By taking licensing as an alternative, one can see his dream come to life on store shelves
The time when Stephen Key started teaching people how to bring their ideas to market without starting a business, he had no idea where it would lead to.
He just saw a need he could meet. At the inventors groups, Key attended, he was surprised to notice that most people were failing.
They had built expensive works-like looks-like prototypes and filed non-provisional patent applications, but their ideas weren’t anywhere near to retail. At that point, Key was licensing his ideas for products and collecting royalties in return for many years.
After reflecting on his success, Key broke his strategy down into ten simple steps and created an educational programme with his business partner Andrew Krauss.
“If I could do this with absolutely no formal training and few skills to speak of, so could anyone, Key reasoned with Krauss seconding.
One of their students was Tim Ferriss, who later went on to write the bestselling 4-Hour Workweek and inspired an entire generation to conceive of their lives differently.
At the outset, Ferriss was fascinated by Key’s methods because he had essentially hacked a system. Key had broken the mold and had found a way to bring his ideas to market without starting a business, building perfect prototypes or filing costly patents.
It was by making simple improvements to existing products and showing those improvements to companies that manufactured similar goods.
Now, Key wanted to get the reaction from the students about his ideas.
People in the market will always vouch that the companies one buys products from are eager to know about ideas the people have of them in mind. Open innovation is thriving globally across a lot of industries because it makes good business sense.
In fact nearly all of the companies Key interviewed at the Toy Fair in New York City and the International Home + Housewares show in Chicago this year had agreed to his thinkings.
The time and effort it takes to sort through outside submissions from everyday people and product developers who don’t work for them is worth it, because that is where their next great idea might come from.
In these days, modern technologies have made licensing ideas easier than in older times. Today, Key thinks that product licensing is actually the ultimate sides hustle.
It is because licensing is ones ticket of playing the biggest game in the world and all without the financial risk of starting a business, but the same rush of adrenaline, excitement and uncertainty that accompany launching any new product.
Is Key sounding a little biased? Yes. Consumer products always captivated him. The same goes for the concept of passive income. But how can one argue with the following facts?
One doesn’t have to quit his day job to succeed at it, at least not at the very beginning anyway. One has to think if he is satisfied working for someone else from 9 to 5?
If one has dreams and aspirations that are not being met and loves being creative, he should consider licensing as a business model because it enables one to leverage the power of large companies to get to market very quickly.
Essentially, it means that one is getting large companies working for him. Though this may sound overblown, but it’s true.
If ones licensees are using their marketing, administration, manufacturing and sales people to sell a product and pay royalties, they in fact want to work for you.
It emphasises speed to market. In these days, speed to market is more important than ever. It’s really one of the only ways to head off copycats at the pass. If you associate with a large company that has a great distribution, retailers won’t stock me-too products that compete with the licensor.
As a strategy, licensing is all about opening up a dialogue and getting the critical feedback one needs to refine his concept into the most marketable product possible.
If one has to innovate alone in a vacuum, he could find himself wasting years on an idea that ultimately goes nowhere. These kind of things keep on happening always.
For a licensor, it requires little to no financial risk. One can license a simple idea using a sell sheet and perceived ownership.
In others words, you don’t need to raise a lot of money to get started, let alone mortgage your home. Benefits are what motivate companies to license an idea but not prototypes, not patents.
For this, one can work whenever he wants to. Most people want more flexibility out of the work week. With licensing, that’s possible. One can study a market, stimulate ones creativity, communicate with freelancers from around the world and contact companies during any time of the day via LinkedIn.
On the topic of royalty, Key met one of his past student David Fedewa who recently received a hefty royalty cheque for one of his licensed products. He asked Fedewa as to why he was so passionate about the licensing lifestyle.
It was because money was flowing in swiftly. Typically, royalties are paid on a quarterly basis, but as per his agreement, Fedewa received an annual cheque for his product.
According to Fedewa, the more time one spends on his products, the more money he makes. In other words, there’s a direct relationship between time and money.
Key is of the thinking that as far as licensing is concerned, it’s just not the case. If one is smart, has a decent idea and can consistently execute, the ratio between the time he puts in and what he gets is not in balance.
Undoubtedly, it takes time to learn how to do all this. But once one knows how to get his product to the right people in the right way, it won’t take much time at all,” Fedewa said. It’s actually best to do this when you have a day job, and not as a full-time business, he emphasised.
Not everyone has the money, skill, time or even the desire to start a business. In that case, licensing is a fantastic alternative. With licensing as the alternative, one can rejoice at the joy of seeing his dream come to life on store shelves.