By Tommy Kirk, COO of Alotech, Inc., and COO of CTI Systems
The Dog Better Not Eat Your Homework
The old adage goes, “The person who is their own lawyer has a fool for a client.”
Most lawyers get it, so why shouldn’t inventors? An early mistake made by many inventors is failing to remain objective. This is because we can’t help being biased—armed with a patent or patent application, it’s easy to believe “my idea is the best one.” But the hard fact, according to Richard Maulsby, director of the Office of Public Affairs for the U.S. Patent & Trademark Office, is there are around 1.5 million patents in effect and in force in this country. Of those, maybe about 3,000 are commercially viable.
That’s a <1% chance that your patent will bring commercial success.
To take inherent bias out of the equation, I always advise seeking a third party to conduct relevant market research. But as the inventor you should still work to become an expert in the markets where the product will be sold.
You’ll need to be able to work hand-in hand with a third-party firm that can provide an independent analysis and closely examine:
- the cost of manufacturing
- your competition
- the key features and benefits that make a product sellable.
After all, it is your invention!
Once that’s done, marketability boils down to four factors:
- Number of people who have pain around the need for the product
- Price they will pay for it
- Cost of manufacturing
- Pricing and availability of competing products
Other market research factors to consider include:
- Key features and benefits (What makes your invention so special?)
- Competing products and substitutes (What’s in the market—effectiveness and value-added?)
Sadly, it’s not uncommon for folks to sink considerable sums of money into new product inventions, only to find that no one wants to buy the fruits of all their hard work. But as we say, don’t throw the baby out with the bath water. Do your homework first.
Swim or Die—The Prototype Problem
Many inventions end up in the ever-crowded prototype graveyard, where “great” ideas are forever laid to rest. To avoid going into the light, while conducting all that market research an inventor should simultaneously be working on a viable prototype. Because, before having a full-blown product, there’s a process you have to go through to make sure your technical and functional aspects actually work—and that there’s even a general interest in your product at all.
The ideal path to help mitigate risk (and death) is to make sure the prototype process is thoroughly vetted:
- Proof of concept (PoC)
This path helps you evaluate the strengths and weaknesses of your product. The difference between a PoC and a prototype can be confusing, as they’re often used interchangeably and incorrectly. The PoC is to be used to show a product or feature can be developed, while a prototype shows how it will be. The main difference between a prototype run and a pilot run is that you’re mainly just checking for the feasibility of the product during the prototyping phase. Only when you realize your product is ready, solves a problem, and doesn’t have glaring technical or function issues, can you begin the production process.
Don’t Fail Business 101
Now that you’ve done your market research and developed a working prototype, the next step is deciding what type of business you’d like to have. Having the “next best snowmobile” is not so great if you decide to sell it in Hawaii. I’m going to tell you that self-manufacturing, distributing, and sales are usually best left to those with the expertise and experience. All too often, inventors believe they can do this themselves… while failing to understand the complexities of supply, distribution, marketing, and sales. Not to mention the legal quagmire of each of these processes.
An alternative might be simply to license out the technology, know-how, or patent to another company that’s capable of handling these logistical problems for you. For many inventors, these business considerations come down to capital, experience, time, and resources. Everyone starts off believing that success is achieved when their products are on the retail shelves at consumer giants like Walmart or Sam’s Club. However, it’s very rare that a large company will purchase your product without some proven success on a small and growing scale. So, before this, two questions must be considered if you’re to have a viable business.
- Online vs. brick and mortar? A growing market that people often forget is direct marketing via online platforms such as Amazon. Some products may or may not be best suited for this.
- Self-manufacturing vs. licensing? Both are viable options, and there are risks and rewards for each. You need to know which is best for you.
I always advise clients to make some initial sales by finding a specific market to work out the kinks in first and obtain relevant market data. Building a database of customers, reviews, feedback, and early troubleshooting can go a long way when you’re ready to scale up and play with the big boys.
About the Author:
Tommy Kirk is COO of Alotech, Inc. and COO of CTI Systems. His journey from machinist to mentor has allowed him to work with client-entrepreneurs in creating the best possible products while reducing overall manufacturing costs. Tommy’s philosophy, teachings, and talks are both critical and organic, rooted in humble beginnings and cemented by success. He has been featured on FOX Business Network’s Manufacturing Marvels® and has also been an invited speaker at mfgCON and guest contributor for Inventors Digest. Tommy is the author of a new book, which is set to release in 2019.