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Kevin Mako: Hello, product innovators. Today we learn from the founder of one of the biggest product TV shows in North America on what it really takes to license your product the way the professionals do it.

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Narrator: You're listening to the product startup podcast. The show that helps bring your product idea to life by chatting with successful inventors, product developers,

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Narrator: manufacturers, and hardware industry professionals. Our goal here is to get to the bottom of what makes a product successful, from initial idea to getting your product on store. shelves. We're taking you step by step to build a functional product and scale your product

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Narrator: business. Hosted by Kevin Mako, one of North America's leading experts on hardware development for small product businesses. Now, onto the show.

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Kevin Mako: Welcome back, everyone. I'm Kevin Mako. Today, I'm very excited to introduce Tom Gray to the show. Tom is the founder and executive producer of the Make48 TV show, a show where contestants have 48.

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Kevin Mako: eight hours to come up with an invention idea, build a prototype, and then showcase it to the judges. The show is on PBS, Amazon Prime, and many other networks all around the world. Tom is also the president of the Handy Camel, a company that distributes client products

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Kevin Mako: all over the world. Simply put, he is one of the big names in the North American product startup space. Today, Tom is going to share some valuable knowledge on how inventors, startups,

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Kevin Mako: and small manufacturers can license their inventions and products and get into the market. how licensing is actually done properly and professionally to get into the distributors, retailers, or big product brands with your product.

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Kevin Mako: Hey, Tom, welcome to the show.

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Tom Gray: Kevin, good to see it, my friend. Yeah, likewise. Yeah, where are you out of right now?

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Tom Gray: In Kansas City, Missouri, hometown. I actually down at the co-working space at the office today.

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Kevin Mako: You know, I usually do all my meetings back at the house at the farm. But I knew this was an important call with you on the podcast.

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Tom Gray: I had the best internet and speaker I can find. Oh, I very much appreciate it. It looks like you're actually in some sort of a recording studio. I can see some of the, I guess, padding there for the soundproofing. Yeah, we have a green screen. Of course, I've got the brick background now, which is all natural.

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Kevin Mako: But yeah, they have a nice here at the office. I have a nice community,

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Kevin Mako: filming, podcast, recording room for special meetings. So I make sure I snapped it up. Very nice. So it's been a while. Well, we've done a few things.

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Kevin Mako: I've actually known Tom for many years through the Make48 TV show.

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Tom Gray: I've had the pleasure of being on set a couple of times, watching all the craziness unfold. Why don't you give everyone just a quick background of Make48?

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Tom Gray: Yeah, it's a concept that was created here in Kansas City, myself, Rich, Kurt and Bob co-founded it.

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Tom Gray: And we wanted to bring teams together from different backgrounds and skill levels and give them a chance to invent a physical product.

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Tom Gray: It doesn't have to be working, but to build a physical prototype all in 48 hours, but you've got the luxury of a state-of-the-out maker space that has the equipment from 3D printers to C&Cs and everything in between and tool techs.

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Tom Gray: So we rely heavily on experts to do CAD design, 3D printing, welding,

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Kevin Mako: and that way the teams just have to collaborate. and that's what's all about and um yeah we know that the whole world can't build everything themselves then that will never happen and certain people have skills and we're trying to just join those

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Tom Gray: two people together to make that product and now i mean it's it's it's it's blown up um amazon pbs uh you know tell me tell me about that where where where can people watch the show

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Tom Gray: made 48 you're on which season i know you're now getting into recorded season four is recorded you're going to season five coming up. Yeah, so season four has just come out on PBS nationwide. We're now in 95% of American homes,

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Tom Gray: which is a really good result for a TV concept. For those that don't know PBS,

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Kevin Mako: there's 300 stations around the country and they all must vote yes, no, maybe to play TV series. So to get a penetration of 95, 96% on average is really good for us. It's also on Amazon Prime,

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Kevin Mako: but yeah, we're obviously planning now for the future and season five.

