October 2019
The market rewards execution, not ideas.
—Scott Adams, “Scott Adams' Secret of Success: Failure”, Wall Street Journal, October 12, 2013.
Is the juice worth the squeeze?
How do you convert an idea to money? By doing something to unlock the value of the idea. Even though it’s easier now than ever before to bring an idea to the marketplace, risk and expense remain part of being an entrepreneur. Success in the marketplace almost always entails failure. Fear of failure is the number one reason people don’t do anything with their ideas.
Louis Foreman (author, The Independent Inventor's Handbook: The Best Advice from Idea to Payoff; publisher, Inventors Digest; founder and CEO, Edison Nation, Enventys, and Edison Nation Medical) takes away that fear by transferring all of the risk and expense to his company, Edison Nation. He helps people find out if bringing their ideas to market is worth it. His company is for individuals who want to profit from a new idea that solves (or might solve) a problem but who don’t want to be entrepreneurs. Edison Nation filters ideas and gets the best to companies that buy or license the ideas.
It costs $25 to submit a new idea (ie, one not found with a Google search) to Edison Nation. The person submitting the idea pays nothing else. If Edison nation successfully sells or licenses the idea, the person and Edison Nation split the profit 50:50. The person may withdraw the submission without penalty at any time during the first 6 steps (ie, before the idea is offered for licensing or sale to companies) and try to profit from the idea without help from Edison Nation.
Execution
Mr. Foreman told us how Edison Nation uses an 8-step process to unlock the value of a good idea. The idea can take various forms: identification of a solvable problem (eg, “I hate peeling hard-boiled eggs.”), an idea that might solve a problem (eg, “Avoid peeling hard-boiled eggs by boiling shell-less eggs in an easily opened artificial shell.”), or an invention that solves a problem (eg, Eggies, patents D662351, D654759, and D714093).
Experts at Edison Nation typically pick 3 ideas each week (of the 55 ideas per day received) that they predict will yield a desirable return on investment. Before developing the ideas, they test each with 5 questions.
1. What is the product/service?
What makes it valuable? (How does it make life easier or more enjoyable?)
What makes it unique? (How does it differ from its competition?)
2. Who is the customer?
• Age • Income • Education • Location
This estimates how big the market is for this product/service.
3. How will the customer react to the product/service?
Ask the customer if he would buy it.
How much would he pay for it?
Is the product/service more expensive than the problem?
From where (eg, store, online) would he buy it?
What would drive his decision to buy? (eg, job bonus, convenience)
How often would he buy it?
Online surveys and forums and in-person interviews (group and individual) suggest whether there is a demand for the product/service. This information can be obtained without revealing any specific details of the idea.
4. How much money will it take to make the product/service profitable?
This calculation includes basic costs (eg, obtaining a patent, creating a prototype, etc.) as well as operating costs and involves creating a pro forma income statement.
5. Where will that money come from?
Typical sources are yourself, friends and family, crowdfunding, banks, angel investors, and the Small Business Administration.
Crowdfunding (obtaining funding by soliciting contributions online from a large number of people; eg, Kickstarter, IndieGoGo), by changing the relation of risk to reward, has made it much easier to bring an idea to market.
• It indicates demand. Loyal customers buy a product/service before it has been manufactured, not knowing when it will be available, and with no opportunity for a refund.
• It provides traction (support needed for something to succeed). Money from crowdfunding sales pays for initial manufacturing and for additional sales made through an individual’s website, Amazon.com, or an omnichannel business model. Evidence of sales on this small scale can persuade big retailers (eg, Walmart) to sell the product/service.
• Successful crowdfunding requires a prototype, a good video of your product/service, and money for marketing.
Only if the numbers add up do the experts start to work on the idea. At each of the 8 steps, they do all of the hard work, look at the result, and decide whether to continue to the next step. They find all of the money needed to develop the idea, to get legal protection (patents, copyrights, trademarks) for the idea, to create a proof of concept (ie, prototype) for the idea, and to find companies that want to buy or license the idea.
Entrepreneurs
Inventors (eg, James Dyson) who want to be entrepreneurs may not need Edison Nation if they have what it takes:
• Passion for being an entrepreneur, which infects business partners;
• Patience in bringing an idea to market, which can take 10 years or more; and
• Persistence to overcome the inevitable obstacles that every entrepreneur faces.
JOIN
It’s free to join Edison Nation. Benefits include access to online forums where you can learn about industry trends, get answers to common questions, and read about the latest happenings at Edison Nation.
You can also read Inventors Digest online for free. It is the the leading print and online publication for the innovation culture.
Thank you, Mr. Foreman and Ms. Carroll, for visiting us and for telling us about your excellent resource for inventors!