Turn Your Ideas into Recurring Revenue (Greatest Hits)

0:00What's up? What's up? Nick Loper here. Welcome to the Science Hustle Show. It's the business podcast. You can actually apply. As you know, I'm a fan of businesses that are time leveraged. meaning you can grow beyond trading hours for dollars. You can get paid multiple times from work you do once. That's the dream, right? Well, one business that checks that box is print on demand. It's a model we've covered on the show for years with some really inspiring stories. As the name suggests, you don't have any physical inventory to buy and you can earn passive royalties whenever your designs sell. Still, it can be tricky to know how to get started, what kind of designs to create, and how to set your listings up for success.

0:36This is where printing profits comes in. It's the brand new podcast from the print on demand experts at Printify. Printify is the leading platform that lets you sell custom products all around the world. The new printing profits podcast is jam packed with practical tips from print on demand pros and covers everything you need to start and scale your print on demand store. So go check out printing profits on your favorite podcast app now. And big thanks to the printing profits podcast from Printify for sponsoring the show. Now here's an oldie but a goodie from the archives from the side hustle show greatest hits collection.

1:08It's how to turn your ideas into recurring revenue. Got a great side hustle for you today. One that doesn't require a big upfront investment or even a ton of subject matter expertise. It's product licensing where you can turn your ideas into recurring revenue. I'm joined by Stephen Key from invent right.com and he's going to share how you can get into this business even if you're idealists at the moment. You can download a free PDF highlight reel with all of Stephen's top tips from our conversation and you can find the notes and links for this episode at sidehustlenation.com slash invent. Now, we first covered product licensing back in episode 99 of the show, where Nate Dallas shared how licensing a game idea of his earned him and his brother$300 ,000 in passive income over the course of 10 years.

1:54It's just a fascinating business, and Stephen's got some great insights on how to get started. All righty, let's do it. Why is this a good time to get into product licensing? Well, first of all, it doesn't require any capital. You don't have to set up a company. And there's so many companies out there that need us creative people. So they're looking for ideas. And every year, there's just more and more opportunity for us to submit ideas to companies and let them pay us royalties for everyone they sell. So that's the basic business model is saying, hey, I am the idea guy who we just had on the show, and I'm going to turn around and essentially sell that intellectual property to some company who can turn that into a product and make money off it.

2:36Absolutely. You're basically renting your idea to a company. Okay. And they're going to pay you on everyone they sell. So you don't have to start a company. You don't have to worry about manufacturing or raising money or do any of those things. And what's really great about it, Nick, it's really speed to market today, right? If you start a company, raise capital, all those types of things that you need to do to be successful, it takes a lot of time and effort. When you license an idea, you find that perfect partner that has relationships, distribution, money. They can put your product on a shelf extremely, extremely quick.

3:10I feel like people will come up with things and then that's where it'll stop because they don't know the next step down the road. And if that is, well, I'm going to need to find a manufacturer, I'm going to need to raise money, and then it dies. So here's an alternative to not let it die, to let it live on and earn some royalties beyond that. So tactically, what's the first step in if you have an idea or maybe trying to come up with an idea? Great question. The first step is to really study the marketplace and to see if you do have a new idea. Now, I don't think you have to reinvent the wheel, but I do think you have to make a small improvement on the existing idea.

3:46But you have to first do a Google image search and see if there's any ideas that are similar to yours. And guess what? You will find similar ideas. That's perfectly fine. But know your uniqueness. So, you do a Google image search. You become an expert in this micro category. The next thing you do, you do a prior art search. Look for prior patents. Go to Google patents. Play around with it. Put a couple words in there. Learn how to search for patents. And guess what? You will find something similar to yours. I can guarantee it, but that's okay too. Oh, so what's a prior art search? You're looking for prior patents on your idea.

4:25And this is like USPT.gov or something? No, it's even simpler than that. You can go to the USPTO.gov. That's the United States Patent and Trademark Office. But better yet, just go to Google patents. It's so much easier. And what's really fun about it, you'll just type in certain words and these patents will come up and look at the drawings first and see how similar it is to your idea. But this is what you're going to discover. you're going to see the history of your idea. There'll be variations, of course. Now, if you find your idea, exactly your idea, but the product isn't on the market yet, or maybe it will never be on the market, you can always call that inventor and say, hey, look, can I help license that idea?