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Kevin Mako: You know, it's been a blast to be on the show as well. More on the, you know, on the tool tech side,

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Kevin Mako: you know, I know, one of our lead designers, Tim Ace,

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Kevin Mako: had a lot of fun doing the CAD work, working with the different teams, getting these products figured out, designed, all within 48 hours. And then, you know, the big pitch at the end,

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Kevin Mako: that, which, you know, I had the, that was a lot

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Tom Gray: of fun actually doing the keynote to last seasons. Yeah. And it was an absolute blast. The energy was there was all kinds of. crazy sponsors there as well,

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Tom Gray: Stanley Black and Decker, some others. I only talk about some of the sponsors that were on there too, because that was very exciting to meet some of the YouTube stars in the product space and all that while I was there. Yeah, we had season four, we had Jimmy DeResta. You know, he's the godfather of making and real talented guy, but he's old school making,

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Tom Gray: you know. He does digital fabrication, but he's really good at welding and woodworking. We gave him the co-hosting position along with Xyla Foxland, and they were awesome together. Yeah, they were. You know,

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Tom Gray: the benefit with Make48, it's 100% real and it's not scripted. And everyone comes together to help, including major corporations.

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Kevin Mako: You know, we have engineers,

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Kevin Mako: sorry, and tool techs coming from big brands to all pitch in. And we have mentors that have to help with, you know, marketing and stuff like that.

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Kevin Mako: So the teams have access to these great minds to make sure that their product and their pitch at the end is up to standard, you know, and give them a good chance of winning. So, yeah, it's amazing. And, you know, all this comes back, you know, let's rewind a little bit back in time here.

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Tom Gray: Talk about your experience in the product sales and distribution, because that's what we're going to get into on this episode, really looking at the real way of getting products onto the shelf through

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Tom Gray: the license vertical licensing, which I know you had a lot of history on both in Australia and then in North America. Give us a quick run through of your background there. Yeah, so before Make48, I was very much heavily in the product world.

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Tom Gray: I would license inventions from inventors at an early stage. I would then manufacture them, warehouse, distribution, marketing, the whole lot, and supply directly to retail.

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Tom Gray: I started doing that in Australia. I supplied Bunnings, which is equivalent to the Home Depot of Australia, which is a big brand down there. And I was in the roofing and guttering industry. So I had shelf space in that section.

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Tom Gray: I started off with one product. I ended up selling that company with I think nine products on the shelf. Once you have success, you often can see grow on that, you know, with the buyer has trust in you.

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Tom Gray: And if you can perform and have good sell through, they will listen to you for new products. So I heavily relied on new inventors to bring me new innovation.

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Tom Gray: You know, I'm not directly an inventor myself, but I know the tricks and the tips that help get the product to the end result. But, you know, fast forward, we came to America. I married my sweetheart here. And that's why I'm here. I've been here for 13 years.

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Tom Gray: And I did the same thing. You know, I started to supply QVC with innovation. We started with the Handy Camel bag clip, which was a cool gardening product. A bag clip that reseals big bags is what it was invented to do.

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Kevin Mako: But as we grew, you know, and, you know, things did, things definitely did get tougher, you know, with retail and with Amazon.

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Kevin Mako: Amazon's a great thing. And it's really starting a new vertical of entrepreneurs, for sure.

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Kevin Mako: but to really get good results and sell lots of something has just got harder and harder because there's just so many people now doing it. So, you know, licensing is becoming still is becoming a great avenue, but you've got to make sure you take those right steps to get

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Kevin Mako: success. So those right steps, I mean, let's talk about today. Tom, you're somebody who's known by everybody in the industry. You're one of the big players in the product space now,

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Tom Gray: especially with Make48 TV show and then, of course, with Handy Camel before. So one of the big questions that I know many of our clients ask when they're designed, developing their products, what is the end game and how does licensing play into it?

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Tom Gray: Now, licensing is one of many, obviously, many channels in which you can choose to sell or distribute or wholesale your product.

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Tom Gray: So it's a very, very interesting one. Let's start from the beginning. What do you need to do to get into the licensing game? game with your product invention.

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Tom Gray: Yeah, this is one that a lot of people have different opinions, but if you know the industry and you've actually been involved in it for a while, you must have a working prototype.

