Some opportunities are just not meant to be. That's true in life, entrepreneurship, and definitely product development. But when one door closes, another opens. That's what I discovered after bringing my ideas for products to market for three decades. Expect to experience bumps along the way. Sometimes, you will have to reroute entirely.
Licensing deals fall apart for one reason or another all the time. It's not uncommon. In fact, it has happened to me on numerous occasions. Feeling disappointed is understandable, but you shouldn't let it derail you.
My hope is that the following stories inspire you to be pragmatic and expect the unexpected.
There was the time in 2000 I reached out to a company about a new packaging design. A few months later, as I was driving a rental car in Houston, Texas, I pulled into a convenience store and there it was: My idea, plastered on a huge poster for a popular beverage. They had even used the same name! I was shocked. So I purchased the product and brought it home so I could put it up in my office in Turlock, California. James Shehan, my longtime right-hand man, could not understand why I would do such a thing. Why wasn't I more upset?
For me, it was a useful reminder that things can and do go wrong -- and that there are often questions you will never be able to fully answer.
Did they work around my idea? Were they working on a similar idea before I submitted to them?
It didn't really matter, because I hadn't filed any intellectual property. Because the technology was not new, I figured it was not eligible for protection. (It had never been applied in the way I was proposing.) In hindsight, I should have filed a provisional patent application anyway, because doing so would have established perceived ownership.
I made a few other mistakes. I showed the idea to a contract manufacturer first, when I should have shared it with a huge company that wanted it and then found a manufacturer to supply it. I also should have focused on contacting companies that are inventor friendly.
Then there was the time I teamed up with Disney and one of their licensees to produce a product called Twist N Chill -- a fruit drink for kids -- that featured my rotating label technology. It was a perfect partnership in that the label offered more space for content and Disney had the stories.
I was part of the team that created the artwork for the label, the bottle itself, and even the machine for the contract manufacturer.
Finally, it hit the store shelves in 2008. Bad timing. It wasn't priced correctly and it did not sell. After all that work and money invested, it very disappointing.
I still keep a sample of that product on a shelf in my office.
Lesson learned: The customer is the ultimate decision maker. Their opinion is the only opinion that truly matters. Some factors, like timing, are out of your control.
Here are a few other examples.
If your product is a success on social media or on national television and you don't have units in the pipeline... you've made a huge mistake. I've seen this happen time and time again. It's difficult to create buzz and excitement around a product the first time around! If you don't have an outlet to start selling immediately, it's unlikely you'll be able to capitalize on the initial enthusiasm generated. Your sales will fall flat.
The takeaway: You must have a mechanism to collect dollars when you launch a product. Even if you're late to deliver, you'll have gathered dollars and caught the first wave of interest. Crowdfunding is a great way to secure those early funds.
Twice now I've seen that giving an exclusive to one retail outlet can tank a licensing deal. Sometimes, companies team up with a retailer. But giving an exclusive to one retailer will always limit your number of sales. If the retailer is struggling, which many are right now, that can further complicate the matter.
Takeaway lesson: Do the math. How many stores are there? Estimate they'll sell at least one unit a week. What's the wholesale price? If the dollars don't add up, you might want to find a different licensee. Don't let yourself be surprised later on.
What if your licensee fails to pay you your first minimum guarantee? You can try to negotiate better terms. But you might also decide to walk away and try to find a different licensee. I've seen this happen a few times.
Takeaway lesson: Stay involved to the extent that you can. Try to be a project manager. Work with the manufacturing and marketing teams. Are they going to miss their deadlines? If you're aware of important milestones, you won't be taken by surprise. You may even be able to help them stay on track.
And then there are some opportunities you just shouldn't make. I know of one entrepreneur who was selling a great product online, but was tired of the work required and hoped to find a licensee. However, her sales exceeded the minimum guarantee that every company offered her. So, in the end, she decided to refocus her efforts on her Amazon sales. She might still be able to license it later on.
Timing is everything!
At the end of the day, you must be flexible. The quickness with which you rebound has everything to do with your future success.
Deals fall apart... and that's perfectly okay. Look at it as an opportunity to regroup.