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Great Invention, No Money?
by Scrupulous » Wed Dec 30, 2009 3:04 pm
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Scrupulous - Black Belt
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Got an idea for a great product or service, and no money to finance it?
Consider leveraging ownership in your property to interested parties from the very beginning, instead of paying out-of-pocket. You can grant percentages of your intellectual property however you see fit and, in a sense, use it as currency.
Now, I don't mean send someone a napkin sketch and say "Here. I'll share this with you 50/50, if you take it and run with it." They will run, that's for sure.
What I mean is, hand over your Joint Ownership Agreement, and ask the party to sign it if interested.
Although this can be done without patent-pending status, it is better to have at least a provisional application filed, whose serial number is referenced by the Agreement.
Consider leveraging ownership in your property to interested parties from the very beginning, instead of paying out-of-pocket. You can grant percentages of your intellectual property however you see fit and, in a sense, use it as currency.
Now, I don't mean send someone a napkin sketch and say "Here. I'll share this with you 50/50, if you take it and run with it." They will run, that's for sure.
What I mean is, hand over your Joint Ownership Agreement, and ask the party to sign it if interested.
Although this can be done without patent-pending status, it is better to have at least a provisional application filed, whose serial number is referenced by the Agreement.
Re: Great Invention, No Money?
by jackbnimble56 » Wed Dec 30, 2009 8:09 pm
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jackbnimble56 - Brown Belt
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Okay Scrup, I'm on board with that approach. You find me the "interested party" and I'll gladly give up a chunk of the Magic Toob and Magic Hold intellectual properties! And I got WAY more than a napkin sketch too. I have a packaged product that's retail ready!
Jack
Jack
Nimble Jack Enterprises - Innovative Solutions to Everyday Problems
To purchase the Magic Toob product visit: http://www.magictoob.com/
To purchase the Magic Toob product visit: http://www.magictoob.com/
Re: Great Invention, No Money?
by Scrupulous » Thu Dec 31, 2009 1:28 pm
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Scrupulous - Black Belt
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Well, it'd be a bit more complicated at this stage of the game. But it's still do-able.
If you wanted to simply divvy up percentage ownership of your intellectual property. Then you'd want to decide whether you're willing to give up more than 50% ownership, which gives you more to bargain with, since you would be giving up control over decisions from then on...not necesarily a big deal.
In general, when you add factors like inventory to the bargaining equation, then you bring up matters such as warehousing, possible trademarking concerns, posession, and so on. But, with a product as storage-friendly as yours, the late-stage may be less of an issue.
If you wanted to simply divvy up percentage ownership of your intellectual property. Then you'd want to decide whether you're willing to give up more than 50% ownership, which gives you more to bargain with, since you would be giving up control over decisions from then on...not necesarily a big deal.
In general, when you add factors like inventory to the bargaining equation, then you bring up matters such as warehousing, possible trademarking concerns, posession, and so on. But, with a product as storage-friendly as yours, the late-stage may be less of an issue.
Re: Great Invention, No Money?
by jackbnimble56 » Thu Dec 31, 2009 5:16 pm
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jackbnimble56 - Brown Belt
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Well I guess only time will tell but I can tell you the intellectual property went on the block as soon as the ink was dry on the patent applications. I've said from the outset that I'll sell out EVERYTHING for a decent price...
Jack
Jack
Nimble Jack Enterprises - Innovative Solutions to Everyday Problems
To purchase the Magic Toob product visit: http://www.magictoob.com/
To purchase the Magic Toob product visit: http://www.magictoob.com/
Re: Great Invention, No Money?
by JoeWaisman » Thu Dec 31, 2009 6:32 pm
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JoeWaisman - Green Belt
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It pays to know a bit about the person you sell out to as well. Again...not speaking from experience but analysis: Consider Jonathan Buford who created the "happy kitty" adult toy. It was unique, and innovative. He was in Asia (Hong Kong) I think and sold the product at a wholesale per unit price to a guy in the US who wasn't able to do much with it. The product sold a little bit, and the inventor made some cash, the US guy who bought it in bulk and warehoused it lost most of his investment. Why?
1) The product (I believe) was primarily tested in Asia. Every woman is different, and in general women of different ethnicities respond different to various things. The product got mixed reviews, so it didn't ever experience the word of mouth effect.
2&3) The product had little marketing, and the roles of each individual were not clearly defined. I believe both guys were upset with the other about this. Something along the lines of the Hong Kong guy believing that the US guy should have been the one marketing it due to proximity, while the US guy thought the inventor should market it cause "hey, he's the inventor."
