Deciding how to bring your revolutionary new product to market is a challenge. Here are some basics to set you on the right road
So you've created a brilliant new product you know will fly off store shelves. Maybe you're considering patenting (BusinessWeek, 2/5/07) it or building prototypes (BusinessWeek, 11/13/06).
But how do you sell it?
The business of patenting, promoting, and marketing products by independent inventors is a $300 million industry, estimates Bonnie Griffin Kaake, executive director of the nonprofit United Inventors Assn. Indeed, there's a host of services to help independent inventors turn their ideas into sales. They range from courses on how to sell inventions to online marketplaces that match innovators with corporate buyers or companies that buy inventions outright.
Tread Carefully Before Paying a Fee
Those familiar with the invention business broadly agree on a few things. Would-be inventors should know the marketplace and be able to explain the value of their product. They shouldn't expect big payoffs up front, and they should be wary of paying a fee to someone promising to sell their idea.
But most inventors spend too much time and money trying to protect their ideas, and not enough selling them, says Steven Key, an inventor and co-founder of inventRight, which sells educational CDs to inventors. Key advises against rushing into the lengthy and costly patent process, because 97% of the patents he sees never make any money, he says. Instead, he says inventors can protect their ideas as "patent pending" with a provisional patent for a $100 fee, and tweak the product while marketing it to manufacturers. "It gives you one year to kind of fish off the pier," says Andrew Krauss, Key's business partner and president of the Inventors Alliance, a California-based educational and networking group for inventors.
Key and Krauss advocate pitching ideas cold to companies that might be interested with a one-page sell-sheet that concisely explains the idea's value. Inventors should target midsize companies in growth stages, Key says, because it's often hard to get on the radar of a big corporation and startups may not have the capital to invest in outside ideas. When contacting a company, inventors should pitch their ideas to someone in sales or product managers in marketing, not top-level executives, who are too busy, he says.
An Intermediary Can Help
Independent inventors have other options to get their ideas in front of corporate buyers. Corporations hire firms like the nine-year-old Yet2.com to license products for their science and technology needs, essentially outsourcing part of their research and development. Chief Executive Officer Phil Stern says Yet2.com can be an intermediary for inventors if their products match his clients' needs. "We'll try to take it as far as we can in terms of screening and making sure it's a good fit before we make a direct connection, which usually results in a confidentiality agreement," says Stern.
All the fees are paid by the buyers, which include companies like Honeywell (HON), Microsoft (MSFT), and Siemens (SI). But Stern stresses that inventions must have proven value before his clients will consider them. "Without any kind of test data or any kind of proof that this does something novel, it's really just a waste of their time," he says.
Stern also warns inventors not to seek big licensing fees up front or huge shares of the royalties because manufacturers still shoulder most of the risks of an unproven product. Key and Krauss of inventRight agree that inventors shouldn't ask corporations for money "to go out and buy a Corvette." Instead they should seek the buyer's help in developing the idea into a product. "We teach how to convince the manufacturer to upgrade the provisional to a full patent and put it in your name," says Krauss.
Other companies offer to help inventors get their products in front of potential buyers for a fee, although this area is rife with scams (BusinessWeek, 4/17/06). "Many, many companies cater to helping inventors and at least 95% are ripping them off," says Krauss. "They don't rip off the ideas, they just empty people's wallets and leave the inventor with a useless design patent and no sales leads."
For more, visit the U.S. Patent & Trademark Office's public forum for invention promoters/promotion firm complaints and responses, as well as disclosure rules. And check out the USPTO's FAQs for inventors.