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Tom Gray: If you don't have a working prototype, you will not be taken seriously for a lot of reasons. First and foremost, companies are getting pitched products every day. And if people have a real life prototype, they're going to look at that person first. They're not interested in ideas.

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Tom Gray: They have no care about an idea. they also need to see some type of protection as in a patent pending phase a utility patent

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Tom Gray: is great if you've lasted that long to secure that but you need some type of protection and the reason that makes a huge difference if you don't have protection and and yourself or even

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Tom Gray: the person you're trying to pitch your product to walks into say a Walmart or a Home Depot and they ask the question it's part of the due diligence of a big retailer is we must see what

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Kevin Mako: you've got protected in this product.

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Kevin Mako: And if you say, look, I don't have any protection at all, well, that's it. This conversation stops right there.

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Kevin Mako: And the reason is anyone launching a product in big retail, especially the retailer, is trying to get big success. They're not going to want to sell 10,000 items and call it a day. They need to make sure they can sell a million items. You know,

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Kevin Mako: it's going to be a big play to get that shelf space. If you cannot protect that product, that

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Tom Gray: means their competitor can freely walk in and copy it 100%.

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Tom Gray: So success is a great thing on one hand, but it also opens up a big opportunity for a lot of people to infringe and take it over. So you must have some type of protection, no matter what, on a product. Great. So first things first,

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Tom Gray: focus on the product.

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Kevin Mako: Then you've got to look at filing at least some degree, you know, whatever you can afford or whatever time permits,

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Tom Gray: at least some degree of protection to get going, right? even if it's starting with a provisional patent, then ideally moving at some point to a utility patent, maybe a design patent, whatever, but either way,

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Tom Gray: some level of protection. Yeah, you've got to have that. No, that's great. Then where do we go from there?

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Kevin Mako: From there you go, and this is probably, you know, the most important thing is educating the person you're pitching it to that it works and how it works and doing it in a really simple way. And that's usually a one minute, one minute pitch video.

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Kevin Mako: You know, someone doesn't want to say. One minute. One minute pitch video to explain it. I love it. Because if you can't explain it in one minute, how is that retailer going to sell it to their consumer? Right. This is the true elevator pitch, right? One minute. Yeah, one minute. Clear, concise to the point.

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Kevin Mako: Yeah, one minute. And that is really important because a buyer will listen for one minute when you think about it. They'll open up an email and they'll watch a pitch video for one minute. If it's five, six, seven minutes long and the first three minutes are you just

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Kevin Mako: talking about yourself, you've already. lost the buyer. They just want to see the product work and straight away they're going to say yes or no.

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Tom Gray: So you need that. I love that you mentioned that because one of the things that I get asked all the time is, you know, what makes a what makes a great product? I say, you know what? If you can't explain it

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Tom Gray: quickly and if it's not a simple solution to a problem, then you've already lost your audience before you've even started. It's very difficult, not only in the design and engineering to make something

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Tom Gray: that's so overly complicated that it takes a novel to understand what its purpose is, then how are you ever going to sell that on the back end? So that's really interesting. You mentioned the one-minute video.

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Tom Gray: That's the first time I've heard that, but it makes perfect sense, clear, concise,

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Kevin Mako: to the point, let them come back to ask further clarifying questions that they want after you being able to explain that. And you should. You know, 60 seconds is enough. 60 seconds, you should be able to bang out exactly what your product does, especially if you're pairing it with a prototype or with videos or,

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Kevin Mako: explainers of how that thing works.

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Tom Gray: And the benefit there too, Kevin, is, again, if you're pitching it to a big corporation, which most people do, you know, they try to find the right corporation for their industry, right?

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Tom Gray: That corporation sometimes will see a thousand different inventions a year.

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Tom Gray: So, again, their time is really precious and they don't want to see, you know, a fluffy video of crap and other things. They just want to get to the point in demo. Now, that's just, don't forget, that's just to the person.

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Tom Gray: making decision. If that product goes all the way to market, it's going to sit on a shelf. There is no video on the shelf.

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Tom Gray: So again, if you can't explain it in one minute, you're going have a really hard time trying to explain it when it sits in a box. Right.

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Tom Gray: So when you're, now we're talking licensing here. You're mentioning it bringing to somebody.

