Inventing for Money - Step 6
Pitch: Make contact and sell
After making the informed decisions about which companies you want to license your product and creating your pitch kit, it’s time to contact the companies and get your foot in the door.
Before launching your licensee marketing effort it is absolutely critical that you understand the relationship between your product and the marketplace.
This is your mantra:
- My invention provides value.
- Because my invention provides value, people will pay money for it. Therefore, it is a valuable asset.
- Like all valuable assets, it must be licensed only to companies who truly believe it is valuable and will treat it as such in their distribution.
- My licensee needs my invention more than I need the licensee. New products are the lifeblood of every company. Without a continual flow of new products and services, companies grow stale, whither and die. My invention will bring opportunity to the company that can effectively exploit it.
Start at the Top
Nearly all manufacturing companies in America have a top operating officer in the company who is called the chief executive officer (CEO). In most companies, but not all, the CEO is also the corporate president. If you have a relationship with the CEO or executive of the company — either directly or through a relative, friend or some other contact—this is the best way to get your foot in the door.
The job of the CEO is to run the company in a way that is profitable for the shareholders. The CEO does this by delegating nearly all of the operational functions to a small group of senior executives who often further delegate to experts who actually do the work. Among those reporting to the CEO are the chief financial officer, who is responsible for the company’s accounting and financial functions, as well as a number of vice presidents in charge of marketing and sales, operations, manufacturing, information technology, and product development (this could also be R&D or engineering.)
The typical CEO works for twenty-five years or more, often starting at the bottom of the organizational chart and climbing the ladder one rung at a time, with each promotion passing scores of increasingly competent and qualified colleagues.
The road to CEO position is modern Darwinism in its purist form. Only the strongest survive the grueling climb to the top. The key qualities required to survive this ascent up the ladder provide the critical opening for the entrepreneur.
The nearly universal truth about successful CEOs is that almost to a fault, they are friendly people. The CEO’s climb to the top requires an extraordinary range of relationships with subordinates, vendors, customers, clients, colleagues, board members, and shareholders. The socially inept need not apply. The skill of building trust and friendship bonds cannot be faked and it cannot be trained. It has been my observation in working with scores of successful CEOs over the years that the successful CEO is inherently, intuitively, inescapably friendly, and just plain nice to be around. The trait is encoded in their DNA, as sure as hair color (for those that have any left) and shoe size. If you place a call to a CEO or extend your hand in greeting, the successful CEO is genetically incapable of being anything but friendly.
This is not to say that the successful CEO will coddle you or want to be your friend. What you should expect from the CEO or their assistant is a prompt, respectful, and businesslike response. If you don’t get one, it may be a sign that you are approaching a company that is in trouble.
Don’t be shy about using someone else’s introduction. Remember that the company needs you more than you need it and that the person providing a referral will be doing all three of you a favor.
An excellent way to make contact is at industry trade shows. Aside from being places where marketing types congregate to launch new products and compare displays with competitors, trade shows are venues for exchanging business opportunities and discussing deals. Many company executives regularly attend major trade shows to meet with major customers, and are open and often eager at this time to discuss business opportunities, both in terms of sales and purchases.
It’s always best to schedule an appointment prior to the trade show, but if you don’t have a prior appointment, try going up to the booth on the first day and ask the booth manager if there is an executive attending the conference that you could schedule an appointment with to discuss a business opportunity. Leave a business card. Often the first day or two of the trade show are reserved for meeting with major customers and accounts, so be prepared to meet on the afternoon of the second to the last day of the show. For a show that lasts more than two or three days, most executives don’t stick around for the last day.
If you can’t get an introduction to the CEO and the tradeshow timing or executive attendance doesn’t work out, the tried and true method of getting your foot in the door is to proverbially kick it in. The steps are quite simple; however, as in most fine arts, success is often in the execution.
Your first mission is to find out who the proper person in the company is to discuss your product. You want to get access to the highest executive in the company who can make a decision. By sending your design to a low-level employee, the burden is placed on this employee to sell the opportunity to his boss, who must then sell it to her boss, until someone high enough in the organization can make a decision. The likelihood that even a stupendous product will ever survive this tortuous journey up is almost nil.
So it is much better to start at the top with the CEO and enlist his or her help in finding the right person in the company to talk to.