5:03That's one way to do it. But I can tell you, once you start searching, you're going to discover a lot of patents out there, but make sure you find your uniqueness. So if you do those two things first and you discover, Well, it's not on the market. And yes, I do have a unique idea because I did some prior art searching. Here's the catch. Then it's real simple. You need to reach out to these companies and show them your idea. It's as simple as that. Now, that being said, you need a little bit of protection, right? Because everybody's fearful, but you don't have to be. Before we do the protection stuff, let's walk down the road of an example.

5:41Do you have something from either yourself or one of your students that would be a good example to illustrate what this search and improvement strategy looks like? When I first started out, I had this one idea of what's called a rotating label. I'd read where there's never enough information on containers for drug facts and warnings and things like that. And I thought, well, gee, I've got an idea to put more information on a container. I'm going to put a label down first, just like there's a label on cough syrup now. Okay. But I'm going to put another label on top of it. And the label on top of it is going to spin and it has a little window.

6:19And as you turn it, it reveals all the information on the base label. So now you've increased your space for more information. Very simple idea. And I went down and built a prototype at Kinko's out of paper. And I did all that great stuff. And sure enough, I had called a company. It was Johnson & Johnson, submitted that idea to them. And the first thing out of their mouth is, you know, do you have a patent on it? So did you just call up like their general like customer service hotline? Like how do you get in touch with these giant companies? Well, this was a little bit different. I called in, you can always get to everybody and I can talk about how to do that now because things have changed.

6:56It's easier now to get to people than ever has been through social media. But in this situation, I called someone up in their graphics department that was doing their label design because I had a new label. And how did you find them? I just called up and asked. I got the 800 number, called for the, asked for the corporate number. And when they put me into the corporate number and I said, look, I'm a product developer and I'd like to speak to someone in your graphics department. Now the operator didn't know what to do. Yeah. Just get off my phone. Like, let me transfer you. Trying to move you as quick as you can.

7:26And sure enough, someone in the graphic department, he doesn't get calls very often. He didn't know what this call was even about. So I said, hey, I'm a product developer and I can add 75 % more space to your label. He was intrigued. He said, really? How are you going to do that? I said, well, let me send you a sample. And then he called me back and said, this is incredible. Do you have a patent on this? That's when I flipped out a little bit because I didn't understand that process. What happened after that? So at that point, there was no patent. No, there was nothing. I panicked. And that's what everybody does.

7:57And I don't want people to do that. But that's what I did. And I called this attorney. mean? First of all, he did a prior art search. This is what he did. And he didn't find anything. He said, Steve, you're an inventor. I said, fantastic. So I filed these two patents and they ended up being worthless because I didn't do my homework. In fact, there was patents out there on this idea exactly. In fact, I thought I was an inventor. I was not an inventor. It had been patented 60 years ago. It cost me$30 ,000. Made a mistake. But guess what? That prior art, Those prior patents of 60 years ago, they found my idea exactly.

8:34But when I read it, something was missing. There was no method of manufacturing. They had three claims. Claims are really the guts of a patent. I read the three claims, what they were claiming that was unique. And I read them, but no one described how to make it. So when I had a call from a big company like Johnson & Johnson, they're interested, and it's not on the market, and there's patents, what do you do? Well, there's a big gap. And that's getting back to your question. I looked at that big hole, even though I found the prior art. It told me what to do next. It told me that I needed to figure out how to make it.

9:09And today, I have 20 patents on that technology. And we've sold hundreds of millions of those labels. And that's why I live up in Lake Tahoe now. Living the dream. Okay, so part of the patent can be like the product design itself, its functionality. But then a separate, even if it's like a very similar thing, if you make it differently, that could qualify for a separate patent? Sure. Okay. What's amazing about patents, you can patent just the concept, okay, or the method of manufacturing, or even how the product could be used. It's amazing. Once you start to dig in, you realize there's so many ways of protecting an idea.

9:45But here's the catch. Companies will license ideas from you without patents. It's not about patents. In fact, what it's about is just a good idea. It doesn't even have to be a great idea. It just needs to be a good idea. Most products that are on the shelf don't have patents. And guess what? Most products go in and out of the market so quick that if you waited for a patent, you might miss the market. So patents are not the answer to it anymore. They're not at all. It's really showing the company a good idea and letting them bring it to markets. The best protection is being first. Okay. And if someone takes it, copies it, my comment is congratulations, you're selling a lot of product for someone to copy you.

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12:59And like I want a place to like hold my coffee like while I'm walking. So we've been through a couple different stroller attachment, cup holder things, a little things that like dangle off of the handle there. So if I wanted to improve upon this or iterate on this somehow, what would be my stuff? So we bought these on Amazon. So we would go to Amazon and see if that particular thing has a patent or, you know, or look at the reviews or what? Perfect. That's a great question. First thing you do is that study the marketplace and read the reviews on Amazon. You'll find something similar and see who's making the products.