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Tom Gray: I presume you're talking about manufacturers or brands. Yeah. You're talking about who are the people that you're actually like, who do you try and license to? Who are those people? What are those brackets? Yes.

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Tom Gray: Initially, people, inventors always think big and they shouldn't think big, meaning, you know, if I've got a hardware tool, I want to take it to the biggest brand, like a Ryobi or a Stanley or a Milwaukee. But the bigger the brand, the harder is to penetrate.

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Kevin Mako: Yeah, maybe focus on one of those smaller tool emerging brands that has a lot more hip and a lot more excitement and they're open to innovation. So don't think you've got to go to the big name brand. At the same time, the big name brands,

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Kevin Mako: generally have all the space on the shelf. They have control of that space. They've been there for years and they're the ones that can get into Home Depot and Lowe's if you have the home run product. So you've got to find the right people for the right industry.

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Kevin Mako: The other key thing I've always found over the years is niche markets obviously means small and different and specialty.

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Tom Gray: If you've got a product for cleaning, you don't have to go to bed, bed, and beyond with your product, go to a janitor supply company who supplies, you know, the janitors of

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Tom Gray: the world or the plumbers or whatever and sells directly to them or a snap on tools or something like that. There's a whole market there for niche innovation products, you know. So you're going to find the right company for your product. You don't necessarily have to think big brands.

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Tom Gray: Starting small. It's absolutely critical, especially as a startup.

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Tom Gray: Most of our listeners and almost all home-based inventors, they start somewhere, they start small, they start with their first. Usually it's one product. It's called a one skew product, right? One item that they're trying to sell

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Tom Gray: to the brand who will then sell it to retailers.

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Tom Gray: And absolutely, one of the easiest things

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Kevin Mako: that you can do is start small and work your way up. We always say, look, if you can sell 500 units in a small, isolated market, then you've got a very interesting proposition maybe to go to the

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Kevin Mako: mid-sized players. So look at the success we had here. Now look at your distribution or your size, look what you could ramp it up to. And of course, then when you go to that next level, now you're proving your model to go to the big, big players. Yeah, I think you hit it right

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Tom Gray: there, Kevin. A lot of people try to go straight to the big players and never sold one of their products.

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Tom Gray: You know, most of the failure of a product happens in that first 12 months of launching the first series of or the first phase product that you have.

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Tom Gray: And, you know, when you're testing your product and you're trying to launch it out of your basement or whatever, which is where you should always start.

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Tom Gray: And people get their first run comes in the door, you know, from the factory. And then they sell it straight away online or whatever it may be. And that seems to be obviously the most common way to do it, which is fine. But the problem is, you know, you've tested your product by

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Tom Gray: yourself or with a couple of friends usually. And you think you know all the problems with it. You will never know the problems until you sell 100 or 200 of them to different people that aren't you or your mom and dad.

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Tom Gray: And after six months, you'll work out all the problems, right? So yeah, that's where it comes very attractive, obviously. If you can iron out those kinks, you prove

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Tom Gray: your model, you start selling 200, then 500, then 1,000, you're showing an incredible growth

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Kevin Mako: success rate, right? And that, that, I think, when you're mentioning the big players, that's always been one of their major hurdles. And what's the point, right, to rush to the big player before you've

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Kevin Mako: proven yourself as well before you've ironed out those cakes and you know the big thing now is you've got reviews reviews is the number one thing people look at so if you sell on amazon or if you sell anywhere on it's see it doesn't matter where you sell your product if you sell on amazon and you sell

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Kevin Mako: a hundred units and there's a problem with it and you get you know 20 bad reviews your product is dead it is not going to go anywhere because even though you might have had one problem that you

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Kevin Mako: could have easily fixed you rush it to market without fixing it you're just killed yourself if you release that product and you get 25 star reviews that is a perfect

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Tom Gray: starting point meaning keep going you know if you can go to a retailer or a big brand and say look I'm going to grow out of my basement I've sold 500 of these but look I've got four star rating

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Tom Gray: I need someone to take to that next level you will get a meeting every time because you have very interesting yeah you have taken that product a lot further than than the thousand other inventors who are dreaming and haven't done a thing because you've invested your money

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Kevin Mako: and proven it out. You've taken that stress off that brand. They would have had to do that same

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Tom Gray: thing and you've taken all that risk from them. So that's the ultimate goal there. If you can launch, do it small and then take it to the big guys. That's what we've always said. Always comes down to production.

