Hello, my name is Christopher Hawker. I am a professional inventor, specializing in innovative consumer products. My company is called Trident Design, LLC. I have developed many products in numerous industries and have over 20 products on the market. My most famous invention is the PowerSquid, a cephalopod-inspired power strip with outlets situated at the end of short cords, thereby eliminating the problem of losing outlets to bulky transformer plugs. John Biggs, editor-in-chief of this blog, has asked me to write the story of the birth of the PowerSquid and its development and journey to market. This is the Song of the PowerSquid.
Part 3: The License Hunt
Armed with our handmade prototypes and fancy brochures, we set about searching for a partner. We felt it would be easy. We thought we would call up the companies, tell them about our revolutionary products, and they would line up to see them. Then they would immediately recognize the beauty of the products and fight over the right to be the exclusive distributor. As you might guess, we were wrong.
We identified our first targets: Black & Decker, GE, Belkin, Monster, Woods, APC, and Kensington. They were all high-profile companies with excellent brands and distribution. We researched the companies to find numbers to call. We began reaching out and left messages, but could not reach anyone. We submitted the inventions through the “front door” formal design submission processes at the bigger companies such as Black & Decker, but got no response. We tried to network our way into others with no success. Now desperate, we booked a trip to the Consumer Electronics Show (CES) in Las Vegas in January 2002 to see if we could attract interest.
The CES was an eye-opening experience. There were an overwhelming number of booths for the technology companies and the display of money and resources was audacious. One company, maybe Microsoft, had set up a fake ski hill in the parking lot, where professional skiers and snowboarders performed aerial tricks as techno music blared. We stepped into the show with our list of targets and went booth to booth to speak to those in charge of new product development. This worked much better than cold calling had. We discovered nearly every target had a high-level person on hand who was either the right person to talk to or knew that person. Furthermore, despite the struggles of trying to reach them by phone, there were all eager to talk in this venue.
Still, we were quickly dismissed by all but Monster and Belkin, both who expressed guarded interest. We kept getting the same response: “This will cost more to make than a normal power strip or outlet and no one is going to pay twice as much for this.” We repeatedly discovered the power delivery industry was very conservative, dominated by players who viewed it as a commodity business that had no room for innovation or good design. No one wanted to take chances and no one cared about fresh ideas.
Then, by chance, I was leafing through the show guide and came across a company I had never heard of that had a promising name: Power Sentry. We visited its booth and discovered the company was the number two player in the power strip industry, behind Belkin, by virtue of owning the category at Wal-Mart and Target. We were also told that their new president spoke often of innovation and that they were definitely interested.
So then began the process of negotiating with the potential licensees. I had licensed one other product in the meantime, a cooking gadget called the Chef Scoop, so I had some experience with the process and terms. The key terms to negotiate in a patent license are royalty rate (typically 2 to 6 percent of gross revenue for products), annual minimums (important in case the product doesn’t sell), upfront monies (which licensees hate), and length of deal (you want a chance to renegotiate after a few years if you get a homerun!). Of course, there are other points to be negotiated, and the language of each can be argued, too. The final document can be more than 20 pages, so there is plenty of opportunity to run up a large legal bill. But if you can agree on the first four points, you can agree on the rest.
The royalty rate and term discussions are relatively straightforward, but it is difficult to argue for upfront fees or annual minimums unless the product has an established history. Therefore, you really have to guess and see what the market bears. I learned quickly that it wouldn’t bear much, and my outsized expectations for the PowerSquid and Ejector Plug were not held by manufacturers. I was in disbelief in how pessimistic they were. Of course, I ended up being wrong, so far at least, about the Ejector Plug, so I have learned to be more cautious in my own expectations and more understanding of the manufacturers’ position. I had to quickly adjust my expectations in terms of upfront fees, and tried to use the lower-than-hoped for fees as a negotiating chip to get a higher royalty, a tactic which worked fairly well.
Monster dropped out of the race quickly, citing a perceived lack of potential. Belkin dropped next because it wanted to focus on a new product line. That left me with Power Sentry and a weak negotiating position. I played it well, though, and got a fair deal. My negotiating method with much larger companies is to insist on fairness. Most people don’t want to be seen as unfair, and it’s definitely to the smaller guy’s advantage to strike a fair deal. (I recommend reading Getting to Yes by William Ury and Robert Fisher. It’s a fabulous take on negotiation strategy.)
So now I finally had an agreement with Power Sentry based on the key terms. It then took another six (anxious) months of talks, mostly among lawyers, to seal the rest of the deal. All of the points are important with serious repercussions. Each deserves its proper attention. But, boy, it’s a tedious process, especially the first few times, when the language seems foreign. The process was also costly. I had a lot riding on both the PowerSquid and Ejector Plug.
Christopher Hawker, an inventor specializing in innovative consumer products, is founder of Trident Design, LLC in Columbus, Ohio. He is the author of “Inventor’s Mind: 10 Steps to Making Money From your Inventions”, a free e-book available at Invent-Shop.com. He will be hosting his first InventShop Inventor’s Workshop in October 2009 for serious inventors who want to learn his inventing system.
This is part 3 of a 6 part series. Read them all here.
Want a PowerSquid? Leave a comment below (including your email) and we’ll pick one commenter at random per day.
I love the power sqid!
Thanks for a terrrific invention!!
I’d love to have a PowerSquid :)
Interesting insight into the licensing process. Six months? Hopefully the ‘Age of the Internet’ will force that to decrease, ’cause that’s eons in “Internet Time.”
Thanks for sharing the “journey”. Its amazing what’s behind a product that you look for a 1sec when flipping through inflight product catalog.
I am sure that in all of us is at least a bit of inventor, After all we daily adapt common items, or uses for those said items to fit our specific circumstances.
