Invent It, Sell It, Bank It!: Make Your Million-Dollar Idea Into a Reality (19 page)

If you enter a contest, enter to win. You cannot overprepare. Familiarize yourself with the criteria for the contest and tailor your pitch to match. As you pitch, address the judges by name; though your presentation should be well rounded, find ways to link your product or idea with each judge’s specialties or interests. Be ready to answer any question. The top ones will be:

•
What’s your market?

• What will your product cost and what can you sell it for based on the competition?

• Is your product patent-protectable?

Make sure you know the results of your market research cold. Ideally, solicit manufacturing quotes ahead of time so that all of your production numbers are fact-based, not best guesses.
Kevin O’Leary says he has reviewed the tape of every deal in which an entrepreneur got funded and found that, “One hundred percent were able to articulate the opportunity in 90 seconds or less, showing me why if I were an investor I would make money. That’s crystal clear in every case.”

YOUR FAMILY REVISITED

If your loved ones are living in fear while you’re out there living your dream, you’re all going to have a miserable experience, even if you do eventually succeed. What’s the point of achieving your dream if you lose everything else that really matters in the process? As you negotiate ways to raise capital, if you have a family, or share your life with a partner, keep in mind that your journey is their journey, too. Even if they know everything you’re doing is to secure their future and maybe even build something to pass on to future generations, it can be scary to family members to watch you put yourself on the line, especially when their lives are going to be affected by the decisions you’re about to make.

It’s crucial that you keep your parent, spouse, or partner informed, and if at all possible, involved, too. Do not quit your day
job before discussing the consequences and implications that decision will have with your family. Do not secretly take out a second mortgage on your house. Having open and honest discussions will be crucial to building the trust and support you’ll need from your spouse or partner as you move forward.

As discussed in
Chapter 1
, discussing worst-case scenarios is important to establishing confidence and trust. A critical part of your conversations must include the following question: What’s the worst thing that could happen? Then you have to ask: Can we deal with the consequences? Discuss worst-case scenarios and establish how you will handle them. You’ll both feel better if you’re on the same page and prepared for any eventuality. Do not shy away from these difficult conversations.

The start-up inventor’s road is an extremely hard one. Don’t take it alone if you don’t have to. Whenever possible, enlist your family in your business. That doesn’t mean you should necessarily work side by side every day—you know best how much togetherness your relationships can handle!—but do whatever you can to make them feel like they are a part of your new endeavor. It will keep you close with a common goal and a common bond. If you keep your family involved, you’ll encounter a lot less resentment from whoever has to pick up the slack, or spend more time alone, while you are holing up in your office until 3 a.m., or traveling to meet buyers, or inspecting your factory. And they will willingly put in the hours to help you—for free—especially when they understand that, ultimately, everything you’re doing is for them.

It’s easy for inventors and budding entrepreneurs to be so excited about a dream that they underestimate the impact their pursuit of those dreams will have on their partner or family, or they dismiss their concerns. Believing in an inventor’s dream is one thing. Committing to an enormous financial risk that could
have long-term implications to your future and that of your family is quite another. If your partner questions the wisdom of accepting a loan or the terms of an investment, do not accuse the individual of being unsupportive. Make sure to explain how you intend to use the money, and how you intend to make it back. Don’t make promises and expect your partner to take you at your word. Show the person a well-thought-out financial plan and be prepared to answer any questions patiently and respectfully.

Dan was supportive of my efforts from the very beginning. If I believed my product was a hero, so did he. He didn’t argue when I told him I wanted to make my earring organizer and jump into it full time (at the time I was writing plays and reading scripts at Chicago’s Victory Gardens Theater). He didn’t try to talk me out of using our savings account to fund my design drawings, prototypes, and the travel expenses I would incur to pitch to retailers around the country. I only felt comfortable taking out the loan I would need to pay the $120,000 manufacturing quote after my market research confirmed that about 90 percent of the women who saw my earring organizer said they would buy it.

Dan and I had a long talk. I outlined to him the cost of the tools I’d need to make the organizer, as well as all the other expenses I had calculated so far, and I shared with him how I intended to pay back the loan. He told me to go for it. Among the many things we have in common, one of them is that we stand behind our beliefs. I was certain my invention was going to sell, and that was enough for him. He knew I could do it. And with his trust and emotional support, I knew I could do it, too. Ultimately, I collateralized the loan with our home, but I reached out to a group of other family members and put a plan in place in case the earring organizer failed. If that happened, they would help me pay down the loan until I got back on my feet, ensuring that Dan and I wouldn’t lose our home. As I’ve shared, I was
confident I wouldn’t have to put that plan into effect, though. Everything was telling me that my invention was going to be a hit. Now I just had to make it and sell it.

FUNDING TO-DO LIST:

Write a business plan.

Calculate your business valuation.

Investigate best funding sources.

Develop a good presentation.

Secure family support.

6

THE TRUTH ABOUT PATENTS

“One idea can change your future.”

—A
UTHOR UNKNOWN

One of the first things I did after designing my first invention was to file for a patent, and I now hold over 120 of them. That should tell you something about how important and valuable I believe they are. Yet many inventors don’t file for patents. There are several legitimate reasons why they make this decision, the primary one being cost. Often, too, an idea is not patentable.

Many inventors have gone on to enjoy success without patents, so it’s certainly not a necessity. Yet a patent arms you with so much more leverage should you have to defend your idea in court and in the marketplace. So if it is remotely within the range of possibility, I would urge you to try to get one. While the preparation of the application and its prosecution before the patent office won’t ever be free, it does not have to be prohibitively expensive, either. That said, ultimately it’s an extremely personal choice. Some people can’t move forward confidently without
one; others believe forgoing a patent is a manageable risk. So while this chapter explores the reasons why a patent is worthwhile, and the various ways entrepreneurs can go about getting one, at the end of this chapter I’ll discuss your strategic options should you choose not to file for a patent.

THE THREE BENEFITS OF PATENTS

1. Patents = Protection

Patents are your best protection against copycats. The United States operates under a first-to-file patent system. Until just a short while ago, we operated under a first-to-invent system. So, let me explain the difference. Say I invented a product, going so far as to create a working model, but I didn’t file for a patent. Under the first-to-invent system, if you came along after me and filed a patent for an invention extremely similar to mine, I could start something called an “interference proceeding” and claim rights to the invention, so long as I could prove that I had invented the idea first. Unfortunately, under this system inventors constantly found themselves in court fighting for the rights to their own inventions, an extremely costly process.

The old system was also a problem for the other guy. Many people ceased developing their ideas because they didn’t feel they could adequately protect them. There was no way to know whether the minute you filed for a patent someone wouldn’t pop up out of the woodwork and claim that he had thought of the idea first. And then you were out of luck, because the law was on the side of the person who thought of the idea first, not the person who filed the patent first.

To solve this problem, in 2011, Congress introduced a bill called the America Invents Act, which switched the United States from a first-to-invent system to one followed by most
other countries in the world, a first-to-file system. In fact, I was honored that the U.S. Patent and Trademark Office (USPTO) interviewed me at the time so that I could explain how such a bill would affect small businesses. I got to attend the signing of the bill and even had President Obama sign my first patent. I believe this new system is fairer and more straightforward.