A missed business opportunity can have many root causes. One of them should not be trying to put one over on the other guy.
Back in 1995, I worked for a small company that designed and built flowmeters and flow sensors for the semiconductor processing industry. The industry needed an electronic output on flowmeters in order to function as an input for flow control. The metering technology at play here was nothing new, but the addition of electronic sensing could make for a tough, accurate addition to flow control technology in applications where corrosive fluids would ruin other devices not designed for this environment, to say nothing of contaminating the working fluids that could trash milllons of dollars’ worth of product – in this case semiconductor chips.
A few minor details here. One of the better ways to do this is to use the in-plant intranet and Internet technology functioning through an Ethernet 802.11 communicatons protocol with an RJ-45 type connector The connections are common, and a certain level of power can be drawn straight from the standard connector without having to provide an external power source. Since this device did not require much power, the existing power supplied through the RJ-45 connector would have been more than sufficient.
The inventor, whom I will call Tim, presented a proof of concept design to the company owner, whom I will call Jeff. Over several weeks, it was determined that the proof of concept design, if modified somewhat, would function properly in this environment. Being that the design was in a proof of concept mode, a more-easily manufactured design would be needed along with custom electronics that could be packaged more efficiently. No big deal.
When negotiations between Tim and Jeff concluded, Jeff threw Tim and extremely ridiculous, insulting offer that would have left Tim with a small amount of cash, which would have been barely enough to break even on his expenses. No royalties will be included in the deal. Tim would have had to sign over the rights to his invention in its entirety and walk away.
Tim walked away, and forgot about the invention.
Enter 1997. A rival company formed and fielded a similar product that duplicated the function of Tim’s invention originally turned away by Jeff. Rival Company manufactures and sells hundreds of these units at premium pricing. Several years later, this company was sold to a larger company making similar products for $30 million. To this day, these units are still being produced. When I reviewed Rival Company’s product, I found numerous weaknesses that could have been avoided had Jeff adopted and improved upon Tim’s invention. Rival Company resolved some of these technical faults, but some of them remain to this day, and will never be resolved.
Had Jeff offered a fair price and royalties to Tim, there would have been little incentive for Rival Company to enter the market.
From my perspective, Jeff wanted to dominate the relationship with Tim and, in effect, throw him a financial bone and take over his invention. If an inventor is hungry enough, he or she may take offers such as this. If not-as in this case-the inventor went away feeling insulted (as I would have!), and the product was never manufactured. The stage was set for competition to take that part of the market. Rival Company produced a somewhat mediocre product that was in desperate need by the semiconductor processing market. Since there were few if any other choices at the time, the product sold well. The product family carried premium pricing and remained at these high levels for several years until competition brought pricing down considerably.
A little bit of fairness, courtesy, and prudent business planning could have resulted in a good business relationship between Jeff and Tim, and left the door open for more products.
Norman T. Neher, P.E.
Analytical Engineering Services, Inc.
Elko New Market, MN
www.aesmn.org