Inventors Digest: Contingency Caution
When a Deal Seems too Good to Be True, It is
by Kenny Durham
[September 2010 issue of Inventors Digest]
I’m unsure who first said, “If an invention marketing company really believes your product is a moneymaker, it should work on a contingency basis.”
My guess is that it was either a desperate inventor grasping at one of the few options left, or an opportunistic invention marketing representative preying on said inventor.
More than likely, it was a combination of the two.
Some invention marketing companies often promise they won’t make money unless you make money on a licensing deal. Don’t believe it. These companies will charge you fees to produce template-like marketing materials of dubious value. The up-selling of more materials of even more dubious value is sure to follow. Meanwhile, you’ll likely end up waiting in vain.
Companies that perform evaluations based on contingency typically position themselves as having expertise across multiple industries. This should be your first red flag. Few companies have the resources to be expert in a vast array of industries.
Inventors are vulnerable to the false promise of contingency deals because too often they’re seeking validation. They’re dying for a so-called expert to confirm they have a valuable idea and that they haven’t wasted time and money.
Yet the words “evaluation” and “contingency,” when used in the same paragraph, should send inventors running.
The truth is, if inventors followed common sense steps to commercialization, they already would have gained confidence and wouldn’t need reassurance from opportunists.
The U.S. Patent and Trademark Office reports between 1-3 percent of all patents issued will be commercially successful. The success rate of some invention marketing companies runs about .001 percent. Yep – about one in 1,000.
Inventors often think invention marketing companies function or ought to function like real estate agents, who agree to sell a home for a percentage of the selling price. The agent is an expert in the real estate industry and well-versed in the nuances of the local market. In real estate, everything has a value – 100 percent of real estate property will eventually sell, it’s just a matter of price.
And this is where a lot of inventors end up acting out of desperation. Unlike a real estate agent, who’s an expert in the housing market, invention marketing companies are likely not experts in your industry.
People spend lifetimes becoming experts in a particular subject area. And how can they know each particular industry well enough to judge whether a product or idea has potential?
When it comes to intellectual property, it’s difficult to determine value because much of the time none exists. This is intellectual property, after all, a novel idea, a potentially revolutionary product that right now has nothing but a patent to back up its promise.
American enterprise universally accepts the notion that marketing plays a pivotal role in the success of products and services.
More than $285 billion dollars are spent annually in the U.S. on advertising. McDonald’s alone spent $2 billion on advertising in 2008.
The fact is advertising works. Its success can be measured through return on investment, market share and various other marketing metrics. It’s understood and embraced by every successful business enterprise, whether a sole proprietor or multi-billion dollar corporation.
If McDonald’s operated within the basic marketing tenets of the intellectual property industry, the fast food giant would have ad agencies lined up around the block begging for its business on a contingency basis.
Imagine if McDonald’s marketing executives sent out a request for proposals, promising the selected marketing agency 10 percent of all McDonald’s revenue following a particular promotion or ad campaign, whether or not the sales were a direct result of the agency’s work.
There’s no way McDonald’s would entertain such an offer. It just doesn’t make sense.
What’s an inventor to do? Like the invention marketer who works on contingency, the lone inventor can’t be expected to be an expert in all phases of product development. It generally takes a team.
“Individual commitment to a group effort – that is what makes a team work, a company work, a society work, a civilization work,” said legendary football coach Vince Lombardi.
Focus on what you do best, and hire a creative marketing team to do for you what they do best.
I understand that sometimes inventors believe they have no choice. The patent process is exhausting and can take a heavy financial and emotional toll.
For these individuals, a contingency deal may be their last option. And so at the final crucial moment, they give away control of their product in exchange for magic beans.
Countless times I hear patent owners say something like, “I’m not greedy; I don’t mind sharing. If they get it done for me then I don’t mind giving them 10,000 times more money than they deserve.”
That’s the sound of the desperate. And every time I hear it, I’m thankful that Thomas Edison or Henry Ford didn’t think that way.
Want to commercialize your idea?
Five common-sense first steps
Step 1. Start with a Big Idea
Innovation starts with a big idea of something you can do better, faster or cheaper than the way it has been done before. But it takes more than just a big idea. Here’s what Thomas Edison had to say on the subject:
“What’s The Value of An Idea? Zero. Ideas that are implemented and become new products and services are very valuable. The value of an idea lies in the using of it.”
Step 2. Do Your Homework
Do your own market research. Make sure someone else hasn’t already had your idea. If your idea is pioneering, try to be realistic about why no one has tried it before.
If it has been tried but is no longer on the market, find out why. Conduct a Web search and a patent search. Google Patents is a good place to start. Consider things like ease of manufacturing, production cost, distribution issues and financial commitment. But most important, think about how your invention will make life better for others.
Step 3. Build Your Plan
Construct a plan. Ask yourself if you possess the financing and skill to see your plan to fruition. If not, locate helpful resources. Inventors groups are a good place to start.
