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A high percentage of inventors come to me with their “million-dollar” idea. More times than not, my response is, “Really? How much money have you made so far?” It’s not that I am in the business of dashing dreams or slaying hope. I believe my role as a patent attorney is to guide inventors along the rocky road of getting a product to market — with the inventor and his or her will-to-invent still intact.
The hard facts are that less than one-half of 1% of inventors’ products actually see the light of the marketplace and are financially successful. In other words, for every 1,000 patents, only about four or five will actually succeed and make money.
So, what does success take? Certainly, having a great idea and being passionate about it are hallmark. Also, the inventor must have tenacity, stamina, and understand that nobody gets to the top alone. The typical “get-rich-quick” approach is a quick ticket to failure. A better approach comes from following these tips to help you successfully move through the steps.
Everyone loves their own idea
And, of course your friends and family “love it” too. However, a successful inventor puts his or her product to a real test by first performing a market analysis. This takes time, but in the long run a good market analysis keeps an inventor from spending thousands of dollars to develop a product for which there is no demand — and, therefore, no need to patent.
Inventors must ask questions and learn what they do or do not know about their idea. A great start is to present the product so no one knows you are the true originator. For example, an inventor might approach a company and say, “A friend of mine came up with this product. I think it’s stupid. What do you think?” The responses can help inventors make improvements, move forward, or let them know it might be wise to shuck the idea altogether.
Confidential resources are available to help individuals perform a solid market analysis. For instance Score, Herndon, Va., a nonprofit association and partner of the U. S. Small Business Administration, provides no-cost counseling services and workshops for entrepreneurs. Another good resource is the U. S. Patent and Trademark Office.
Inventors should be leery of for-profit “invention mills.” Unfortunately, they are usually ruthless and are just looking to turn a large profit and don’t have the inventor’s best interest in mind. For more information on invention promotion scams, visit the National Inventor Fraud Center and the Federal Trade Commission Web sites.
In addition to just “falling in love with your own idea,” a lot of inventors fail for other reasons. A common mistake is to try to develop an idea that is too technical and that demands resources not available to a solo inventor. Companies can patent and develop products more easily because they have marketing departments, sales teams, design groups, and distribution networks. I have seen individuals invest well over $100,000 on a product which I am almost certain will fail because the idea is just too complex.
The right Idea + the right team
Because many products take more funding and expertise than available to a single inventor, I try to steer inventors toward a simple idea that is easy to manufacture and sell. I also urge inventors to team up with those having the skills to help get the product to market. Examples are 3D modelers, prototype builders, writers, and graphic artists. Inventors love to market their products, but most aren’t good at marketing.
One of the first products that my colleague Howard Loewenthal and I invented is a good example. The patent-pending dripless turkey baster sat for seven years on my shelf because my focus was solely on selling the baster. Finally, I got a marketing expert involved by giving him an equity stake in the business. His recommendation: Don’t sell the baster — sell the valve that’s inside the baster. The valve is what makes the baster dripless.
A typical turkey baster sputters. Why? As the cook operates the device, it becomes partially filled with hot oil from the turkey. The hot oil heats up and expands the remaining air in the baster. As a result, the expansion of the hot air causes the basting oil to drip and squirt out of the baster. This flaw makes it all too easy for a cook to get scalded.
In contrast, the unit we invented includes a valve that is inserted into the top of the baster tube. The baster bulb slips over the valve and part way down the tube. Basically, the valve lets the expanding hot air escape into the bulb (not through the tube tip), thus providing a dripless baster. The baster valve is easy to clean. Just pull off the bulb, remove the valve, and rinse everything in warm water.
Selling the turkey baster as a complete unit would have required $100,000 in tooling. In addition, the baster would have been sold to just one company. But by changing the focus to licensing the valve, many of the companies that sell basters that leak want to buy the valve. Suddenly, we went from a weak position, which demanded a large outlay of cash, to a strong position that required relatively little cash outflow outlay. To see a video of basters before and after using the valve visit, www.WonderValv.com.
To cite another case, my colleague Rich Spencer and I sell a golf tee that is die cut in a plastic card. Companies can use the cards as a marketing device. The patent-pending golf tees sell in the U. S. and internationally. However, sales so far have been disappointing and well below our initial expectations. Both Rich and I believe this is a multimillion dollar product. The takeaway? The inventing process can be frustrating, so it’s important to just keep moving forward.
I can’t stress enough how critical it is for inventors to reach out to the right people with the right expertise. Do your due diligence first. Look at experts’ track records, talk with others who have worked with them, and ask “experts” to show examples of products they have successfully commercialized.
A short while ago, a local inventor named Dave Hoffman created a wireless test indicator. After a 2-hr consultation, I discovered that Hoffman had built 10 prototypes. I put him in touch with a marketing expert who had connections in the tooling industry. Within three weeks, all the indicators were sold to Fortune 500 companies. This was something Hoffman had been unable to do on his own for the 10 years his product had been patented. The right expertise can make all the difference — period. Subsequently, Hoffman has had another hundred indicators manufactured to sell them.
Another good reason for developing a “simple” idea is that simple products can generally be manufactured one at a time, or in small quantities. This puts inventors in a better position to manage cash flow and profit margins. Manufacturing in small quantities also lets inventors make design changes less expensively. Seek out domestic manufacturers that will produce a few of the products at a time. A down economy has made many shops hungry for work, so they are more likely to take small orders now than in the past. Once the products sell, use the profits, no matter how small, to produce greater quantities. Over time, the cost of production will fall and profit margins will rise. The goal is to get to positive cash flow as early as possible. Many inventors make the mistake of going overseas where they must place a minimum order of say, 5,000 parts. Most of these products end up sitting unsold in a warehouse or garage.
Sole inventors should avoid selling out to big box stores such as Walmart, Lowe’s, and Home Depot. Their distribution model produces small profit margins for inventors. Instead, sell directly to end users.
Here is an example of marketing to the end user. Another colleague, Greg Getzinger, and I commercialized a patent-pending pizza-cutting board called the Portion PadL (www.PortionPadL.com). Getzinger invented the board for his pizza shop to quickly and efficiently cut equal slices. Selling the device to Dominos, Schwan’s, Speedway, and other franchises gives us higher margins than we would get by selling through Walmart or pizza-supply companies. The Portion PadL is selling extremely well. This is due in large part to Getzinger’s sales and marketing expertise and tenacity.
To patent or not to patent?
The process of licensing products (as opposed to selling them directly) can be difficult and frustrating. A good patent takes time, resources, and a well-qualified patent attorney or agent. Inventors who license a product must approach a lot of gate keepers who usually keep the gates closed. Inventors selling products directly can knock on lots of doors that would be closed to them for licensing deals.
Just as important as the question, “Can my idea be patented?” is the question, “Is the idea worth patenting?” Again, this is where a good market analysis is critical. Should it reveal that there is little or no demand for the product, then it’s time to “fail fast, fail early.” Move on, and put your time, money, and energy into the next idea.
Real failure comes when inventors jump ahead to start a nonprovisional patent or write a patent themselves. Other bad ideas are to finance their ventures through credit cards, friends, or family, or borrow from a bank, venture capitalists, or angel investors. These inventors try to go it alone, sell to big box stores, spend a lot of money, and then never invent again. Now their “million-dollar idea” has cost them their dreams.