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Tom Gray: And I think this is a very interesting topic when we're talking about licensing in particular, because you mentioned one of kind of the minimum bars is a prototype. And realistically basically speaking, that may get you into the licensing meeting, but you're not going to go to

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Tom Gray: become a big time product until people see those reviews. And that requires essentially

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Kevin Mako: bridging the gap between your finished product or your pre-production prototype or whatever else to actual manufacturing.

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Kevin Mako: And that's where I guess, I think it's important to explain kind of a distinction here between manufacturing and licensing because of those. those are kind of two different fields. One, essentially, you're producing yourself,

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Kevin Mako: the other one, you're licensing to a company for them essentially to produce your technology. Correct. Yeah, so you're going,

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Kevin Mako: again, you can spend really the littlest amount of money you can and do a basic prototype. Take it to a company. The problem is the company then has to do the two years of R&D, getting it perfected, and spending all that money to find out

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Kevin Mako: even if it's going to actually work. So most licensing deals, when they're signed actually fail to advance all the way through. I guess especially if they're signed premature of the product actually being premature developed. Again, you go

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Kevin Mako: back to if an inventor really puts money behind it and does all the R&D and tweaks it and perfects the prototype and the product first, you're going to just have a lot higher success rate because it's ready for manufacturing then for large scale manufacturing

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Tom Gray: because even, you know, I've done this mistake myself where you go on to invest 50,000, dollars of tooling you pump out you know a thousand it's like oh no here's a here's a problem

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Tom Gray: i've got to retool up again and change that whole tool around and spend another 10 grand you know this that's the kind of stuff that a company is going to have to do with your product you know so

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Tom Gray: the further you take it the higher the chances you're going to be you know yeah you know something we've always said too with with development is you're going to have a lot easier time raising a small

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Tom Gray: seed round or friends and family round or whatever else to get let's say from your rough prototype to a quality pre-production like ready to go professionally prototype then you will trying to sell

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Tom Gray: some absolute long shot um licensing deal with a company that may or may take the license to deal

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Kevin Mako: and never run with it right it may just sit on their shelves for the two year and by then you know it's quite possible that your product value has has been marginalized or competitors have come in or whatever else.

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Kevin Mako: So, you know, it's interesting. You bring up that point. It's like the closer that you can get to those reviews, the better.

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Kevin Mako: And I think that's one of those things that it's difficult because we've lived in a history where you do hear those occasional lottery winning success stories from the 1970s where somebody comes up with a great patent and all of a sudden's getting, you know,

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Kevin Mako: royalty checks for millions of dollars. But that's simply not the way products are done anymore.

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Tom Gray: It's all about what have you sold and how have your customers appreciated that value that you've given them through your product, then figure out how to scale to these mega markets that, you know, eventually are out there. Yeah, I recently,

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Tom Gray: you know, I speak to a lot of heads of innovation for companies who do licensing, you know, through, through Make48, I've had the luck to meet these people. The average licensing deal and royalty check on an average product, like I'm talking about not

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Tom Gray: low, not high, just the average price is between $20,000 to $30,000 royalty checks per year on a good average product. So that's not big money. You know, inventors think that they're going to make

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Tom Gray: a million dollars, like you say. That doesn't, that, you're better off going to buy the lot of ticket, you know. So don't expect too much. And with licensing,

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Tom Gray: most people when they license a product, they have one good invention and they license it. Very rarely can you come up with a new idea every,

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Tom Gray: every six months.

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Tom Gray: So what that tells me is that, and I'm a believer, just keep your day job, just keep your job. And if you make a licensing deal and you can make

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Kevin Mako: income on the side, that's a great passive income. Yes. Yes.

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Kevin Mako: And then, you know, if you really think

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Tom Gray: that this is something you need to jump into, wait until you're in the business of it. It's, I think it's the same whether you're going into manufacturing or whether you're going into, you know, taking the long shot and hoping to get a great licensing deal.

