Derek Sivers

One Simple Idea - by Stephen Key

One Simple Idea - by Stephen Key

ISBN: 0071756159
Date read: 2011-04-29
How strongly I recommend it: 4/10
(See my list of 320+ books, for more.)

Go to the Amazon page for details and reviews.

Good introduction into the world of licensing your ideas to companies that manufacture products.

my notes

It is often much faster and more economical for a company to bring to market a licensed product based on a simple idea - an improvement or enhancement to an existing product - than it is to start at square one in R&D and go through the whole long, complicated, and expensive process of coming up with and developing an idea themselves. So licensing our ideas is really just good business for companies. It reduces their R&D costs. It accelerates their product development time. And it creates a multiplying effect: essentially getting other people to develop ideas for them for free.

This concept of companies licensing ideas from outside their own walls is known as open innovation.

Intellectual property is the legal ownership, by a company or individual, of an intangible asset, a creation of the mind - an idea.
Intellectual property encompasses many types of intangible assets, including musical, literary, and other artistic works; ideas, discoveries, and inventions; and words, phrases, symbols, and designs.

A simple improvement or a small incremental change to an existing product is often the easiest, fastest, most cost-effective, and most profitable way for companies to bring a new product to market.

It’s hard for them to think outside the box or even right beside the box, which is where many of the most doable and profitable ideas are situated.

A midsize company is usually the ideal candidate to license your idea. They are most likely to view the licensing of an idea as an opportunity to become number two or three in the market.

When a big corporation is interested in an idea created by an independent product developer or a design firm, they typically want to purchase the idea (patents) outright.

Find the number three or number four player in the market and show them how licensing your idea can make them number two or even number one.

When consumers want something, they want it now, not years from now. Consumers in the commercial, government, and scientific sectors are no more patient.

Open innovation - licensing ideas from the outside - enables them to be first to market and to fill their shelf space with products consumers want.

Find the answers to these six critical questions:
1. Who are my competitors? Identify both the major players and the smaller players.
2. How does my idea compare and contrast with other products in the market?
3. What value does it offer that the other products do not?
4. How large is the market?
5. Who are my primary customers?
6. What are my potential sales?

Building and testing a prototype and filing a patent.

Know the basics of manufacturing the product, so that you can speak intelligently about it to potential licensees.

File a provisional patent application. It will give you patent pending for one year without huge expenditures.

I can develop a product for licensing in less than 30 days and for under $500 - which I had already done successfully 20 times.

Most people innovate backward. They develop a product to solve a problem that bothers them personally without first confirming that it bothers the market universally.

Instead of creating a new market for your idea, create an idea for an existing market.

It’s one thing to create a product you like. It’s quite another to design a product that consumers like and will buy.

I just went to Toys “R” Us and walked the aisles. I looked at what was on the shelves and tried to imagine ways to make a small change that would have a big impact.

My shopping excursions only planted the seed of an idea. I had to do more market research to germinate that idea: to figure out how to design it, how much it should cost, who might license it, and so on.

Discover hot markets and emerging trends. Check out websites such as and

Look at new products, and ask store managers which items are hot.

There are usually three or four big companies that produce most of the products in a given market. Review their product pages or online catalogs. Go to their media page and read any new product releases.

Innovation through observation is observing how people use products at home, at work, or at play to identify their wants, needs, and desires.

Update or spruce up something that has been around, relatively unchanged, for a long time.

Paul came up with ideas by looking at how kids play traditional childhood games and then updating them. One day he decided to take a look at a game kids have been playing forever: tag. “What can we do to update tag?” he asked himself and his team of engineers. “Is there any technology we can apply to tag?” Sure enough, they came up with Lazer Tag, using infrared technology.

I went into the Disney store at my local mall and asked the manager what their most popular product was. He said it was their cups. I saw that some of the plastic cups had a double-layer outer wall. The back layer was a color (red, blue, yellow, etc.), the front layer was clear plastic, and there were sparkles between the two layers. I immediately thought of other images and games you could put between the two layers of plastic, which kids could play by rotating the cup.

