Why Your Idea Will Fail
This is an extract from my new book, IP is Everything, which discusses how to use intangible assets in building your new business…
A.k.a the Psychology of Inventing and The Pathology of Brilliance
I thought it useful to consider the one thing that most business and invention-type books do not discuss – the psychology of invention, ideation, and creation, and the impact that it has on product success. I believe that this is central to understanding why most inventions do not make it to market and end up in a heap of shattered dreams, wasted money, and strained relationships. Every case is different of course, but after having counseled and worked with so many inventors and entrepreneurs, some successful, some unsuccessful, I thought it useful to share some of these insights. While these are my thoughts and broad-brush generalisations, they have been echoed by many other venture capitalists that I work with, as well as numerous patent attorneys, product commercialization specialists, and government funders.
Why Intangibles Are Closer Than You Think
IP is seen by many as something abstract, ethereal, and completely out of touch with the challenges they are confronted with in their everyday lives. Most businesses don’t give a minute’s thought to intellectual property and, those that do, see it more as a nuisance than a help, something that the legal team should sort out, not senior management. And the few that have tried implementing half-hearted IP policies, strategies and management principles in their companies have come face-to-face with the inevitable ‘IP paralysis’ that I mentioned earlier, when everyone knows there’s something to be done, but no-one knows what. The same holds true for lone inventors and entrepreneurs. But it’s important to realize that IP isn’t a distant concept, or a new figment of the legal imagination thought up by scholarly types with a penchant for administration.
Let me illustrate this for you: think back to a time in your childhood or at university, or perhaps in a career situation, where you did something creative or special. Perhaps you were in school and had studied hard for a test or put in a lot of effort with your homework, only to have someone else copy your answers. Or you may have come up with a good idea, only to find that someone else, after you had disclosed it to them, had pretended the idea was theirs and perhaps had gotten credit for your work. They may have stolen your idea for a business, plagiarized something you had written, or appropriated for themselves a cool idea or concept that you had thought up.
How did you feel?
Upset? Furious? Anxious? Did you wish upon them all sorts of malignancies and bad luck?
My question is: why?
Why did this simple act, where someone took one of your ideas (it’s only an idea, right?) and passed it off as their own, why did this upset you? Why did you think about it and ruminate on it for ages afterwards. Why did it hit you in the gut in the way that it did?
What did they actually do to you?
When I ask people this question, they usually reply that they’re not entirely sure, but that it felt like someone had stolen something from them.
But what had they stolen? It wasn’t a physical object – perhaps you’d caught them copying your answers in a test, or perhaps they didn’t do their bit on a group project but got the same marks as the rest of the team – but it wasn’t anything tangible that they’d pilfered. It wasn’t money that they’d stolen. It wasn’t as if they’d taken off with your girlfriend or boyfriend.
No, they’d stolen something much more intimate. They’d stolen your intellectual property. Your thoughts and ideas that you had worked hard at to conceptualize and eventually convert into some physical or abstract form had been appropriated, stolen, or abused by someone else.
Usually when I use this example people start realizing that the loss of IP can hurt just as much as the loss of a physical possession. Sure, it’s not irreparable (most of the time). Of course it can be re-done (most of the time). Yet it has a marked impact on the human psyche and can cause a lot of anguish, resentment and tension. Depending on the scale of the problem, it can feel like the loss of a friend or partner – you’re worried that you won’t find another one as good and that a major opportunity has been taken from you.
And it’s this issue surrounding scarcity of new ideas and their potential future value that drives people to do things that, to outsiders at least, look positively crazy.
An Insider’s Point of View
This book is meant to give an insider’s view of how to use the rapidly evolving legal and innovation systems to your advantage, and to lift the lid on what works and what doesn’t when it comes to making money from IP.
There’s no arguing with it – people mess up new products and ideas A LOT. As mentioned before, ninety-five percent (yes, 95%) of new products or concepts never make it to the real world or die shortly after being released. Some studies say 99% don’t make it, others say 94% don’t make it. Whatever the actual percentage is, it’s still a huge waste of brainpower, effort, and hard-earned money, and a lot of these failures could have been avoided by getting a couple of the basics straight, identifying self-defeating behavior in your own mind, and having realistic expectations.
That is what I’d like to focus on in this part of the book – stopping the waste of great ideas, which could have been helpful to humanity.
