Anatomy of an IP-centric company
Now that you know a bit more about the various types of IP rights, it’s worth placing this in the context of what a company looks like that has IP at its core, instead of being just a product- or service-driven company.
So, what does an IP-centric company look like? What makes it different to other types of companies and what can you, the budding entrepreneur, learn from these companies? Well, many of the best IP-centric companies are start-ups themselves, while there are other multinational giants out there that only discovered the value of IP much later in their corporate lifecycles.
The Value of Intangibles – Lessons from the S&P®500
In an earlier post, I made mention of the fact that more than 80% of the market capitalization of the S&P500 (a tech-heavy stock index) was not to be found in the physical assets that could be accounted for. If the market cap of a company was say, $10 billion, this meant that accountants and auditors could only find, on average, $2 billion of bricks, mortar, and other physical assets to point a stick at. The remaining $8 billion can simply not be accounted for and is ticked-off on a box marked ‘intangible assets’, ‘intellectual capital’, or intellectual property’.
Intangibles are generally things that you cannot see or feel or touch, but that does not mean that they don’t have any value. There are many ways of slicing and dicing IA, IC, and IP. In the 1970s, less than 20% of the value of these companies could be accounted for by intangibles.
This increased rapidly in the 1980s and 1990s, eventually reaching the levels they are now – 80%, and in certain cases, more. While this could also be associated with more speculative trading on the stock markets or just plain old greed, the fact that companies are commanding such large market capitalizations while not having many physical assets indicates that there is something else happening here.
IP That Reaches Across a Company