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Tom Gray: But in either play, certainly, don't quit your day job until you've got it to a point where you think, okay, you know what, we've either got big investors on board or big buyers are now chomping at the bit. Now I really need to dedicate 50, 60, 70 hours a week to this and nothing else.

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Tom Gray: And I'm distracted worth work. Okay, now I'm ready to pull the trigger. Then make that change. But ideally not beforehand. Yeah. I'll tell you another thing, Kevin, with licensing. And I see inventors get really uptight about this is when you go and you go and you get.

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Tom Gray: going to you're negotiating your your product a lot of inventors get upset when the license company doesn't take their name of the product because a lot of people a lot of people like to name

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Tom Gray: their product but and they want to see that name attached to it forever that doesn't usually work

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Kevin Mako: because there's two very powerful things with a product there is the pattern that goes with it and then there is the name that's branded with the product but if you go to a company they're going to always brand their own brand.

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Kevin Mako: They're not going to give you both of those things, right? Because a brand is very powerful. A brand, to me, is a lot more powerful than a patent.

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Kevin Mako: And that's when we can

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Tom Gray: trademark something, right? And you can protect a trademark a lot easier than a patent.

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Tom Gray: But you think of brands. Brands can last forever and ever and ever.

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Tom Gray: And innovation can rotate through those brands. So they'll often use their own trademark brands to grow and use your innovation to go under that umbrella.

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Tom Gray: So again, inventors get really uptight and think that they're getting ripped off because the company is going to change the name of their product. And that is completely normal. Well, so from the licensing deals that you've seen,

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Tom Gray: how much rights do the inventors have once they sign that deal for their product? Things like the name, even the design itself.

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Tom Gray: Usually the pattern is the only thing they've got. A pattern or a patent pending is the only they can license.

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Tom Gray: If you don't have that and you go to a company, you've got nothing, that company has all the right in the world to just take your product and run with it because you didn't get off your bum and do your own, you know, protection.

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Tom Gray: So the pattern is the only thing.

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Kevin Mako: You can have an exclusive license where you cannot sell that ever again and that company has an exclusive right, but they've got a usually hit a minimum threshold of selling so many units per year,

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Kevin Mako: you know, and that keeps them the exclusive right. But then you've got,

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Tom Gray: you can have a non-exclusive license. For instance, you might go to someone and say, hey, I want to license this product to you, and you can put it in Home Depot and Lowe's and Menards, for example. But then I'm going to take the same product and take it to a

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Tom Gray: completely different industry for another partner. And that's a negotiation you're going to have to have. Right, right. And that splits your risk between two companies, you know?

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Kevin Mako: right but usually if a company's going to spend money and market the product

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Kevin Mako: they're going to want to have it exclusively yeah and i think for the better the better deals that i've seen in any case and the better wins um first of all usually they've been in production at least for a little bit they have some users and second of all the ones that i've seen that they

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Kevin Mako: really want to scale up with them they demand exclusive at least for a certain amount of years three

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Tom Gray: years five years depending on how much money they plan to put into marketing and whatever else to to actually make it a big hit product.

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Tom Gray: I think so because every product needs marketing. And when you're talking about brand new innovation, no one's ever seen brand new innovation before. So if you've got a brand new invention, someone has to spend big money to tell the world it exists, right? And why they should buy it, right? And why they should buy it.

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Tom Gray: And that's the most expensive part.

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Kevin Mako: That's what takes millions of dollars when you think about it. I've got a good friend who's big in the toy industry. And she said whenever they launch a brand new toy, they have to spend $2 million on marketing.

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Kevin Mako: right to give it to give it the right shot of having a chance to succeed anything less and they just didn't spend enough but they think two million is the the amount they have to spend right so if you've

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Kevin Mako: if you've gone out and licensed a two or three different companies and only one person is going to spend their money and take the risk the other two are going to be like this is great someone else is marking this product for us right right and straight away the deals just don't work because that

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Tom Gray: happens they they look at each other and like well I'm doing to spend all the money you know And that's why exclusives are usually the only way it works. Right, right. And I think there's a lot of value to the exclusive for the inventor, because realistically speaking,

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Tom Gray: hopefully they're negotiating along the lines with an exclusive. Like, what is the inventor going to get in exchange for the exclusive? And generally, it's got to be favorable.

