Inventing for the Rest of Us

Inventor Trends During Down Times

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Some buddies & I were debating the other day if more people start businesses during recessions, or during periods of growth. I didn’t have access to yearly data on entrepreneurs, but what I do have is access to the US Patent & Trademark Office data. So if we asked another question, do more people start inventing during a recession or expansion?

Just a few disclaimers. We looked at approved utility patents that were filed by independent inventors. In the definition of the USPTO, a patent is filed by an independent inventor if an individual is listed and not a company. Unfortunately, year by year data isn’t available before 1991. The year is the year that the application is approved, not the year it was submitted.

Actually, the data shows us one thing for sure – we peaked in the late 1990’s during the dot com boom. Since then, we have been on a slow and steady decline in the number of applications being approved, not because the USPTO isn’t approving enough, but just fewer applications are being submitted.

Inventor Patents vs Economy

We had a positive blip in 2006, but after that it was back to the usual decline.

So back to the original question: how closely does the economy relate to people inventing?

It appears that there may be a slight direct and positive correlation between GDP growth and approved patents, but there is a 2 year delay (see GDP growth in 1994 and patent peak in 1996, again GDP growth 2004 and patent peak in 2006). That makes sense that there would be a delay after the application is approved. A rough guideline is that patents take on average 2 years to get approved, which would account for the delay. So the answer appears to be that, yes, in a growing economy, more people will be creating inventions. In a sagging economy, fewer people will jump ship to create a risky invention.

However, the larger thing that this shows us is that relatively steady decline in patents from the late 1990’s. I have two theories of why this might have happened:

The high-tech boom of the late 1990’s caused a slew of patent applications and approvals because everyone wanted a piece of the gold rush. Not only that, since internet technology was new, no one was sure what could be patented and what couldn’t. Since then, we’ve come to a better realization of what can be patented, thus the drop in patents being submitted and approved. (Patent approval rates as a percentage have actually decreased since 1998, also having some effect)
Also, I think the mounting legal costs of filing and then PROTECTING patents is increasing. Because of this, fewer individuals have the resources necessary to pay a lawyer $10,000-$20,000 to file, and potentially hundreds of thousands to defend a patent if it is infringed.

So there you have it. When the economy is good, more people invent (albeit with a little lag).

Top 10 Tips for Starting a New Business

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I recently read an article in Inc. Magazine about entrepreneurs who started their businesses during a recession. Like many small businesses, we are not totally immune to the macroeconomic cycles of the day, but if you have a good business, it doesn’t matter what the consumer confidence is. If you’re thinking about starting a business, here are some things to consider before making the leap:

1. Jot down a rough business plan; this helps you to focus your time and energy in the right direction.
2. Pick something you really enjoy doing since you’re going to be doing it a lot.
3. Network and make new contacts, utilize your existing rolodex.
4. Start the business while you are still working, this ensures adequate flow of money while you are still going through the startup phase. Try giving your product or service away for free to get your first customers. This will also help you learn a great deal about what your future customers will expect.
5. Get a support system while starting your business, people whom you can bounce ideas off of and get to listen to your latest business decisions.
6. Join a related industry or professional organizations prior to starting your business and do more and more research on your industry, services, until you become an expert.
7. Save your time and money in the long run by hiring or partnering up with expertise that compliment your skill sets and experience.
8. To finance the business, save your money, as well as approach potential investors and lenders. Also prepare a backup plan in case your first financial plan falls flat.
9. Bring a professional attitude and process to your business right from the start, to let people know that you are serious about your business.
10. Before starting your business, learn about the legal and tax issues.

- Bryan Daigle
President & Founder of ideatango.com – the #1 site for inventors & invention ideas For more good info & advice, check out the official IdeaTango Blog

Putting on a Giant Expo

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Now back in college, I ran a couple events for the University of Texas Ultimate Frisbee Club Team. Our biggest money maker as a team, and a way to subsidize our spring season travel ($50,000 travel budget), was hosting tournaments. Back when I was there, our club team hosted two tournaments.

I learned a great deal from putting on these events, the biggest which would attract up to 30 teams, or 450 individuals to come play, and several hundred spectators. We’d organize about 45 volunteers for an event like that, so we definitely had a LOT of help.