Hopefully, you’ll also benefit from my first-hand account of what happens when things work out, and the detailed, step-by-step instructions of how you can use the currency of the 21st century – your personal intellectual property – to make sure you get your place in the sun and see your brainchild born, grow, and mature. But I’ve got to warn you: it’s going to hurt.
And possibly upset you.
And cause a lot of introspection.
Because most of the time, the failure of a new concept, new product, or new patent is not because of a big bad wolf knocking on the door, or the wily competitor that steals your idea, or the evil venture capitalist that runs you out of your own business. It’s something much more personal, more intimate, based on our deep-reaching relationship with these thoughts and ideas that we create and tend to appropriate for ourselves. Most people tend to focus on external factors dictating business success, but few look at the internal, personal factors that tend to more often than not dominate the failure or success of a new concept.
As mentioned, I’ve been through this myself before, having set up a medical devices enterprise that manufactured and sold life-changing technology to people all over the world. I’ve fought with competitors, shareholders and co-directors, been held to ransom by inventors, seen profits fly out the window, experienced the havoc and excitement of foreign product launches, negotiated licensing deals with enterprises all over the world, experienced the frustration of dealing with governmental departments, and seen the remarkable change in people’s lives when a product that I helped bring to market changed their lives forever. Crucially, however, I have experienced the theft of key pieces of intellectual property, which we managed to thwart in the nick of time. Twice. I can assure you it was more stressful than any of the other aspects of business risk because I immediately felt it was personal in nature. It hit something inside of me.
Positive Attitude Matters
One of the central tenets that I need to get across in this book is that IP rights should never been seen in absolute terms. I’m always struck by how many inventors I worked with were focused not on collaborating with others, but rather on whether they can go about suing others that infringe on their patents – this is usually on of the questions that they would ask during an initial consultation on the patentability of their invention. It is, quite understandably, a defensive knee-jerk caused by their concern that something awful will happen to their new idea if they take a misstep somewhere along the line. But that is, quite simply, the wrong attitude to have when it comes to legal rights.
Things are never, ever white or black when it comes to the law or legal rights. When it comes to IP and other things lawyerly, it’s usually grey, that is why court cases happen – each side is 100% certain they’re right.
But here’s the painful truth – it’s unlikely that your patent will be completely watertight or will stop all infringers. It’s important to realize that a patent is a strategic business tool that you can use in negotiations, negotiations that would otherwise not have happened if you didn’t have any rights to your invention secured. It’s a mechanism to scare off the 99% of would-be infringers.
I want to get the message across that in this new era, IP rights won’t be tools of exclusion, but collaboration, but for this to work inventors have to realize the limitations of their brilliance and their intellectual property rights. Always being on the defensive is not a good or healthy way to spend your life or your money or to risk your company’s future. Litigation is always a last resort; that is why I’m going to show you step-by-step how to use your personal IP as leverage to get as much value as possible from each idea that you’ve protected. And I can say at the outset that strategy, whether in business, war, or love, seldom involves picking a fight.
The Pathology of Brilliance
But let’s first have a look at what I call ‘the pathology of brilliance’, which gets in the way of so many potential business successes. You’re smart, and you have an idea that you want to get off the ground and build a new life around. You want to make money out of it and use it to help others. You want to get out of your current job and dedicate yourself to this idea, or implement it at work to help you get that promotion. Or perhaps you’re an entrepreneur who’s found that elusive idea that can help you establish yourself in the market and carve up your competitors. You can see it, taste it, and now you want to live it. It could be anything: a new type of earplug that you’ve thought up, a web-based business selling ethnic crafts, a pet photography business, or you want to start up a franchise making the best apple strudel in the world (SuperStrudel! Strudel Delight! MadAboutStrudels! Strudel Ninja! Schnappy Schtrudels!). It’s brilliant! You want to make something of your life, show the world what you’re made of, and give something back to humanity.
You feel inspired, alive, and you can see the whole picture: you’ve got a killer idea, an awesome brand, a new angle that no one had thought of before. You lie awake at night figuring out all the pros and cons, seeing the expansion of this plan, figuring out how to make it work, and visualizing that perfect name on all your products or services, on your letterhead, outside your eventual corporate headquarters, even on Oprah one day…
This idea isn’t worth millions. No, it’s worth billions! Everybody will want this stuff, everybody needs it. You decide to register a domain name to host your website and quickly hop on to whois.com or GoDaddy.com® to register it. But it’s been taken. You try a couple of derivatives, and they’ve ALL been taken! You’re upset. You languish while thinking out a new name, picturing the whole thing in a different way, but it’s not the same as the original. You end up abandoning your plan. It’s all too difficult.
