May 2022

          The best way to make your dreams come true is to wake up. —Paul Valéry

We now have our own dream catcher.  It’s a book, Inventor Confidential: The Honest Guide to Profitable Inventing, that tells inventors how to keep the nightmare of empty promises from ruining their sweet dreams of financial success.  The author, Warren Tuttle (independent contractor for external open innovation, Lifetime Brands; past president, United Inventors Association of America), kindly summarized his book for us.  The first half of the book is about product development, the second half is about what interferes with financial success.

There are two ways to bring an invention to the marketplace: indirectly (by licensing (ie, renting) or by selling the invention to others who bring it to the marketplace) or directly (by arranging for all of the steps yourself: production, tooling, landbridging, shipping, warehousing, fulfillment, sales teams, orders, collecting money, reinvesting money, etc.).  Either way, the odds of success are low for an independent inventor because the vast majority of inventions are not salable.

Licensing to a large company is obviously the easier way.  It provides less potential profit for an inventor (typically 2-7% of wholesale profit) but transfers the risk of failure to a company that acts as an angel investor by providing brands, resources, and capital.  The odds of financial success are still low but at least the inventor does not fail to get the invention to the marketplace.

Getting the best licensing deal requires preparation.  Ask experts in the industry to vet the inventive idea so you can learn what the challenges are to making it profitable and to learn if it has legs.  (To be profitable, your invention must uniquely solve a problem that is big enough to interest a significant number of customers.)  The bases of a licensing deal are a physical prototype and a patent.  So develop a prototype of the invention to prove that it can be built and that it works and to help identify its patentable traits.  And patent the invention to acquire ownership of intellectual property that can be licensed.  Then prepare marketing materials: a sell sheet describing benefits of the invention and a video showing the invention providing those benefits.  Practice communicating politely and effectively with buyers.

There are two main ways to ask a large company for a licensing deal: indirectly (through an an inventor submission/marketing/coaching company) or directly (through a company’s open innovation program).  In general, an inventor is best served by the direct way.  Why?

If you have a dream, there will always be someone who wants to sell something off of that dream to you.  During gold rushes of the old West, people selling shovels and pick axes to miners made more money than did the miners.  Today an inventor submission/marketing/coaching company selling to inventors makes more money than do the inventors.  Such a company takes submissions from inventors, prepares the submissions for licensing by adding prototypes and patents, and represents the inventor to companies that practice open innovation (the art/science of looking outside of the company for new products).  Or the company offers an inventor advice on how to do the same.  The marketing message is that this process is easy, simple, and results in a gold mine for the inventor.  These companies do not buy from inventors, these companies sell to them.  The primary goal of this business model is financial success of the company, not of the inventor, because no one can reproducibly pick a winning product.  This business model is driven by cash flow, taking a lot of money up front from a naive inventor in exchange for information and products that often do not help the inventor and for advice that is often nothing but thin air.  Usually only the company makes money because the odds of financial success for the invention are low.

In contrast, an inventor can skip the middleman and directly ask the open innovation program of a large company for a licensing deal.  Such a program buys from inventors (ie, licenses inventions from them) and does not sell to them.  The primary goal is joint financial success of the company and the inventor.  This business model is driven by profit for the company and for the inventor.  The odds of success are still low but a prepared inventor has nothing to lose and everything to gain.  If no company wants to license your invention, recognize this as an opportunity to fail fast and move on to your next and better invention.

Which method do you prefer?  Feel free to hire an inventor submission/marketing/coaching company.  But do so while you are awake with your eyes wide open.  Ask the people who will work with you what their relevant business experience is.  Ask for data: what fraction of their clients get a licensing deal; what fraction of those make enough profit to pay for this company’s services; what fraction of those make a net profit from their inventions.

If you want free help with open innovation or a free evaluation of your invention, consider submitting a description of your invention to Tuttle Innovation.  This company is paid by companies that practice open innovation, not by inventors.  The site has links to educational videos and podcasts.  You can also contact companies that have open innovation programs directly.  For example, Procter & Gamble, which sources 50% of its products through open innovation, has an open innovation page here.  MarketBlast offers a free platform for directly submitting inventions to companies looking for specific products.

Thank you, Mr. Tuttle, for writing your book, for advocating for inventors, and for sharing your valuable time and talent with us!