Stephen Key was a mentor to Tim Ferriss˳ If you are not familiar with Tim, he wrote two bestselling books, The 4 Hour Work Week and the 4 Hour Body˳ One Simple Idea is a “how to” book on licensing your ideas˳ Licensing is one of the most lucrative business models in the world˳ Think about these companies, Microsoft, Oracle and Apple˳ These companies all license their ideas and make more money per person than 99% of all other companies˳ I am a big fan of Real Estate but if you need to make money with less risk and less capital requirements, then licensing is the way to go˳
Why is this important to me?
Most people are not familiar with the power of licensing and royalty checks˳ This book shows you how to do it and I will expand on the why˳
Why licensing? I have had several businesses and I can tell you that licensing is by far the most lucrative of all˳ When you own the IP (intellectual property), your marginal revenue of the next license sold is infinite˳ That is a very good profit margin by anybody’s standards˳
Inversion is one of the most powerful learning strategies in the world˳ Inversion means to look at the opposite or reverse of something˳ I told you above that Licensing is one of the best models out there˳ Let’s use inversion to show you why˳ When you sell somebody else’s stuff, you are only as good as your next sale˳ This means that no matter what, you have to buy what you sell every time˳ Thus your gross profit can be anywhere from 0% to 50% based on your cost structure and the competition level˳ This is what Wal-Mart does˳ Note that they are the best cost cutters in the world and competing with them head on would be a disaster˳
Let’s suppose you are a consulting or service based company˳ Again, you are only as good as your next consulting gig˳ I know that consultants make a ton of money but for every hour they consult, they lose that hour of opportunity to do something else˳ Thus you are trading hours for dollars˳
One Simple Idea is packed with great information and Stephen’s 10 step plan that shows you how to do it˳ We will touch on a few points˳
First of all, there are two major reasons to license˳ Number 1 is royalty checks˳ You can make money while you sleep˳ Now you are NOT trading dollars for hours because you can be doing something else and still receive checks˳ Number 2 is omnipresence˳ You can do this from anywhere in the world˳ You do not have to be handcuffed to a desk in some vaulted locked building˳ All you need is a computer and ideas˳
Stephen outlines several key factors to being successful at licensing˳ For the sake of time, I will highlight a few of the topics in this review˳
1˳ Look for ideas – You do not have to be Einstein to have a break through idea˳ If you have ever been shopping, then you can come up with ideas˳ The key here is to focus on thins that really annoy you˳ If they annoy you then maybe they annoy others˳ This is a starting point for a new idea˳ Think about problems and come up with solutions˳ This also gives you a reason to go shopping˳
2˳ Prove your idea – The traditional licensing model works like this˳ Find an idea, build an expensive prototype, spend a small fortune for patent protection and hope it sells˳ This is why most people don’t think of licensing as a viable career because the barriers APPEAR too big to bridge˳ Proving your idea before you spend any money is now easy to do˳ Google has built in traffic˳ It is a ready-made platform for idea creation and proof˳ One simple way to do this is to create a video of your idea and ask for feedback˳ You can do this for a few hundred dollars˳ This process alone will save you tons of heartache and money˳ You need to prove the idea before you do anything else˳
3˳ Protect your idea- Contrary to negative belief; most companies do NOT want to steal your idea˳ The traditional way to protect your idea was to submit for patents˳ This is a very expensive endeavor˳ One thing Stephen points out to avoid this is a PPA˳ This is a provisional patent application and costs $110 to submit˳ This gives you Patent Pending status which is all you need for 1 year to prove your idea and get it to market˳ This one concept can pay for this book 5,000 times˳
4˳ Pitch your idea – If you decide to bring your idea to market then you need to be schooled in business˳ This means you need money, management, and accounting, production, sales and marketing˳ Then after you have all this, you need customers˳ This is like a beginner climbing Mount Everest in the winter time˳ The odds all point to your death with this approach˳ Pitching your idea to the big guys is the way to go˳ They have the name brand, infrastructure and distribution channel to hit millions of people NOW˳ Pitching your idea is the best way to go and causes the most fear˳ Everybody hates to cold call but this is required for you to pitch your idea˳ This is much easier than it seems because companies want new ideas and that is the hook for you to get in˳
One Simple Idea is an outstanding guide to help you turn your ideas into a royalty check˳
I hope you have found this short summary useful˳ The key to any new idea is to work it into your daily routine until it becomes habit˳ Habits form in as little as 21 days˳ One thing you can take away from this book is the PPA˳ The biggest obstacle to ideas coming to market is the shear cost of getting protection and the fear of somebody stealing your stuff˳ For $110, you can protect it for one year and if it makes you money then you can protect it longer˳ Remember, in this game, the first to market wins˳
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