13:36See who's who's your competition. OK. And it's really not your competition. It's the companies you're going to show your invention to. So you're looking at them closely. Why is yours different? Why is yours better? Read the comments and then determine, hey, do I want to go forward? Do I have an opportunity? Is mine unique? Okay, perfect. And you decide, yes, mine is unique. Next thing you do, do a Google image search and type in cup holders on strollers. All right. And look around. You'll find a lot of them. But if you find them, just read them. Don't panic. But if you still haven't found yours exactly, bingo.

14:12Okay, there you go. Now you have an opportunity. Do you have to build a prototype before you approach these companies? Like you mentioned, I made up my prototype at Kinko's. I sent it in. It's so easy. You're going to fall out of your chair. Let me tell you how easy this is. No, you don't have to build a prototype. Not yet, anyway. You're going to create a sell sheet. It's a one-page advertisement of your product. and you're going to find someone on Fiverr or Upwork, some 3D computer generated graphic that's living who knows where he's going to look, you know, someplace. He's going to create this sell sheet for you.

14:45He's going to take your sketch on a napkin that you gave him and he's going to make this 3D looks real, like you could order it. And he's going to do that for about 50 bucks. Okay. So now my idea just came to life and you're going to put some benefit statement at the top the big benefit of your idea. Drink coffee while running with the stroller and my child. Yeah, it doesn't leak. It holds a tall iced coffee with no problem. Exactly. And so you're going to put a couple other features it might have. Easy to connect, fits on any stroller, whatever. And then you're going to put your contact information.

15:22That is the number one tool you need. Okay. Because you're selling a benefit. And then I understand, okay, so I'm reaching out to the companies that are already manufacturing these. here is, but what's to stop them from saying, hey, man, thanks for doing our homework for us. Now we have your idea. We don't need you anymore. Companies, because of something that's called open innovation, is that companies are relying on us to submit ideas to them. Now, this has been going on in the toy industry for 70 years, right? They count on toy inventors to submit ideas. In fact, In fact, once you start in that field, they will pester you for ideas.

15:58So they love you. And the minute they take your idea, that starts to get out and the doors shut down. So you're a free resource. They don't mind paying your royalty on a product. Not at all. In fact, they would love to. I interviewed Alex Lee, the president of OXO, the big kitchen company. They have over a thousand products. And he says, look, we love paying royalties. We love paying royalties. because most of our products come from the outside, from people like you. Now, not all companies feel that way. You got to find the companies that are inventor-friendly, right? The real big mega companies forget these guys because they're going to say, look, you need to have a patent.

16:36But the truth be told, you don't need one because it's not about protection. It's about selling. How do you tell if the company is inventor-friendly or not? Depends on how they treat you. If they're really big, big companies just aren't friendly. As a general rule. Yeah. Go to the midsize guys. They will love you. So you build a relationship. You ask them what their process is. Ask them what do they need. And you send them the sell sheet. It's so easy today. Most of these companies have an online submission forms. You don't even have to pick up the phone anymore. First of all, you find the company you like.

17:09And how do you do that? Go down to where your product's going to be selling. If it's going to be selling at Walmart or Target or Toys R Us, Davies R Us, go down there and look at all the products. and find where yours is going to sell. And those are the companies that you're going to reach out to. Now, just to be on the safe side, type in the name of the company, type in complaints and lawsuits and see if they're having any problems. Really simple. Things have changed so much in the last couple of years. You don't even have to call companies up anymore. Go to LinkedIn, type in the name of the company, and you're going to find someone in sales, marketing, a new product development.

17:46Reach out to them, tell them you're a product developer. never say you're an inventor in their minds. They know it and crazy inventors. I know we all are. So send them a quick note. Don't send them a link. Don't tell them who you are and what you've done. It doesn't matter. Just say, look, I'm a product developer. I'd like to submit an idea to your company. What is your process? That's all. And they'll say exactly what they do, who to contact. Now you've got a name. Okay. Right. So now it's not even cold calling. I tell everybody, You don't have to be a salesperson. Your product needs to sell itself.

