So you have an idea? And you want to see it on store shelves? For starters, join a local inventor club. This will help you with networking, resources and it will temper your enthusiasm. I know this is difficult -- whoa, do I ever! -- but impulsive decision-making is the top reason inventors fall prey to sweet-sounding promises by invention promotion firms and lose an estimated $300 million annually.
In my first installment, I described the good news Why Inventing Has Never Been as Cheap and Easy. Five major factors are now working in our favor.
Now, Part 2, the bad news: It's Never Been So Crowded and Consolidated.
Just because it's easier to get into inventing, doesn't mean it's any likelier to eke out a personal net profit. Oh, sure... winners win big. But the odds remain whoppingly against us, some say under 100-to-1 (compared to 35 percent win-rate in 8-deck blackjack).
Such low success rates are rarely discussed, partly because media prefer to celebrate (and we prefer to consume) the solo entrepreneur success story. Whereas 99 failure stories in a row gets rather old, rather fast. Also, since the mid-80s, the invention promotion industry has been relentless in misleading inventors with overly optimistic statements. In a classic pump and dump scheme, inventors are filled with "you can do this" enthusiasm (pump) and then sold about $12,000 of "development services" in the form of cookie-cutter binders full of worthless documentation, all the way down to the standardized rejection letter that invariably arrives a few months later (dump).
Hence, inventor anguish remains private. Publicly, we just hear happy inventor stories. Even legitimate companies who do good invention development work do not disclose their success rates. It's a secret. They only tout their (few) successes: Anybody can do this! I'm a single-mom and my invention changed my life! I just had a simple silly idea and now I'm rich!
You know it's a bubble when it's all up, no down. So, if you are an inventor, here's downer news that few will tell you... you probably can't do it. Not alone, anyway. And not without $30,000+ you can afford to lose. The odds you face are just too long. So don't quit your day-job, OK? Here are the five forces working against us:
- Idea Oversupply Low barriers to entry make it easy for you... and your competitor, too. Hence the overcrowding by low-quality idea-submissions, defined as somebody with a cheap provisional patent or inappropriate design patent, plus a digital animation of non-functional prototype. This, my friends, is not a good submission, no matter how brilliant your idea may be. The economics of inventing are like any creative industry. Take music, for example. New technology might make it easy for any starter band to produce professional-sounding tunes and post them online, but it's not any more likely to land a million-dollar record deal. A large consumer goods company recently admitted that they reviewed 1,000+ submissions over two years, yet decided to commercialize only 20, and only half were hits. That's 0.05 percent per year.
- Retail Consolidation
How many national retail chains exist today? Maybe 12? All big box with ironclad access to 300+ million U.S. consumers. Mom and Pop shops or regional retailers are effectively gone. Yet these were the shops who would have been likely to give an untested product a chance. But big box or big teleshopping? Forget it. The logistics are too onerous, the capital requirements too high, and all power rests with a lone retail buyer who reserves the right to return thousands of units of your product -- unpaid! -- should they not sell fast enough. An inventor running a single-product company will go bankrupt faster than a bug's derrière goes splat on a windshield. (My derrière can attest to this.) Your only chance is to start selling via small stores, if any remain near you, or small e-retailers (not the big ones) and hope that with a good track record of sales, a larger manufacturer or wholesaler will notice and offer you a licensing deal or buyout. But don't even think of selling to big box first. They probably won't accept your product, and even if they do, they will quash you in the process.
- Media Fragmentation and Short-Termism
So you (wisely) decide to start small, selling from your own website, or niche e-retailers. Maybe you raised the cash via crowdfunding. You'll need at least $10,000 for tooling and an initial inventory. Starting with online sales seems clever. After all, the entire retail market is shifting, with much lower cost online companies offering more selection at lower prices. You bypass big box, right? Wrong. You run into big box's media spend. Face it, nobody's ever heard of you or your product. Spam your Facebook friends all you like, but you'll need to attract far more significant traffic to your website or small e-retailer listing. And big box is big because it commands all the category awareness and online keywords. In 2011, they spent $7.1 billion in a media landscape that is now too fragmented and short-termist for your listing to ever rise to the top for any significant amount of time. You might score a great PR coup with a terrific story in your local newspaper, and earn hundreds of great customer reviews, but your web traffic (i.e. sales) goes back down to flatline in less than 48 hours. The internet may be the greatest open architecture ever designed, but it is now primarily a receptacle for big advertising budgets.
- Patenting Onerousness
The U.S. Patent and Trademark Office started with three distinguished gentlemen (including Thomas Jefferson) huddled around a desk to review the validity of applications. In 1790, they approved three. Today, your patent application must be checked against over 8 million existing U.S. patents and counting. It will remain "pending" for an average of 33.9 months and has a 50/50 chance of being denied... for a variety of legitimate reasons. It's just the nature of the Herculean task that 6,865 patent examiners do every day. In 2011, they got 503,582 new applications (and yes, the USPTO is hiring to reduce the 644,387 application backlog). USPTO fees are wholly reasonable, but your patent agent/attorney must charge for his/her time. This gets pricey as time wears on. Expect to spend between $5,000 to $15,000 for a proper prior-art search and well-written utility patent application. Any less is worth less (possibly worthless). And consider patent insurance. Bad things can happen, even if your patent is awarded. It takes $250,000+ in legal fees to enforce your patent rights in court (against a knockoff) or defend against a frivolous infringement lawsuit (from a patent troll). You'll win, but only if you can afford to fight.
- High Price of Good Design A final word to my designer friends: You rock! I love you. Really, just accept my love. I know that we inventors are nightmare clients because we tend to be broke, paranoid, control-freaks and always in some inexplicable hurry. So I take this moment to acknowledge that a good industrial designer should be every inventor's best friend. However, you're just too expensive! We can't afford the $150+ hourly rate. I know, I know... good design school is expensive. And I also know that a good designer is a key success factor, transforming my great idea (which is only an ugly klunky prototype today) into a great finished product that people might actually buy. And I also understand that cheap 3D-printing and all the whiz-bang tech in the world will never replace the 50+ hours of human intelligence and empathy required to do great design work, hence your cost. But please consider opening inventor-friendly entry-level services whereby you agree to share part of the financial risk. Otherwise, inventing will devolve into an exclusive playground for those with $10,000+ to spend on design alone.