Step 4. Own your Idea
File for a patent, copyright, trademark or whatever intellectual property protection is appropriate. At this stage, you likely will have to hire a patent attorney.
Step 5. Treat Your Idea as a Business
Do what successful businesspeople do – concentrate on the things you do well and build a team to fill in your gaps. Focus on the financial bottom line, keeping costs as low as possible.
The Art of IP War
This article popped up on my Google alerts and I wanted to share. If you have IP, it’s a good rule of thumb to put the same tireless effort that you did inventing the IP into advertising and marketing it.
http://patent-warrior.blogspot.com/2010/06/marketing-and-enforcing-your.html
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Press Release
Contacts: Kenny Durham, President Joan Koerber-Walker, President and COO
Innovators Warehouse AMA Enterprises, LLC
InnovatorsWarehouse.com Home of Amilya.com
Lee’s Summit, MO AMAEnterprises.com
816-509-7642 602-456-9636
FOR IMMEDIATE RELEASE:
Leadership and Teamwork in Action – Companies Join Forces to Support Entrepreneurs and to launch The Recipe: A fable for leaders and teams.
(Kansas City, MO) May 4, 2010 — Innovators Warehouse, an intellectual property consulting firm based out of Kansas City, has partnered with AMA Enterprises, LLC, on the New York City launch of The Recipe: A fable for leaders and teams, the newest book by national media personality, entrepreneur, and green pioneer, Amilya Antonetti. The week long launch, sponsored by Innovators Warehouse, includes a private VIP and Media Event honoring Patriarch Partners founder Lynn Tilton, Fox News Commentator Monica Crowley, and CNN commentator and Tech Entrepreneur Ken Colburn on May 10, 2010 and a public event featuring an Expert Panel of Entrepreneurs and Leaders on Tuesday, May 11, 2010 at Barnes and Noble’s Lincoln Triangle location in Manhattan. Free and open to the public, the May 11th event at 7:30 p.m. For more information and to register visit http://TheRecipeNYC.eventbrite.com .
A serial entrepreneur and business leader, Amilya has shared her personal success story to a world-wide audience, through appearances on Oprah, Big Idea with Donny Deutsch, CBS This Morning, Fox Strategy Room, and countless media outlets. Her personal story began with a quest to create environmentally sound products that would not harm her ailing newborn son and evolved into a multimillion dollar business and a multibillion dollar industry. Amilya’s story has been memorialized in the best selling Chicken Soup for the Soul series, as well as in magazines and newspapers worldwide. In The Recipe she shares the lessons she has learned in her journey by way of an entertaining yet meaningful story of six brother who must come together as a team and as leaders as they take the reins of the family business. The book also contains a bonus section of Little Spoonfuls of insights and exercises the reader can along their personal journey as a leader and as a teammate. When asked why she wrote The Recipe, Antonetti replied “You may see me, but I am nothing without my team. Leaders learn this early. If reading The Recipe helps other people along their personal success journeys, I am blessed.”
One of the newest additions to Amilya’s team is Kansas City-based intellectual property firm, Innovators Warehouse. Experts in guiding inventors through the marketing processes that must occur before a patented product can be launched into the marketplace; Innovators Warehouse’s teamwork approach was recognized by Amilya as a perfect complement to her personal philosophy and recipe for success.
Innovators Warehouse President and Founder, Kenny Durham, said of the sponsorship opportunity, that “we’re ecstatic to be recognized by Amilya as an organization that shares her teamwork philosophy and we are thrilled to have the opportunity to sponsor the launch of her new book, The Recipe: A fable for leaders and teams. We look forward to continuing to work together as a team in the effort to move the innovations of our clients from paper to fruition.”
ABOUT Innovator’s Warehouse
With a common sense approach to marketing and advertising for intellectual property owners. Innovator’s Warehouse offers no obligation tools to help innovators and patent owners reach their goals
ABOUT AMA Enterprises, LLC
AMA specializes in creating market opportunities for quality products that deliver value to consumers and supports the designers, inventors and entrepreneurs who create them. Our mission is to discover, develop, and deliver, products and services that create better choices for today’s consumer.
Contact: MediaRelations@Amilya.com 602-456-9636
ABOUT The Recipe: A fable for leaders and teams
Hardcover: 208 pages
Publisher: CorePurpose Publishing; May 1, 2010)
ISBN-10: 0974705691
ISBN-13: 978-0974705699
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Innovators Warehouse to sponsor Book Signing
Innovators Warehouse has teamed up with author Amilya Antonetti and will sponsor her NYC book signing event for “The Recipe”.
The free public event and leadership discussion at Barnes and Noble Lincoln Triangle location (66th and Broadway) in Manhattan on May 11, 2010 at 7:30 PM. See below for more details. Free Registration for the public event is available at http://TheRecipeNYC/eventbrite.com
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