But what have you spent? Nothing. A couple of thoughts, visualizations. Dreams. You haven’t even spent any money on it. Yet you’re upset about it. Someone else beat you to it. They’ve taken… well, nothing from you really. Yet you’re still unhappy about it. Your billion dollar idea – that was only an idea remember? – has gone ‘poof’.
But that’s nothing – it gets much worse when you get a bit further down the track. You’ve secured a business name, domain name, and you’ve taken the bold leap to speak to a product developer or prototyping company about your idea. You realize you need funding and you start talking to venture capitalists.
But all of a sudden it becomes too complex, too many people want a slice of the cake, and you’ll once again be someone else’s slave while they reap the profits of your idea. You decide to give up and work on something else. Only to have the cycle repeat itself again.
This is the nature of invention or innovation. It’s not something ‘out there’. It’s something innate to each of us, born in to us, something that’s not only a product of the mind, but usually a kick in the gut. It is, in a sense, the spark that we all hope will become a flame.
But as soon as we try to concretize it, put some meat on its bones, it starts escaping us and we come up with manifold excuses for its failure, blaming others along the way. This sometimes happens right at the outset of the adventure and fizzles out. But sometimes this is something that can take years to play out. Inventors put their life earnings into an invention, start up the company, speak to investors, fly around the country trying to drum up support. They speak to their patent lawyers, file patents here, there and everywhere, become fanatical to the stage where they start losing funders, supporters, friends and even family members, who eventually walk out on them.
And the reason for this is that something has changed in the minds of those inventors. They’ve become (i) paranoid, (ii) extremely anxious, and most devastating of all, (iii) they’ve started over-valuing the brilliance of their idea. This toxic combination eventually results in their idea not progressing further than the invention stage. At some level they might actually fear that their invention does become a reality and it turns out to not be as great a success as they had imagined. And then what? What do you do after the idea that you have built up to such radical heights in your mind, what do you do when it nears fruition and turns out to not be so great after all? You rather jeopardize the process and blame anything and anyone except your own obsession.
See, I told you this was going to hurt. But rather you hear it here first, re-assess your approach to the matter, and have a chance at making it into one of the success stories.
A Reality Check – the Big Patent Lie
Having dedicated nearly 15 years of my professional career to intellectual property, it was striking for me to see how the people with those attitudes were the inventors that failed every time. Not because it wasn’t a brilliant idea, but because their valuation of it was so divorced from reality that they became impossible to work with and started ruining their relationships with the few on-side supporters they had.
On the other hand, inventors who realized that this idea was most likely not their last, who thought that it would be awesome to see if it could become a reality, who were willing to work hard and deal fairly with others to make it work – well, those are what we call success stories.
Here’s the real world reality: there is no such thing as a billion dollar idea. In fact, there are very few million-dollar ideas. Every single person you’ve ever met who’s a millionaire or billionaire did not get there with a single flash of brilliance, a single concept, a single patent, or a single idea.
Making money is a series of small steps, requiring improvisation and, most importantly, flexibility at every turn; invention and commercialization are a series of small steps that build on one another.
I’ve seen inventors turn down enormous sums of money with this reasoning: ‘if they’re offering X, then surely it’s worth 10X’.
Or 100X, or (yes, I’ve had this, as has every other venture funder or patent attorney that I know) 1000X.
I’ve been on both sides of the negotiating table, and I’ve been there when the inventor’s paranoia kicks in. It’s usually after the second or third potential funding meeting, when things start to look good and the funders start getting interested in working with the inventor. Funders would have done some initial investigations and a due diligence and, if everything comes up smelling like roses, they’d start talking money.
This is when things tend to get derailed.
The inventor is happy with what is discussed around the table. But then something strange happens when he or she is lying awake in bed that night. Instead of thinking of ways in which they can work together to get the product going as soon as possible, he/she starts getting paranoid. This is normal in any transaction of any consequence. But the invention, that until that stage had been an intangible idea, something potentially worthless, and an item that even the inventor wasn’t even sure had any worth, suddenly becomes a reality in their mind.
A reality in which he’s cut out of the deal, someone steals his idea for a zillionth of its true worth, and he’s left with only the paltry amount of money that they offered him for it… All of a sudden it’s not worth the $750,000 that’s on the table, or the $2 million cash injection for a 50% stake of the startup. No, now it’s worth at least $100 million. $200 million. $10 billion.