Never had I appreciated the experience of putting on a large, high-traffic event until 5 weeks ago, when IdeaTango was officially acquired by InventBay. Since then, my focus has been on only two things, the InventBay Expo, which we held last weekend, and launching them a new website within 3 weeks.

We launched the new website October 9th, with much help from my IdeaTango partners and our experience working together. This past weekend, October 18 & 19, 2008, we officially held the coming-out party (Quinciniera or Barmitsva as it is called in other cultures) for InventBay, in the only place big enough to hold us, Las Vegas, Nevada.

The expo was hosted at the Sands Expo, in Hall A, which has 178,000 sq feet of open space. Of course since this is our first year, we only filled up 1/2 the show floor with ~130 exhibitors + another 70 booths where people could sign up for local inventor associations.

Some valuable lessons that I learned when putting on tournaments, came in handy when being an integral part of this expo:

You can never do something on this scale alone, so the ability to delegate is more important than any other factor.
If something can go wrong, it will. Double-check and verify everything. For example, for one of our tournaments, the person who wrote up the tournament finals bracket left it at his house, and caused our Sunday playoffs to start an hour late. Eventually this led to us shortening the finals game because we didn’t have daylight. At our expo this year, Kinkos was scheduled to print up a bunch of stuff for us the day before the doors opened. I asked our guys to double check what they received. Well, Kinkos forgot to print our speaker bios and we had to go back and pick it up 7 hours later. Good thing we checked!
Stuff will go wrong, and rather than say that was ____’s job, just take the responsibility. Do whatever you can to fix it, even if it sometimes costs money.
Always throw a party. I was able to convince our executive team that we needed a mixer, networking-like event either Friday or Saturday. Thanks goodness, because some of the people we talked to said that they met “so and so” and because of our party, they’ll come back next year. It’s a great way to informally talk with exhibitors, speakers, VIP guests, because once those show doors open, you won’t have another opportunity.
Have fun. This goes with the point above. No matter what, if people have fun at your event, most will come back. Of course you need things like qualified attendees and exhibitors, but having fun can make up for quite a bit.

Let me tell you, it was fun and emotionally fulfilling to be part of such a big event, but I’m glad it’s not happening again until next year!

- Bryan Daigle

Street-Smart Tactics to Get the Financing You Need

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The most important thing to make your business venture successful is $$. To get financing, you need to impress investors, and trust me, that is not an easy task. So before you venture into the investor market and pitch your business, here are some tips to help your prospects:

Smart Stalking: Just finding investors can be tough. They hide because otherwise they’d have everyone asking them for money all the time. The best way is to get a personal introduction from someone that knows the investor. That’s where networking comes in handy. You can also use resources such as LinkedIn to find potential investors. Also, many people that call themselves “investors” actually don’t have experience investing in companies, so be sure they have done investing before.

Speak Their Language: When you are presenting your business ideas in front of the investors, be very careful regarding the language you use. There are industry-specific terms which might not be understood by everyone; so speak in simple, plain language to avoid misunderstandings.

Remember That It is Their Money: One investor pointed out that the key for an entrepreneur seeking funding is to figure out how to convince an investor to pull out his or her wallet and why they should invest. Put yourself in their shoes. Why would you invest in your business?

- Bryan Daigle
President & Founder of ideatango.com – the #1 site for inventors & invention ideas For more good info & advice, check out the official IdeaTango Blog

Successful Marketing for Successful Inventing

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Famous inventor and entrepreneur Bob DeMatteis always says the same thing to every new entrepreneur and inventor: “If you want to be successful, then you must have a successful marketing strategy.”

Of the four people whom you must have to launch an invention – a patent attorney, a marketing expert, a manufacturing expert and yourself – the most important person is the marketing expert, since often inventors aren’t good salesmen or marketers. For whatever reason, the side of the brain that helps people think of inventions, seems to conflict with the side needed to market inventions. And to make money, you need to sell your product.

