The CES Paradox
Damned if you do.
Damned if you don't.
I was reading an editorial blog on engadget.com about the surge of crowd-funded start-ups at CES and their impact on the CES trade show as a vehicle to promote these newly formed companies.
What caught my eye in this blog post was not as much the editorial itself, but more one of the first comments by one of Engadget's readers:
“jonthan.perry
So with all of their backers money, these guys are treating themselves to a week in Vegas (flights, hotels, meals, transportation), paying for booth space (along with tables, signs, props, ect...) instead of focusing on finalizing the product and getting it into backers hands? CES seems a bit overrated to me, just if you are going to announce or launch a product, why would you a) wait until CES to demo, or b) show off an incomplete product. ...”
I have a feeling more than one reader had the same thought when reading this Engadget blog. For the start-ups that are contemplating the idea of spending significant amounts of money and time to prepare a booth and go to Las-Vegas to attend CES, the decision must be based on both priorities and perception.
If the start-ups product satisfies an existing need - IE building a better mouse trap - I suspect it will be easier for the casual observer to see the value in such promotional costs because the intended purpose of the product is better understood and it's user base is already established.
However, if the product is intended to satisfy a need that is yet to exist, the start-up has to first properly define and promote the need before promoting the product . Spending a big chunk of your crowd funding money on casino hotel rooms and plane tickets to Las-Vegas, will likely be perceived as an extravagance for a product that is still technically considered vapor-ware.
On the other hand, the product with an established need will have to be refined and properly tested before ever being promoted along-side competing products at a venue Such as CES.
The inventor of a product that has to create a need in the minds – and wallets - of potential buyers, may still find value in a visit to CES but they will have to do things in reverse. Instead of setting up a booth at CES to attract the media, they should instead attend CES as a visitor and bring their product to specific media personnel on a one to one basis. The media people chosen for these presentations will be the ones that will best promote the need and not necessarily the product that has yet to be brought to market.
Crowd-funding websites such as Kickstarter and Indiegogo monetize their service by retaining a percentage of all revenue awarded to projects posted on their site in addition to passing on all shopping-cart fees to the owner of the posted project.
I see this as a fair exchange, as the most popular crowd-funding sites have done a good job of promoting their service and by consequence the innovative projects they host.
It is precisely this promotional vehicle that may be the solution to the paradox faced by some of the crowd-funded innovators contemplating an investment in a CES booth to further promote their newly designed products.
Such crowd-funding sites setting up their own CES booths, and inviting each their ten most-monetized projects of the past year to present their wares in a standard and unified fashion, will not only give content to the crowd-funding site's booth but should help reduce the costs of attending CES for the project owners contemplating their own independent booth space.
By having the crowd-funding website pay for the booth and its design and having each of the ten project owners pay for their own transportation and lodging, this would be a win-win situation for both the website and the project owners in terms of promotion and public relations.
They could also leverage the good will they have established with all successful project owners such as designers and artists to bring chosen, products, services and animation to the booth and the attendees.
Apples and Galaxies
Patents as obstacles to innovation
The other day I had a discussion with a stranger. The only thing I knew about the stranger was that it was a lawyer. I wasn't even sure about its gender. During the discussion, I mentioned I was an engineer to emphasize a technical point I was making. Its reply: “What does an engineer do?”. It was evident by the context of the discussion, the question was meant to be a defamatory statement. This begs the question: what does a lawyer do? Are the legal services offered by corporate and patent lawyers worth the investment?
All the talk about “Patent Wars” in the technology, business, and social medias, have had me thinking about the role of patents as purveyors of innovation. Instead of being protectors and motivators of innovation, patent law and the whole legal industry that has spawn from it, have made patents one of the biggest obstacles to inventors and the products they design and develop.
Even though The SLD Project is still in the design phase, I have counted at least a half dozen patentable inventions and improvements to existing designs that I have created as of this writing. Due to the modular design of the Photowebs System Camera and to the convoluted legalese involved in writing up a typical patent application, I figure there is 8 to 10 independent subsidiary patents for each of the major inventions and design improvements mentioned earlier.
I estimate the cost of developing and building a Proof of Concept prototype of the Photowebs Modular System Camera at $50 000.00 USD. With about 50 patents, and a conservative estimate of $10 000.00 USD per patent application to cover legal and professional preparatory fees, I project the initial legal costs of bringing a propitiatory version of The Photowebs Modular System Camera at ten times the total cost of the Proof of Concept phase of this project.
Open Photowebs
A photographic Adafruit
Companies like Adafruit and Smartduino are innovators on two levels: not only do they offer innovative components and the open source software to go with them, they are the purveyors of a new type of business model adapted to the realities of globalization in an information age.
By far the biggest obstacle to getting the Photowebs Modular System Camera to market is the legalese associated with making a propitiatory version of this system camera.
A crowd funding goal of over half a million dollars, where the near totality of the raised funds go to a conglomerate of corporate lawyers, is unreasonable and based on the average funding goals for projects of this type, will be difficult to attain under the best of circumstances.
Even with the necessary funds, be it through crowd funding or private equity, the time it will take for another company to copy the design and bypass the original patents, is today measured in days and not years. Enforcing these patents would raise the total cost of the original budget by several orders of magnitude.
This is where small businesses like Smartduino have got it right. Their business model is based on helping themselves and their customers prosper, and not a group of third party corporate lawyers. Not only is the software to run their products open source but the hardware itself is also open source. They make a profit by being the first to offer a particular component and by ensuring the continued improvement of existing products. And since they are the inventors, they have a head start at making the best version of a particular component even when an other company uses their open source designs to make a competing version of the same product.
The advent of LinxCNC and of quality 3D printers at a reasonable price, have made it possible for small businesses to start-up and succeed using an open software/open hardware business model.
This is the business model I am hoping to apply to The SLD Project. If I can reach a crowd funding goal of $50 000.00 for the Proof of Concept phase of this project, I will have sufficient funds to apply an open source/open hardware business model for the Photowebs Modular System Camera.
I will then be able to submit a feasible and professionally prepared project to an established crowd funding website to obtain the necessary funding for the production and distribution phase of this project.
