Part 3 - The Patent Portfolio Blueprint: Turning One Product Into Multiple Revenue Streams

Welcome to this edition of the Million Dollar Mastermind podcast. This is where we pick the brains of high achievers from all walks of life and get their hard earned real world insights on winning. I'm your host, Larry Wydell.

How do you come up with 40 patents for a gadget?

I don't know if we have enough time, so the quick version that I'll caveat with, I am not an attorney, so I wonder if. Talk to your IP attorney.

It's almost like you're making money from how many patents you can have. It's like that seems like that became a game more than anything else.

It is a game. You look at companies like a tool, like Mac Tools. I don't know that they're this, but I imagine that they are. Those companies start with the single patent, and what happens is when you file a utility patent, for example, when that patent issues, you don't close it, you file. I think it's called a continuation of process, a cip. And that continuation process leaves that patent open. And all IP attorneys out there are probably like rolling their eyes at me right now. But you leave the patent open and you get to amend the scope of that patent into another patent. So you get to take this thing that's really specific and you get to broaden it a little bit and that becomes a new patent. Then you get to broaden it a little bit more because you leave that one open and that becomes a new patent. So we had, and we had other products. Like we came out with a can product that had a number of patents in it. We had, we came out with two different versions of Bottle Keeper. One that was double walled, single walled, and we had some unique things with lids. But all of those things you leave open and then you get to amend the patent and, and then at the end of the day, like, we had a path. Windpoint won't do this, nor do I necessarily think they should. It's not what they do professionally. But our next step in that continuation process would have given us the ability to basically have patent coverage on any time you put a container into another metal container. And that all stems from all the way back to just the original Bottle Keeper product.

Wow.

So there is a, there is a huge strategy around executing patent prosecution, which is why if your listeners are ever considering patents, you cannot talk to your real estate attorney friend. You cannot talk to a general counsel about patents. You have to talk to a IP intellectual property specific attorney. It is extremely nuanced. And they are like doctors and attorneys and accountants. Some are really, really good. Some are really, really bad. Use your references because it does matter.

Yeah, great advice. And so you sell. When you sold the business, you sold the patents, is that right? They had access to the patents, the.

Patents, yeah, I mean we sold everything. So we sold all of the assets, the business, the brand. They continued on with the brand for a while. But yeah, the patent portfolio was certainly a massive value point to them.

Well, we started off talking about you were running a business was heavy, you know, had a lot of moving parts, lots of things to keep up with. How long before you got involved with that, after you exited Bottle Keeper? That wasn't Bottle Keeper, was it?

No, no, no. Bottle Keeper was light. I mean, even at the point of the acquisition, we only had four employees.

Right. So how did you get involved? It seems like a total career change type thing.

Were you from there to now?

No.

Well, yeah, it is, yeah. That's, that's the beauty of it. That's the stuff that I like. I mean from from there to now.

Is what's the stage that you started off talking about? That was heavy. A lot of different moving parts, equipment.

That was the medical device. That was before Bottle Keeper. That was the exactly good clarification. That was in between college and Bottle Keeper, which was about 10 years, 11 years.

That was a good foundation. I mean, so that was quite a long period of time. Yeah, yeah, that was. That's pretty much your graduate degree in business. That's the way I was 100%.

It absolutely was.

And, and so now where did you get the idea? Is it Pentane Systems is what you you're doing now and this is your idea?

Yeah.

And where did that come from?

It completely organic. I I from a wise man took some.

Were you on the beach again with your, your friend?

