Find a buyer for your invention before you start inventing
Finding the right buyer up front helps you focus your invention on what will be most valuable to them (and to you).
Most inventors start with a problem and think their invention is the technical solution to that problem. In reality, the technical solution is only part of what the invention needs to solve, particularly if the eventual goal is to sell/license the invention to an acquirer. Let's talk about a smarter approach.
Why find an invention buyer first?
The benefits of trying to find your buyer up front:
- if you can find a buyer: focus energy on solving the requirements (technical and non-technical) of the buyer; and
- if you cannot find a buyer: avoid investment (time and money) in an invention that does not have a buyer.
Focus energy on solving buyer’s requirements
When building a startup, smart advice is to focus on your customer (instead of focusing on what you are building). This helps founders focus their energy on what will provide the most value to their customers (and therefore to their business). This approach to putting customers' needs first is generally attributed to Steve Blank as Customer Development (and then popularized by Eric Ries as Lean Startup).
The same logic holds true for inventions. If an inventor intends to sell/license their patent to another company (e.g., that already has distribution in a target market), the inventor needs to treat the company/buyer as their customer + the invention as the product. The inventor can then work with the potential acquirers (akin to customer development) to focus the invention on the invention space that is of greatest interest to the acquirer. The goal is to understand the potential acquirers' technical and non-technical constraints.
For example, the buyer may have a specific category or price point that they are interested in. Presenting the buyer with a technically excellent invention that does not align with the buyer’s short-term business objective has a low likelihood of ending in a deal. Refining your invention and making it "better" may not only be costing you time and money, but may be pushing it further outside a potential acquirer's objective space. Instead of figuring out your licensing plans later, you can figure out your potential acquirer's business objectives up front, before you have gone deep on your invention. An inferior invention that fits cleanly into the acquirer's existing short-term roadmap has a far greater chance of success than a technically superior invention that requires an acquirer to revamp their short-term roadmap. Note that if the invention is highly desirable to end customers but requires incumbents to significantly change how they operate, that means that the inventor will likely need to build a startup vs sell/license an invention to an incumbent (learn more about how incumbents struggle with disruptive innovation in Clayton Christensen's Innovator's Dilemma).
Avoid investing in inventions that don‘t have a buyer
Shifting to the 2nd point of why you should find a buyer for your invention first: if you cannot find a buyer for your invention before you build it, what will change once you have built your invention? If you do not know who to sell your invention to today, what will happen after you create your invention (other than the fact that you will likely be hundreds of hours and thousands of dollars less wealthy)? Do not fall into the “patent it and they will come” trap. Most inventions (just like most startups) fail to deliver ANY value to their creators, much less the kind of outsized gains that would justify such a risky investment. The deeper you invest in your invention, the more narrow your invention space becomes, and the less likely you will be to create an invention that is of value to a potential acquirer (and to be valuable to an acquirer, the invention must be of interest to the end customers + NOT covered by existing products).
Find your buyer, figure out what they need and desire, and focus on inventing that.
How to find an invention buyer first?
This is literally the million dollar question, and there is no easy answer. But here are some tactics to consider:
- identify 50 companies that sell related products.
- go to LinkedIn and find 1st and 2nd degree connections that work for these companies (hopefully 5 or more you are connected to)
- build a shareable business model for how these companies will monetize your to-be-built invention.
- create a shareable business model for how these companies will pay you
- create a 1 page summary at least including purchase price, landed unit cost, upfront/one-time costs, size of market, and a sales ramp (how they make money) + patent sales price/royalty rate (how you make money)
- reach out to the LinkedIn connections to see if they would be up for a 15 minute call about a product you are building
- walk them through the 1 pager with a goal of figuring out what they dislike about how they make money or how you make money
I am working through this process for a couple of inventions we are thinking about now. If you would like to see the collateral that we are creating, drop a comment and I will share it with you (or grab time from my calendar to discuss).