2011-11-02-Business Roundtable-Inventions
Seminars@Hadley
Business Roundtable with Urban Miyares: Inventions
Presented by
Urban Miyares
Moderated by
Tom Babinszki and Larry Muffett
November 2, 2011
Tom Babinszki
Good morning. This is the second day of the Business Roundtable in Chicago at The Guild for the Blind. My name is Tom Babinszki, and we have Mr. Urban Miyares with us, who is going to give us two sessions of excellent presentations today again. Thank you so much for joining us for the second day.
A little bit of housekeeping – As I mentioned yesterday, we are not releasing the microphone. We don’t have any voice chat capabilities. If you have any questions, please let us know by typing. If you hit F8, type in your message and hit enter, it will show up in the message list and you can read the messages by pressing F9.
Today we are going to talk about ideas and inventions. Urban will discuss what to do when you have a great idea and you would like to sell it or when you have an invention and how to go about it if you don’t have too much money to start developing it. With that I’m going to turn it over to Urban. Probably he’s going to speak approximately an hour then we’ll take a good 20 minutes break and we’ll come back for another hour. Urban, it’s your turn. Thank you.
Urban Miyares
Well, thank you, Tom, and good morning everybody. We’re going to talk about inventions and ideas today. Let me give you a little bit of background. As a young kid growing up in New York City, I was quite inquisitive. I’d be the one that would grab a toaster and take it apart to find out how it would work. But I was just inquisitive; I wasn’t an inventor. I never put it back together again and, of course, my father used to get real upset with me with all the pieces and parts all over.
But as I grew up and later in my teenage years, I came up with a little game. Wire puzzles were very popular then and I came up with a wire puzzle and went through one of these idea development companies. It was called Raymond Lee Corporation which wound up being closed because they were running an illegal operation at the time. You learn sometimes the hard way as an inventor or wannabe inventor to get going.
What we’re going to talk today about is inventing ideas as a business, not as a hobby. You know, the time when you could sell your idea – you came up with this million dollar idea then you could sell it – those days are long gone. It’s so much easier to steal an idea today than it is to buy one.
So if you have this idea and think someone’s going to buy it – unless you have a track record in coming up with inventions – and there are professional inventors who all they do is come up with ideas for inventions and companies hire them and pay for their ideas – don’t think you’re going to jump right into the business of creating ideas and selling them. It’s a business; it’s an industry; it is extremely large and if you’ve not done it before, be very careful getting in there.
One of the tricks I like to tell inventors is don’t spend money until you’re sure you’re going to make money. And if everybody likes your idea, then why aren’t they buying it now and jumping onboard with you, with your idea or invention?
As I got more and more into the business world, I had some ideas and inventions and started companies around; did quite well and really liked working with inventors and ideas and with that I started a company that would help inventors with ideas. They would come to workshops I would do and learn how to do pretty much what we’re going to do in a very short period of time. You’re going to get a sample of it today.
But these ideas and inventions – most of them were really not practical and you’re going to find out why they weren’t, but if there was an invention that me and my partners thought were viable, we would jump onboard and put our money where our mouth is. We wouldn’t charge the inventor; we would go in partnership with them.
And we owned a couple of manufacturing companies at the time and from that we have been able to have been involved in many products that in the market today in various industries – from toys and games, to construction, to safety products. So it’s quite an exciting field, the invention industry.
There’s no such thing as a bad invention or bad idea. Every invention, every idea works. If it didn’t, you wouldn’t have come up with it and be so excited about it. You, as a person with a new idea or invention, have to realize that again, it’s an industry and you must decide – are you doing this as a hobby or are you going to do this as a business with a goal of making money.
And if it’s a goal for making money, the first decision you must make with this is what role in the business aspect are you. Are you the inventor, are you the business person, are you the manufacturer or are you the marketing person? You can’t be all. And inventors tend to be very emotional and make emotional decisions. Business people are analytical and make analytical decisions based on facts that they have. So if you’re a business person or an entrepreneurial type person, you have to have a little bit of an analytical side and have facts and figures before you can move forward on a decision.
Are you a marketing person? Do you have the personality, the character that can market your product? Can you do public speaking? Do you have that appeasing outlook, personality – the appearance – somewhat what we talked about yesterday known as the soft skills.
And so these are critical things that you need to decide of what role will you be in the business aspect. And then like we talked about yesterday with partners, my suggestion would be find partners to fill out those roles. If you’re not the marketing person, then find someone else. You can be the inventor, but you may need someone else to help perfect your invention better.
So you come up with this great idea or this innovation - you want to solve something. Let me tell you – there are dozens, if not hundreds, of books on how to bring a product to market; how to make a million dollars with your idea or invention, and basically the books are all right and they all say the same thing, but just in different words.
The standard format of doing it is get your idea invention down in some form, written or some tangible form; go to an attorney – preferably an intellectual property attorney or a patent attorney, which is commonly known as a patent attorney – see what they say - if you can protect it. Then go on into developing your product with a prototype and go on and run the business aspect. That’s the typical way of going and it’s also the way of going broke.
Most people get as far as the patents with their invention and spend all these thousands of dollars in their patent and the product never gets into market. As a matter of fact, according the U.S. Patent Trademark Office a few years ago, 70% of all patents issued to inventors never get into the market. Why? Well, you’re going to find out why in the next couple of hours in these two sessions why.
