Stephen Key: Turn Your Ideas Into Goldmines While Other Do The Work

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Pump your profits and make more while doing less. Welcome to Bacon Wrapped Business with Brad Costanzo. Sizzling hot business advice guaranteed to make you fat profits. Every week, our chefs will serve you proven recipes for ramping up your revenue. Now here's your host, Brad Costanzo. Hey there, this is Brad Costanzo, and welcome back to the show. And I got to tell you, I woke up this morning really excited to jump on the phone with my guest today and I could give you a long winded introduction about how happy I am that you choose to spend your time listening to my show. But instead, I kind of want to get into the introduction here if it's all right with you. So today I'm interviewing Stephen Key. I'm going to bring him on in just a second. Now, maybe you've heard of Stephen, maybe you haven't. And if not, after this episode, I guarantee you'll never forget him. Look, if you've been listening to my show for any length of time or you know anything about me, then you'll hear me talk a lot about the power of licensing when it comes to business. Don't let that term licensing scare you. It's not complex, especially when you keep it simple. And as you're about to find out, simple ideas are what today's episode is all about. In fact, if you're anything like me and the idea of a simple business with very few moving parts, fewer employees, and the ability to work from anywhere in the world and earn truly passive income, I mean, this is really one of the true ways to earn passive income without starting off with a fortune. Then today's show is really going to open your eyes. Stephen Key is a successful and award winning inventor, entrepreneur and educator. He's licensed over 20 products in the past 30 years and he holds about 13 patents, maybe more. Steven's products have sold in Walmart, 711 Disney stores and theme parks worldwide and have been endorsed by Michael Jordan and Alex Trebek from Jeopardy. He's the author of a book with a title that I absolutely love. I wish I could have written this title as well myself. One simple idea. Turn your dreams into a licensing gold mine while letting others do the work. For my copywriter friends out there, you'll realize how genius that really is. But he inspires readers in this book to license or rent their ideas to companies from Fortune 500 companies and smaller using a simple 10 step system. Now, Stephen has been on national television shows, many times, magazines, newspapers, and even interviewed by authors such as Tim Ferriss of the Four Hour Workweek and Donnie Deutch of the Big Idea. Andy was a consultant on the first season of the hit ABC show American Inventor, created by Simon Cowell. Maybe you caught an episode or two. And he's also the co founder of Inventright, which we'll talk about a little bit later. A company dedicated to educating inventors, entrepreneurs, or anyone with an idea on the necessary steps to build wealth through licensing. But before we jump into this, I want to let you know up front, this is show is not going to be about inventing. It's not even for inventors. It's specifically for people like myself. Marketers, entrepreneurs, opportune ers. We'll talk about that in a minute. But anybody who loves the concept of capitalizing by connecting the dots, that's kind of a cool statement, capitalizing by connecting the dots. It's one of the things that's led to a lot of my success. And if you're anything like me, you're going to love this. I'm going to take Stephen down a path that I guarantee most other interviewers have not taken him down. They usually talk about the necessary steps to take your own idea or invention to market, but I'm going to take him down the path of, of how do I capitalize and use licensing if the product or idea isn't mine. But I wish to go out and connect the dots to create capital. So to heck with this introduction. You guys want to meet Steven? Let's go. Stephen, are you with me?

Yes, I am, Brad. Thank you very much.

Thank you. As I said, I'm really excited to have you on here and a lot of the folks listening to this, hopefully they've heard of you. I know a lot of people have read your book. I know Tim Ferriss wrote right up on the COVID of your book. A lot of my listeners, including myself, are big fans of Tim. I actually got into the whole world of online marketing because I read the Four Hour Work Week and he talks some really good stuff about you and how you had a good impact on his business as well.

But.

The whole licensing and inventing. What do I want to say? This whole area is just so fascinating for me and I think for my listeners too, because it cuts away all of the necessity to be an expert in every part of business, does it not?

Absolutely it does. Basically licensing, Brad, is where you come up with an idea and you're going to rent it to a company and let them do all the heavy lifting. Let them spend their money, their time, their resources, while you sit back and collect the royalties. It's a perfect partner. It's speed to market today when you have ideas.

I love the fact that you said rent it, because I actually have that on my notes, that if you didn't say I was going to pull it up because it's the best way to describe it because people think that I have product, the only way that I can get paid from product or idea or information is to sell it to the end user. But that's not really true. You can literally rent somebody else the right to use their product that they can make money and then they pay you for the privilege of doing so.

Yes. For full disclosure, one of my early students you had mentioned was Tim Ferriss and probably the most persistent pest I've ever met.

That's great.

And he coined the phrase licensing is like renting an idea. And I love that he did that because he just kind of simplified it. And it should be simplified because it's not complicated whatsoever.

No, it's really not. And I think a lot of people make it sound more complicated, especially if you start to think, oh, licensing, legal agreements, lawyers, etc. But, you know, today we're not going to really get into that. But I also want to preface this with, you know, in a previous episode of Bacon Wrap Business, I interviewed Mitch Axelrod, who is. He's kind of honed his expertise on licensing information, intellectual property, content to businesses. So this doesn't have to be a physical product. This can be an information product. It can be an idea, a process, it can be absolutely anything. The world is really your oyster when it comes to this stuff. And once more, I would love to go into. Go ahead.

I was just going to say thank you for mentioning that because you're absolutely right. You can license a business method, a service, you could license a product or even material. So just about anything that has value, you can license to another company.

