Looking back, when I started teaching people how to bring their ideas to market without starting a business, I had no idea where it would lead. I just saw a need I could meet. At the inventors groups I attended, I was surprised to discover that most people were failing. They had built expensive works-like looks-like prototypes and filed non-provisional patent applications, but their ideas weren’t any closer to retail. At that point, I had been licensing my ideas for products and collecting royalties in return for many years. After reflecting on my success, I broke my strategy down into ten simple steps and created an educational program with my business partner Andrew Krauss.
If I could do this — with absolutely no formal training and few skills to speak of — so could anyone, we reasoned. And we were right.
Tim Ferriss, who would go on to write the bestselling 4-Hour Workweek and inspire an entire generation to conceive of their lives differently, was one of our first students.
At the time, I wasn’t quite sure what to make of his intense interest. Now I get it.
Ferriss was fascinated by my methods because I had essentially hacked a system. I had broken the mold. I had found a way to bring my ideas to market without starting a business, building perfect prototypes, or filing costly patents.
How? By making simple improvements to existing products and showing those improvements to companies that manufactured similar goods. What did they think? I wanted to know, and quickly. That’s what selling my ideas on the street at art fairs and festivals had taught me.
The truth about the companies you buy products from? They need our ideas. They want to hear from us. Open innovation is thriving globally across a swath of industries because it makes good business sense.
In fact nearly all of the companies I interviewed at Toy Fair in New York City and the International Home + Housewares show in Chicago this year agreed. The time and effort it takes to sort through outside submissions from everyday people and product developers who don’t work for them is worth it, because that’s where their next great idea might come from. Why not look?
Modern technologies have made licensing ideas easier than when I got started. Today, I think product licensing is the ultimate side hustle actually. Why? Because licensing is your ticket to playing the biggest game in the world! All without the financial risk of starting a business, but the same rush of adrenaline, excitement, and uncertainty that accompany launching any new product. Think about it.
Am I a little biased? Sure. Consumer products have always captivated me. The same goes for the concept of passive income. But how can you argue with the following facts?
1. You don’t have to quit your day job to succeed at it — at least not at first anyway. Are you satisfied working for someone else from 9 to 5? If you have dreams and aspirations that are not being met and love being creative, you should consider licensing as a business model. It enables you to leverage the power of large companies to get to market very quickly.
Essentially, you are getting large companies working for you. That may sound overblown, but it’s true. If your licensee is using their marketing, administration, manufacturing and sales people to sell your product and pay you royalties, they are in essence working for you! How cool is that?
My students are able to license their ideas by working in the morning, at lunch, in the evening, and on the weekends.
2. It emphasizes speed to market. In this day and age, speed to market is more important than ever. It’s really one of the only ways to head off copycats at the pass. If you partner with a large company that has a great distribution, retailers won’t stock me-too products that compete with yours.
As a strategy, licensing is all about opening up a dialogue and getting the critical feedback you need to refine your concept into the most marketable product possible. If you innovate alone in a vacuum, you could find yourself wasting years on an idea that ultimately goes nowhere. It happens all the time, unfortunately.
3. It requires little to no financial risk. You can license a simple idea using a sell sheet and perceived ownership. In others words, you don’t need to raise a lot of money to get started, let alone mortgage your home. Benefits are what motivate companies to license an idea. Not prototypes. Not patents.
4. You can work when you want to. Most of us want more flexibility out of our workweek. With licensing, that’s possible. You can study a market, stimulate your creativity, communicate with freelancers from around the world, and contact companies over LinkedIn during any time of the day. How cool is that?
I asked David Fedewa, who recently received a hefty royalty check from one of his licensed products, why he’s so passionate about the licensing lifestyle. (Full disclosure: Before he became inventRight’s Advanced Negotiations coach, Fedewa was my student.) Royalties are typically paid quarterly, but per his agreement, Fedewa received an annual check for this product.
“When my side hustle started paying my mortgage, it changed my life!” he exclaimed. “Developing products and working hard is finally paying off in a way I could not have imagined.”
With other side hustles, Fedewa said, typically the more time you spend at them, the more money you make. There’s a direct relationship between time and money, in other words.
“As far as licensing is concerned, that’s just not the case. If you’re smart, have a decent idea, and can consistently execute, the ratio between the time you put in and what you get paid is not in balance. Granted, it takes to time to learn how to do this. But once you know how to get your product to the right people in the right way, it won’t take you much time at all,” Fedewa said. “The possibilities are endless!”
It’s actually best to do this when you have a day job, and not as a full-time business, he emphasized.
Historically, the go-to-market model taught at the university level and elsewhere is to start a business. Thankfully, that’s changing.
Not everyone has the money, skill, time, or even the desire to start a business. Which is fine! More than fine actually, because licensing is a fantastic alternative.
You can still marvel at the joy of seeing your dream come to life on store shelves. So, what are you waiting for? It’s time to get your side hustle on.
For more on licensing as a side hustle, listen to my interview with Nick Loper on his excellent podcast Side Hustle Nation.
Originally published on Inc.com on April 21st 2017.
