Ups and Downs of New Product Development

Ups and Downs of New Product Development

Taking a new product to market is a funny business – full of ups and downs, and most of all – uncertainty.

I’ve always been penned the idea guy. I was always having “aha” moments, and I’d constantly plague my friends with vetting my ideas. Most often they’d say, “no Adam, it’s a horrible idea”, or “don’t quit your day job”. With this one; though, I got all thumbs up. I would not have gone forward to the extent I did if I hadn’t received the positive (and very critical) feedback of my closest friends.

So, upon receiving the positive re-enforcement on the blue skies’ idea, I went forward to build a prototype. Maybe my friends were biased? The positive feedback continued when we exposed the product to absolute strangers at a tradeshow. This was a relief, as it’s always an apprehensive moment when revealing a very personal idea to the general public. The feedback was so good actually, that we immediately picked up licensing discussions with an international company! At this point, everything was absolutely positive. My idea was well received, and the feedback from strangers positive. Now the icing on the cake- an international licensing agreement paying royalties. It was a dream come true! I could finally get that dream RV and motor my family cross-country to see all the sights that my four-year-old could take in.

As I mentioned, the process is full of ups and downs. Licensing discussions progressed. Slow, but sure, they progressed. It all started with the shipment of the prototype to the company’s headquarters. It was there they performed focus group testing, and decided on how they’d enter it into the market. The apprehension was near unbearable. For several months, I waited on the results of the focus group testing. Finally, nearly six months later, I received a head of agreement. An HOA is a starting point for the actual negotiating of the deal itself.

Ups and DownsAmong many things, it outlines the terms, the royalties due, and the level of exclusivity. So, one night while driving back from a day visit with a long-time friend, I received the call from my wife. “Adam, do you want me to read it to you now, or do you want to wait ‘til you get home to read it yourself?” Given I was nearly an hour away still (and couldn’t bear the suspense), I asked her to read it to me. Music to my ears, it was. A 7% royalty on gross sales, international distribution, a non-refundable licensing fee, it was all there. It was as if they were reading my mind. Remember; though, this was the HOA. It wasn’t the formal, legally binding document yet. So, we returned the HOA with a few small revisions, and were told it needed to pass the board’s review.

Ups and downs, ups and downs. The apprehension (and anxiety) began again while we waited on the board to approve the HOA. It was another excruciating six months later when I finally heard back from the CEO of the company. It was a no go. At the time, there was no explanation, just an apology that the board didn’t agree to go forward.

This was more than a year after discussions picked up after the tradeshow visit. My fear at this point was one of IP theft. I’d read that some companies have a product development strategy that involves keeping inventors involved in licensing “discussions”, while all the while paving their own way to commercialization. Remember, there are two very sincere concerns any inventor has, “will I be the first to market”, and “will an overseas company knock off the product?” Here I am dealing with an overseas company. I absolutely thought the worst, so I continued down the road of product development myself to beat them to market. I sincerely thought I was in a race.

At this point we’d formally begun the product development process. We needed to get the product from prototype form to something commercially viable. We found a competent Chinese manufacturer, and began the sampling process. We spent nearly another full year (and a small fortune) in sampling (six different rounds), and finally got it right. We were ready to get it in front of buyers. The first buyer we got it in front of loved it. They were the second biggest interest coming from the trade show, and it made sense to reach out to them.

Ups and Downs

They were (are) a real blessing. They imported our first container directly from China, and they sold it well. They got us on the map. Ups and downs; though, people – ups and downs. Let me explain. Two containers came out of China at that time. One went directly to the U.S. Retailer, the other to me personally (that came to me as part of a licensing deal with our manufacturer). You see, we did end up in a licensing deal. This time with our own manufacturer, who found an interest in selling it themselves (in countries outside of North America). So, here we are with two channels of distribution, one with the U.S. retailer and the other our own e-commerce initiatives. The relationship with the U.S. Retailer was moving along perfectly.

Customer reviews positive, and the product selling well for a new release. Our own e-commerce sales were going at a nice clip too. We had a Today Show spot that gained us some momentum, and we had some traction. Until, that is, we found a product defect. Thank god it didn’t affect the Retailer’s container, only ours. You see, tools can become dull after they’ve been used extensively. Sadly, as our own container came after the Retailer’s, the last of the batch had defects (as a result of the worn milling tools).

Of course, we started our own sales with the product that came off the line last. The one’s that had the largest defects. Translating this issue with the manufacturer was not easy. A genuine trust issue ensued, whereupon they didn’t understand my view, and I sincerely thought they weren’t taking responsibility for the defect. I eventually made a video of the defects, and sent it to them. Thankfully, they did finally take responsibility, and they sent us a whole new batch of replacement parts (at no cost). Sending the parts out to each customer cost us a small fortune, but we were (again) back in business with some real advocates as customers. And with the ups; of course, there are downs. We were (are) in the final phase of arguing our patent.

The patent process is yet another process of high anticipation, apprehension, and anxiety. The patent attorneys are paid to prepare a patent application with broadly sweeping language. They’re geared to get you the largest amount of protection possible. You pay dearly for the service, and they do a great job. The examiners at the Patent office; however, are pre-disposed to say no. It’s their job to argue that a patent is not patentable. If they were to allow a patent that shouldn’t be allowed, they’d be in a lot of trouble. In fairness to them, I understand their view.

Product Development Team

I understand both sides, and see the merit of the process. It is, I can tell you, one of the most exhausting processes one can undertake. You watch the back and forth between your attorney’s and the office examiners, and you constantly wonder if your investment in patent prosecution was a value-added expense for the business. If you go down this road, know that things don’t happen quickly, and that you will likely get angry with your patent attorneys. If you’re like me, you’ll wonder if they’re translating your idea accurately. You are; after all, the inventor and they are hired to translate your idea in such a way (in legalese) that will award a patent. We; though, don’t speak legalese.

Things have a way of coming around full circle? They sure do. Fast forward to today. The CEO of the overseas company has come back into the picture. I finally found out why things didn’t eventuate with them. The entire executive team left. Turns out private equity took over the company, re-aligning priorities (our licensing deal not being one of them). He’s still interested in international distribution. I welcome his involvement, and he’s actually becoming something of a mentor. You never want to burn bridges when angry. As angry as I was with them (and suspicious of their intentions), I never voiced it. Sometimes there’s more to the story, and it pays to have an open mind. Sometimes defeat comes back to present opportunity.

Taking a new product to market certainly has its ups and downs. Its full of uncertainty, and you need to adopt a mindset to be responsive in such a way to accept changes, not defeat. The Marine Corps is famous for its culture of adapt and overcome. The same can be said for new product development (or any new business initiative for that matter). Online business involves collaboration with people, and people aren’t perfect. There will be obstacles, and you’ll need to learn how to overcome them to succeed.

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