You're right. And you know, in my practice, I've got my own consultancy and I take this a little bit different, a different approach than traditional marketing consultants do. As I don't work as a, you know, fee for service, pay me this, that or the other. I usually use very proven marketing campaigns that either myself that I've used and I've come up with and I know they've worked because I've tested them out either on my own business or in other business or in other market segments. And in essence, what I'm doing is I'm licensing the right to use these marketing campaigns in my client's business. So I am being paid a guaranteed amount. Plus I actually put a performance bonus in there. But at any point, if they decide to stop working with me, those, the rights to these campaigns come with me. So it's a, it's an incredible way to just kind of switch the, you know, switch the phrasing and the approach to a service based business into creating a real nice income stream that, hey, even if you use this proven campaign over and over for years and years, you still have to pay me for the right to use it.

Beautiful business model.

Thank you. So today I want to dive go deep into a concept that you brought up on another show, the Art of Charm podcast, which is a friend of mine, Jordan Harbinger, he was a guest on Bacon Wrap Business. He interviewed you. It was an amazing interview and I really do recommend anybody go listen to that, especially in order to get all the fundamentals of licensing, especially as it is deals with products. At the very end of that interview, and I was re listening to it today, you talked about what you believe is really the future or an amazing opportunity, which is being the connector representing different people who either have different ideas or who need different ideas, whether it's artists and people who have design or you know, really anybody else. But if you don't have the idea, you can still make a fortune connecting the dots between who needs this and who has this.

Brad, I think it's better if you don't have the idea, the table that you should do this. Really?

That's great. Why is that?

And that sounds really crazy. I've learned that it doesn't have to be your idea. It could be anybody's idea. In fact, I had mentioned to you earlier that my most successful product that I have licensed and collected royalties for over 10 years was an idea that someone else invented 50 years ago. The problem was they didn't have the expertise or knowledge at the time to figure out how to manufacture it. So I went down that road and figured out how to manufacture it, filed some intellectual property, and that's been a great income stream for me for many, many years and still is today. So I don't think you have to. In fact, I believe in this, the multiplying effect. My father taught me very early on, if you really want to create great wealth, you have to find a way that doesn't require your presence or your hands. And he was absolutely right. And I'm glad you picked up on that, the interview I did earlier, because if I was going to start over, I would do it very differently.

Oh, this is perfect. That is a question on my paper here. How would you do it if you were starting over?

I would do it so differently because a couple things have changed. The first thing has changed. It's called open innovation. Companies around the world have finally realized that maybe they don't have the smartest people working for them. So they've opened their doors to look at outside ideas from anybody. That means most those doors are swinging wide open for anybody that has an idea, they want to see it. That has created a remarkable opportunity. So now you can get into just about any company. Number two, if they're looking for ideas, how do you feed that monster? Now, you can try to come up with ideas yourself, but I'm not a very creative guy. But I know there's a lot of very brilliant creative people out there. I've met them at some of the top design schools in the country. They pay a lot of money to be creative, and they have ideas that are just absolutely brilliant, but they don't do anything with them.

So when you say the design schools, are we talking art design and what kind of design? Just for a little bit of clarification there.

No. Wonderful. It was a surprise to me how many different areas there are in design. I didn't so many disciplines of design. But there's a school down in Pasadena that I went to. It's called the Art Center. And I showed up one day and I was invited to go down there to give a talk about licensing. And I walked in their gallery and it had. All the students had their projects there for everybody to see for the semester. It was remarkable. They had. People were designing new shoes, new motorcycles, characters, everything you can think about, people had designs for. And they were such. It just blew my mind, the talent. And I asked the professor later that day, I said, what are all these students doing with these ideas? He said, well, Steve, they throw them away. Wow. And I was like, well, are you teaching licensing? And he was like, well, no, that's why you're here. I thought, well, this is crazy. I said, well, what are the options that they have now? I said, well, two, either get a job working for somebody else or start their own business.

Right? And one thing we probably all know about a lot of really creative artistic folk is that that's very right brain. And starting a business is very left brain. And a lot of the most artistic people in the world are not the suited, you know, Entrepreneurs, business people, managers. So they pro. And they realize that about themselves. And I'm generalizing here, but. And that probably shuts them down from ever thinking that there is a market for their creative work.

You're absolutely right. Most creative people want to stay creative. So what I kept on. It kept on dawning to me. If I was going to start over, I would build a network of these highly skilled professional product developers, and I would build a network with those guys. I would contact all those companies that are looking for ideas, build relationships with those guys, and say, look, I'm going to keep feeding you ideas from the top talent of the country. Now, all I ask for you is tell me what direction we should create in what are you looking for? Build that relationship. And then I'd bring the two together. So that multiplying effect of having all those companies now the top talent, all I do is put the two together and take a piece of that income.

That's great. So, and it's really, it's not rocket science. It's. You're meeting, you know, supply with demand. And I mentioned this in the intro. I've got a principle. I always espouse both on the show with my clients in my life. And it's how I solve a lot of business challenges is with these, I guess, three and a half questions, which is, who else? Who else needs what I have and who else has what I need? So if that's website, who else has the website traffic that can be sent to my product? Or who else has a product that I can send my website traffic to? As a real basic example, who else has a distribution channel? Who else has a product? Who else has anything? Who else has what I need and who else needs what I have? The what if question is the next one. What if? And this is the brainstorming. What if we do this? What if we do that? What if I let them sell my product? What if I let them give my product or information away for a small fee? What if I do this? And then is there any. The last question is, why not? Is there any reason that this would not work as a win for the customer, a win for my partner, and a win for me? And that's really what we're doing here, is you are saying, okay, who else, you know, needs what these designers have? Well, there's a lot of businesses out there. And who else has what they need? Well, you know, these, these designers and artists and everybody else.

So would you.

Okay, let's say somebody is like, dude, I am sold. This is I'm scrapping everything. This is the direction I'm going. Would you start to approach the. The companies first, or would you start to build those relationships with the designers first? Now, granted, you can. Nothing stops you from doing both simultaneously. But if you were to approach it, what steps would you take first?

