Licensing Your Ideas For Passive Income With Stephen Key

Welcome to Real Fast Results!  This is Daniel Hall, and I’m
very excited about this particular episode because I’m bringing on
a guest who is going to be covering a topic that I am intensely
interested in.  His name is Stephen Key, and he is
going to be going over the idea of licensing your ideas for passive
income.  That means selling your ideas to companies and making
a royalty income from that. I have searched high and low
for an expert to come on who is both very accomplished and willing
to share their secrets.  So, I am very appreciative that
Stephen decided to join us today.  Stephen, welcome to the
show. Hopefully, the people reviewing this material will understand
that they can take action as soon as today or tomorrow.
What I will do is show you how to come up with simple
ideas, show them to companies, and let them pay you for your
creativity.  You don’t have to build a business or
spend a lot of money to do this. The Benefits of Licensing
Your Ideas I believe that we are all creative, but a
lot of us don’t want to start businesses.  I admit
that I'm not the business sort, but I'm very
creative.  So, what should I do with all
of my ideas?  Should I let them just sit in a
corner?  I feel I let them sit, sooner or later I'm going
to see them out there on TV or on store shelves.  The game has
changed.  You don’t have to start a company, or raise money,
or quit your job.  You don’t have to do anything that’s scary
or dangerous. You can take some of your ideas, show them to
the “right” companies, and you don’t even have to own it. 
That’s what surprises everyone.  Everybody thinks
that you have to have a patent.  You don’t have to own
anything; it’s all about speed to market.  So, you just have
to have the right idea and show it to a company. The big
idea is that you can take intellectual property that you have
developed, without having a patent for it, and bring it out to the
marketplace and actually sell it so that you end up with money in
your bank account.  It doesn’t matter if you have a
business or not.  You’re not actually selling an idea but
renting it.  You’re just going to let these companies rent
your idea for a while, and every quarter, you’re going to collect
royalties from it. If you can make this work for you, this
opportunity will allow you to live anywhere you want to, and you
won’t have to work a 9-5 job.  However, once you start doing
this, you’re going to want to work on this all of the time. 
You can work anytime you want, live anywhere you want, and let the
big companies do all of the work for you. Steps To Licence Your
Ideas For Passive Income The first step is to see if you
have a marketable idea.   You need to find out
fairly quickly, and the best way to do that is to just study the
marketplace.  What’s out there?  I recommend doing a
Google Image search.  If you’ve got a new hammer, look at all
the hammers in the world.  You can do this at home. 
Spend a little time just playing around with the idea, and be an
expert in a micro-category.  Just sit, search, and see
if you can find your “idea”. If you find that
there’s something unique about your idea, move to the next step,
which is to do a Google Patents search.  That sounds
very difficult, but all you do is go to Google Patents and type in
a few words that hold similarities to your idea. Then just scour
through what other people have done in that space.  In order
to create for the future, you must know what’s been done in the
past. By looking at past patents, it gives you a glimpse of the
past. If you’ve taken these first two steps, and you still
think that your idea is unique, you’ll want to continue moving
forward with it.  Now, this doesn’t mean that you
need to reinvent the wheel. You just need to be able to propose a
small improvement, but one that no one else has seen.  The
smaller an idea, the better. Simple ideas is where it’s at, and for
a few different reasons.  First, if you make a bit of an
improvement on an existing idea, then you know there’s a market for
it already.  Also, it’s likely that the manufacturing can be
done because it’s already being done, but you’re making a small
improvement. The third step in this process is to show a
company your idea.  It really is that simple. 
You do this with a one-page sell sheet.  It’s basically just
an advertisement.  You know how you drive down a freeway, and
when you see a billboard, you get it instantly?  That’s all
your sell sheet needs to be.  It should have a big benefit on
the top that tells the company what your idea does and why they
should care, a picture pertaining to your idea, and then your
contact information down at the bottom. Here’s how easy this
is.  Let’s say that you just have a sketch on a napkin. 
You can find a freelance designer on the Internet that does 3D
computer generated graphics.  This person would be able to
take a simple sketch of yours and make it beautiful.  They can
make your idea come to life.  It may not be real yet, but they
can make it look real, and you can have that done for under $100.
It’s important that you understand that the benefit
statement that you use should let people know, at a glance, how
your idea will make the buyer’s life better.  It’s
essentially just a benefit-driven headline.  Once you have a
sell sheet, you need to make a list of companies that could benefit
from your idea.  I call it follow the money.  Who could
benefit from my idea?  Just go down to a retail store that you
think it might sell in, and look at where it’s going to be on that
isle.  Those are the companies that you’re going to submit
your idea to. The next step that you’ll need to take is to
file a PPA (Provisional Patent Application).  You can
file it anywhere in the world and in the United States for
$65.  It gives you one year to shop around and show it to
companies and put “patent pending” on it.  Now, that $65 just
gives you one year, but during this time, you can shop it around
and see if anyone wants it.  After you have that, then you can
move forward and contact the company. To reiterate, here are your
steps:


