moneymaker

What Is An Advisory Board?  Do you need one?

Last month we discussed why I think that business cases are a necessary part of making money off of your idea (even though some sources don’t agree).  Now, how do you bring that business case to life?

Well, there are three main options with many variations within those three categories:

1. Sell the idea to the highest bidder

2. License the idea to many companies/manufacturers

3. Turn the idea into a business yourself

Although the first two are important, and often good or great options, I will focus on the third option today – turning the idea into a business.

First of all, this option may have the greatest potential for making money BUT it also has the greatest risk of failure.  So, you need to be honest with yourself about whether or not you can handle it.

Question you should ask:

Are you cut out to be a business owner?  Not in the Shark Tank, The Social Network, glamorized kind-of-way.  I mean, do you enjoy the hard work and the emotional rollercoaster that is owning a business and are you able to delegate things that you might enjoy doing so that you can focus on money-making activities that you may not enjoy?  If the answer is “no, I am not okay with those things.” That is perfectly okay!  Not everyone is!  You should probably consider going with options 1 or 2.

If, however, you ARE okay with those things and want to move forward as a business, then let’s keep going.

*Actual Fortune Cookie fortune from Shreya’s lunch last week.  Who says they’re BS??

For one of the patents that I am working on, we are finding that the best option is to build the idea into a business for now and eventually sell the idea and/or business to someone – to flip it like a house (or a pancake).

We had to do some self-reflection at this point.  Yes, we’re willing to do the work, BUT we don’t necessarily have the connections or the experience it takes to build this particular business.  So, what do we do?  Give up?

NO.  We had two options as we saw it: 1) we hire a “CEO” or business partner who already has connections to introduce us to people and ease our entry into the market OR 2) we get help from an “Advisory Board.”

What is an Advisory Board?  It is a group of more experienced and better-connected individuals who can provide guidance and/or connections but that will take a laissez-faire attitude towards the business.  They are not too invested.

The CEO is a great option and we thought that we NEEDED this option at first.  What we learned, though, is that it is an expensive option.  No one with the experience needed would put their time and energy into helping a wee start-up like ourselves without a significant chunk of equity (think: 50%).  We did not want to give up that equity.  Plus, we are willing to do the legwork.  We are willing to knock on doors, put ourselves out there, and otherwise put the sweat in and put the ego on the line.  Therefore, the advisory board is looking like a much better option for us.  Small equity options for the advisors, minimal time investment on their part.   They help to ensure that we are knocking on the right doors and that the doors will at least open for us.

So, for us, the Advisory Board was just what we needed.  You may need more than that or you may not know people who would be a good fit.

Hope this helps…and until next time.

One of the first, most daunting tasks that I had to tackle was writing a Business Case.  I am not an MBA and have never taken a business class in my life.  However, when I worked at the IP Portfolio Management start-up, we talked about a lot of business-y things and it turns out some of those business-y things were parts and pieces of business cases.

Some people say that business cases/plans are a waste of time.  Others will tell you that they are essential (just do a Google search).

Why did I do them?

I have found, as a lawyer helping business owners, that the whole business case process is a great exercise for most business owners – especially if you are a newbie business owner.  It shows potential investors (which, as a Lawyer-Human – I think of myself as an “investor” in your business in many ways because…well, even though you’re paying me, I’m investing my time in helping you with your business) that you have actually given your business some thought and it’s not simply a whim.  Should you spend months writing up a detailed business case?  Probably not.  Unless you are entering some sort of business case competition, of course.

What that dude in the article said – it’s probably true – no worthwhile adventure follows a plan and there’s no substitute for doing.  However, there’s a difference between veering off the path because there’s a fallen tree on the trail and wandering lost through the forest with no idea where you’ve come from and where you’re headed to.  My business case had a cursory sketch of a plan.  However, the main purpose was to answer these questions:

1. What space in the marketplace does my idea fill?

2. What similar things exist?

3. How is my idea better and/or different?

4. What are all the different ways that I can make money off of this idea?

5. How much money could be made?

6. What could go wrong?

7. How do I plan to get rid of the idea/Who will take it off of my hands?

I told the story of my idea clearly and CONCISELY (with real numbers and references to where I got those numbers).  With tables and graphs, my business case was under 10 pages. Then, as I started talking to real people about what I was selling, I got new ideas and found that there were areas that my numbers weren’t 100% accurate.  You know what I did with that information?  I made a note of it somewhere and did not bother trying to rework my business case.

Why?

I’m not entering a business case competition.  I’m trying to help my client make some money off of his idea.  If it turns out that we need to send a business case to some venture capitalists in order to get an investment?  I’ll spend a day or so prettying it up at that point.  For now, I’m going to keep talking to as many people in the market as possible.  The business case helped me to define who I want to talk to and what I would want to talk to them about – which I will talk about that process (how to get meetings and who to get meetings with) in the next post.

Hopefully this was helpful.  If you’re still feeling rather clueless about the whole thing – I don’t blame you.  I stared at my computer screen for about a week typing business-y sounding words and then deleting them.  I finally just sat down and made myself put something together.  It took me about a week and once I stopped trying to sound smart, it came together pretty well.