You could do either one. Right? It doesn't matter. Okay. Those companies are going to want to work with you. And I'll tell you the reason why. It's. You're providing a service that's absolutely free.

That's true.

So they're not going to say no.

No, you're a scout. It's, you know, you're, in essence, you're a talent scout for them, but you're an IP scout.

Yes, you are. So they're not going to say no. I think the trick is I would build those relationships and be able to leverage those relationships with my designers, saying, these companies are looking for ideas. Now, those designers are going to get. They're going to get pretty excited about it because now they have a door in. They don't have to deal with them. They don't have to worry about contracts. You can handle all that. All they need to worry about is, hey, this is pretty exciting. Do I have the next idea for P and G or. Or General Electric, who knows who? Right? So they're going to be extremely motivated. If you go to the designers and set that up first, and then you go back to these companies and say, look, I got the top talent in the country, they're going to be excited about that, too.

Right.

It's absolutely free. So it's going to be hand in hand. And if I. If I was going to start, I'd build a website and I would put those nice big logos of all those companies looking for ideas that I establish relationships with.

That's great.

And you would be flooded with people that are creative that want you to represent them. So this is something. I'm surprised more people haven't caught on about this. So it's this perfect situation that's happening at the moment, and it's. I would. If I was going to start over, I would build a team of designers, a team of a list of companies that I'm working with, and just ask them, what are you guys looking for? And then I would send that. That information out to my designer and said, all right, you guys, here's your assignment. Let's go.

Yeah. You know what? You know what's great about. There's two points I want to bring up. That's Great about that. Number one, you. I guess the first thing that people think of is, okay, I don't have to have the idea, but I have to recognize. I just have to be able to recognize a great idea or recognize the opportunity. But what you just said even removes the necessity to be able to recognize a great opportunity. Because if you've got open dialogue with both sides, like the companies, they tell you specifically what they're looking for, it's almost like they're giving you a shopping list. Like, this is what we want, this is what we'll pay for. This is what fits into our company culture.

And they would give that assignment to even their in house product developers, right? So they're telling you what their, their marketing departments are saying. Look, this is, this is an area we want to, we want to develop products in. And you're just, you're just managing the system a little bit for them. You're making it easy. I wouldn't screen it at all. In fact, the only opinion that really matters, you know, a lot of people ask me, look, how do I know if I have a good idea? Well, you don't. The only people that really do know, and they don't even know is the company you're going to license it to. So I wouldn't screen it at all. I'd give them an assignment, let them start submitting it. What I like about this though, Brad, you don't really have to do any of the work. You have to understand prototypes, you have to understand sell sheets. You have to understand the process and you put that responsibility onto your designers.

I like that.

See, this is what I need from you to make a presentation that's beautiful and that's really simple. It's a one page sell sheet. Show me the benefits. Maybe a little video, maybe a prototype, maybe file a provisional patent application, which you can do for $65. You give them all the tools of what you need to make a presentation. So you put all the work on them and then you start feeding these companies with those ideas.

That's even better because I would bet that a listener right now is thinking, oh man. But I've got to be an expert in sales sheets and this, that and the other. No, you have to know, you don't have to build them, you just have to know what these companies want. And then like you just said, tell them, this is what I need from you. Once you give this to me, I will open the door, walk through it with you, and see if we can make this happen. And when it comes to the legal side, there's a million IP attorneys out there and there's a million resources. You don't have to be an expert in any of those areas as long as you know how to find the experts that can help you.

It's so simple when you think about it. You're going to submit an idea. If they take it, they're going to pay a royalty for that idea every time they sell one in the marketplace. It's really that simple. Okay, go ahead.

No, I was going to say I kind of know the answer to this, but I'm teeing it up. So for folks who aren't really familiar with the licensing concept, the average licensing royalty totally depends upon. I mean, it depends upon what you're licensing, the market for it. Every deal is negotiable, so there's no set fee. But typically, what do you see, like between 4,5% on the low end. And I mean, on the low end you could even get 1% or something if the volume is high enough. But, you know, maybe. Would you say like 4 to 15% is probably the general range for mainstream licensing deals?

Yeah, for. Basically, yes. For product licensing, you're probably talking. You're right about the volumes. It's always volumes. Right. So it's probably between three and five. Very rarely does it go over seven.

And that's. And that's of gross sales or.

That's absolutely right. Yep. And. Well, it's really the wholesale price. They're going.

The wholesale price. That's right.

Yeah, it's a wholesale price. And of course there's some things that they deduct from it, but it's pretty standard. You could also have a standard licensing agreement drafted up so you don't have to renegotiate every single time at different terms. It's really quite simple. Once you do it once, you can do it a million times. Licensing, once you learn that skill too, you could help other companies, research universities, you could help them. There's so many companies that have IP intellectual property that they're not going to use.

Oh, yeah. I mean, didn't Google really. That came out of University of Illinois, if I'm not mistaken? And I believe they may have either owned the IP originally, and I don't remember the exact story about this, but I know that it was developed on campus.

There's so many research universities and I've reached out to a few of them just to ask their process, how do they license their, their ideas? And it's very haphazard. I was surprised, maybe not all of them. But the ones I called, they just, in my opinion, didn't know how to pitch it. They didn't. Two things they didn't realize how to reach out to a potential licensee and then the art of the pitch. So someone with these type of skills, once you get involved, you could reach out to universities, other companies that have IP and just be the connector. And that's what I like about it. And your income stream is there's no limit to it.

