair out of your drain is a nightmare especially if you don’t
want to use harsh chemicals. My friend Gene Luoma invented Zip-It Drain
Cleaner – a simple piece of plastic with teeth that grabs the hair and gunk as
you pull it out.
Using these techniques, you could look at a company’s product line and
come up with variations on their existing products. I would exhaust all
possible variations. It’s just a matter of time before someone else will come
up with their own variation. You just need to come up with it before they
do. The process is quite mechanical, but it does work all the time.
Companies are very risk-averse. They’re going to make a small
improvement on one of their existing products that’s selling well before
launching something completely new.
You could change the material, the shape, or the features of an existing
product. I did this with the Michael Jordan Wall-Ball. Typically, indoor
Nerf basketball games have a square backboard. I literally changed the
shape of the backboard to be Michael Jordan (literally a picture of him cut
out in the shape of his body). This product sold for over ten years and other
NBA players were eventually added to the line.
I used this same process for an innovation in guitar picks. I took a
different material (lenticular lens) and made a guitar pick out of it – so by
rotating your hand back and forth the images on the guitar pick changed
and looked like they were moving. Imagine Taylor Swift playing her guitar
or scenes from Pirates of the Caribbean on a guitar pick! Once again, a
change of material created something fresh and new.
The most successful inventors I know stick with one industry. This
allows them to do two things: 1) become extremely familiar with the
products on the market today including the design, cost of materials, and
features and benefits, and 2) develop relationships with key players to
whom they will pitch their products. By knowing what’s out there already
they can figure out what’s missing. And, because of their relationship with
licensees, they can pitch ideas using only a sell sheet (or even just a verbal
description).
The ways to be creative are endless. Remember professional toy and
game inventor Sara Farber? She loves wordplay and puns and often starts
with the name of a game. She stays current by watching television to see
what the latest obsessions and crazes are, so she can be inspired by them.
But how do you test all of your ideas? Creating sell sheets and
prototypes takes a lot of time. Don’t forget the importance of provisional
patent applications. More time. If you want to increase your chance of
success, you can’t go through the entire process for every idea you have.
You need a testing process where you can sort through those ideas and
focus on the best ones.
Early in my career, I used to sell soft sculptures made of nylon and
fabric at street fairs, county fairs and even state fairs. I quickly learned that
if I didn’t have a design that would sell, I didn’t pay the rent or even eat.
That’s when I learned that I needed to test ideas quickly. Test your ideas
with a sell sheet or just a strong one-line benefit statement. Sell the benefit,
don’t sell the product. If you can’t sell the benefit, why bother with the rest?
And that’s exactly what I’ve been teaching others for the past 20 years.
Say you have a new hammer innovation. It has a very soft handle, so it
doesn’t put any strain on your grip. Also, it’s made with lightweight
material. It doesn’t put any strain on your elbow or shoulder. It also has a
very large head, so it hits the nail every single time. With this new hammer,
you can work longer and be more productive. Basically, you can get the job
done faster. You could call a company that produces hammers. Speak to
someone in sales.
Hi, I’m a product developer and I have a new hammer innovation. My
new hammer allows anyone to be “more productive and get the job done
faster.” Can I send you more information?
You just pitched the benefit without telling them much about the
innovation. You can determine if there’s any interest before building a
prototype, producing a sell sheet, or filing any intellectual property.
Basically, you can test the waters to see if you have a marketable product
idea. Talk about saving time and energy!
Easy enough right? Well it becomes that much easier when you stay in
an industry long enough to build relationships with the relevant decision
makers. Here’s how I accomplished that goal.
First, I started submitting my ideas to an inventor-friendly company. I
would show them quality work, so they knew I was capable of designing
for them. At first, I sent them a great sell sheet and prototype. It showed my
work and dedication. Of course, I got rejected. But I had a great attitude and
told them I would be sending more ideas over. I produced another sell sheet
and even a prototype. Things started to change. They could see that I was
working for them. I was investing my time and energy creating products for
them. That’s when they gave me a target to hit. “Steve, we want you to
create in this particular category.”
It was at that point that I asked them if I could send them brief one- line
descriptions of product ideas. If there was any interest, I would expand
upon it with a sell sheet or maybe even a prototype. They agreed!
I would send them ten ideas at a time. Just one or two sentences
describing the product and the benefit. I just became an idea factory. I
wasn’t bogged down by sell sheets or prototypes. They would respond to
me very quickly with: Seen it, not interested, or maybe—this is interesting
please provide more. I would then create a sell sheet, sometimes a
prototype.
I was selling the benefits of my product ideas way before they were
products. I could just focus on being creative. It worked out extremely well
for me to stay with this one company. I understood their product line and
was creating products just for them. I was able to license close to 20 ideas
to them over the years. I was even able to apply the same techniques in a
completely different industry. Remember, it’s all about relationship
building. Once you start to invest in them, they will start to invest in you. I
know you’re most excited about pitching your ideas, but you have to learn
to sell yourself first.
People ask me often, “Aren’t you afraid they’re going to steal your
ideas?”
No.
Like I said at the beginning of the book, companies need us to stay
competitive. In most cases, they are not out to burn you. In some situations,
when you do have interest in a product, you can file a provisional patent
application if it makes you feel better. How do you know if and when you
should file? You can always ask a company if it’s important for you to file.
Companies have different opinions about this, so ask. If you’re new to the
licensing game, I would highly recommend that you file, so you feel more
comfortable.
The very large companies tend to like intellectual property protection as
it allows them to go after copycat products online. They can also contact a
major retailer if a copycat makes it to the store shelves. While no one wants
to get into a lawsuit, large companies have the resources to do so.
Midsize and smaller companies basically understand that it’s pretty darn
difficult to protect something today and definitely not economically
feasible. In my interviews, the small and midsize companies all said that
patents are nice but not necessary.
In either of these cases, if you have filed a PPA prior to submitting your
idea, you have kept the door open for your licensee to pursue a non-
provisional patent application should they desire. You have left the options
open – and that’s probably a good idea.
Ultimately, I know if I’m building a relationship and we’re working
well together, there’s no need to rush to file. It all depends on the industry
you’re in and the relationship you have established. Full disclosure: I’m not
an attorney and I’m not giving legal advice.
Licensing was perfect for me because I always wanted to be my own
boss. I’m thrilled to report that open innovation has been growing for
decades and I see more successful licensing agreements today than ever
before. It’s a fantastic model for people who, like me, want to focus on
being creative, but we shouldn’t take the opportunity for granted.
I wrote this book because I’ve seen too many inventors just throw up
their ideas against the wall to see if one sticks. I’ve noticed that companies
are getting fed up with too many product submissions that obviously don’t
fit their business. I’m talking about very poor submissions—ideas that
really don’t fit in to a product line, or even worse, ideas that aren’t even
original and can be found within minutes online. I know I’ve talked about
how licensing is a numbers game. But you shouldn’t miss the forest for the
trees. For the open innovation model to succeed, independent inventors
have to be assets for companies that are looking for ideas. You must go
from amateur to professional.
To optimize your long-term chances of success through licensing, find
an industry that you’re passionate about and stay long enough to build
relationships. Take every chance to meet people in person. Attend trade
shows and even corporate headquarters when you can. Study the product
lines within the industry so you can really tailor your ideas to your potential
licensees’ needs. Cultivate the skill of producing ideas. Be reasonable,
patient, and always be respectful of people’s time. Your potential licensees
will recognize that you’re investing in them, so they’ll give you targets to
hit. You’ll be free to be an idea factory and submit product ideas to them
that are fairly rough. This is when you transition from amateur inventor to
professional product developer.
In this book, I’ve tried to provide you with a roadmap of how to become
a professional product inventor. It’s all about doing things the right way!
Make sure your product isn’t already on the market. Create good marketing
material and file a provisional patent application if warranted. Find
inventor-friendly companies and study their product line. Know something
about manufacturing costs and materials. Treat your potential licensee with
respect and don’t be a high-maintenanceinventor. Build relationships within
one industry for the long haul.
I’ve been helping inventors license their ideas for the past 20 years
because I truly believe in this wonderful community. By being an asset to
companies that are looking for ideas, I think you can help future
generations of inventors by keeping the doors of open innovation open. So,
try to be an ambassador for the inventing community and leave a positive
impression with every company you work with. It will help you and your
fellow inventors succeed.
Keep inventing!
PART EIGHT
Samples
Sell Sheets
View at www.inventright.com/pro-
inventor
The following sell sheets were supplied by inventRight Design Studio.
For more examples of sell sheets, watch the videos on my YouTube channel
inventRightTV. There is a playlist about sell sheets that includes 16 videos.
Non-Disclosure Agreements
(NDAs) - View at
www.inventright.com/pro-inventor
There are many types of non-disclosure agreements. Included here are
just a few examples. Please note: There is no such thing as a standard NDA!
Please do not find and use one from the internet. Have an attorney write one
for you.
Sample Non-Disclosure Agreement 1 is the standard inventRight Non-
Disclosure Agreement we use with all of our students before we look at
their inventions.
Sample Non-Disclosure Agreement with Work-For-Hire Clause is
supplied by Richard Bennett Salles of Foundation Patents. Thank you
Richard.
(925) 478-5662 (www.foundationpatents.com)
Sample Non-Disclosure Agreement 2 is supplied by Stephen Key.
Sample Mutual Non-Disclosure Agreement 3 is provided by patent
attorney Damon Kali. Damon has provided a few notes about NDAs and a
short outline of what is included in a well-balanced NDA. Thank you
Damon. (408) 420-2381 (www.kali-law.com)
Sample Term Sheets

