Inventors, Here's How to Avoid Getting Ripped Off
Watch for these red flags of shady and subpar service providers.
Opinions expressed by Entrepreneur contributors are their own.
At a black-tie event celebrating the National Academy of Inventors in Washington D.C. a couple of years ago, I had the pleasure of sitting across from Arthur Daemmrich, director of the Lemelson Center for the Study of Invention and Innovation at the Smithsonian Institution. Daemmrich is a leading scholar on science and technology studies. At the Lemelson Center, which is located in the National Museum of American History, he leads a group that researches invention and innovation.
I couldn't resist the opportunity to ask him about the history of the inventing industry itself. When I brought up service providers taking advantage of inventors, he told me, "Steve, this has been going on since the Wright brothers invented the airplane."
To tell you the truth, hearing that surprised and disappointed me a bit. But it also made sense. I've been teaching inventors how to become entrepreneurs for more than 20 years, and in my experience, many would love to have someone come along who offers to do all the work for them.
Only wanting to hear what they want to hear becomes problematic quickly for inventors. "You have a great idea! We can help you protect and bring it to market."
Believing wholeheartedly in the potential of their inventions makes them susceptible to being overpromised. In reality, commercialization doesn't really work that way. There is no magic person, company, or organization that is going to bring your product to market for you.
I made a living as an inventor for many years, and this is what I learned: You have to do the work yourself. No one else will work as hard as you will, because no one else will ever care as much. That's just a fact of life.
Don't get me wrong — no one does everything well. You should analyze your strengths and weaknesses to help you determine what you need to hire out. Personally, I was great at building prototypes and reaching out to companies for licensing consideration. So, I partnered with a talented graphic designer who was very skilled at bringing my ideas to life on the page.
Trust only those who have your best interests at heart. Use the following insights and strategies to help you kick the tires on service providers in the invention industry and avoid getting scammed.
Watch for red flags
- High-pressure sales techniques. If a service provider calls you constantly to pressure you to sign up, that's a red flag. Deciding to get help with your invention is a big decision and you need time to do your homework. Don't let anyone pressure you into making a quick decision. Fear is often used to encourage inventors to pull the trigger on a service quickly. "Take action on your idea before someone else does!" "If you don't patent that invention now, someone else will beat you to the Patent Office!" Take a deep breath, refuse to let anxiety be your guide, and keep learning.
- Companies that change their name. When you change the name of your business, you throw out all of the goodwill your brand has established, which is why reputable companies don't often do this. Reeducating their customers takes too much time and is too expensive. Usually, a name change signifies something else. Make sure whomever you decide to work with has been in the business a long time without a name change.
- Tearing down the competition. Having to pull someone else down to make yourself look better is a sure sign the service you're providing is inferior. Service providers who engage in this behavior lack confidence. If their business was successful that's what they'd be focusing on.
- "We only get paid when you do!" Some invention service providers tout this like a badge of honor. But this statement and others like it are actually another warning sign. Typically, what's being played is a game of bait and switch. You think you're sharing your contact information with a potential partner, only to be hit up later by someone selling you a service. Service providers who have your best interests at heart understand that you will come back if you're successful, which is why they provide education along with their service. My patent attorney John Ferrell once told me, "Steve, protection is easy. Selling is hard. Start selling!" That was truly priceless advice. Because I've been successful, I've kept coming back to him for two decades. You don't need someone representing you or a middleman. What you need to become a successful inventor is education. Remember, no one is going to work as hard as you will.
- Constantly advertising themselves. Service providers who constantly and exclusively talk about themselves and their accomplishments is always a red flag for me. Why? Because this behavior tells me they're just not that busy. If they're not that busy, they probably don't have the level of experience I'm looking for. When you're providing a good service, you don't need to advertise nonstop.
- Selling access. LinkedIn has changed the game for creative people. You don't need someone to open the door for you — and that includes paying to pitch your idea at a trade show or in a contest. You can get to anyone these days, including retail buyers, contract manufacturers, and companies that license ideas from independent inventors.
- Using middlemen. Companies sometimes hire independent third parties to handle the influx of ideas they receive from inventors. In my experience, these companies are not that serious about open innovation. Companies that genuinely rely on the contributions of independent inventors, like Hasbro, have specific employees and actual departments whose job it is to internally review ideas.
Avoid getting scammed
- Do a thorough background check. The Internet has made it difficult for people who have a poor track record of providing services to hide. Always type the name of the individual or company followed by the words "complaints" and "lawsuits" into your search bar when doing your initial research. What comes up? Dig at least a few pages deep because although this information exists online companies will do everything in their power to bury it. Keep in mind, there are always at least two sides to every story, and no person or company is perfect.
- Get testimonials that are current. We're talking about innovation here! Things change pretty quickly. Someone's past experience might not be that valid today. Make sure whomever you're working with is up-to-date and current with their information and the service they're providing.
- Ask for referrals. Specifically, I recommend asking for the names of at least four people the service provider is currently working with. Call these people up and ask them directly about their experience.
- Check out their LinkedIn and Facebook pages. Are they active on social media? Service providers who are not providing great service tend to avoid posting on social media because of the likelihood of getting slammed.
- Realize that birds of a feather flock together. You should also investigate affiliates of the company and/or person in question. Their relationships with others will tell you a lot about their integrity
- Avoid organizations that don't truly help. There are many organizations, including 501(c)(3) nonprofits, that service only their sponsors. These organizations do not provide resources or information that is actually empowering. How can you spot the difference? Actions speak louder than words. Take a look at the board of directors and the services they provide. If they're truly doing a good job, they will be able to provide you with a list of testimonials and referrals.
Get everything in writing
From deliverables to due dates, make sure the exact terms of your agreement are written down on paper very clearly. Confirm that all parties understand them. Try to avoid making any upfront payments.
Educate yourself (before you spend money)
Identify successful entrepreneurs and inventors to learn from. Read books from industry leaders. Watch videos that pertain to issues and problems that you might encounter. Educate yourself first.
If anyone promises you that you don't need to do this — that is, educate yourself about what is required to bring a product to market — that is a huge red flag. The best service providers believe in educating you along the way and will go out of their way to provide you with quality information. When you have good information, you're able to make better decisions.
One final note. Sometimes, free advice can be very costly. There's a lot of information about inventing and patenting online that is outdated, ill-informed, and/or reductionist. Always consider the source of the information. Someone who has taken a decade to bring one product to market and made every mistake imaginable might not be the best person to learn from. And why would you take inventing advice from someone who has never actually made a living as an inventor?
Listen to inventors who have commercialized their inventions repeatedly. Not one time, not twice, not even three times! I'm talking about over and over again. A great example that comes to mind is the toy inventor Richard Levy, who has been commercializing his toy inventions for more than 40 years. His books are a priceless resource!
In the toy industry, some of my other favorite inventing experts to follow and learn from include Mojo Nation's Billy Langsworthy, Azhelle Wade the Toy Coach, and Mary Couzin of ChiTAG. Tracy Hazzard and Robert Bear are two podcasters who consistently produce high-quality information about inventing and product development. And as far as intellectual property strategy, you can't beat IPWatchdog.com. I'm also a big fan of Russ Krajec of BlueIron, who dispels patent myths on his blog.
Make sure to take advantage of the resources offered by the United States Patent & Trademark Office, as well as your local inventor group.
Inventors, you can do this. Do your research, take your time, and always continue to educate yourself along the way.