No, you're right. I mean, because the world at that point really is your oyster when it comes to the connectors share of this. So let's do an example. Let's say you find me and I'm a designer and I've got design for a new widget and you have a great relationship with another company who wants that widget and they're willing to spend, I mean, they're willing to pay 5% royalty on the wholesale price to the inventor. But as the, in essence, the licensing agent, which is what you are at this point, what is a typical and once more beautiful part about licensing is it's all negotiable. But what do you typically see as the cut for the licensing agent of that fee?

I would start 50. 50.

Okay.

And the reason why it sounds a little high, but it really isn't. You say, look, I would approach it this way. I am going to have an exclusive on your idea. I'm going to represent your idea with my team of, with companies, my relationships, and give me six to seven months to cut a deal. And if I cannot cut a deal, it's all yours. No harm, no foul. You take no ownership of it, give himself a certain length of time, and if you can do it, fantastic. If not, here you go, it's yours again. You go ahead and you try it. Most people that are creative, once they see that the system works, all they do is be creative, feed you ideas, and you feed them to the companies. And so it's a multiplying effect for everybody.

No, you're right. And the nice part about licensing, you know this. Well, some of the listeners may not, but the way a lot of these deals work is that it's not just, oh, you get paid. When we get paid, oftentimes there is a guarantee and then a percentage of that guarantee is paid up front for, you know, and it all depends upon, you know, what you're doing and who you're working with, et cetera. But I mean, you could get a, you could get a large chunk of cash up front. Just for the rights to use this as the.

I do it a little bit differently because that's usually top loading a deal. And some companies push back on that. I understand. The smart companies do anyway, so I always tell them, look, you're absolutely right to. From your perspective, if you're going to give someone an exclusive with an idea, there's minimum guarantees. It's a performance clause. If I'm going to give you an exclusive rights, you have to guarantee me X amount of sales a year, basically. So you've got a guarantee and if they don't perform or for some reason it doesn't sell well, or maybe change of management, you get it back. That's how it protects everybody. Minimum guarantees is one of the greatest tools for independent product developers. It's wonderful. The second part, I never ask for money up front. What I do though, I do ask, I say, look, instead of a licensing fee, why don't you help pay for the intellectual property, the patents.

Ah, that's great.

Yeah.

Because those, those can be very expensive.

They sure can. And especially if you've got a good idea, there's going to be multiple, probably patents, there's maybe international patents being filed. They could, it could add up to a lot of money. And if, and this has happened to me before, I've licensed it to a company sold for, you know, four or five years, change of management, they want to do something else. They don't hit their minimum guarantees. They paid for all my patents and guess what? They gave it back and I licensed it to another company again.

That's beautiful. That's beautiful. And you know, the other beautiful part about this is that depending, this is totally dependent upon what you're doing, you may license this idea, product or piece of intellectual property to a company in one industry and maybe you've got an exclusive on that industry. Depending on what it is, you may negotiate. Okay, well, but I can also license it to this industry or I can also license it over here. So you can have once more. Yeah. Multiple ways to skin that cap. And it's really all negotiable. It's up to your imagination of, you know, what's possible.

What's wonderful about that, the one product that I've mentioned, I was able to license it to different categories. It's a rotating label, it's in the packaging industry. So I can license it to someone in liquor, license to someone in soda, spices, food, pharmacy.

Nice. Now I know a little. I want you to back up and just explain what that is. I'm familiar with it's the Spinformation, right? Is that what you called it? Yes, Accudiol or something of that nature.

Yeah, it started out. It's basically. It's really simple. It's just two labels on container, and the base label has information, and the top label has a window that when you spin the top label, it reveals more information on the base label. It's two labels in one base. It's a very clever way of just delivering more information for maybe multiple languages, drug facts, warnings, games, coupons, things like that. To give you an example, people are always like, well, the label industry, well, you know, it's consumables. One of the top companies, of course, in the country, Coca Cola, they do a billion Cokes a day. So not all of them are that large. I had licensed it to a company, Rexell Sundown, when I first started, and they did. That was a small company and they had it on two production lines. Their total production lines were 13, but they had it on two, and they did 50 million labels for me a year, that was a quarter of a million dollars just for one account.

Wow. And you didn't. The nice part, you didn't have to do any of the business that you had the idea, you built the relationship, you signed the agreement, you cash the checks.

Absolutely.

That's really what's so exciting about this.

Well, better yet, it wasn't even my idea.

Is this the one you said that you had found the idea elsewhere and somebody else had not capitalized and monetized it and you.

I'll tell you, I thought finally I had this great idea, I'm not that creative. And my attorneys were. They kind of questioned it because they knew I wasn't that talented. But they did some research and they realized, hey, Steve, maybe you were the first one. Well, I found out a little bit later, no, someone else had invented it. And everybody told me to kind of do something else. But when I read the patent, there was no method of manufacturing, and better yet, no one had ever produced it on the market. So I just figured out how to manufacture it and then started licensing to every company I could possibly find.

That's great. Now, how hard was it to get in the door and find companies in order to license it?

Well, this was a few years ago, so it was a little bit more difficult. But it's not that hard today with LinkedIn, today with companies looking for ideas, with open innovation, it's easy now. Now, getting into a Coca Cola might be a little bit more difficult. And I tell everybody, if you've got an idea for someone that large, go through their ad agency because number one, they're going to pick up their phone because they sell, right?

Yeah.

And number two, they're almost obligated to show any creative idea to their client.

That's, that's perfect. I love that.

Yeah.

Because they're obligated, they have to show it. They already trust their ad agency. So you're kind of going in a side door.

So. Yeah, you're going on a very high level door. That's, that's the difference too. Right.