I looked on the bottom of the cups in the Disney store and saw the manufacturer’s name, Trudeau. They licensed the idea from me, and for five years my rotating character cups were sold in every Disney store and theme park worldwide.

“What if a combination lock had letters, instead of numbers, so you could spell out your secret code?” He now has a successful product, Wordlock, which is sold in tens of thousands of stores around the world.

Many companies don’t know how or don’t have a system in place to go find those ideas. Likewise, many independent product developers don’t know how to license their ideas, and some simply prefer hiring someone to “rep” their ideas to licensees for them. This scenario creates a huge opportunity for you to profit from connecting innovators with manufacturers. As a product scout, you find great ideas and then find the right companies to license them. In return for your services, the product designer splits the licensing royalty with you.

Five simple strategies to product-scouting success:
1. Become a licensing expert.
2. Find your niche.
3. Study the market.
4. Focus on ideas you can sell.
5. Cut a win-win agreement.

Become a licensing expert: a master at finding marketable ideas and getting them into the marketplace.

At inventRight we offer courses with CDs and workbooks as well as online classes and other tools for learning how to find, develop, and license great ideas.

Another great resource is Ideapow: an “online learning lab” for “entrepreneurial-minded people” who want to learn how to license ideas.

Take the rifle approach and focus on an industry you’re familiar with.

Stay plugged into new and emerging trends.

Many designers think they can simply list their ideas on a website and it will somehow sell itself. Companies simply do not search these sites for ideas. But you can, and you know how to evaluate an idea. These designers are likely to be desperate for some help licensing their ideas. Try typing these keywords into your browser and then bookmark any sites that you like:
• “Invention for sale” or “inventions for sale”
• “Patent for sale” or “patents for sale”
• “Invention listing sites”

Visit inventor forums. Do an Internet search for “inventors forums” or “inventors discussion groups” to find forums where you can go check out what’s on the minds and drawing boards of designers.

Mine the talent at art and design schools

Publicize constantly.

It’s not about how big or small, how complex or simple, or how unique or clever your idea is. It’s about which idea is going to take the least amount of work and has the highest probability of success.

Whenever I come up with an idea I’m interested in, I give it this four-step litmus test to see if it’s a potential winner worth pursuing further:
1. Does it solve a common problem?
2. Does it have a wow factor?
3. Does it have a large market?
4. Does it use common production methods and materials?

Companies don’t want to educate the market about a product or create a new market for a product. They’re like me: they like ideas that are simple to explain and easy to show its unique value. They want ideas that consumers will take one look at and say, “I get it. I love it! I see how it benefits me. I want it.”

Whatever you do in life, find someone who has already done it, get as close as you can, and learn as much as you can.

Sometimes, because you’re not an expert in a field, you can look at things differently and see simple ideas with mega marketing potential that the “experts” might overlook. But once you get an idea that fires you up, you need to gain some expertise in that field so you can make good decisions about whether and how to move forward with it.

The only opinions that really matter are the opinions of potential licensees.

Companies are only interested in licensing ideas they can:
• Put on their existing production lines quickly and easily, with little or no modification to their manufacturing processes
• Distribute through existing channels in which they already operate or that are closely related to the channels in which they operate
• Produce at a cost and sell at a price that is profitable

Call the manufacturer and ask for someone in sales. I would say something like, “I’m Stephen Key with Stephen Key Design. I’m working on a special project for a client, and I’d like to send over some drawings and get a price quote.” The sales rep is going to fall all over him- or herself trying to help you and supply you with what you need. Just make sure to send over a nondisclosure agreement (NDA), and make sure you’ve already filed a provisional patent application on your idea.

Send over a drawing, and I make sure to include “Patent Pending” on the drawing so they know some intellectual property protection has been filed.

Ask for a price quote on 10,000, 100,000, and 1,000,000 units. The sales rep will go to work for you and come back with a price quote and all this other information to help you because the sales rep wants to get an order! It’s brilliant.

Occasionally, I will call contract manufacturers and ask to speak to engineers. If I ask a few basic manufacturing questions and don’t ask them to divulge any trade secrets, they’re usually very helpful. Sometimes, you can’t get them to shut up, because they’re so happy to have someone interested in what they’re doing.

