The guest today is Eric Huber, a prolific inventor who has licensed many of his product ideas. He loves making things in his garage and coming up with creative solutions to problems. He’s been licensing his product ideas for nearly 10 years now, and has a wealth of knowledge to share. In this episode, Eric offers advice on how to come up with ideas, and how to license them.
What you will learn in this episode
• How Eric got started licensing his product inventions
• His process and advice for idea generation
• How to make your idea licensable
• What you need to know about protecting your idea
• The business of licensing product ideas
• Eric’s advice for other inventors
How Eric got started licensing his product inventions
Looking back, Eric has been inventing since he was 11. It was only in 2008 that he decided to start taking his inventions seriously as a business idea. By the time he decided to take his ideas from his garage to the public, Eric had a folder full of sell sheets for about 100 different products. This helped him stand out.
A sell sheet is a 1 – 2 page brochure about a product, something that will communicate to a potential licensee what your product’s features and benefits are. The first thing Eric licensed was a Hot-Cold Food Tent for the house-ware industry. It was an item that opens over food that keeps it either hot or cold for picnics. He made a list of potential licensees that might be interested in that product and ultimately got it placed through a company that placed it with the licensee.
Eric’s process and advice for idea generation
Eric’s main advice is to be observant. Observe what’s going on around you, what’s happening in your life and in the lives of others. It sounds simple but as we become adults we start looking at things as ‘that’s just the way it is.’ As an inventor, or creative type, you have to be able to say you don’t accept it just the way it is. Looking at things in that manner opens up your eyes to issues that you can solve.
Eric is a big believer in keeping a notebook. Every year he has a new notebook with that year on it, and he writes down his ideas, clippings, observations, neat shapes, jotting that stuff down. When things are in flow, Eric aims to come up with 5 ideas a day. Then for every 10 ideas he comes up with, he does due diligence and a simple prototype on 1 of them. For every 10 of those, he will usually license 1 idea. So to have 10 licenses he needs 100 ideas.
A firm believer that with more ideas come better ideas, Eric finds the best ideas are the ones that come out of a need you have for yourself. However, if someone does come to you or you see something posted saying, ‘I’m looking for ideas’ it can get you thinking in a particular market. Then you’re not just looking at your day-to-day life but coming up with ideas for a potential licensee that has requested ideas in a particular area.
How to make your idea licensable
Eric says coming up with the product idea is the easy part, finding the need that is not taken care is the biggest challenge. Find a better way to solve a problem, and then determine whether that need is something others have too. Eric has found sometimes when solving a problem for himself that he’s the only one with that problem! Weeding out which ideas should be made into a prototype is hard so Eric has someone trusted, like his wife or son, look at it and see if the idea has potential.
The next step is to do basic due diligence on the idea, like searching the internet for patents to investigate patentability, manufacturability, marketplace need etc. Once that checks out, it’s time to make a prototype. Eric loves working with clay, foam core, paper mache, duct tape, and sewing. He can make almost anything that will be a look-like prototype (it might not actually work) but tells the story through its visual image. How far developed your product is can determine potential licensees and even royalty rates, so sometimes he’ll go further and have somebody with engineering background do some AutoCAD drawings or 3D computer animations as well.
What you need to know about protecting your idea
Patents are something that can be very important but they’re also very expensive and take a long time, and cost a lot to defend, so it’s sometimes difficult to justify investing all that into the patent. What Eric works with a lot is the provisional patent application, or PPA. It’s something you can write yourself, it’s filed with the US Patent Office and it gives you 12 months of patent pending status for you to find out if there’s a market for it and look for a licensee. He then has it written into his contract that the companies he licenses to reimburse him for the full patent application.
When starting out, the biggest thing Eric finds and has experienced himself is being paranoid someone will steal your idea. That’s fine but then it will stay in your head or file cabinet and go nowhere. You need others to help you. So Eric has learned to get a feel for the trustworthiness of people when working with them. You can use non-disclosure documents and other contracts that help to keep that privacy and confidentiality around too. It’s a calculated risk but people generally would rather work with you that against you in this open innovation market. Companies rely on outside people for ideas and they don’t want to get a bad reputation.
The business of licensing your invention
Most of Eric’s license agreements have come from companies he’s found at trade shows. There’s a trade show for almost every industry. Here you can talk to people at their booths and get an overview of who might be good potential licensing opportunities. Ask if they are open to working with outside inventors. Find out who would be the best person to talk to at the company. Then follow up. Eric often starts with LinkedIn, otherwise, the next step is usually through email. Eric doesn’t do a phone call until they’ve responded to his email or LinkedIn communication.
There are legitimate companies that act as your agent to find you deals, but nobody is going to work as hard as you are for yourself. Eric always tells people to do it on their own first, get their feet wet and understand the process before venturing out with an agent. There are a lot of product agents out there, otherwise, companies like Quirky and Edison Nation also do that. Usually, you would split the royalties with the company. Do not spend any money up front with a company who says they will find a license and take care of the patent. Check the USPTO website to be aware of invention scams
Depending on the industry, the product, how far you’ve developed it etc., it generally takes 18 – 24 months for your product to hit the market and to see royalties coming in. Royalty rates range but 3 – 5% is about the average. It’s very difficult to get an advance these days, so it’s important to make sure the licensee is continuing to push forward with your product and not just sitting on it.
Eric’s advice to other inventors
Eric says not to be afraid, just go for it! Research your idea, make sure it might have potential and then just go and do it. Educate yourself as much as possible. There is no recipe for success as an inventor, but you want to learn as much as you can from others that have done this, to try to minimize mistakes. It’s completely accessible to everybody that has an idea, determination, and professionalism. There is the potential for anybody to be successful at it.
The US Patent Office website www.uspto.gov
The United Inventors Association of America www.uiausa.org
Quirky: The Invention Platform www.quirky.com
Edison Nation www.edisonnation.com