And, and then approaching, approaching them. Do you typically like if you were approaching an ad agency or you know, the company, and I am also setting you up. I do know that you teach people how to do all this stuff and we're gonna. So if you're sitting here listening, oh man, you're not giving enough information. I don't know how to do it. We're gonna give you resources from Steven to go out and learn how to do this, you know, step by step or even help, you know, Stephen and his team hold your hand. But in general, do, do you send a mail, do you do a cold call? Do you try to get an introduction? What, what have you found is kind of the best way for John Q. Public to do this?

Well, first of all, let's talk about the ad agencies because that's really quite simple. I, I'm always a little bit, I do a little kind of quiet. You know, I would call up an ad agency, maybe speak to some low level account executive and just say, look, I'm a product developer and I've got a packaging innovation that maybe, maybe just one of your clients might be interested in. Now, I've already done my research and I know that Coke is their client. Say that. Right?

You can play a little bit of like Columbo.

You have to. And it works. So he's intrigued. So you send him over to a website, you send him a sell sheet. He looks at it and they're like, wow, this is, this is kind of interesting. And then I'll send a sample and they'll see that before you know it, they get all excited about it and then they start opening the door. So I do it very. Not under the. I just keep a very low profile. Right, Sure. I don't try to oversell it. I think people like to be surprised kind of. So if you're going to call now, let's say you want to call directly to a company. That's really simple. I would pick up the phone and of course I'm going to reach the operator. And that's your best friend. Don't forget it, everybody. Yeah. Because they're going to help you. And if you're very polite. That's one thing I learned from my mentor early on, is that be polite to everyone going up because you're going to probably meet them coming back down sometimes.

That's true.

Okay, so you get in with the gatekeeper, you say, hi, I'm a product developer. Never say, you're an inventor, right?

Yeah, inventor. Because it's like, oh, gosh, some guy from his. In his garage has got some crazy idea.

It's true. Oh, yeah, it really works. Well, if you're going after a PR piece, being an inventor, they love that. Or at a dinner party. Yes. But never to accompany your product developer. They have product developers. They know what they are. And I just say, hey, hi, my name is Stephen Key. I'm with Stephen Key Design. I'm a product developer, and I would like to start some submitting ideas to your company. Now, they don't know what to do with that.

That's a good point.

And I know that. So there's a couple departments I know I don't want to start with. One of them is legal. So if they mention something going to the legal department, you say, you know, that's not really the right place. So you guide them to someone in the marketing department. If you have a new hammer, you might say, gee, I have an idea for a small tool such as a hammer. Can I speak to the project manager? Small tools, and they'll connect me or. But those people are a little hard to get to as well. So you can always ask for someone in sales because guess what? They always pick up their phone.

That's a good point.

Yeah. And so if a salesperson likes it, he just doesn't care where an idea comes from. He just wants to sell. So you show him an idea and he might be that person that's going to champion your idea. He might see it and go, you know, this is fantastic. I sell this to all my customers. He might run in and show it to. Who knows who he's going to show it to. And he could get it in there for you as well.

I love it. Now, if you are. This is now just a small twist in the languaging. When you're introducing yourself, if you're acting as an agent on somebody else's behalf, do you introduce yourself as an agent or do you introduce yourself as the product developer?

You just might say, look, I represent product developers and we'd like to start working with your company. Submitting ideas.

Yeah, easy.

It's really quite simple and most people are not going to be prepared for that call and I know that, so I know who I need to get to. But also some companies are, today you could go online, they've got things to fill out, which is kind of a black hole. But you need to kind of, you need to still make those calls. LinkedIn, if you have a name, that's even faster. If you can drop a name, you can get there so much quicker. So there's all these different ways, but companies in some industries, they have a new product submission division and they've got a person there waiting to receive those ideas. That's how crazy it is.

They're waiting for the ideas and they can't have enough of them. That's what they feed on. Okay, so now the. I would imagine the typical response is, but there's so many companies out there, where do I start? It's almost like going to the Cheesecake Factory and looking at their menu and going, this is an 80 page menu. I don't even know where to begin.

That's actually a wonderful question. What I do, I would go down to a store that you think this particular product would sell well in.

Okay.

And let's say, you know, I want this to be in Walmart, so I go down to Walmart and I find the aisle that this particular product would, would be on and then I draw this big circle, big target and I call all those companies that are in that spot. So for instance, so let's say I have a hammer innovation. I go down to Home Depot and I, I find all the hammers. I look at them all there and I write down all their names. Those are the companies I target now. But realize this, the large companies don't really need the help. Right? I mean they have a terrible attitude and they've got the business, so they're a little bit tougher. Right. They only really bend when you're biting into their business a little bit.

Right.

The small guy's too small, basically. You find that mid level guy. I call everybody, by the way, but I just know that I'm going to find that, that mid sized company that wants to be number one. They want to be hungry, they're willing to take a risk. Those guys, you love them.

Oh yeah. Find number two and number three because they're striving to get up to number one.

Absolutely.

That's great. And you know, it's Really? I guess that simple. You don't have to just open up the, I don't know, not yellow pages, but you don't just have to start dialing every company. Go find out, okay, who do you represent? What kind of ideas do you have? Who else is already selling ideas similar to that? And then call them up because the one thing you know, you know they're capitalizing on that.

You could also. Today it's a little easier too. You can do a Google product search and become an expert in a micro category.

Okay.

Because you could go there and say, look, I want to look up, you know, barbecue spatulas. And I could see every barbecue spatula that's ever made. And they, you know, then I could dig a little deeper and they'll have the spec and have the manufacturer, all that stuff, it's all there. So, you know, within a couple hours you can be an expert in the field. That's what's really amazing about today, the research ability. And I love that because today it's all about speed. Right? And that's why licensing is so exciting to me is today it's really not. It's not about starting the company and building your way to the top. To me, it's about finding that partner that has everything in place, making that connection. And then it's speed to market. And that's your best protection ever.