Step 1: Check to make sure your brilliant idea
is marketable.

Check Google Images

Check Google Patents.




Step 2: Make a sell sheet to present to
companies

Benefit-driven headline

Image that makes idea come to life

Contact information




Step 3: Make a list of companies to submit
your idea to.


Step 4: File a PPA


Step 5: Submit Your Idea

Submitting Your Idea To submit your idea, I
recommend that you go to LinkedIn and find a company that you
want to send it to.  Find someone in sales or someone
in marketing.  Tell them that you’re a product
developer.  Never tell people you are an inventor. 
Anyway, let them know that you would like to submit an idea to
their company for them to review, and ask them what their
process is.  That’s all it takes to get up and running. This
person is going to tell you what you need to do, and they may just
respond with an email address, which is great because you can just
send your sell sheet in electronically.  If the
company takes an interest in it, they will bring all of the right
people in the room to look at it.  Hopefully, at that
point, they will pick up the phone or send you an email saying, “We
want to know more.”  Now you’re in the game.  That’ when
the magic happens.  Either they will like it or they
won’t.  You’ll know very, very quickly whether you hit
it big or not.  If it’s a great idea, the company
that you submitted it to would respond very fast in most
situations. It’s when they call that things get a little
trickier.  It’s time to cut a deal. I recommend that
you get someone with a little more experience to help you.  If
you’ve never done this before, find someone that’s done it, or find
someone with a bit of legal expertise.  You’re going to need
some guidance at this point.  Now they want it, and they are
going to want to cut a deal. You want this deal to be cut in a way
that you benefit best for your idea. This is so simple that anyone
can do this at any age.  I have been teaching people that are
18 and still in high school to do this and people in their 80’s to
do this.  Anyone can do this. Cutting A Deal Exactly how you
can go about cutting a deal with a company is beyond the scope of
this particular discussion. However, here is a little
insight. There will be a licensing agreement, and they are
going to pay you a royalty on every one (use of your idea/product)
that they sell.  So, basically, you’re going to rent it to
them.  At this point, you can also get them to pay for the
patent too.  There are all sorts of things that you
could potentially negotiate, but on the whole, they are going to
rent it, they are going to sell it, they are going to pay
you. Royalties - Example Let me give you an example
of one of the ideas I had. It was a little Nerf basketball
goal. But, the backboard depicted a picture of Michael Jordan, and
it was in the shape of Jordan’s head and shoulders.  This sold
for 10 years, and I collected royalties on a prototype that
probably cost maybe $10.  The first year was $100,000 in
royalties, and it continued to sell for 9 years after that.
I sent the Michael Jordan basketball goal idea in on April
9, 1999, and had a contract on the 12th.  So, I had a
contract 3 days later.  That’s how fast it went.  They
were already selling the square ones with a little picture of
Michael Jordan on them.  It was a split royalty.  They
paid Michael Jordan and they paid Stephen.  In this case,
Stephen’s cut was 2.5%.  That’s not a very high royalty, even
for a small idea.  Usually, the average is 5-6% off of the
wholesale price of the product. Every time the product was shipped
for $4.99, I would get 2.5%.  They made bigger ones and
smaller ones, and they even made them with different basketball
players.  Another product of mine also sold for 10 years.
The last check i got was for $0.55 and I kept it. More Tips
On Licensing Products The most important thing to understand
is that you can do this.  You don’t need to have a
degree in product development or even a business of your
own.  All you need to do is have a love for
products.  Find a category that you’re fascinated with. 
If you like golf, stick with that.  Look at golf products,
study them, and think about what problems there are.  That’s
really the first step.  It’s not hard. I like to
teach people that they should try to be an expert in a
micro-category.  It may be something that you’re
already in the business of.  It’s even better if it’s related
to something you’re already doing.  One of my students
was in the restaurant business, and he noticed that it was really
hard to get the tomato paste out of the big cans that they
used.  He created a tool that allowed them to pull it all out
at one time.  You see?  He knew the problem personally
because he was in the business.  He discovered there was a
problem, created a mechanism to solve that problem, and then
licensed the mechanism. Most people don’t even know that you can
license ideas in the hospitality industry.  This is a huge
industry.  Here are more industries that are on fire
at the moment:

The Pet Industry

The Kitchen Industry

“As Seen on TV”*

The Fitness Industry

The Home Improvement Industry

The money that you can make in the "As Seen on TV” industry
comes so quickly that you have to be a little careful. All
of these industries want ideas.  If you want to
take action right away, call a company that you have no idea that
you want to submit an idea to. Just call them up and ask them about
their process.  Tell them that you’re a product developer and
you would like to start submitting ideas to their company. 
Then, ask them what their process is and take notice of how they
treat you.  They are likely going to treat you with great
respect, tell you about their process, and endearingly wait to see
what you have.  That’s when you’ll realize that there are no
barriers to this.  You don’t have to have experience, and
you’re only as good as the ideas you are sharing with them today.
So many people are surprised because once you take that fear away,
they can see that they can do this.  On the other hand, some
people just expect companies to just take their idea.
 I've been teaching this for 15 years, and I
haven't seen a problem yet.  If you act
professionally, read as much as you can on the topic, and be
reasonable, you won’t have much trouble.  You do have
to do your homework, however.  Search for the company, and
look up complaints people have had about that company.  Also,
understand that if they treat you great going into it, they will
treat you great throughout the process.  Kick the tires, but
be professional about it. Companies don’t take ideas because you
might have some intellectual property, and social media is a
nightmare.  They want the doors to be open, but people don’t
submit ideas anymore that make sense.  There are industries
that have been doing this successfully for years.  For
instance, the toy industry has been welcoming outside people for 50
or 60 years.  Imagine having 10,000 people submitting
ideas.  This would increase any chances that you have of
finding a winner, and then they could cherry-pick the very
best.  Most companies would love to pay you royalties
for a winning idea. Do I Have to Have a Brilliant Idea to
Do This? You do not have to reinvent the wheel.  Big ideas
take a lot of money and time because you have to educate, and most
likely, spend a lot of money to get it going.  When
you make simple improvements on existing ideas, the product is
already selling and has already been proven.  You’re
just bringing the next addition out.  They already have the
marketplace established, so it’s speed to market. Here is an
example of how simple this can be.  I've got a water
bottle with a label on it, and you could spin the label on the
bottle and it would reveal more information from a little window on
the back.  In other words, the label is in two layers. When
you spin the bottom of the bottle, new information would be shown
through a little window on the top label.  This could be used
as a marketing device. This particular water bottle has a college
team’s logo on it, and it was being used as a recruiting
device.  Imagine yourself at a football game, and you happen
to spin the bottom of your bottle of water and realize that it does
that, so you begin reading.  Then you find out all sorts of
things about what the university you were at offers. This is a sort
of cool and clever idea, but all it really involves is an extra
layer of the label on a water bottle.  The best part
is that this piggybacks on products that are already on the
market.  All I did was add a little value by
making some use of, or a simple improvement to, the label that
would have existed already.  It delivers more content. 
You could use this for contests and all sorts of things.  In
fact, you basically double the label size this way, and a company
can add more promotional materials, which makes the label all the
more valuable to the company at hand.  For this project,
my one-line benefit statement was, “This label adds 75% more
space.” If you had an idea like mine, you might begin by doing
a Google Image search for, “Labels that add more
information.”  Then, I would just look at all of the
images.  I've seen labels that pull out like an accordion
book.  I might even go into someone’s website.  I'd
just search around for everything having to do with labels.
 I'd look up “expanded content labels”, and “labels that add
more information”, and “labels that function”.  I just
start to become an expert in one little area.  In
this case, I looked at this and found retailers that sold
different types of labels.  Those would be the companies that
