All posts for the month May, 2017

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Keeping Control of Your Inventions

Getting Help – But Keeping Control

Getting a new product on the market requires many skills and inventors often benefit from teaming up with someone with complementary skills to launch their invention.  But for partnership to work you need to outline your expectations in an agreement, even if it is a checklist, that you share with prospective members of your team.  Some items you and your partner should discuss and document.

1.       Responsibilities. Explain clearly what each party is responsible for doing and what each party is financially committing to the project.

2.       Decision making. You should state that the final decision is yours, but that you will discuss each major decision with the parties and take into account their input.

3.       Ownership of the idea, or partnership arrangement.  It may be too early to form a company, but you should state how much of the idea is owned by each member of the team.  Include a statement here that each party’s ownership may change if additional members or investors are added onto the team.

4.       Patent ownership.  The simplest way of doing this is starting a company or LLC and then assigning the patent to the company with each team member owning the percentage discussed in number three.  All members of the team should agree to assign the patent to the company.

5.       Profit / revenue sharing.  This should be along the line of percentage of ownership.  But you should also discuss taking money out. You may need to take money out of the company, while your partners might want to completely reinvest any profits. 

6.       Adjustment procedures.  Agree that the percentage of ownership can change if a team member’s participation changes from the original agreement.

7.       Commitment levels.  Be clear in what commitment level, in time and money, each member can expect from the other members.  

8.       Product Review.  The team should meet every quarter to review the project status and discuss how they will move forward in the next three months. 

9.       Expected business model after product is launched.  In many cases you might just license the idea in which case the ownership percentage will stay the same.  Other times you might expect to go into business.  If that is what happens be sure to discuss that people will be paid a salary, agreed to by the partners, based upon the time commitment to the company. 

10.   Derivative products. You should state that the team is for just the one product, and its product improvements, and that any derivative products that might come out of the project belong to you.  Or derivative products could belong to the team.

11.   Dispute resolution.  You might want a clause that any disputes will be settled with arbitration.  Most areas will have services that offer low cost arbitration or dispute resolution

This might seem like a lot of items to discuss before starting on a team partnership.  But my experience is airing out the possibilities prior to starting keeps everyone’s expectations in line and helps focus the members on their responsibilities and commitments and the team’s eventual success. 

The post Keeping Control of Your Invention appeared first on One Stop Invention Shop.

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This 24-year-old made $345,000 in 2 months by beating Kickstarters to market
Zack Guzman | @ZGuz

Monday, 30 Jan 2017 | 11:35 AM ET

Published originally on CNBC

Less than a month after starting a business, a 24-year-old entrepreneur CNBC has agreed to call “Jack” wired $70,000 to a factory in Shenzhen, China, praying that the money wasn’t going to disappear.

Weeks later, 15,000 plastic toy cubes with joysticks and clickers on their sides, designed to help people who fidgeted too often, arrived. A whole team exhaled, excited about the possibility of making $345,000 in just two months.

The Stress Cube staff knew they were taking risks as they tried to capitalize on the success of various products on crowdfunding sites. They also knew the rewards could be enormous.

For Jack, this all started with an inflatable chair.

After graduating from college in Canada, Jack found himself bored of working on behalf of yet another social app hoping to one day garner a billion-dollar valuation.

I started realizing I wanted to run a company that actually sold something,” he recalls.

Around the same time he noticed a start-up that appeared poised to do that faster than anyone. It was an Indiegogo campaign for KAISR, an inflatable lounge chair made of parachute material that had surpassed its goal by raising $18,500 in 12 hours last March (and eventually over $4 million).

As the Indiegogo gained in popularity, Jack’s research led him to realize that the idea was far from unique. In fact, the Lamzac inflatable lounge chair had already gone viral, five years after the idea was presented by its Dutch inventor on Holland’s TV show “Best Idea of Holland.”

The only thing that was new about this chair was the buzz from the crowdfunding campaign.

Jack wondered if he might be able to produce his own successful knockoff. A cursory search on Alibaba revealed manufacturers based in China that were offering product samples, and after minor sampling fees and a little back and forth with the winning factory, Jack had his product: The Cozy Bag.