Oh yeah. I mean, money loves speed. And there's so many ideas. I mean, I had one where, you know, years ago, I saw it on TV after I had this great idea. I had no idea what to do with it, but I was really excited about it. I was like, ah, this is way too complex. This is, you know, when I was in my early twenties, way too complex for me to, to try to do something. I'm just going to go back to my cubicle and work. And that's such a depressing thought when you realize that, hey, guess what, there are other ways to capitalize on this. People need these ideas. 5% of a big number. If somebody's selling 10 million, $100 million worth of something, that's an extreme. But 5%, that's a really, you can get really rich off 5% numbers.

We have one student of ours that came up with this great organization tool and it's one of the top sellers in the Apple stores and he has 200 SKUs. He was able to take that same idea and apply it to all these different types of the ways they use it.

Is it an app or is it.

Something it's an organizer? No, actually, it's called Cocoon. It's one of those designers again. Right. He. He has a background in industrial design. He went to the Art center, too, and he came up with this little way of organizing things for your. Your purse or your backpack or your suitcase. You name it. It just has elastic bands, and you just put things in it. It's very simple.

Oh, wow.

And it's everywhere. I've seen ideas. I'm very fortunate because of working with a lot of students over the years, that I see some remarkable ideas, but I also see some of the dumbest ideas you've ever seen.

I believe it.

And I scratch my head thinking, never in a million years are they going to license those ideas. And when they do, I'm always shocked. It's not an amazing world.

And it also has to. It shocks you, but it also has to really excite you about the field. Because even if the dumbest ideas in the world can get licensed and create cash flow for somebody, that means that a good idea has a hundred times better shot at doing that.

I don't think it has to be an A idea. I think it would be A, B and C. And I've seen it. So we always bring on students at times, and we let them talk about their experience. And when you listen to them, you realize, well, they're not great salespeople, and they don't have any special skills, but they came up with an idea and they sent it to a company, and now they got a licensing deal. And. And most people end up scratching their heads about it. Like, how did he do that? It's not complicated. You do have to get off the couch, Brad. That's the deal.

That's great. What do you think? Are some of the markets or are there any markets that you see as being hotter than others? So there's. We talk about various different things in this conversation.

All right, that's another great question. The pet industry, it's on fire. It's been on fire for years. People love their pets. They're always going to feed their pets before they pay their mortgage.

Yep, couldn't agree more.

Yeah, that's a great industry. I would say kitchen gadgets is also.

Oh, yeah, always a really good one.

Well, that's because I think in the last couple years, people have been staying home a little bit. So kitchen gadgets, do it yourself. Same thing with the economy. People are doing more themselves. That's really popular. Hardware, of course. Novelty gift. That was an industry I was in for years. That's kind of a goofy industry, but because it's seasonal, it's a huge demand. If you're creative and like stupid, fun, dumb ideas, they will love you to death. That's a great industry to be in as well. Toy industry is a little competitive. There's some really smart, creative people in that space. There's only a few really big companies now, so it's a little bit difficult to get to those guys. You have to go through toy brokers, which is. You can still do it, but it takes a lot of past knowledge on what has been done.

Makes sense.

Packaging industry is a little bit difficult. I wouldn't recommend anybody to go into that without a background and machinery of how these things are made, because at the end of the day, it's hard to change equipment because it's so large. The volumes are so large that it's all scaling up. So it takes a certain person with a certain expertise to win in that category. Okay. So it's just. It's fun. You never know. I think, of course, apps is on fire. I mean, I always thought, do we need another app? Yes, we do. And that's never going to end. So it's, I think, opportunities wide open for anybody. That's why I would build a network. If I was going to be in the kitchen category, I would know all the companies in the kitchen category that are looking for ideas. So I'd have, like, 20 companies, personal relationships, and then I'd get all the top designers. Right. About 20 of them, and say, all right, we're going to win in the kitchen category here, guys. And these are what these guys are looking for. Let's keep on feeding them.

What do you guys got that's beautiful now, kind of reversing back in the beginning, you talked about how you went to, I think it was something in Pasadena or an art design school, et cetera. What are some other places to find some of these great product designers that folks may not know about?

The Art Center? There's quite a few of them. They're worldwide, and it's very expensive. I think it's a couple hundred thousand dollars to go to in two years.

Okay. Wow. So these are pretty talented. And resources.

They're the best.

So if you do nothing else but going to the Art center and finding. And it's not just people who are making paintings. Right. It's people who are designing all types of things.

Yeah, they do. There's like seven disciplines of design.

That's great.

And I would tap into all of them and just they have an alumni in fact, I've spoke at their alumni association out in New York. They still are very. A lot of organizations are very. They support their. Their. The trade association supports their members. So I tap into all the alumni. Most of those alumni now have design studios firms, and they all have ideas, too.

Yeah, I imagine.

And those guys are sick and tired of designing products for other people and not collecting royalties. That's why I tap into all those guys.

So you tap in, you start off the. And it's easy enough to start off the beginning relationship. And then what do you. How do you offer to build. Get the relationships with the designers? Do you come in and try to meet with. Whether it's a class or, you know, what's kind of the step right there?

Yeah, I would. I would probably. I'd probably meet with the professor first.

Okay.

Teachers. And say, look, I'm looking for some of your top talent here to show them an opportunity and build a relationship with that first. And that person might be able to feed you every year. New, new talent coming up. Right?

Yeah.

So I would do that. I'd also go back to some of the design firms and maybe start with some of the smaller ones first. Build a relationship with the owner and say, hey, do you guys have any ideas laying around? Do you like me to push uphill for you? Of course they're going to say, yes. Build a relationship with those guys, too. You might realize you might need two or three of these design guys behind you to really make a difference. These guys are fast. The thing I like about when it's at this level, their prototypes look beautiful. Oh. Imagine they're gorgeous. And they've been taught to not so much invent, but to innovate. And that's a very big distinction, because you don't have to invent something new that's very hard to bring to market. But if you innovate, make an improvement on a small. On a product that already exists. And that's what they do.

