In the world of aeronautics, the term "augered-in" is a euphomism for "crash and burn" -- as in when the plane hits the ground at a high rate of speed and you fail to survive unless unless you eject. See here if intrigued :)
I used to criticize VCs for essentially putting so much fuel (capital) and pressure on a young business that they would rather blow it up in their effort to see if it scales than carefully feed and craft the business into a successful, albeit smaller, enterprise. As I've matured and come to learn the distinction between a portfolio and an operating business, and the reality of managing financial assets, I have a better appreciation for what VCs do and why they do it -- short version: big returns matter, failing fast matters, and there is such a thing as an acceptable loss -- they want to find the winners quickly, double down, and get their money back. Time value of money and opportunity cost argue convincingly against the slow-grow approach when your business is managing financial assets...
EIP is a little different from a VC in that when our projects auger-in, we generally just terminate our involvement and return all the IP to the inventor. So, yes, the inventor has lost some time, but they've learned a lot at no cost to them, and they can leverage the work we did to either modify the product or to try to commercialize it themselves. Our work is nowhere near as life-changing as recruiting management and employees, and then shutting down the company.
But that doesn't mean when we terminate the project it's any less emotional for the inventor. After all, we teamed up on an objective of market entry and riches and there was an emotional investment by both parties in the product opportunity. So far in our brief existence, we've terminated 7 products. In every case so far, we've run into a major issue that we believe creates an impossible hurdle for a licensee to cross. That is, there wasn't a meaningful patent asset (so why would a licensee pay us anything?) or there were so many interdepencies required (we need this and that and so on), that only a very desperate licensee would take the risk. Or, perhaps the market volumetrics were too small or the design-around risk was too great.
The good news for us is that we're getting better and better at spotting critical risks earlier and earlier. The game we're in requires a lot of at bats in order to get some hits. For us, our goal is to get better and better at seeing the pitches and connecting the bat with the ball. That's great news for our inventors, because the better we get at hitting, the more likely the "surviving" products get on the shelves. For many of them, seeing a product on the shelf is validation and their insight/inventive genius, and the royalties are merely a byproduct.
Another post or two will be coming that details a few of our recent projects that augered in, and why...
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