Idea Buyer LLC is a new product development company that operates IdeaBuyerDOTcom – an online marketplace for inventors, companies, and universities to sell their intellectual property (patents, trademarks, and copyrights).
Idea Buyer is a marketplace to license and sell patents. Since it’s founding in 2007, it has become the world’s largest marketplace for patents and has processed Billions of Dollars in patent sales.
If you read the popular business books out there, you will notice a common thread uniting almost all of them: the advice to form partnerships. While the value of partnerships is unquestionable, there are certain principles that must be followed if you are to form one. In this article we will elaborate on several key principles that have been proven to lead to long-lasting and mutually beneficial partnerships.
The first principle is honesty. In today’s uncertain world, the value of someone who does what he says and says what he means is enormous. Such people are spoken fondly of by their peers and rewarded with lucrative opportunities that less scrupulous people are passed over for. When it comes to partnerships, honesty is a must. If you hype everything up or overstate your capabilities, how can you expect partners to trust you? The answer is that they won’t, and you will bounce from one short-lived partnership to the next until you learn this vital lesson. Always deliver on your promises! Consider this the bedrock of any long-lasting partnership.
The second principle is timeliness. Business partnerships involve overlapping responsibilities. Both parties expect certain tasks and obligations to be met by the other. Therefore, it is in the best interest of the partnership for both of you to meet your obligations in a timely manner. Few things kill a partnership quicker than a partner who constantly misses deadlines or makes excuses for his lateness. Inventing is a fast-paced world, so there is simply no excuse for this sort of thing. If you want to create partnerships that last, make it your business to meet your obligations when you say you will.
The third principle is to have clearly defined roles. What does each of you expect of the other? A vaguely defined partnership is no help to anyone. It only leads to arguments and confusion over who should be doing what when, in reality, this should be clearly spelled out from the beginning. Fortunately, this is a pretty straightforward matter. Think about why you are partnering with someone in the first place.
Presumably, they have skills that you do not, and vice versa. Therefore, you should decide up front, “Okay, I will take care of ABC, you will take care of XYZ, and we will meet in the middle.”
Another key consideration is to make sure your partnership isn’t a shady “silent partner” type of deal. Hard experience with trial and error, and also sound business theory, reveals this to be a bad idea. Partnerships where one person brings nothing but money tend to fail and disappoint those involved.
Some inventors are so desperate for investment capital or key personnel that they offer irrationally high percentages of future profits for those people to come aboard. In addition to advertising your desperation, this is a mistake for standard business reasons. John T. Reed, Harvard Business School graduate and real estate guru, explains why:
“At Harvard Business School, one of the lessons we learned was that one’s cost of capital was an indication of one’s competence as a businessperson. To put it briefly, if you are paying 50% interest or 50% of your profits to your silent partners, you are an incompetent businessman. Some successful investors would protest that was how they got their start. I don’t doubt it. I know some of them. But it was still a dumb move and the investors in question are lucky such terms did not blow up in their face and ruin their reputations before they got started.”
Reed’s point is that competent partners should not be putting all of their eggs in one basket. Instead, you should aim to form partnerships based on skills and overlapping responsibilities, not just the need for money. No investor should have such an enormous stake in your invention or project. The key principle here is not letting any one partner be in a position to make or break you. When you think about it, this is sound practice no matter what you are getting into.
Above all, your partnership should be founded on respect and compatibility. While the primary reason for partnering up is the success of your invention, it will be pretty hard to work together effectively if you despise the person. For this reason, you should seek out partners who are not only competent and successful but who conduct themselves with integrity and professionalism.
Does all of this seem like a lot to swallow and keep in mind when evaluating a partner? Here is a quick, informal test you can use that covers most of it. Would you invite this person into your home? Would you feel comfortable introducing them to your family? If they have the skills and track record and you can answer “Yes” to those questions, you probably have a solid partner in front of you.
Eric Corl is the Founder and CEO of Idea Buyer, a marketplace for new technology and products that connects inventors with consumer product companies, entrepreneurs, retailers, and manufacturers at Idea Buyer