inventor
These sample term sheets were supplied by two of our students. Both
resulted in licensing agreements.
Sample Licensing Agreement
inventor
Over the course of my career, I’ve seen many, many different types of
licensing agreements. Some have been as long as 30 pages. Others are only
two pages long. There’s no such thing as a standard licensing agreement. At
the end of the day, what’s really important is the company you’re signing
the licensing agreement with.
Never sign a licensing agreement without having a licensing attorney
review it first.
The first draft of the licensing agreement should come from the licensor,
not you.
The following licensing agreement was supplied by attorney Noah
Harfouch of The Harfouch Law Firm. Mr. Harfouch has negotiated
hundreds of licensing deals across the world. I have had the pleasure of
knowing him for some time now! Thank you Noah.
(248) 274-6529 (www.harfouchlaw.com)

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BECOME A

Copyright © 2020 by Stephen Key Media, LLC. All rights reserved

This publication shall not be construed under any circumstances, by

T here is nothing like bringing a product idea to market. To see your

few years ago, while travelling with my wife Janice to speak at an

“We always encourage inventors to sign the NDA because it protects

Stephen: Why pet toys?

Stephen: Tell us about licensing your first product.

Who doesn’t love a video? A one-minute video that shows a problem

Y ears ago, when I started reaching out to potential licensees, I didn’t

C ongratulations! You’re getting responses from potential licensees. Now

A fter interviewing 28 experts across 17 industries, I can say with

Sample Term Sheets

Sample Licensing Agreement

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