ASOTV Licensing
Today (about 3 years ago) was an interesting day in ASOTV licensing. Those of you who know me realize my heart is the educate and inspire inventors to create great new products that can be licensed into the As Seen on TV distribution channel. that goes into mass market retail.
I’ve been at this for about 15 years total and three years ASOTV with serious focus growing this year because I believe it’s the fastest. least expensive way an inventor can make money on a product. even at concept stage. I enjoy the freedom of not having to charge service fees. which gives me peace of mind since I don’t have to charge anyone any money. Most products fail and about 90% of patents issues by the USPTO never see a store shelf so the invention business is not normally a quick or easy path to riches, but it is a path nonetheless.
I have quite a bit of experience in business, in general, and launching my inventor husband’s ideas but sitting on this side of the table is an eye opening and really fun experience. I share the conversations below as a training tool for innovators.
A Tale of Three ASOTV Licensing Discussions
They start bad but end really well.
Let’s call the product, PickThick for training purposes…. This is a “Not So Great” Example for the MANUFACTURE and SELL invention strategy.
We had an initial conversation where a Term Sheet was sent to the Inventor of PickThick. A product already on the market selling in limited distribution.
This is an example of someone who wants to manufacture and sell their product and build a business around it. They’ve experienced some sales success toward that goal.
I know this route well because it was my strategy for our SportsShade Canopy Awning product. You can make more money in the long run, but the path is normally much more costly and difficult than you expect. Having a strong background in business. strong capital reserves and a lot of persistence and tenacity. Access to a pre-established distribution channel and sales teams is a must. Funding product liability insurance, managing increasing manufacturing costs and expenses. protecting profit when faced with aggressive buyers who are trained to gain discount. managing massive vendor shipping requirements and navigating accounting issues are the norm. Not to forget merchandising. It’s one thing to get a product into the store and it’s quite another to merchandise it in a way that makes people buy it. Single product vendors have a difficult time getting inside retail and doing well, once they do.
Pick Thick
Enter… a conversation with the inventor of PickThick. A product seeing some early sales success in limited distribution. We like the item for TV and it makes it through three subjective committee reviews and a due diligence market analysis. We’re ready to contact the inventor and offer a term sheet and licensing agreement with a guaranteed minimum first year royalty of $250,000. If the product tests well, he makes millions in under a year. If it fails, then released from the licensing agreement in under 3 months.
He was a very arrogant and rude man with a giant chip on his shoulder. He said we’re all talking down to him because he’s this very accomplished businessman, which maybe he is???? But…. he’s spouting his relationship with Kevin Herrington from Shark Tank. (Which is the first clue he has no understanding of our industry because everyone inside knows Kevin is mostly selling services now.)
In any case, he seemed peeved that we are all trying so hard to get him on board and gave me a quick, “Don’t call me, I’ll call you. I’m a very busy man.” brushoff… so…. he has our number and I’m not holding my breath. As of July 17, 2016, I checked back with him. He’s selling a whopping $30,000 in revenue a year and missed his window. There are lots of similar products on the market now. It hurts me more then it hurts him I think, because I know how much money we both lost, by the delay.
Furnace Friend
Started off rough but ended really well. It began with him playing coy about his meetings with all the big name buyer (which is almost always a lot more hope, than actual sales opportunity.) Then he went into the “if it makes sense, I’ll entertain it” mantra. Even so, I pressed in and connected with him because I sensed he was a nice man who deep inside knows he needs an opportunity break.
Once the walls came down and I sensed we were having real conversation rather than guarded salesmanship, it really went well. I called from the Will It Launch office and hunted Ed down, then had a three way call, where Ed was stellar and Paul was honest. It ended with Ed agreeing to send the term sheet for Paul to review. Seems like the product, inventor and investor may be a great match. I liked the whole thing and believe the product has a real chance.
write to me at carrie@inventiveideas.com and let’s see if the next winner can come from you!
See you on the shelves!
Carrie Jeske
ASOTV Licensing