18:18And it does that with the sell sheet. You're just delivering your idea to companies. You're like the FedEx man. Here's my idea. Here's my idea. Here's my idea. And you do it to as many companies as you can. Okay, that was the next question. Do you cast a really wide net on week one? Or do you say, okay, this is my dream company. I'm going to give them a month to get back to me or just blast it out as far as I can? Blast it out. You don't want to wait because you've protected your idea with the provisional patent application. It's called a PPA. You can file it yourself. And in most situations, it's only$65.

18:54Versus whatever, like tens of thousands to get an actual patent. See, the old way, let me explain why things have changed. The old way, I'm going to build a prototype. I'm going to file expensive patents. And then maybe after about a couple of years, I'm going to contact a company or start my own company you see if anybody wants to buy it. So this is once you have provisional patent applications where you see like patent pending on like every product. Yes. For 65 bucks. Okay. And I wrote a book just on that topic because you have to write one that has perceived ownership. Okay. This doesn't actually give you like any protection, but it kind of gives the perception like, Hey, I'm serious about this.

19:32Oh, it's a great tool. You can put patent pending. No, it's, it's the right thing to do because it gives you one year to investigate to maybe file an additional provisional patent application. Now, it's not a patent. It's a provisional patent application. The USPTO, which that's who you'd file it with electronically, they're not even going to open it up, but it gives you a date. That's what's important is that date. Provisional patent applications is the number one tool of why companies are licensing ideas from people. And I see licensing agreements every week now. There's no patents, not at all.

20:09So that's why this is easy for anybody to do anywhere in the world. You can file a PPA anywhere in the world in the United States. You can submit it to companies online. Easy to do. File a PPA for$65. There you go. Build my sell sheet for 50 bucks. I'm into it. A hundred dollars. Now, confession time. I do not have a patent provisional or otherwise to my name, though I do think Brynn was part of a classified patent for her work a few years ago. But we have been doing a different kind of design work as part of our downstairs remodel that's been happening this spring. That's the interior design variety rather than physical product design.

20:46Now, in this case, you can spend hours and hours on Pinterest, or what we ended up doing was just taking a short class. It was Design a Space You Love, taught by Shea McGee on Masterclass. Brynn and the kids love watching her show, so this was perfect for us. With our new sponsor, Masterclass, you can learn from the best to become your best anytime, anywhere, and at your own pace. There are over 180 classes to pick from, everything from how to make viral videos to the science of better sleep, with new classes added every month. Some exciting instructors include Richard Branson, Sarah Blakely, Malcolm Gladwell, Steve Martin, Chris Voss, and many more.

21:24In the Richard Branson class, for example, which is called Disruptive Entrepreneurship, He's got lessons on how to be a David to an industry Goliath, very applicable to side hustlers, I thought. It focused on differentiation, how are you going to earn media coverage, how are you going to go up against these big guys. And the other lesson I liked was on finding great people, looking beyond the resume, how to narrow down potential candidates. So whether you want to advance your career, whether you want to grow your business, become a better chef, land that book deal or anything else, Masterclass has got you covered.

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22:33Masterclass.com slash hustlepod. And big thanks to Masterclass for sponsoring the show. Just a quick break to thank our sponsor for this episode, Printing Profits. It's the all-new podcast from the print-on-demand experts at Printify. The Printing Profits podcast is jam-packed with practical tips from print-on-demand pros and covers everything you need to start and scale your print-on-demand store. So go check out Printing Profits on your favorite podcast app now. And big thanks to the Printing Profits podcast from Printify for sponsoring the show. A lot of side hustlers suffer from what-if-itis.

23:06What if it doesn't work? What if I don't have the skills? What if I pick the wrong path? But one thing 100 % of our amazing guests have in common is they took their shot. They phased down those what-ifs and they got their answers through taking action. Our partner Shopify helps turn what-ifs into why-nots. Shopify is the commerce platform behind millions of businesses around the world, from household names to the very guests on this show. What if I can't design a website? Shopify's got you with ready-made templates to match your brand style. What if people haven't heard about my brand? Shopify helps you find customers with easy-to-run email and social media campaigns.

23:41And what if I get stuck? you can tap in to Shopify's award-winning 24-7 customer support. Let's turn those dreams into and give them the best shot at success with Shopify. Sign up for your$1 per month trial and start selling today at shopify.com slash side hustle. Go to shopify.com slash side hustle. Shopify.com slash side hustle. This is actually really interesting because we've been talking a lot on the show. one of the hottest side hustles of the past couple of years is the Amazon FBA business, a fulfillment by Amazon, like private labeling. I'm going to find a product that's selling. And if you go back in the archives, Greg Mercer has a really detailed criteria of what he looks for to find a hot moving product and, you know, make some tweak to it.