Dien Rice
December 7, 2000, 06:30 PM
Thanks Gordon.... That was a great post!
> So I went through the room, almost 500
> submissions, and several dozen products,
> either in prototype or that had actually
> been developed by those type of people you
> saw the other night Dien.
> Part of the job, the one I hated, was to
> call those most recently rejected, and to
> tell them that.
Yes, I know what you mean.... These inventions to them are like their children, it's emotionally hard for them to have them rejected....
However, I think you have to not get TOO close to your ideas, since sticking with a BUM idea could cost you a lot of money....
> What I found AMAZING, was that not ONE of
> them believed our evaluation of their
> product/idea...NOT ONE.
> They just KNEW they had a winner, and they
> were going to take it elsewhere, to some
> company that knew what they were doing...or
> they were going to do it themselves.
> Their reactions surprised me. I tried to
> offer the team's suggestions on how they
> might make their creative babies
> profitable...but most refused to listen.
Yes....
What I was thinking as I attended the meeting was that, groups of inventors like this could be a "hungry" market for marketing knowledge and consultation.... But now I see Bob Beckman has already explored that avenue!
> In his best selling book, 7 STEPS TO FREEDOM
> II, Ben Suarez did the exact same thing when
> he started.
> He created a product he LOVED. He just knew
> it would make him rich, and what he found
> out AFTER spending his time and money and
> effort on this product was that NO ONE
> wanted it.
Ben Suarez's story is amazing.... I learned a lot from it! It's worth getting 7 Steps to Freedom II just to read it (it's in one of the Appendices)....
> Now from those hundreds of projects I found
> about 5 that I thought my genius could turn
> into winners. Of course I had no idea how,
> but they were products that I probably would
> have bought, so in a sense, I picked
> projects I LIKED, which is a big mistake
> too.
> So I called these 5 people up to tell them I
> was working on their projects, discuss the
> time lines, and what would happen after all
> the testing, and then tell them about the
> typical offer SCI would make...
> when they got to this, all 5 people pulled
> their product, because we weren't going to
> pay them enough. They wanted more.
Yes, I know what you mean.... I also used to think like this, but really, in general royalties are by necessity just a small portion of the retail price, because of the cost of manufacturing -- and it is also the manufacturer who is risking the most amount of money....
It reminds me of when I went to "Pitchfest" (I wrote about it some time ago), and heard first-hand some comments from venture capitalists. People who go to VCs I think are often like these inventors.... They are afraid to let go of control of the "product" (in this case, their company). Yet, they want a lot of money for the small portion of their company they are willing to sell.... It's unrealistic.
How the VCs think, I learned, is they first think, WHAT IS THIS COMPANY WORTH? If the company is already worth, say, $500,000 (that is, they are already making lots of sales, already has some revenue, etc.), then how much they put in for what percentage is based on that.
If you want $400,000 in Venture Capital money, and if they believe the company is now worth $500,000, they will ask for 80% ownership for the $400,000 they put in. When you think about it, this kind of valuation method makes sense....
> I also found out how UNREAL people's ideas
> are of doing remote direct marketing or
> product development.
> Going through those hundreds of projects,
> and talking to dozens of people, was a great
> lesson for me.
> So, if you have an idea, WHAT IS YOUR
> MARKET?
> If you say EVERYONE, friend, it is my
> OPINION, you are in trouble from the get go.
Heheh, YES, this is a great lesson.... :)
> But I reserve the right to be wrong, and you
> may prove me so at your own time, expense
> and money.
Hmm.... my feeling is that some of these inventors don't really want to go beyond being hobbyists in their heart of hearts.... I don't know why, but that's the feeling I get from reading these true stories....
Thanks Gordon for sharing that.... :)
Dien
> So I went through the room, almost 500
> submissions, and several dozen products,
> either in prototype or that had actually
> been developed by those type of people you
> saw the other night Dien.
> Part of the job, the one I hated, was to
> call those most recently rejected, and to
> tell them that.
Yes, I know what you mean.... These inventions to them are like their children, it's emotionally hard for them to have them rejected....
However, I think you have to not get TOO close to your ideas, since sticking with a BUM idea could cost you a lot of money....
> What I found AMAZING, was that not ONE of
> them believed our evaluation of their
> product/idea...NOT ONE.
> They just KNEW they had a winner, and they
> were going to take it elsewhere, to some
> company that knew what they were doing...or
> they were going to do it themselves.
> Their reactions surprised me. I tried to
> offer the team's suggestions on how they
> might make their creative babies
> profitable...but most refused to listen.
Yes....
What I was thinking as I attended the meeting was that, groups of inventors like this could be a "hungry" market for marketing knowledge and consultation.... But now I see Bob Beckman has already explored that avenue!
> In his best selling book, 7 STEPS TO FREEDOM
> II, Ben Suarez did the exact same thing when
> he started.
> He created a product he LOVED. He just knew
> it would make him rich, and what he found
> out AFTER spending his time and money and
> effort on this product was that NO ONE
> wanted it.
Ben Suarez's story is amazing.... I learned a lot from it! It's worth getting 7 Steps to Freedom II just to read it (it's in one of the Appendices)....
> Now from those hundreds of projects I found
> about 5 that I thought my genius could turn
> into winners. Of course I had no idea how,
> but they were products that I probably would
> have bought, so in a sense, I picked
> projects I LIKED, which is a big mistake
> too.
> So I called these 5 people up to tell them I
> was working on their projects, discuss the
> time lines, and what would happen after all
> the testing, and then tell them about the
> typical offer SCI would make...
> when they got to this, all 5 people pulled
> their product, because we weren't going to
> pay them enough. They wanted more.
Yes, I know what you mean.... I also used to think like this, but really, in general royalties are by necessity just a small portion of the retail price, because of the cost of manufacturing -- and it is also the manufacturer who is risking the most amount of money....
It reminds me of when I went to "Pitchfest" (I wrote about it some time ago), and heard first-hand some comments from venture capitalists. People who go to VCs I think are often like these inventors.... They are afraid to let go of control of the "product" (in this case, their company). Yet, they want a lot of money for the small portion of their company they are willing to sell.... It's unrealistic.
How the VCs think, I learned, is they first think, WHAT IS THIS COMPANY WORTH? If the company is already worth, say, $500,000 (that is, they are already making lots of sales, already has some revenue, etc.), then how much they put in for what percentage is based on that.
If you want $400,000 in Venture Capital money, and if they believe the company is now worth $500,000, they will ask for 80% ownership for the $400,000 they put in. When you think about it, this kind of valuation method makes sense....
> I also found out how UNREAL people's ideas
> are of doing remote direct marketing or
> product development.
> Going through those hundreds of projects,
> and talking to dozens of people, was a great
> lesson for me.
> So, if you have an idea, WHAT IS YOUR
> MARKET?
> If you say EVERYONE, friend, it is my
> OPINION, you are in trouble from the get go.
Heheh, YES, this is a great lesson.... :)
> But I reserve the right to be wrong, and you
> may prove me so at your own time, expense
> and money.
Hmm.... my feeling is that some of these inventors don't really want to go beyond being hobbyists in their heart of hearts.... I don't know why, but that's the feeling I get from reading these true stories....
Thanks Gordon for sharing that.... :)
Dien