The difference lies in the vision to see a need, or desire, and capitalize on that.
This is the first time I have seen any of these articles, but I have them all bookmarked now, because I do believe that in all of us lies the ability to make something that will ease the way for others to accomplish a task, whether it something so simple as to be overlooked, or a component for a space launch.
These are the ideas, and qualities that have brought us to this point, and will do so beyond our wildest dreams.
Big fan of the Power Squid design. One of those leaps where you think “It’s such a simple idea, why hasn’t anyone done this before?”. It’s interesting to see that it’s not as simple as one might expect to bring the idea to fruition.
Most interesting series.
I’ve always wanted to buy one of these…I have an obscene amount of wall warts.
Great series! http://AppUseful.com
Powersquid looks awesome. I need one for my aquarium setup.
get me one of then squids, ARRRR
I used to work for a big private investor looking at new business ideas to fund. THe only provisios were that HE should completely understand the product and be able to explain it also to his aged father.
The single most common problem we faced looking at new ideas was the inability of many inventors to explain lucidly and quickly why their idea was a good one and how it would make us all money.
The second was smething akin to artistic integrity. Manufacturing a commercial product always carries compromises so tha it is possible to make money. An too many off the ideas people who came to us were unable to let go of the smallest aspect of their idea for the sake of practicality and profit.
Both these barriers stopped far more deals happening than failure to agree terms. In several cases once we got over the initial hurdles of understanding and trust the ‘deal’ was cut in hours rather than months. But getting there…ohhhhh I’d rather have root canal work ;-(
Love it, use it at all our events. One of those “why didn’t I think of that” devices.
I love powersquid!
Loving the unfolding story, but need the other parts now! hehe!
I had always associated Philips with the PowerSquid – so it looks like Power Sentry did a deal themselves? Surely this is significant as Philips are huge – in particular over here in Europe where I have seen the Philips PowerSquid for sale.
Here is one with our massive UK sized plugs on the end of its tentacles:
http://www.amazon.co.uk/Philips-PowerSquid-SPR4500-Connector-Kingdom/dp/B000YI9YF0/ref=sr_1_1?ie=UTF8&s=electronics&qid=1248593082&sr=8-1
Later in the story (and in real life), Philips will purchase Power Sentry. Then they take it global, as Philips has that global reach.
Hi Chris, great to hear from you. Oh no, I have spoiled the plot! Had no idea there was to be a part 4. Great product (probably get one after my Belkin 6 way fails or I need more outlets) and it is great you persisted. Philips have always been innovative in their industrial design and I imagine (as you’ll probably explain later?) they appreciated your invention.
As a general comment, a great book about persistence with innovation is “Against The Odds” by James Dyson (of vacuum cleaner fame).
Ah, part 3 of 6 – silly me. Just discovered the USB squid too…
http://www.thinkgeek.com/computing/accessories/93ad/?cpg=ab
There are so many aspects of life that need this sort of creative thinking.
… not to be confused with Freeman Dyson, of the famed “Dyson sphere,” who is also a very peristent sort! :)
(posted in case anyone else got confused, as I did.)
powersquid. ftw!
I think we can all give a big sigh of relief that this was not licensed to Monster.
Chris,
Thank you for these posts, they’re a great insight into the product development process.
Were you worried about any of your potential licensees lifting your IP while you were shopping it around?
E
Why not go to Microcenter, or Frye’s, and buy those cheap multi-headed extension cords. Plug one in to the power strip, and have three outlets!
Sure, you could increase the number of outlets and the ability to plug in transformers by using these, but the chances of over-burdening the powerstrip increase dramatically. Thus, your average, cheapo powerstrip will either burn out or not provide enough power for all the devices plugged into it. You could buy a more expensive powerstrip and some of those adapters, but then you’re paying more than you would for a PowerSquid!
Thanks again, Chris, for the inside look at the process. This is only Part 3, but you’re already bringing up a good deal of issues that I’d never imagined!
Me me! Squid me!
Thanx for your journey Christopher. I can atest that the story’s the same in Australia. The time in not only finding ‘takers’ but also the ridiculous cost of legals and time to negotiate cannot be understated – in our case add working online systems in the market that aren’t just prototypes.
Ps Love a ‘Squid’ – haven’t seen them ‘down’ here (Do you have an Oz distributor?)
An info filled article that gives a practical view of a mine field process, if only more entrepreneurs would share specifics on the practicalities of getting a product to market. Write a book, im sure many would buy!
Great article, and very reassuring – I’ve had similar lack of response from potential partners/licensees when going via the supposed official submission channels when trying to licence my award-winning PostureMinder software. It’s downright rude not to even acknowledge an enquiry when you’ve set up a portal to accept them. Maybe I need to save up and get myself to CES or similar events next year!
http://www.postureminder.co.uk
That guy looks like Scott Peterson.
Anybody that has a full powerstrip knows how useful this type of device is.
Great Product. It is the type of thing you say: “Why didn’t I think of that before?”
Ingenious product. One year I gave every one of my friends and family a PowerSquid for Christmas. After a few weeks and initial confusion as to the usefulness of the product, a flood of compliments came back to me in spades.
Hi Chris,
Your insight into your development process is very helpful. I have a new patent pending product for home remodeling, power outages and construction applications. I have a working prototype and am now at the beginning of organizing the logistics for costs and securing tooling, materials, manufacturing, and distribution. I thing licensing might be best for me – and was wondering what your thoughts are on securing an “invention Broker” to walk it through the process with less hurdles and rejection that doing it myself. My goal is to get it to market as quick as possible. I am securing U.S. and international utility patents, but the the faster to market the better.
The product has electrical and compressed air components, but really is no more complicated than your Powersquid.
I’ll send you a link if you’d like to see it.
Thanks again for the helpful info.
B.C.