I submitted it to.  In other words, you could go to those
who have something substantially similar, and that could be the
first step in who to contact. Everybody thinks that you’re going
after the competition.  No, it’s your potential
licensee.  As you are researching the market, you’re
also looking for potential licensees.  The next thing
that you would do is perform a search on Google Patents.  I
would type in the same thing as I did before, which would be
things like “Labels that add more information”.  Various
patents involving these types of labels would come up,
and I would search through them to make sure that I'm not
copying anyone else’s patented idea. Then I would search through
the manufacturers that came up in this search as well.
Again, when you do this for a day or so, you begin to
become sort of an expert in a very narrow category. 
If you do this and you start to think that you have a marketable
idea that would work, that’s when you begin to make plans to put
together your sell sheet.  You might even decide to make a
YouTube video about your ideas.  YouTube videos are
very powerful, and one that you make for something like this
shouldn’t be more than about one minute long.  All
you need to do is demonstrate a problem and how your idea could be
the solution.  For example, if you wanted to sell the label
idea spoken about before, you could show a person that was
frustrated because there wasn’t enough information about something
on his label.  Then, you could show that person happy because
he found a bottle that gave him all the information he was looking
for. If you made a YouTube video and a sell sheet, you
could add a URL to your sales sheet that people could click on to
see a demo of your idea.  Since you studied the
marketplace and made a list of companies, you have done all of the
work.  You have a video, a sell sheet, and a list of companies
to send the sheet out to.  That’s when you’ll want to file
your PPA (Provisional Patent Application).  At that point,
you’ll have one year to shop it around before you have to file a
non-provisional, which would be a patent.  You can file a PPA
anywhere in the world, yourself, for basically $65.  If you
are in a higher income bracket, it might cost $120.  Either
way, it’s very affordable. The sell sheet that you make would need
a good image. A 3D, computer-generated graphic might run you
$50-$70.  That, along with the cost of your PPA shouldn’t
exceed more than about $200, and yet, you’ve created a package that
could potentially be worth hundreds of thousands of dollars.
I'm amazed at how many ideas I have seen that were truly
remarkable, but they take forever because they aren’t simple. 
People try to reinvent the wheel and have to educate people about
their idea.  On the other hand, I've seen small
improvements on products get licensed all of the time.  In
fact, I see licensing agreements almost every other
week.  The people that are getting these contracts are
using my 10-step system, and five of these steps you learned
about today. It’s really quite easy to put together the
marketing material, create a list, make a sales sheet, and reach
out to a company.  These are all steps that people can follow
and complete both quickly and inexpensively.  I have even
taught people in other countries how to do this, and they end up
feeding ideas to United States companies.  You can do this
from just about anywhere. Speaking of doing this
inexpensively, there are people offering to do 3D renderings on
Fiverr each and every day at a very low cost.  It’s
incredible how much skill people have today and what little they
charge for them.  There was a time that something like this
would have cost thousands of dollars, and now you can have this
sort of thing done for as little as $10.  It’s just
incredible. One of the points that I want to get
across is that you need to reach out to everyone that you can, and
if you get a “no”, don’t let it deter you.  Keep
trying.  I recommend contacting at least 25 different
companies, and all at the same time.  Don’t wait to hear back
from one.  Right now, you might be thinking, “Well, what if
there are two different companies that want it?”  I usually
respond to this question with, “What a great problem to
have!”  This could potentially cause a bidding war for your
idea. By the way, there’s one industry that you would not
want to contact more than one person at a time with, and that’s
DRTV (Direct Response TV, otherwise known as “As Seen on
TV”).  It’s a very small community, so contact them