Yeah. That's where the real money is. Because you don't have to convince somebody that there is a market for this. You just built a better mousetrap.

You got it. And those guys are. They're trained to do that through observation. Yeah.

Yeah. And that's. I love this because it really is like, that's not one of my. That's not one of my strengths. So I remember when I read One Simple Idea, and I thought about this for a while, I'm like, I really consider myself a creative guy, but when it comes down to thinking about how to improve this, you know, whatever. I'm looking at a dog collar sitting in front of me like, how do I improve this dog collar? I don't know. And I go off to thinking about something else. But somebody does, and somebody's probably improve that dog collar. He just doesn't have a market for it. He doesn't know what to do.

Yeah, my background, you know, I started and I went to college, studied economics, hated every minute of it, and became an artist. You know, I loved working with my hands, but I wasn't that creative. It just, I loved it. But I could tell there's people that were really, really good at this. But where my strength was, I found a creative way to get into companies, a creative way to build those relationships, a creative way to bring it to market. And that's where my, I think my skills came with. But my ideas were never that great. But I ended up licensing tons of stuff and making a very good living. But I'm an amateur at best.

And the fact that you've had so much success being an amateur at best, I mean, it's really encouraging to anybody out there. You know, one of the, or two of the things that kind of came to just sprung to my mind with licensing, different opportunities. Well, first of all, this isn't even an opportunity. It's just kind of for folks having a hard time really wrapping their mind around this. One of the oldest industries ever, publishing is nothing more than a licensing agreement. You're licensing content from an author and you're paying them, I mean, a really good publishing deal, 10 to 15% royalty on your book on a really big mainstream publisher. But they're, in essence, they're paying you for the. Right, they're renting, you know, your, your, your information because they have a, they have the distribution, they have the, the people, they have the ins with everybody else. Versus, you know, in the past, if you were to self publish, you're kind of sitting there going, now what do I do now? Granted, the whole publishing world has been turned on its head from self publishing. I've published eight bestsellers, My People's Things. And Stephen, one of the things that I did just in licensing information, I call this a reverse ghost writing deal. But I had an idea for a book and I wrote the book and I wrote it in the author's kind of their voice because I knew, okay, this was a great, catchy title and I have an idea for what it should be. So I kind of, I wrote it, I had it edited, and I had it Improved. And then I licensed the author's name and I leveraged their distribution channel. So as opposed to the author going, an expert going, I'm going to hire somebody to ghost write a book for me and I'll just pay them a fee or I'll pay them, you know, 10% of whatever I make. I was like, no, screw that, I have the content. I just need somebody else's name on this. And what they got is they got a best selling book because they promoted it to their big following. And I own 80% of the royal of the, I own the, I'm sorry, I own the copyright on it and I pay them like I don't know, 20% royalty. They did nothing. But they get the benefit of a best selling book.

That is absolutely fantastic. Thanks. You know what that is? That's creating for the marketplace and that's really smart because I talk a little bit about that, of course. But you found an opportunity. You found someone that had the great distribution, you were able to use their voice, content. I think it's brilliant. And that's why I'm saying don't ever just try to pull an idea out of your head.

No, you know what I did right after that? Sorry to over talk, but what I did right after that is I said, okay, how can I make this easier? So I found another friend who had tried to publish a book on, or a series of books on Amazon. These were actually recipe books. And he was a nobody, absolutely nobody. And he realized that, okay, this is harder than it looks. You can get it, you can get the book published, but getting readers to buy it is a different thing. I have another friend who has a very large following in the health and wellness space. And I just, I said to him, how would you like to have a best selling book and not do anything except for let your list know about it? He's like, what do you mean? I was like, well, I'll be right back. And I called my other friend who had these recipes. I go, hey man, can I, how do you like these to get an income stream with nothing else? He said, sure. I said, I just need the master rights to all your recipes that you created. And I, I changed them up a little bit, did a little bit of editing, wrote an introduction based upon the person who owned the big health blog. And now it's the health blog. And I don't really want to give all this out just because, you know, whatever, but like the names, although you could find it, but there's the health blog, you know, ultimate Recipe collection. They didn't do anything. They got their, they put their name on it, they put their, you know, their authorship on it. They didn't write anything. I handled absolutely everything. All they did was tell their list about it, that guys go get our book. And it got up to a best selling recipe book for like two or three days on Amazon. It was amazing. And then the guy who had all the recipes written, he's making. I can't even remember what the, what the royalty rate was, but let's just say, okay, I'll pay you 15% of everything we sell and I'll pay the other people who had the blog 15%. And I kept 70%.

Well, you know, that ties in perfectly. Now I know why you're so fascinated about being the middleman now.

You know, I'm out. My brain works.

Well, you're, you've done the same thing, but in a different field. See, you understand it. And that's just putting the pieces together. That's, you know, looking, you know, from a different perspective and how to put the pieces together.

And you know why? Because I'm lazy.

I really am.

I don't like product creation. I don't like thinking about all the other ways. I'm always looking for shortcuts, but more so leverage points. And I think that's really what everybody should do is look for, where are the leverage points in your business? What are you trying to accomplish?

I used to say when people ask me this is really a tough question, Steve, what do you do? Truly, I'm an opportunist.

I am the same thing. I say I'm an opportune. That's great. So this was another thing I love talking about because it really opened my eyes and it's something that in the mainstream world of licensing, it's done all the time. But I was really just getting introduced to this world and drinking from the fire hose. So about a year ago, I went to the licensing expo in Las Vegas. Have you ever been to that?