Having a marketing expert on your team as early as possible is absolutely necessary, because your success as an inventor depends on whether you can sell your invention. For that to happen, you have to successfully market your invention. How well your product will sell is not dependent on patents, because patents don’t mean your product will sell.

You might be a brilliant inventor, but a marketing professional on your team will help you evaluate the market needs, inform you about your customers, and determine exactly where and how to market to customers in order to earn a profit.

Since marketing types are expensive to hire, consider bringing them in as a partner. That’s what we did with ideatango, and boy has it paid off. Just be sure to do your due diligence when looking at anyone. I suggest using a trial period where either party can back out if it’s not working out. However you do it, make sure you have someone with the right marketing mindset when getting your product or business off the ground.

- Bryan Daigle
President & Founder of ideatango.com – the #1 site for inventors & invention ideas For more good info & advice, check out the official IdeaTango Blog

Selling My Company 2.0

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After weeks of negotiation hoopla, legal paperwork, and minutae, I can finally get something off my chest. My first company (and one true love), IdeaTango, was recently bought by another industry player, InventBay.com. Here is today’s press release.

I’m taking a cue from Norm Brodsky, who wrote about his highly publicized acquisition in Inc Magazine while it was still taking place (and falling through and then taking place again). Because of its public nature, I can’t get too much into the details, but I’d still like to share my experience with some of you who might find yourself in the same position one day.

After two years of not knowing what would happen the day-after-tomorrow, it’s finally good to know that my partners and I have had a successful exit. That doesn’t mean that we won’t continue to work for the acquiring company, we will, it just means that our few years of doubt and hard work, have had their first payoff. The second payoff will be in working with InventBay (a publicly traded pink sheet company) to maximizing their value to shareholders and owners.

It’s funny though, because there were definitely days that I didn’t know how much longer IdeaTango would be around. Usually it had to do with cash. Sometimes I had to reach into my own pockets. Later, I had to ask for help from my inner circle of friends and family. As you can see my earlier posts, we even thought about approaching professional investors.

We made the decision to sell the company for three reasons. First, we realized we needed more resources ($$) to take IdeaTango to its full potential. Second, we realized that we were running low on both the time and energy needed to pitch, get rejected by, and then acquire some investors. The time horizon for selling a company like ours would save 75% of the time. Third, my partners and I sacrificed for two years (no salary, no benefits) and needed a shot in financial arm to rejuvenate us.

It was not an easy decision to make, and of course I would have liked IdeaTango be sustained and grow using its own internal cash flow. But with a model like ours, which requires a long time horizon, that just wasn’t possible. Perhaps that’s a lesson learned for my next startup.

Overall though, my partners and investors were happy with the deal. Myself, Pablo, and maybe even Lisa will continue in some capacity with the acquiring company.

Feel free to ask me questions about how my experience might apply to your situation.

- Bryan Daigle

Marketing Plans Basics

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Whether you want to market your invention, sell it to a manufacturer, or license it, you need to have a good marketing plan in place. A well-written marketing plan will help you understand the environment where your product will exist, sell your product, and ultimately make you more successful.

A marketing plan should cover the following:

• Market research: surveys, focus groups, or secondary research
• Target market segments: characteristics, needs, trends
• Competitive analysis: what do your competitors offer, for what price, what features do they have
• Differentiation: how will you be unique and different from your competitors, you need to stand out
• Pricing strategy
• Marketing and advertising execution strategy
• Sales strategy

Start with an outline of the marketing plan, and then write as you go. Your plan is a living document and will change over time. After a few major revisions, consider starting from scratch with a clean slate to help you think clearer.

- Bryan Daigle
President & Founder of ideatango.com – the #1 site for inventors & invention ideas For more good info & advice, check out the official IdeaTango Blog

Is an MBA Worth It for Entrepreneurs?

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This is definitely not the first time this question has been asked. So is getting an MBA worth the financial cost, time, and opporuntity cost? Like my old Thermal Fluids engineering professor used to answer to all our questions . . . the best answer is it “it depends.”