No, I was in Montana at that point in life. I took. So the, the transaction closed in March of 21. I part of the deal was I had to stay on as a CEO to oversee the transition. Right. Because they basically just combined our company into theirs. The brand stayed alive, the website stayed alive, but we had to convert all of our stuff into their stuff. So that was the end of the year. I took wise guidance from a very brilliant gentleman that had more gray hair than I to not just go start another company, which of course is exactly what I wanted to do because I mean you, you grind at that. That like it's. If it sounds easy, I promise you it was not. It was phenomenally difficult until literally the very last day, until the day that you're on the phone with 20 attorneys and they're talking in like the King's English saying, do we consent to this transaction? I, I, I. It's the weirdest call you ever have. Until that call is over, it is insane. And then it's silent. That's hard to mentally process. And I mean that very, like, sincerely. I realized that this was a, this was a life changing transaction. It was a huge game changing thing. But it was phenomenally difficult from the beginning to that point. And that last six months you have this thing while you're also trying to run a company and that thing could blow up at any second. And you get three calls a day about why it might almost blow up. And you string this thing along until it finally closes and then it just goes completely silent. It is a feeling that I will never, ever forget to come out of such a positive experience. I literally, I remember driving, we were in LA at the time, driving by myself in the car in the silence and pulling up to a stop sign and literally just like bursting out in tears for no reason whatsoever. It was just such a mental roller coaster to just come stop.

Kind of a relief of stress, basically.

Just like, yeah, kind of. So I, yeah, absolutely. So we fast forward. I take the time off, I get bored. I do some carpentry projects. I remodeled my kitchen, which you can't see on the video, but it looks really nice now. I get to the point where I want to go and start using my brain again. I go to companies that my wife and I had invested in and I ask them if I can help and they say, yes, please look under the hood. So I look under the hood and I quickly realized that they two companies, specifically one was a $20 million year business. They were profitable. They had no idea how they actually made money. They knew how to drive revenue and they knew that they had expenses and they knew that revenue minus expenses at the end of the year equals net profit, if you have it. But, and that's true, that's 100% accurate. But if you understand the nuance of how to acquire a customer and the costs associated to acquiring customer and the impact that fixed expenses versus variable expenses have on the business, you have all these levers that you get to pull that change that net profit outcome, and they didn't understand those levers. We at Bottle Keeper deeply understood those levers. That's one of the big reasons we were able to grow as fast and as efficiently as we did through the whole life of the business. We built systems internally that Gave us clarity into how to pull those levers, how to use ad spend, and at what marketing efficiency or return on ad spend it needed to be at to accomplish our net margin goals. How expenses, as we levered them up and down, impacted the business, the result of which is we were profitable every single year except for one. So I rebuilt some of those systems in a much better, sexier way inside these companies, and it totally changed them. That company increased their net margin by 50% the following year because they knew they now knew how to better leverage. In their case, it was advertising dollars.

Yeah.

So I then got paid as an advisor to help turn around an early stage ecom business. It was a $2 million business. They were losing $100,000 a month and did the same thing. They had no idea how they were spending or making money, so built the systems and it completely changed their business. Three months later, they were profitable. Now, a year and a half later, they've grown 300% profitably and they're crushing. So Pentane is that. Pentane is a system that uses math so you don't have to. It uses math built on the expenses in your company to tell you how to operate the business profitably.

Incredible. And so people sign up with you and then it's a matter of getting their information into Pentane, I guess. And are you doing all of that?

So it is a. It's a traditional SaaS platform.

Okay.

So. So if someone can sign up on pentane.com and go and do that and. And we have it's. It's coming out in the next three weeks. A revised onboarding process where they can do it themselves. In 10 minutes, they can have a fully functional system with all of their expense data in all of their revenue APIs from Shopify and Amazon, wherever they're collecting revenue, QuickBooks, all of their advertising APIs from Meta, Google, Amazon Ads, TikTok, all the things. And it takes all that data and it gives them a picture of what's happening in the company. And then they get to enter their net margin goal and it tells them how to accomplish that.

Yo.

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And so how long did it take you to get the pentane? Was it like created organically in the process of solving the problem? Those first two companies that came to you and you said let's just put this into a system because that's just the way you go about. The question I'm wondering is, could you get at least a few patents out of this thing?

