An interview with the Co-Founder of inventRight; Author of One Simple Idea Series
Stephen Key is an inventor, author, speaker and co-founder of InventRight, LLC., a Glenbrook, Nev.-based company that educates entrepreneurs in how to bring ideas to market.
1) The idea of “renting” out your ideas is fascinating to me. How did you come up with this as a business model?
I worked at Worlds of Wonder, a startup toy company, in the â€˜80s. I watched the creator of Teddy Ruxpinâ€”the talking teddy bearâ€”collect royalties on every bear that WOW sold. Teddy Ruxpin was the best-selling toy in 1985 and 1986. I can remember traveling to China, looking at the bears roll off the production line, and thinking, â€œKen Forsse is collecting millions!â€ My father always told me that if I wanted to create wealth, I needed to find a business opportunity that had a multiplying effect and that didn`t require my presence. Soon after I arrived back in the United States, I quit my job at WOW.
Licensing seemed so straightforward to me. If I could design a product that a company could sell, they would pay me for my efforts. It was and is more or less working on spec.
2) Can you share a few of your most successful ideas that you licensed to other companies?
One of the first ideas I licensed was the â€œMichael Jordan Wall Ball.â€ It was an indoor Nerf basketball game whose backboard was shaped in the image of Michael Jordan. I licensed it to Ohio art. At the time, they were selling Nerf basketball games that had a very small sticker of Michael on the backboardâ€”they were boring. The Michael Jordan Wall Ball sold for more than 10 years. Ohio Art also created different versions of the game using other basketball players` likenesses.
I am also the creator of a rotating label innovation I named Spinformation. I`ve collected royalties on hundreds of millions of labels. The label has been featured on NescafÃ© coffee in Japan, Jim Beam`s DeKuyper liqueurs in United States, and Rexall Sundown Herbals. It is currently featured on bottles of water in some national parks as well as colleges.
3) How do you know when you have a good product idea?
You never really know if you have a good product idea, but there are a few indicators I rely on to let me know that I`m on the right track. Does it have a large market? Can it be manufactured easily? Is it easily demonstrated (in other words, without having to educate the consumer)? And of course, does it have a high profit margin?
4) What is your process for validating your idea?
I validate my ideas by submitting them to potential licenseesâ€”which is not only easy to do but also affordable. After all, their opinion is the only opinion that truly matters. First I file a provisional patent application. Then I begin submitting a one-page sell sheet that showcases the benefit of my idea. I quickly discover whether or not there is any interest in the idea.
5) How do you find potential companies to license your idea to?
Identifying potential licensees is easy. I like to visit retail stores I think would sell the product. I locate the aisle where similar products are sold; the companies selling products in the same category are my potential licensees. I also use the Internet to flesh out my list. Doing a Google image search generates a lot of similar ideas. I add the companies manufacturing those products to my growing list and contact all of them.
6) How do you protect your idea while you are pitching it? Do you need a patent?
You do not need a patent to license your ideas. Most of the ideas I (as well as my students) have licensed have not been protected by intellectual property, save for a provisional patent application. Companies pay royalties for ideas that are not protected by IP, for ideas that have patent pending status, and of course, for big ideas that require a wall of patents. To succeed at licensing your ideas, what you need to do is have established perceived ownership. I have a new book coming out this month that explains what I mean by that in great detail. It is entitled How to Sell Your Ideas With or Without a Patent.