4) There was no distribution channel. You're probably better off getting 10,000 websites that are already selling adult toys to sell yours than if you have 1 website among those 10,000 that is selling the product. This of course would have required them to set up drop shipping, affiliate payouts and a pricing structure that included selling the product for less than the MSRP.
How is it that people try to sell their product via a single website in the post-dot-com-boom/post-dot-com-bust era? I don't know but they decided to sell their idea mainly via their website. Which would have worked a bit better except the search engines couldn't find their website, which was designed to look good rather than show up in search engines.
Let's not forget the many, many adult shops in every city. What most people don't know is that it can actually cost money to put an unproven product on the shelves of a store. There are many though that will display products for free, and pay the wholesale price for each sale. Giving away your product doesn't necessarily mean you're giving it away and there are good ways of doing this.
1) The product (I believe) was primarily tested in Asia. Every woman is different, and in general women of different ethnicities respond different to various things. The product got mixed reviews, so it didn't ever experience the word of mouth effect.
2&3) The product had little marketing, and the roles of each individual were not clearly defined. I believe both guys were upset with the other about this. Something along the lines of the Hong Kong guy believing that the US guy should have been the one marketing it due to proximity, while the US guy thought the inventor should market it cause "hey, he's the inventor."
4) There was no distribution channel. You're probably better off getting 10,000 websites that are already selling adult toys to sell yours than if you have 1 website among those 10,000 that is selling the product. This of course would have required them to set up drop shipping, affiliate payouts and a pricing structure that included selling the product for less than the MSRP.
How is it that people try to sell their product via a single website in the post-dot-com-boom/post-dot-com-bust era? I don't know but they decided to sell their idea mainly via their website. Which would have worked a bit better except the search engines couldn't find their website, which was designed to look good rather than show up in search engines.
Let's not forget the many, many adult shops in every city. What most people don't know is that it can actually cost money to put an unproven product on the shelves of a store. There are many though that will display products for free, and pay the wholesale price for each sale. Giving away your product doesn't necessarily mean you're giving it away and there are good ways of doing this.
___________________________________________
"The horse is here to stay but the automobile is only a novelty, a fad."
Fun links:
*http://www.scribd.com/doc/441708/Bad-Predictions-About-Great-Inventions
"The horse is here to stay but the automobile is only a novelty, a fad."
Fun links:
*http://www.scribd.com/doc/441708/Bad-Predictions-About-Great-Inventions
Re: Great Invention, No Money?
by Scrupulous » Sun Jan 03, 2010 11:13 am
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Scrupulous - Black Belt
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That seems to be quite a saga.
From what I can tell, the Happy Kitty could still find it's day in the uh...er...ohhh I don't know.
It's interesting that you can't really find them for sale very easily, because I'll take three. [kidding]
If there is a lesson in there, it would be to structure any deal to maintain the appropriate incentive(s).
That and, don't put all your kitties in one basket.
From what I can tell, the Happy Kitty could still find it's day in the uh...er...ohhh I don't know.
It's interesting that you can't really find them for sale very easily, because I'll take three. [kidding]
If there is a lesson in there, it would be to structure any deal to maintain the appropriate incentive(s).
That and, don't put all your kitties in one basket.
Re: Great Invention, No Money?
by DeaconLen52 » Sat Jun 12, 2010 12:27 pm
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- White Belt
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I agree with my friend Jack. This sounds like a pretty sound idea. Anyone interested in shared ownership of the BinkyBottle???
Youtube this: 'The Binky Bottle'
DeaconLen52@yahoo.com
http://www.youtube.com/watch?v=EotlHJcHm8g
Youtube this: 'The Binky Bottle'
DeaconLen52@yahoo.com
http://www.youtube.com/watch?v=EotlHJcHm8g
Re: Great Invention, No Money?
by jonbuford » Sat Jun 19, 2010 5:53 pm
- jonbuford
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JoeWaisman wrote:It pays to know a bit about the person you sell out to as well. Again...not speaking from experience but analysis: Consider Jonathan Buford who created the "happy kitty" adult toy. It was unique, and innovative. He was in Asia (Hong Kong) I think and sold the product at a wholesale per unit price to a guy in the US who wasn't able to do much with it. The product sold a little bit, and the inventor made some cash, the US guy who bought it in bulk and warehoused it lost most of his investment. Why?
I think knowing the full story in this case would be a better example. Hi, I'm Jonathan Buford.
The fact is that no one made any money in this case, and that a lot of potential return was lost.
Initially, the adult toy company was founded by 3 people, Mike (the distributor and investor), myself, and the 3rd, the missing person from the anecdote, was Phillip, the Salesman. Mike and Phillip were based in the US and came to HK for sourcing and sales presentations to retailers. I lived in HK doing children's toy product development at the time. All three of us were new to the adult toy industry, but it seemed like a good opportunity since the market was not innovating (this was back around 2005 or so).