If the sales rep or the engineer tells you that the company can’t manufacture your idea, ask him or her why. This way you can understand the manufacturing process, then redesign if necessary.

Online encyclopedia HSIM

Far too many inventors and independent product developers overlook this step. They design with no knowledge of, and with no regard to, manufacturing.

Only in the United States, patent protection is granted to the “first to invent,” meaning the first who conceived of and practiced the invention. In almost all other countries, entitlement to a patent is established by the “first to file,” which is awarded based on the date of the application, regardless of the date of the actual invention.

“Provisional” patent applications allow an inventor to obtain a priority date and a patent pending number, which is valid for one year. A final or complete nonprovisional application must then be filed before the 12-month anniversary of the provisional patent application or the original date will be lost.

Further, in most countries a mutual nondisclosure agreement (NDA) signed by both the inventor and someone with whom the inventor wishes to show or discuss his idea can protect the confidentiality of an invention prior to submitting either a provisional patent application or regular nonprovisional patent application. This is a must in countries where it is first to file.

The number one rule of this game is first to market wins. So if you don’t get your idea to market quickly, someone else probably will.

Protect your intellectual property while getting your idea to market. It’s called a provisional patent application (PPA).

Recommend David Pressman’s books Patent It Yourself and Patent Pending in 24 Hours.

A new method of doing business or a new manufacturing process (utility patent).
• A useful apparatus, machine, manufactured item, or composition of matter (utility patent). The ideas of most entrepreneurs, independent product developers, and small businesses fall under this category.
• Computer programs and mathematical algorithms used in computer programs (utility patent).

A provisional patent application (PPA) is a relatively new device that the USPTO began offering in 1995. It is a straightforward application that uses text and drawings to specify how to make and use an idea. PPAs apply only to ideas that fall under the utility patent category. A provisional patent is in force for a period of 12 months, after which you can either file a regular nonprovisional patent application or let it expire.

• You can include a “Patent Pending” notice on documents, drawings, sell sheets, and prototypes you present to potential licensees.
• As long as the patent is pending, no potential competitor can access your patent application to rip off your idea. In fact, the USPTO won’t even read your provisional patent application until and unless you either file a regular patent application or someone disputes your rights to the idea.

You can write your own PPA, but I recommend using the PatentWizard software ( from Neustel Law.

Start an “inventor’s logbook” and keep it updated. An accurate and detailed logbook is your first line of defense in protecting your idea. Under U.S. patent law, intellectual property ownership is based upon “first to invent,” not first to file a patent. So it is extremely important that you document your idea from the moment you conceive of it, through each design change, and all the way to its final design, licensing, and manufacture.

An NDA is necessary whenever you show your idea to anyone other than your immediate family and most trusted friends.

It’s important to include a provision in the contract that limits the scope of the NDA to information that is known to be confidential.

A good NDA will contain these key provisions:
1. The parties agree not to disclose each other’s confidential information to others.
2. The parties agree not to use each other’s confidential information without compensating the other party.
3. The parties agree to return all documents, information, and prototypes supplied by the other in the event no agreement is reached with regard to the idea.
4. The parties agree that information that is already known to the receiving party or that is known and used by others is not deemed confidential.

Very few, if any, companies and investors go searching the Internet and “tweeting” for ideas to license or fund. Nor do they routinely (if ever) scout social media or any other media for ideas to bring to market. Nor do they frequent (if they visit at all) inventor and product developer forums in search of the next big idea, which in reality is usually a simple idea with big market potential. These services and media channels may serve a good purpose, but it is not to bring a licensee to your door, despite innumerable claims to the contrary.

It is far more effective to go out there and find a licensee for your idea. Doing your homework to identify and qualify potential licensees

To successfully bring an idea to market, you must control every step of the process - from developing your idea to protecting and licensing it. Throughout the process, you must also control who knows about your idea, what they know about it, how you tell them about it, and when. So protect your idea with a PPA and an NDA before showing it to anybody.