With about $5,000 they pulled together, Jack and a partner launched their company. They bought 250 air lounges and secured a domain name, plus a handful of Square credit card readers. Within weeks, the team sold lounges directly at concerts and fairs. They spent full days building brand awareness and a following on Instagram and Facebook.

Sales grew, but margins slipped as they spent more and more on advertising, which was necessary to battle competitors like WindPouch, Dumbo Lounge and Chillbo Baggins.

Total revenue neared the $100,000 mark. Then Jack looked to leverage everything he learned from the first experiment on an even bigger viral hit.

In August, Google Trends had alerted Jack to what would become one of Kickstarter’s top 10 most funded projects in history: The Fidget Cube.

A small, handheld toy outfitted with six sides’ worth of clickers and joysticks, The Fidget Cube promised to help anxious people occupy their hands. The campaign raised $15,000 on Kickstarter in less than a day and nearly $6.5 million in total.

But the project hit a snag when manufacturing issues caused a delay in deliveries. Many backers worried that they wouldn’t receive their cubes by Christmas.

As with Cozy Bag, Chinese manufacturers on Alibaba had been offering comparable products since shortly after the Kickstarter appeared. Thanks to their experience, Jack and his partners were able to pivot quickly and use WordPress and its sales plugin WooComerce to launch their Stress Cube site by the end of November.

They spent less than $5,000 on start-up costs, mostly on a bulk order of 1,000 plastic cubes at $3.65 apiece. The plan was to turn around and sell each for $19.99.

A Stress Cube (left) compared with a Fidget Cube (right).

CNBC | Fidget Cube

This time they used FollowLiker, automated software that helps grow followings and build brand awareness.”It just wasn’t as apparent to me how powerful that can really be and how one Instagram ad can in three days generate $30,000 in sales,” Jack says.

A week into operations, they sold over 100 Stress Cubes a day. At their peak, they sold about 800 a day. At that point, the 24-year-old and his partners had to bring on contractors to help with handling all the shipments and rent out a 400-square-foot office space.

When inventory from a second order dwindled, Jack and his two partners placed an order for 15,000 Stress Cubes and faced the terrifying prospect of wiring $70,000 to a factory in Shenzhen without insurance or any guarantee that the cubes would arrive.

“All I have is a Skype contact with some lady in China, and I don’t know what her name is — not that that would matter if I knew her name, anyway,” says Jack. “It was the scariest thing I’ve ever done.”

But the shipment arrived, and the fear subsided. Though Stress Cube’s founders still have cause to worry: A patent could shut down the operation that grossed them nearly $350,000 in just two months.

KAISR recently shut down operations and refunded much of the $4 million it raised after settling a lawsuit with FatBoy, the company which now owns the Lamzac patent. And FatBoy has since aggressively expanded its battle against competitors in the U.S., filing four cases against imitators, a company director said.

Mark McLachlan, co-founder of Fidget Cube’s parent company Antsy Labs, claims to have a patent pending. Still, he tells CNBC that he isn’t overly worried about the competition from knockoffs, which he refers to as “the nature of the beast,” since in his opinion the original cube is superior.

“It comes down to making the better product,” says McLachlan.

“One of the few downsides with crowdfunding is that everyone … can see how much hype and demand (including sales figures) surrounds a product,” McLachlan says. “Our advice to other inventors is to just make the best product you can.”

“The world is filled with products. I don’t need to sell Stress Cubes.” -Jack, founder of Stress Cube

Jack is primarily concerned about patents. “I’m checking every other day to see if there’s any new information,” Jack says. But if he has to pivot again, that’s no problem. “The world is filled with products. I don’t need to sell Stress Cubes, I just want to sell products that people like,” he says. He hopes to have 10 product lines within the next five years.

“You can talk to economists that are 60-years-old and they’ll tell you, ‘Oh, yeah, if you open up a business you should aim to be profitable within 18 months,’” says Jack. “None of that is relevant anymore. You can be profitable within four days.”

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