Whether you make contact with a CEO on the phone or at a trade show, it is almost certain that the response will be, “Send me something.” Even if you are granted a personal interview, the CEO may request to see the material in advance so that he or she can be prepared for your meeting.
Here are the basic steps for every approach and pitch.
1. The letter
Write a letter to the CEO and include a couple of 8 x 10 color photos of your prototype. Send the letter by USPS express mail or Federal Express. Tell the CEO that you are a product designer (or whatever you call yourself) and that you have a product that would be perfect for his or her company. Photographs of your prototype are attached and you would like to schedule a meeting with him or her at their office to discuss the possibility of licensing the product. In the letter, inform the CEO that you will follow up by phone in a week or so to set up a meeting, and that you hope that he or she will have time to discuss the opportunity with you. A sample of this letter is attached in the appendix.
The fact that you have addressed the package to the CEO by name and sent it by express mail will ensure that the correspondence will receive special handling and routing in the company mailroom. The letter will likely be hand-delivered to the CEO’s administrative assistant who will open the letter and place it on the executive’s desk or in his basket.
The CEO may or may not read the letter, but will instinctively look at the photos. Your product is now at the top of the company.
The CEO will either be intrigued by the product or indifferent. But in either event, he or she will hand the letter back to the admin assistant and ask that it be routed to the appropriate department (product development, marketing, new business, R&D, legal, etc.) for handling. The job of the CEO is to delegate. Once the admin assistant has their hands on the letter for the second time, you have accomplished your initial mission of finding the right person in the organization to talk to about licensing your product.
Your next step is to follow up by phone with the CEO.
2. The follow-up call
In his autobiography, Lee Iacocca, who is unquestionably one of the great deal makers and sales personalities in the modern era, describes the pre-call anxiety that he would get as a young man having to make telephone calls. Clearly he was able to overcome his shyness.
The key to overcoming any shyness that you might have is to fully believe and internalize the following concept. Repeat this out loud as often as necessary:
"I don’t need the company as much as the company needs me."
Knowledge is power, and since you have the knowledge of this disparity in relationship, you also have the power position in the call.
Call the company’s main number and ask for the CEO by name. One of three things will happen: the admin assistant will answer the phone; you will get the CEO’s voicemail; or the CEO will come on the line. You need to be prepared to handle each of these events.
If the admin assistant answers, ask to speak to the CEO by name. “Is Mr. Iacocca in, please?”
The admin will then screen the call. This is what they have been trained to do over many years of working their way up to the CEO’s desk.
“May I ask who is calling?”
“Yes, my name is Pat Jones. I sent Mr. Iacocca a Federal Express package last week containing photographs of an electric cup holder for possible license by Chrysler. I promised Mr. Iacocca that I would follow up this week by phone. When would it be convenient for me to talk with him?”
“Oh, Mr. Jones, thank you so much for calling, I do remember the package with the photographs.” (Enthusiasm and an excellent memory for details are two of the admin's Darwinian survival skills that advanced her up the ladder to the top.) “Mr. Iacocca reviewed your photographs and forwarded them to our R&D department for further evaluation.”
“Wonderful, who heads that department?”
“Dr. Ann Walker heads our R&D department.”
“Thank you for your kind help, and please thank Mr. Iacocca for the attention to my product.”
If Mr. Iacocca answers the phone, the script will be very similar. “Mr. Iacocca, this is Pat Jones; I sent you an express mail package last week containing a couple of photographs of the electric cup holder for use in Chrysler’s new hybrid minivans. I promised in my transmittal letter that I would call you back this week to follow up. Do you recall seeing it?”
“Oh, Pat, thanks so much for calling [this is his DNA talking], I do have a vague memory of the photographs [probably true; most CEOs are overwhelmed with minutia and if he was busy that day he may have delegated the project before giving it his attention. Remember that his admin is the one who was job-screened for remembering details.] Very interesting idea, can you remind me how it works? [He’s curious now, but Mr. Iacocca has an engineering background and is a little embarrassed that he can’t recall the photographs.]”
“Of course, the cup holder has a flip-down cover and a twelve-volt heating/cooling element that automatically senses whether the drink should be heated or cooled and maintains the cup at a constant temperature.”
“Right, right, very clever. Well, I forwarded the package over to Bill Richards who heads up the hybrid minivan project. I’m sure if there is any interest, someone from legal will be giving you a call.”
“Thank you, Mr. Iacocca.”