one at a time.  There are only five or six players in that
community anyway, and you’ll want to contact each of them one at a
time.  When it comes to everyone else, however, you’ll want to
contact as many people as possible.  Keep good notes, and even
if you get a “no”, you might get a “yes” next time. Act
professionally and ask for feedback.  Maybe you can resubmit
it, or maybe you can tweak the idea a bit before submitting it to
the next company.  Everything is based on
relationships, and if you submit another one before you know it,
they’ll start to tell you what they are looking for. 
That’s golden because if you know what people want, you’re in a
much better position to provide it.  This definitely gives you
an advantage, and they realize that you are working for free for
them; that is, until they take it and rent it from you. 
You’re an asset.  They want these calls, and they are really
going to love you. When they finally say, “We want to talk more,”
you’re going to fall out of your chair.  This gives
me goose bumps to this day.  That’s when you’ll know that
you’re really in the game.  Again, anyone can do this. 
The steps are easy, and you’ve been given all of the advice that
you need to get started today.  The only thing that hasn’t
been discussed much at this point is the contract.  I can
talk all day about how to cut these deals, but there note
enough time during this interview. However, here are ways
to cut deals that you get it every time. How To Get A Deal
There’s one way to get a deal every single
time.  It’s all about taking away fear.  When a
company sees your idea, they want to license your PPA.  They
want to license that number.  They want to license your
concept.  It comes down to what you are granting and what they
are licensing.  In their mind, they need something tangible.
 I always tells these companies, “We’re going to make
improvements.”  That’s because they are; they always do. 
That sounds really simple, but they always say yes.  It’s good
business.  The company will tell me, “You’re right Steve;
you’re going to make improvements.  We’re going to make
improvements, and we need to add it to the contract.”  Now,
what happens when they do that? When your idea is
patent-pending, you’re going to ask for a certain
royalty.  That may be 5%, for example.  Then you
make the agreement that when your idea goes to patent, you’ll be
paid 7%.  At the same time, make the agreement that if it
doesn’t issue at all, they pay you at least 1% for your
efforts.  Doing it this way takes away all of the fear from
that company.  They are always worried about owning something.
 I don't believe that you own anything, ever.  Products
go in and out of the market so quickly today that your product
might go through its life cycle before a patent can even get
issued.  It’s not about patents.  It’s about
selling.  So, the way you do these deals is you just
take away the risk for these companies. During your negotiations,
you tell the companies that you speak with, “If it issues pay me
[this], and pay me [this] if it doesn’t.”  Since you opened up
the grant of license, you can always file another PPA to get paid
the 5%.  That may seem a little complex. I have written a book
on this topic alone.  These are the deals that I
see happening every day because you take away the risk and you
give the companies three different opportunities, and all along,
you play the patent game.  Even more importantly, the patent
game doesn’t play you this way.  This is something that’s a
bit hard for many people to grasp, but it’s not that complicated if
you sit down and think about it for a while. What happens is when
your product lands on a company’s desk, the CEO may look at it and
say, “Hey, I like this, but let me bring my team in.”  He
shows it to the sales guy, and the sales guy goes, “Hey, I can sell
this.”  Then, they go to the marketing person, and he says, “I
can market this product because it has a great benefit.”  They
bring the manufacturing guy in, and he goes, “This is an
improvement on our existing ideas, so we can make this.” 
Finally, they bring the legal guy in, and he asks, “Well, does he
own anything?”  This makes everyone in the room start to
think, and they say, “We don’t know.  Take a look at his
Provisional Patent Application.”  That’s when the legal guy
asks, “Well, will he get a patent,” and everyone goes, “I don’t
know”.  You see, no one knows; this is the gray
area. You’re playing the unknowns.  This
opens the doors for you to say, “I know it is speed to market, and
I know it’s not about protection.  It’s about selling. 
So, let’s just go sell it now.”  Why wait for a