I’ve personally wrestled with this question over the last 5 years. I’ve swayed from being utterly convinced that the MBA route is the way to go, to being on the other side and saying to myself, “what the heck does an entrepreneur get out of an MBA”. If you’re going through a similar debate, maybe something in my rough thinking will apply to you. Currently, if someone asked me whether I’ll get an MBA eventually, either full-time, evening, or executive, I’d say there is a 75.1% chance. (the additional .1% is so I can say I’m “more than” 75% sure)

However, this will probably not happen now, nor in the next year or two, due to my personal situation – which of course we always have to consider. I was happy to find out that GMAT scores last for 5 years. Sometimes colleges will accept them for longer, on a case by case basis.

Seeing how I want to continue down the entrepreneur path and don’t see myself going back to the “dark side” of the 9-5 cubicle-ridden corporate world, what benefits do I see in an MBA?

NETWORKING. Probably by far and away the largest benefit of getting an MBA is hobknobbing with other ambitious individuals. Even with the internet, who you know is still more important than what you know. You’ll be mingling with future investment banker executives, corporate executives, and successful entrepreneurs. So down the road if you’re trying to penetrate a market, or just need some good advice, the contacts and friends you make at Bschool will come back to help you along.
CREDIBILITY. That piece of paper you get with an MBA is in my opinion, more valuable than the education it took to get the piece of paper. If you’re presenting to investors, bringing on partners, pitching your product, whipping out the old “union card” MBA line will definitely benefit you in some situations. The perception is that if you have an MBA, you “must” know what you’re doing! That’s a good perception for people to have about you and your company.
STUDENT LIFE. Who doesn’t want to be a student again? Who doesn’t reminisce about their college years and want to go back? Even with internships, between Winter breaks, Spring breaks, and summer lulls, you’re looking at 4-8 weeks of vacation per year. And you don’t have to feel guilty going on vacation because all your classmates are doing it too.
CONTINGENCY PLAN. If for whatever reason, say you start a family, company goes bust (as it happens for every long term entrepreneur), or you buy a house that’s over your budget, and you need a stable income as a fallback plan, that MBA will get you in more doors than just an undergrad degree. Those contacts you made at MBA school might even help you through some of those doors.

As an entrepreneur, those are some of the major cons of going back to get an MBA. Of course studies show that an MBA only helps you if it’s from a top school. A University of Phoenix MBA will unfortunately not help you at all. Although we know these by heart, here are what I see as the major cons of getting an MBA:

CURRICULUM. Most MBA schools are there to teach very basic business knowledge to individuals that will go work for a corporation. There are some schools that have a very strong entrepreneurial program – Michigan, Berkley, Stanford, Carnegie Mellon – so if that’s your route, I’d consider looking into those. I personally think I’ve learned more in starting my own company than I would ever learn getting a top-notch MBA.
COST + OPPORTUNITY COST. Not only will a good school cost you over $75,000 out of pocket, it has an even higher opportunity cost because you could have been working or building companies all that time. Total cost then exceeds $200,000 if you think about lost time. Of course taking an evening program or executive program reduces the opportunity cost significantly, but you give up your social life.

We’ll see what happens, maybe I’ll be part of the union one day, or not. Whether it’s right for you, well, it depends.

Find What People Want – Conduct an Idea Survey

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Before your creativity comes into play and forces you to invent something unique, a piece of advice to you: always keep in mind that it is absolutely essential to know what the market wants before you go on inventing something. I’ve learned this lesson the hard way in the past.

To know what your market wants, you need to conduct a market survey. However, before you start, prepare a list of questions to ask your target market customers. Here are some examples to get you thinking:

• Will they buy your products? If so, how much will they pay?
• How would they improve the product?
• What are the problems that you face and want them solved immediately?

An experienced inventor once told me he would sit outside his grocery store and ask passers-by the above questions.

Another inventor told me he would approach people in the area of the store where his product would be found, and survey people. Here was his trick; he would tell them he was doing a survey for his friend’s invention so the person being surveyed was more likely to tell the truth (rather than avoid hurting the inventor’s feelings).

Try some of these techniques and develop your own process. The most important thing is that you have a process for surveying customers.

- Bryan Daigle
President & Founder of ideatango.com – the #1 site for inventors & invention ideas For more good info & advice, check out the official IdeaTango Blog