The third and more difficult scenario is if you end up in Mr. Iacocca’s voicemail. You can leave a message, but depending on the style of the CEO you may or may not get a call back. Most CEOs always erring on the side of courtesy will ask their admin to either call you back or send you a non-committal letter. In any event, if you leave a voicemail message, you should keep calling back until you talk with someone live.
Assuming that you now have in hand the name of the person who may be able to take action, it is now time for step two.
Call the switchboard and ask for Dr. Walker.
“Dr. Walker, my name is Pat Jones, I just got off the phone with Mr. Iacocca [or “Mr. Iacocca’s office,” if you were referred by his admin—never make anything up] about an electric cup holder design that he reviewed for me. He told me that he has sent the design on to your office for further evaluation. I would like very much to stop by over the next week or so and show you an actual prototype, as well as demonstrate the sensor technology for you. Do you have forty-five minutes or so next week to look at the prototype with me?”
“Oh, hi. I remember the cup holder. I sent the package on to the interior trim manager, Bob Wilkins for a more detailed look.”
It’s time to smile and dial again.
“Mr. Wilkins, my name is Pat Jones. I’m following up after discussing my cup holder design with Mr. Iacocca and Dr. Walker. Dr. Walker told me that you have been assigned responsibility for evaluating my design. Can we get together next week sometime for me to show you the prototype and demonstrate the innovative sensor technology?”
“Mr. Iacocca is in on this? What did you say your name was?” More Darwinism—it’s a tall ladder and Wilkins has a short reach. “Sure, I can meet with you next week. I’ll have my assistant set up a time with you.”
Note that by starting at the top and working your way down, the project drops down the chain only just as low as it needs to go to where someone competent can make a decision on it.
Furthermore, by starting at the top, the approval path has been optimized. The right people in the chain have seen and delegated the materials. Dead-end approval paths have been avoided.
Finally, by starting at the top and dropping down the chain, everyone down the chain feels responsibility for some action, because each received a review action-item from their immediate supervisor.
Since you actually talked to the CEO you can drop his or her name wherever it serves your interest. The farther down the chain gravity takes you, the more valuable the initial contact.
When inventors are passionate, prepared, concise and knowledgeable, they are consistently more compelling than those who lack these qualities. Here are a few tips on how to make your pitch one that will successfully convey your vision and enthusiasm with potential licensees.
- Assume a one-hour time allotment to pitch your idea. Your time allotment may be less be flexible.
- If you must use PowerPoint, keep it short and informative. There is nothing more tedious than listening to someone recite the text that is displayed on a series of PowerPoint slides. A few slides at most to show pictures are all you need.
- Your most important tools are your pictures and your prototype.
- Be very prepared to answer questions about:
- How the invention works
- How it is built
- The patent search that you did
- The application filed and future applications planned
- Know the licensee’s financial health, business prospects for selling the product, probable price point, manufacturing costs, profit margins, and customers.
- Above all - be upbeat and positive! Convey a sense of fun and excitement, in addition to demonstrating your steel-trap mind. The combination is irresistible.
- Welcome questions and be happy to answer them. If the person asking the question hated your idea, they wouldn’t bother asking a question!
Prepare a hands-on demo. The glitzy use of PowerPoint slides and video with music backgrounds is no substitute for your personal demonstration of your invention. You must have a well-built, working prototype, with prints demonstrating its use. If you will be presenting to a group, perhaps a PowerPoint presentation would be useful to show the pictures or charts, but keep it simple.
If you can afford it, carry a spare prototype, in case the bus driver drops and breaks your luggage.
The nature of the demo meeting in large part depends on the company you are visiting and the product you are offering. For example, the cup-holder meeting with Chrysler might take place in a small ten-person conference room with white boards on the walls and a projector on the table. Pat, the inventor, should take two working prototypes, several cups, two 12V battery sources (small transformers with the necessary cables and spares). Pat should also assume that his demo will completely fail due to a power brownout or some other catastrophe in Detroit, and be prepared to talk through the operation of the product using pictures or a simple PowerPoint slide deck.
Prior to going to the meeting you should spend many hours thinking and answering all possible questions about how the invention works, how it is built, the patent search that you did, the application filed, and future applications planned. You should also have done significant research on the licensee’s financial health, business prospects for selling the product, probable price point, manufacturing costs, profit margins and customers.
With this information in hand, you would then be prepared to cut a deal.