As Chuck Close said, “The advice I like to give young artists, or really anybody who’ll listen to me, is not to wait around for inspiration. Inspiration is for amateurs; the rest of us just show up and get to work…”

To help you get to work, we have some pretty awesome resources for people just starting out – shoot me an email at shreya@layroots.com and we’ll send you our “business resource” sheet.  If I had had those resources 3 months ago when I was going through this, I probably would have had a much easier time.

Please remember that this is just a documentation of my own journey.  There are different ways to do things and nothing in here is legal OR business advice.  If you think you have a better way – I’m always open to ideas.  

I want to add that I don’t plan on this being patent-centric.  Look at the NFL – they make tons of money off of licensing trademarks/brands.  Intellectual property is not just limited to patents – but includes trademarks, trade secrets, and copyrights.  For copyrights, think of sampling older songs – sampling can be a form a licensing.

Let’s start at the beginning.  In this post, I’d simply like to set the stage for my adventure so you know where I’m coming from and why I would agree to do this work.  Right out of law school – fresh-faced and doe-eyed – I worked for a start-up.  We were going to change the face of the monetizing intellectual property market.  What the eff does that mean?

It means that we took inventors’ ideas – whether patented yet or not – or companies’ portfolio of ideas and we found people to license those ideas in non-competing markets.  So, you have a widget and you’re selling it to the avid widget market.  We take a look at all of your widget patents with fresh eyes and see that your widget could also be used by gadget makers who sell to gadget consumers (a non-overlapping market).  We create a business case after performing some market analysis.  We find gadget makers.  We present to them how this widget could increase their revenues if only they would license it from widget maker.  They sign the deal.  We get a cut of the royalty rate negotiated.

Sounds like a pretty sweet deal for all, doesn’t it?

Here is why I believe we failed:

1) We did not do a good enough job creating the business cases.

2) We did not go after potential licensing partners with the ardor that we needed to go after them with.

3) We did not have an adequate screening process for the patents that we accepted.

This process is not easy; it’s a lot of work.  However, as my business coach is fond of saying, “I’m not saying it’s going to be easy; I’m saying that it’s going to be worth it.”

What’s Happening Now:

Two individuals have found me with innovations related to the energy industry.  One individual has a patent granted; the other individual does not have a granted patent – only a provisional patent.

Person 1 has gotten a formal, independent valuation done before coming to me (good!); however, it is a mechanical device with no prototype.  Why does this matter?  Buyers will have to invest their own time and energy doing all of the research & development to get this puppy up and running.

Person 2 only has the provisional, but he has actually been using his idea in commerce since applying for the provisional.  He knows that the idea works in real life, it will not require a large investment by the buyer, and he came to me with interested parties already lined up.

So, this speaks to #3 above – my screening process.  These two people have come to me with some proof that their idea is worth something.  The proof does not guarantee success, but it provides a jump-off point.

#2 above – pursuing potential licensing partners: I have a plan that involves calling, pestering, bribing with lunch/coffee, and emailing until I’m blue in the face.  I have made the commitment to do what it takes to create opportunities for these two clients.   This is my first step – I will find people related to and/or working in the specific markets that these innovations benefit.  Then I will talk to these people and use any information gathered to narrow my target market(s).

#1 above – the business case: Since my days at the start-up, I have worked in corporate finance, gotten a business coach, done a lot of business research, and watched a lot of Shark Tank (joking…sort of…).  I have a much better idea of how to structure and write a business case.  Additionally, after writing extensive business cases for the above, I will get these business cases looked at by people so that they can be ripped apart and rewritten.  The valuation does not substitute for a business case.

What Next:

In subsequent posts, I will discuss the business case writing process in more detail (pitfalls, tips, etc); I will talk about what sorts of people I am meeting with; I will talk about what the responses have been like and how I am using that information; and anything else that I learn or come across along the way.

I hope it’s helpful to all you idea people out there to hear the journey of making money off of your ideas.  Please remember that this is just a documentation of my own journey.  There are different ways to do things and nothing in here is legal OR business advice.  If you think you have a better way – I’m always open to ideas.

I want to add that I don’t plan on this being patent-centric.  Look at the NFL – they make tons of money off of licensing trademarks/brands.  Intellectual property is not just limited to patents – but includes trademarks, trade secrets, and copyrights.  For copyrights, think of sampling older songs – sampling can be a form a licensing.

 

 

For People wondering “Who the hell is this person?” A little historical perspective:

Before I opened this law firm business with my husband and before I was an attorney, I was a chemical engineer for the Oil & Gas industry down in Houston, TX.  It was a natural progression for me – I grew up in the energy industry.  My dad worked for Oil & Gas.  I have lived in Alaska, Houston, Saudi Arabia, and Norway – an oil brat.  I have socialized with Oil & Gas people my whole life.  Most of my friends from the University of Texas work for the energy industry in some capacity.  In law school, I worked for the Tulane Environmental Law Clinic challenging industrial plants for violating their permits (air and water pollution stuff mostly).  I am interested in a future that incorporates other energy sources; however, I also have an understanding of the past and current state of the energy industry.