So what do you do if you have a product or an invention? Here I’m sitting in front of me right now with a Styrofoam cup that has a lid on it. We had coffee this morning while we were waiting – I hope you had coffee too – for it. And with the lid has this interesting thing that you pull up and out so that you can sip the cup and leave the lid still on there and keep the coffee hot. Someone came up with this idea and it’s probably an invention that was patented, copyrighted. Yes, you can copyright inventions too and we’ll discuss that in a second.
And so this is a simple form that probably took thousands of dollars to develop, believe it or not – this little Styrofoam pull-up tab. And it seems so simple and stupid – anybody could have come up with this idea, but someone actually did. And I’m sure you also have some ideas or thoughts. Like I said, everybody’s an inventor. Just think about a time that you came across a problem or something – “That’s stupid. Why did they do it that way?” And, “Why is the closet door opening this way instead of this way?” “Can’t they do something better than this?” And things like that. “I have a better way.”
If you’re in cooking, you come up with a different formula to bake bread – something that’s salt-free; gluten-free; sugar-free and the bread rises by itself. That is patentable. And by the way, that is also copyrightable. So these are things you need to know the industry if you’re going to get in there and that’s the first step of doing it.
So let’s go into a situation. Let’s suppose you have a product right now or an idea for a product. How do you do it when you have no money? Let me tell you the tricks that professional inventors do. And again, it is a profession and some of these inventors are not highly trained or education or skilled and some are. Some are engineers – I find a lot of engineers in the inventing field; architects in the inventing field and people who are brought up and raised on farms.
Amazing when you live in rural communities and you don’t have a store next to you and you need something done – the tractor breaks down or something, a device – you come up with something to fix it so it’s still workable. And it seems like people in rural communities that live away from mainstream downtown cities, tend to come up with great ideas and inventions on that. And having worked with hundreds, if not thousands of inventors over the years, you can almost profile who’s going to come up with a good product or not by where they grew up and where they live or their educational background.
But we all have inventive type of minds. There’s a saying – “Your first product will never make you money; it’s usually your fifth product will.” As an inventor always comes up and what is your next invention after you’ve invented what you’ve got now? How soon will it be?
So you got this great idea. What’s the first thing you do? Well, what most people would do is try to solve the problem. Forget about that. Don’t do that whatsoever. You look at your product and you find out what industry is it in. If it were sitting on a store shelf, what would it sit next to? If it was advertised in the catalog or in the Yellow Pages, what category would it be in? And generally, that would be your industry.
The next thing you would do is, if you were able to solve this problem – remember, we haven’t solved the problem yet. We don’t have the invention; we don’t have the prototype yet. Don’t go out and spend money building a prototype. I’m telling you right now. You build a prototype - you’re going to waste your money in almost every case.
What you do is get analytical first. Say, well, someone would pay $10 for my product and it’s an electronics product. Well, there’s a book called RMA which stands for Risk Management and Associates, and if you take Hadley’s course on How to Get Into Business or Evaluate a Business With Little or Minimal Risk, you’ll learn about the RMA book. And if you want to know about it online, it’s www.RMAHQ.com. Again, RMA – Risk Management Associates – HQ – headquarters quarters - .com. RMAHQ.com. And you’ll learn about this book and basically the book will give you the industry statistics based on previous years’ tax returns and all for all businesses.
Now you know your product’s in an industry. Let’s say the product is an electronics product that’s in the toy and game industry that would be sold at retailers, whether it be mass market retailers or just a local hobby shop next to you. Well, that retailer has to buy it from a wholesaler; that wholesaler buys it from a manufacturer and that manufacturer gets the idea from you, the inventor.
Now what the books tell you to do – which I’m saying you don’t need to follow unless you got tons of money – they say you go out and get a price from manufacturers to find out how much it costs. And I’m saying that’s a waste of time because a manufacturer is only concerned about making your product and the first question they’re going to ask is, “How many do you want? Do you want one; do you want 100; do you want 10,000; do you want a million units?” And they’ll give you a price on that.
And too many inventors who don’t know the industry or the business inventing say, “Well once I get it in a product and I get up to a million, then I can get the price lower. I’ll go overseas and manufacture it.” And that’s the way to spell doom in the inventing business. That is not the way to do it – the way professionals do it, although that’s the way the books tell you to do it.
So what you do is get the RMA book and you track back the industry and you can find out cost of sales of each one of those industries to the point that you’ll get to the manufacturer and find out what their labor cost is, what their raw material cost is to produce your product and you could figure for $10 and if you go back and it’s an electronics made out of plastic, I’ll tell you right now, you have to make it for $1.30 or less if they suggested or you believe the consumer would be willing to pay $10 for your electronics product – this is the analytical side.
So now you have something to work with - $1.30 or less - based on your preliminary research in numbers. Can you design the product for $1.30 or less? You’re going to find out that it’s not going to be that easy if the suggested retail price is $10. You might have to jump that price to $30, $40 or $50 and then reevaluate – would this product sell for that higher price. This is the main reason why most inventors who come up with great ideas, even those who get patents on their inventions, never get it in the market cause it cannot be produced cheap enough for the consumer to buy or be willing to buy it or able to buy it.