patent to issue when it might not even issue?  Even if it does
issue, by then it may be too late.  So, you play that game of
the unknown, and that way, when you work the contract, you can keep
that gray area open and a little vague by adding new intellectual
properties that keeps that patent pending as long as you
like.  At the same time, you are minimizing their risk because
you’re telling them that if it doesn’t go to patent, my royalties
will be basically nothing.  It makes them very happy, in fact,
because you’ve countered everything that could possibly happen.
Again, it’s really about selling.  It’s not about protection.
 I have seen tons of licensing agreements in my lifetime,
in 99% of them, no one owns anything.  A lot of the time,
people don’t like to hear that.  Patent attorneys don’t want
to hear that, for example, because they want to sell you the
patent.  They want to sell you that process of filing a
patent. I want everyone to know, that’s not what I'm seeing.
 I see these agreements probably every other week, and
I've been seeing this for 15 years.  It’s not about fear, or
being an expert, or anything like that.  It’s really about
getting into the game today.  If you’re creative, you
don’t need to have a background.  All you need is one simple
idea. It's always a numbers game in anything you do
in life.  You can start one business and pour all of your
money and energy into it.  In four or five years, you may have
become a substantial success, and you may not have.  With
this, you may have 20 or 30 ideas in a year, and you can just put
all of those bowls out there.  Essentially, you’ll have all of
these companies working for you and you’ve increased your chances
tenfold.  On top of that, you were not the one to take the
risk. Licensing Your Products Vs. Selling Products Through Amazon
FBA I have a lot of students that do both.  Personally, I
don't want to have any skin in the game, at least not
financially.  Plus, I know that I don't have the time to
manage something like this, and have no interest in doing so
anyway.  At the same time, I do like to have multiple products
out in the marketplace, and I like to have several different
balls up in the air at any given time.  I like that what I'm
doing carries no risk at all.  This is something that’s
very easy to do, and I have done the other. I
have managed a company before, and have had my own
employees.  It’s complicated because you have to watch all of
the time and stay aware of the market swings.  All of
that stuff is someone else’s problem when you’re just licensing
your ideas.  It’s not that this is any better than
any other business model, really.  It’s just another way to
play the game.  I personally think you should play the
game in all sorts of different ways.  So, it’s not a
matter of one being better than the other; it comes down to how you
want to spend your time. If you’re a really
creative person, and you want to find something that can build
great wealth, then you need to find something that has a
multiplying effect.  Licensing your ideas does this.
Connecting With Stephen The 10 steps that were partly
outlined are completely outlined in a book called One Simple
Idea.  You can find it on Amazon, and it’s been
selling there for over five years.  It has also been
translated into five different languages (learn more about selling
foreign language rights to your books).  I call this book
your “road map” for pursuing this type of business.  I also
have a YouTube channel called “inventRightTV”.
 My partner Andrew Krauss and I produce two YouTube
videos every week, and each one is on the 10-step process that
you’ve been introduced to today.  Last but not least,
I also write for three online magazines, on a weekly
basis.  They are:

Entrepreneur.com

Inc.com

Core77.com

      Daniel's Real Fast Result
Tip: Passive Income I agree with all that Stephen has
discussed today. I firmly believe that we should all seek out
a business model that supports our lifestyle and gives us the kind
of time freedom that we need.  This particular model is right
in the cross-hairs of that goal.  That’s one of the reasons
why I just love the idea of all of this. So, go out and make
it happen! Resources Stephen's Book - One Simple
Idea Google Image Search
- https://images.google.com/ Google Patents -
https://patents.google.com/  Finding 3D
Artists - https://www.fiverr.com/ Selling
Foreign Language Rights To Your Books Real Fast Results
Community If you are diggin’ on this stuff and really love what
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