I got asked that question the other day by another very intelligent guy and the answer is maybe technology is different than physical products. Physical products are largely black and white. There's some gray area in there depending on the types of patents and what you're trying to accomplish. Software and process are a little bit different. And how we build a moat in this business has to be different than how we built the moat with Bottle Keeper, which was very intellectual property heavy. So there, there may be as we get a little further along, but quite frankly, I'm not sure I want to spend the time and money going down that rabbit hole again when I, I have other ways that we can build. We can build some pretty strong moats.

Or just a kid anyway, and you could get bored and decide you want to do it later.

You know, I might, I absolutely could. That could happen.

You could get that bull. Once you get that bull, you get him up on the wall.

Yeah.

Then you're going to say, I'm starting to get restless. So talk about you put yourself through the ringer. Various, you know, success in various situations, various parts of the country, various businesses. And now you've got essentially kind of a lone ranger type life where you kind of control things. Describe the payoff for putting your because you said it was hard, hard, hard, hard, hard. But you did not back off from it, but you saw it through. And this is what I like to bring out periodically is entrepreneurs, if they know their success, even though the problems it's created, if you just hang in there, there is another side of the mountain and where you don't have to keep doing this forever, but the rewards for going through, paying the price, putting up with it are astronomical, beyond what you can imagine while you're going through it. And so it helps to know that so you can emotionally, you might not accept it, but at least logically you could say there's going to be a better day this is going to lead to something wonderful that I can't even imagine right now. That's what you find out. For most people that paid a price to build a business put up with it, of course it was a nightmare going through it. But then they come out and it's like, I would have gone through it ten times had I known it was going to be this good on the other side. And so what? Describe where you are right now in your life. Because I get the idea that things have. You've got things pretty well organized for yourself.

I would not say that I have things pretty well organized. I would say that. And maybe that's not fair. We live a very intentional life. The things that we have done in the last 15 years post medical were all done intentionally. I mean, they were not accidental. We didn't accidentally get into a situation where we could travel four or six months of the year while running a profitable business like that was. We did that on purpose. And I think that too often people end up in a position that they don't want to be in because intentional decisions weren't made. And then they feel stuck and they can't get out of it. And the reality is you always have a choice and the choices that you make whether to continue or do something different will dictate that outcome. And for, for me, I have always been really, at least for the last 15 years, very, very sensitive to that. So we are very intentional with the decisions that we make and how we do and build. And pentane will be the same to that. I mean, also, the more you do it, the more comfortable you get with it. Like going through this version of startup is completely different than the last version of startup, which was different than the prior version of startup.

Right.

You get better at them, you get, they get easier to tolerate the ups and downs. The ups and downs get flatter. But to your point, which is a really, really important point, companies fail when people quit. Like that's when they fail.

Yeah.

And I fully appreciate that everybody's circumstances are different and sometimes you may not have another option and then you have to. And you have to deal with that. But the reality is, is if you as an operator can do everything you possibly can to mitigate your risk, your downside risk, to let things play out over time, it's these tiny little tweaks and tiny little sort of evolutionary changes that happen in the business that you may not recognize. But you look back at a month from now or two months from now or six months from now. I mean, I'm doing it right now. Like, holy hell. I cannot believe how this got to this in that period of time. But when you're in the midst of doing it, it feels like it's a mountain you can climb. So you just, you just gotta keep your head down, one foot at a time. Walk away from it for 20 minutes, sleep on it. Like nothing bad is gonna happen in a good night of sleep, come back to it.

Well, and the thing is, just because you can't see how it could possibly work out today doesn't mean that you can't. That you won't see how it can work out tomorrow or this afternoon.

Absolutely.

Or it doesn't mean that somebody is not gonna show up this afternoon with an idea or you'll hear something in the wind and like, oh, that didn't think of that. And then things change.

But you're.

If you're not in the game, you can't capitalize on that, you know?