So, in my spare time I had been working on concepting and making rough prototypes of what became the Happy Kitty. Mike and Phillip came over one fall for the toy show, and I told them about what I was working on. Phillip thought it was a great idea and Mike did as well, so we set up an arrangement that was mutually beneficial to all of us and Mike agreed he would invest in the venture.
I quit my job and worked on this full time, this is where I *made* money in the above story. I even generated enough marketing hype to get an interview in Wired online (http://www.wired.com/culture/lifestyle/ ... 5/12/69788) which drove 50,000 unique visitors to the web site within 2 months. For $35,000 investment, I was able to develop, test, tool, and manufacture the first batch of 2000 Happy Kitty units. The cost per unit was around $10 ex factory, I did not make any additional mark-up. So, for $15,000, I developed, prototyped, and did the shipment inspections.
To be perfectly honest, we never found any issues with differences in race during the testing that was done, however, this first batch of 2000 was only intended to be a sales sample batch and to settle early purchases. The plan was to have Phillip go out to the wholesale buyers and sell the product, generating additional orders which would allow for us to improve on any feedback from customers.
There was an issue with the performance of this first batch due to the production elastomer material having an impact on how well it was able to move. The result was that the movement was restricted and not as noticeable as the early prototypes. The solution to this was to increase the power available by moving to a rechargeable battery in the next order, but we never even had that opportunity since Phillip never went out on sales calls.
Mike and I discussed what to do, and he wanted me to come to the US to do sales, but there was no additional budget for this. At that point I had no option available to me but to find consulting work to pursue to make ends meet since I had quit my job expecting that our company was adequately funded.
I never did ask or get anything from the sales of that first batch, and based on my estimate, Mike made most or all of the sunk cost back from those sales.
So, perhaps still a similar lesson, but I wanted to at least set the record straight as the story told above leaves out a few key facts. This was my first startup, and I use it as an example that product does not equal sales. In this case Mike and I both were hamstrung by a partner that did not follow through. We were trying to start a company with too little money, and so did not have enough runway available to handle any issues that did arise.
Probably, if I were to go back and make a change to the whole story, I would have started with something that was not quite as innovative that would still have some edge to it. Something that would have been more consistent between the prototype and production. The second part would be to double the amount of initial investment that was secured, or not do it at all. We just didn't have enough resources to handle a change in plan, and I think each venture has a pivot or change in plan along the way.
If anyone has any questions or comments, you can find me on twitter: @jonbuford.
Re: Great Invention, No Money?
by JoeWaisman » Sun Jun 20, 2010 1:00 am
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JoeWaisman - Green Belt
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- Joined: Tue Dec 29, 2009 4:10 pm
Jon, your story is one of the most interesting I've seen to date. Great product idea that almost made it...and who knows, still might. Thanks for sharing your story (and correcting my flawed assumptions).
If memory serves (and apparently it sometimes doesn't)...are you still actively connecting inventors, designers and manufacturers? If so I suspect a number of people on this site could use just such a service.
If memory serves (and apparently it sometimes doesn't)...are you still actively connecting inventors, designers and manufacturers? If so I suspect a number of people on this site could use just such a service.
___________________________________________
"The horse is here to stay but the automobile is only a novelty, a fad."
Fun links:
*http://www.scribd.com/doc/441708/Bad-Predictions-About-Great-Inventions
"The horse is here to stay but the automobile is only a novelty, a fad."
Fun links:
*http://www.scribd.com/doc/441708/Bad-Predictions-About-Great-Inventions
Re: Great Invention, No Money?
by JoeWaisman » Sun Jun 20, 2010 3:10 am
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JoeWaisman - Green Belt
- Posts: 234
- Joined: Tue Dec 29, 2009 4:10 pm
Lots of interesting reading linked to that twitter account. So far two of my favorites are:
http://startupshk.posterous.com/redligh ... gmentation
http://hackfwd.com/documents/The%20Hack ... eprint.pdf
http://startupshk.posterous.com/redligh ... gmentation
http://hackfwd.com/documents/The%20Hack ... eprint.pdf
___________________________________________
"The horse is here to stay but the automobile is only a novelty, a fad."
Fun links:
*http://www.scribd.com/doc/441708/Bad-Predictions-About-Great-Inventions
"The horse is here to stay but the automobile is only a novelty, a fad."
Fun links:
*http://www.scribd.com/doc/441708/Bad-Predictions-About-Great-Inventions
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