Yes.

Okay. And it's crazy, like I was a fish out of water. You're dealing with some of the biggest brands in the world there. And I was just talking to everybody, finding out, just asking questions, and I loved it. Highly recommend anybody go. And I think it's free to go to. I think the tickets are free, but there's like 20,000 people there. And I stopped by. The most memorable experience is I stopped by Wiley Pre. I think it's Wiley maybe. Is Wiley owned Dummies Books?

I think so.

I think so anyway, I stopped by the Dummies Books stand and we were just talking. And everybody's familiar with, oh, Dummies Guide to, you know, doing whatever. Dummies Guide to Podcasting. But what I didn't know is that they license out the Dummies brand for physical products. And he gave me a bunch of different examples, and I was like, well, give me one example. And one he gave me was, he said, well, there was a company, and it was a very small company. They decided they wanted to license the Dummies brand and build a GPS like a kind of like a Garmin or TomTom Navigation System for Dummies. And it was really called GPS Navigation for Dummies. And so they went to China or Taiwan or wherever, and they had one of these made. And you can get them made really cheap. And they just customized the software enough to where when you first logged on, it had the little dummy's head on it, and it was kind of, you know, the yellow and black theme around it. But it was really simple. It didn't do. It didn't have all the bells and whistles. It was just really simple. And the. The guy who represented Dummies went on to explain, he goes, so they licensed our name. Now, what that brings, number one, is people know the Dummies brand as opposed to, you know, Acme GPS, you're competing with Garmin and TomTom, so now you have a name brand behind it. But he said, more importantly, you know, they don't sell Garmin and TomTom at CVS and Walgreens and a lot of other places, but they sell Dummies products. So we picked up the phone and we introduced, you know, the person who now represents our Dummies GPS to our channel partner over at Walgreens and CVS and whomever and now, and even Home Shopping Network and stuff. Now they're opening doors because they licensed our brand.

Well, you know what's amazing about that story? That's called licensing in. And the terms are always the same. I became a Disney licensee.

Oh, really?

A couple years ago, I had started a small company. That's the reason why I wrote that second book, the one simple idea for startups. I was in the guitar pick business. Now, why would anybody be in the guitar pick business? So. But I realized that we created these guitar picks that were lifestyle. Some of them were in the shape of Mickey Mouse. We had ones with the lenticular lens that had 13 frames of a Disney movie. We did all this kind of crazy stuff that musicians liked. But that wasn't our audience. Our audience was just everyday people. So we ended up selling more guitar picks than the largest guitar pick manufacturer in the world. In fact, he made them for us.

You gotta be kidding me.

No. He was so astounded until I told him, I said, look, you've got great guitar picks, but you're only selling to great guitarists. I'm selling them to everybody else.

Yeah. I mean, I can just imagine if, you know, I started playing guitar when I was, I think I was in sixth grade or something like this, maybe even younger. And you know, at the time. Yeah. If you would have given me a novelty pick. I don't know if, you know, Mickey Mouse, you know, whatever it was, Batman pick, all that other kind of stuff. I could see how that's.

We sold them at Walmart. We sold them at 7:11. People ask me, why would 7:11 carry a guitar pick? There must be a lot of musicians that go there. I laughed so hard. But the point is, after we had developed our line of guitar picks, we started with the skull because skulls were very popular, our skull shaped guitar pick. We basically ran out of content. So I went to one of those shows, licensing shows, this was in New York and I met some people and of course Disney and I became a Disney licensee. And, and we put Mickey Mouse, Winnie the Pooh, you name it, Nightmare with Tim Burton's movie. We put them all on guitar picks and sold a ton of them. And the great thing about what you just said, we were able to leverage the Disney name.

Oh yeah.

And they even would call companies, retailers for us if we couldn't get in.

Isn't that great? Talk about getting. It's like Big Brother to walk you to the cool party.

What was really great, it cost us for three years. The minimum guarantees were $50,000 for a worldwide exclusive at Disney.

Really?

Yeah.

That's actually really cheap.

I thought we made that up the first year and I thought that was the best money I ever spent.

Wow. So I was going to. And that was one of the next questions I was going to ask because, you know, the bigger the name, the more money you're going to have to pay for it and the more complex it's going to be. So if you, but you, you got a worldwide exclusive for guitar picks for Disney for only $50,000. And you had to pay that up front, right?

No, I had to pay it. We had to pay a one time fee each year for three years.

Okay. Of 50,000.

No, no, they divided that 50,000 three. You know, each year.

Oh, they financed it over three years?

Yes.

It's even better.

Let me tell you what's crazy. I remember calling up the licensing person at Disney, and I was very new to this Brad, and I said, can you explain to me how this works? So he explained to me, and he said, well, what do you have? I said, well, I have a guitar pick. He goes, well, have you ever considered licensing our images on your guitar picks? I said, well, no. He goes, well, we don't have anybody that's currently doing that. How would you like to be a licensee? I was like, you've gotta be kidding me.

So Disney, they gave you the idea?

Yes.

That's beautiful. You know, that brings me right back to the licensing expo when I was walking around the booths and there are several booths. I remember one for Elmer's Glue. I remember for, you know, the one that had the. That represented all Edgar. Who is it? Edgar Rice Burroughs, who has all the Tarzan stuff. So they. They had these booths with displays of all different types of products with let's. Whether it's Elmer's glue on it or the Tarzan logo. They had, like, Tarzan hot sauce, Tarzan greens drink. And I go, you guys sell this? They go, no, these are examples of stuff that we would love to put our name on. So if you sell a hot. If you can get it, if you do a hot sauce, if you do a greens drink, if you do a protein drink.