Absolutely true. You never know what's around the corner.

How long have you been writing for Inc magazine?

We were on Inc. 5000 list in 2018 or 19. I wrote a couple articles, maybe one or two articles back then I started writing for them again earlier this year. I should be writing a lot more. I'm supposed to be writing one article a month. I think I've written three in 11 months. So I need, I do need to write more. I've been focused so much on pentane, but I do really enjoy this chapter post Bottle Keeper chapter. My life is really dedicated to helping other early stage founders solve problems that are complex or may at least they seem complex. And writing is a really good pen. Pentane is one of the ways to do that. Writing is another way to do that. Sort of share. Share the war stories that help other people make decisions faster.

Is it rewarding for you to. I know, for name recognition, to build your brand and for the business and all of that. That payoff. But is it satisfying writing for a magazine like that?

It's satisfying writing. I enjoy writing and frankly, it helps me organize my own thoughts.

There you go.

I wrote for Entrepreneur for a couple of years. I wrote 60 or 70 articles for them.

Oh yeah.

And I really enjoyed doing that. And that was an early bottle keeper, early mid bottle keeper stage. So I've been writing kind of like that for a while. I took some time off in between the things. But doing it at a publication just gives like I'm not going to do it on my personal blog and reach the people that Inc. Magazine is going to reach.

Right.

So it at least gives you the capacity to. To have more people see that content, benefit from the content. I'm not doing it for brand recognition, frankly. I don't. I'm a private person. I want to remain, as much as I can, a private person. That's why I'm largely off the socials and all those things. So it's really more just. It's a great avenue to get content to the people that. That might be able to use it.

When you and your wife traveled, where did you like going the most? Looking back on it, what. What was the most fun?

Where we went back to the most was Europe.

Yeah.

Spain, France, Italy were the. The highlights. Spent a bunch of time in Switzerland, Germany, Austria, all that stuff.

Yeah.

But where we traveled, that was probably the most impactful is Africa. And where you. We saw the most cultural difference was in Asia, namely in Cambodia, Japan. And that going to those places is just absolutely fascinating because it's so different. Europe's not that different. They speak a different language. Food's a little different. Their culture's older. It's not that different.

That challenging, those differences in culture and everything over in Cambodia and Pacific Rim.

I wouldn't say that I would call it challenging. I found it really interesting. You get to immerse yourself because of what we were doing. We were doing it for a month or so at a time. It wasn't like a.

Right.

We were fortunate to not be in a position where we had to limit it to four days or five days. So we got to see a lot and, like, really kind of dig into it.

Mm.

And it's just an opportunity to soak up another worldview and learn about Buddhism and visit. Visit temples and sit with monks and.

Yeah.

And learn about. They have some. Like most countries have some pretty troubling history. And that's a part of the story, too.

Yeah. Very interesting. Adam, it's been a lot of fun talking with you. Congratulations on a great career so far. I'm looking forward to seeing what happens with Pentane going forward. I like to give the guests, my guests, the last word. So do you have one last parting shot for the people that have stayed with us all the way through?

Yes. And I don't mean this in a conspiratorial context, unless you like going down that rabbit hole, but question everything. Just because someone tells you something needs to be done a certain way does not make it true. If you have an mba, that's great. You have the basis for what is mostly financial accounting, and that's helpful. But how you build a business is how you choose to build a business. You get to do it however you want, and then you have to listen to what the customer tells you. So I just, I believe deeply in that. Just because it's done a certain way doesn't make it right or wrong or a good fit for you. You get to go in and craft your own movie.

Yeah. Fantastic. Excellent finishing comments. Thanks so much, Adam. Good luck getting that elk. And you're a compound shooter or a traditional longbow compound.

I haven't gotten to the recurve yet. That's next. Next in my Montana habits.

Okay, well, wish you the best and look forward to talking to you again down the road.

Likewise. Thanks, Larry.

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