View From The Bridge

The Stockholm Syndrome and Tragic Invention Lock-in

I was surfing around recently and I found this quote from Robert J. Sternberg in an article titled "Creativity as Investment": "Practice in the realm of ideas is what financial investors do in the stock market. They defy the crowd to 'buy low and sell high.' Buying low means pursuing ideas that are unknown, or at least slightly out of favor, but having growth potential. Just as not every stock with a low price-earnings ratio is a good financial investment, neither is every new idea a good creativity investment. Buying low is inherently risky. Selling high means finding buyers for one's work, convincing them of its worth, and moving on to new projects when that work becomes valued and yields a significant return. Analogous to stock market investment success, sometimes creativity fails to occur because a person puts forth ('sells') an idea prematurely or holds an idea so long that it becomes common or obsolete."

For some reason (perhaps the headlines about the kidnapped Austrian?), I was struck by how we at EIP, and inventors in general, can learn a lot from that quote and how important it is to keep perspective and timing in mind when it comes to inventing and new ideas. Just as investors can hold their losers for too long (all sorts of emotional baggage around "I'll sell when it gets back to where I'm even" or "this is a great idea that's just ahead of its momentum curve,") we at EIP need to be thinking about when to fish and when to cut bait. When is a product ahead of its time, when is it past its window, when is it just out of favor but will come around??? And, most importantly, when is it just an average idea that has average odds of success. For these are the real killers in a portfolio as they suck time, money and energy without a chance for a booming return...

Recall my post about the State of Fear as well as my post about The Art of Letting Go. Once we start moving on a project at EIP, two things happen: (1) we begin to turn over more cards and get some facts and data, and (2) we begin to "own" the product and get emotional about it. Just as there is a very fine line between genius and insanity, there is a very fine line between not giving up when all sorts of naysayers and bad research reports are staring you in the face, and recognizing that discretion is the better part of valor and we need to terminate a project rather than throw good money after bad. Sometimes we need to dig in and find a way to charge the hill differently. The idea is still screaming to get out and be a success and we just haven't pulled it out right. And we can't give up (see prior posts on the Importance of Passion).

Other times we need to simply bail out. The danger of getting so close to the product that we begin to love and promote it despite all the evidence that it's a loser is very real and can be debilitating. This is what I mean when I say "Stockholm Syndrome" -- we've been kidnapped by the invention. But we don't see it that way; we see it as our job to defend and explain the product. As the product sponsor and owner, we just don't think the world /understands/ the product and we just need to explain it better. For it's really a good product. Really. Just like a kidnapper is really an OK person who's misunderstood... Really...

The Power of Magic and Elegant Simplicity

I delight in my Chief Product Scout role at EIP. I get to see all sorts of new and crazy stuff just about every day. One of the puzzles I continually try to work out is: "what makes a new product concept just zing right to the top of my priority list?"

We have a finely tuned and honed process of screening at EIP, and before we start sinking any meaningful dollars into a project, it goes through a couple different gates and spin cycles. But before all that happens, it has to get past me. Don't misunderstand, this isn't a God complex post; it's an attempt to distill the learnings of the past 18 months and the past 1500 ideas that I've had the joy and pain of reviewing.

I've concluded there are two ways to jump to the top of the queue and get me so jazzed that I become a zealot in convincing my partners we gotta start the gating process. The first way is what I call "magic" -- you present an invention to me that feels like a magic trick. I just WANT to say "voila" when I demonstrate it to my partners. This requires a prototype (of course), and it requires someone who seriously knows what the hell they're doing. Someone who knows something so complex, or so arcane, or simply so unobvious that no one has ever done it this way before. And it's incredible. It's a frickin' magic trick waiting to be demo'd. A customer that sees this product on a 30-second ad spot just HAS to try this sucker out. Because it's sooooo cool. We've got 2 of those in the portfolio today (and one pending), and I can't wait to show them to you. Think P&G Swiffer -- it just magically makes the dust and dirt JUMP right off the ground and into the Swiffer. Or think the Rabbit screwpull for a wine cork -- how the heck does that work?! These are the products that just bring a smile to my face every morning and every investor meeting.

The other route is what I call elegant simplicity. It's the product you look at and say "Why didn't I think of that!" It's not necessarily obvious, but it's one of those products that you just KNOW you could have thought of if given the right moment of reflection and prodding. And just before you buy the thing and delight in the value/utility/time-saving it provides you, you curse yourself for NOT thinking of it and getting rich and retiring to multiple homes scattered across Paris, Hawaii and Jackson Hole. You need it, you want it, and you know everyone else will buy it. Products I think of in this category include Gladware (uh, CHEAP Tupperware?! now there's an idea it took a genius to think of), Spinbrush (hey, Frank, think we can make a cheap, battery-operated spinning toothbrush?), Uncrustables (Joey, c'mere, check out this PB&J sandwich without any crust! Son-of-a-BITCH, I've been making those for years!), and, of course, the all-time champ: intermittent windshield wipers (Eh, Vinnie, it ain't raining very much, what if we made the wipers PAUSE for a few seconds between swipes?). We've got a few of those in the portfolio too, and I hope you'll find them as fun as we do...

If you're a serial inventor out there, and you have a product that either possesses magic or elegant simplicity, please, make my day and bring them to me.

Early Adopters and Information Cascades

My business partner at EIP, Dave Bayless, is always ahead of the curve on strategy, financial modeling and social networking. One of the things Dave has been educating me and Vandy on is the importance and relevance of information cascades to our long-term success at EIP (and the success of our inventors).

In the world of consumer products, an information cascade is best thought of as word-of-mouth, as propelled by the presence of key influencers in that word-of-mouth flow. For example, if Joe tells you product X is great, and you trust Joe for product guidance, you are more likely to buy product X. But if Jim tells you product X is great, and you just met Jim at a party, the influence Jim has on your future product purchases is less than Joe. HOWEVER, if Jane, who you also just met tells you that product X rocks, and perhaps even Pat tells you that product X is awesome, you're increasingly likely to try product X. That is to say that word-of-mouth, on its own, is not enough to trigger an information cascade -- there must be present some individual with a disproportionate influence on the information sharing and/or the presence of a "herd" that influences you.

In our world at EIP, we need to think hard about the best way to trigger an information cascade in our new products we're bringing to licensees. If we can influence the way a licensee launches and markets a new product, and increase the odds of an information cascade, we increase the odds of success. This is a whole new branch of theory and there is little fact-based experiment upon which to build. But it's an intriguing new area...

So, in the spirit of having some fun and trying to create some information cascades, I'm launching a new blog (my 3rd!) that is all about consumer products that I own and love. I'm an avid consumer product buyer, and I love sharing the great new products I find.

So, check my First Adopter blog out if you get a chance. The first post (at the bottom of course) explains my reasons and rules, and gives you a sense of why this isn't just another gadget blog...

Peer to Patent

It was with incredible joy that I discovered today that some of my late night musings on crowd-sourcing the patent application process (see here and here) are actually well under way at the patent office. There is an initiative in the software world called Peer to Patent that has received a test case approval from the USPTO and is supported by small companies like IBM and Microsoft. It's substantively similar to what I had proposed, and this one is already moving.

This is an awesome step forward, and I'm quite hopeful it will soon be extended to other fields like consumer products. I was a year late with my idea as Beth Noveck had started blogging on the thread last summer and there was even a Wired article...

Go Beth and the USPTO!