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Kevin Mako: Otherwise, why would the inventor want to sign such an, you know, such a deal? It's a minimum. It's usually a minimum per year of royalty check, no matter how, a minimum. No matter how, if they sold zero, you still get that. check.

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Kevin Mako: The problem is there's always a clause in there. It's fair for the other person, too. So there's always a clause that if they put it on the shelf and this whole product's a failure and just doesn't sell for whatever reason, and that's very common to, then everyone can walk

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Kevin Mako: away eventually, you know, because you can't hold someone to the fire if the products are done. You know, no one's, no one's winning in that situation. And they've taken some risk too. So it's not like they're, it's not like it's a one side of deal because they put, you put money into

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Kevin Mako: R&D, maybe you've gone to production, you know, you put your money in, you've got to the point where they have interest. But now they're also putting in probably a similar or possibly even more money into launching that. So I would imagine that would be a reasonable kind of course of action

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Kevin Mako: if it doesn't actually fan out for either party. The company is definitely putting in the bigger money, usually.

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Kevin Mako: Our last calculation on our product we did, you know, the tooling was expensive,

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Tom Gray: but the tooling ended up to be 15% of the total budget of what we needed. Right. And that's where a lot of people think, well, if I just make my product, it ships to me from overseas or local, it sits in a warehouse and they're like, okay, it's ready for sale.

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Tom Gray: But no, nothing's been sold because you're just beginning the journey. Right. Well, that comes back to what you were saying about the bigger you go, the more difficult it is. Because if you are going to those national brands, they have to spend on national campaigns. Yeah.

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Tom Gray: So that's where if you go to a small regional brand, maybe they would look at it as a much more reasonable investment, as a much smaller investment. And that could prove your model for a future deal, maybe of much greater size.

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Kevin Mako: Maybe it's not in their region or maybe to partnership associations of theirs or whatnot. But the key is getting in the door, proving that tracker.

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Tom Gray: Everything really seems to keep coming back to, you know, the more you can prove, the higher the chance of success, the better deal you're going to get and so on, right? I think it's like anything in life, right? it, no different than getting a job. If you've got experience and you've done it before,

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Kevin Mako: you're going to have a better chance of someone with zero experience. Yes.

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Kevin Mako: No, I'm a big believer. For inventors that spend 10,000, 20,000 on their product, it shows me they've got skin in the game.

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Kevin Mako: And that's always a good thing,

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Kevin Mako: you know. So you have to do it. You have to spend money somewhere and you have to build something sometime. Yeah, I mean, that's a big topic, obviously, and money and how you go through.

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Kevin Mako: through the rounds to actually get to it. But looking at the hopeful long shot lottery ticket is really not the way to win. It's not going to happen. I have, I don't think I can think of a time that I've ever seen somebody come with just some rough idea, rough design,

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Kevin Mako: some basic, maybe even just a basic provisional patent or something like that. And all of a sudden be making millions and royalty checks. It never happens. There's a couple of stories, you know, you've heard in the past many years ago, maybe that it happened. And even those, you know, riddled with some difficulties. but realistically,

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Kevin Mako: it's that, you know, pushing it forward, raising investment if you need to, to get it to a point that you actually have a sellable product or are even doing some small sales then looking at licensing.

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Kevin Mako: And I think that's a big misunderstanding in the product industry. When you talk about the term licensing, people think, oh, license the idea. No, they're not licensing the idea.

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Tom Gray: They're licensing something that has been successful in the market that has some patent protection and some proven technology track record, units out there, right? That's what they're licensing.

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Tom Gray: They're not licensing the idea, although the idea is the initial gold, absolutely, but that's not what they're licensing at the end of the day. Yeah, an idea is in your head. An idea doesn't mean anything. A prototype is exactly the idea that you've built that was in your head, right? Right.

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Tom Gray: And even if you haven't gone to market, that's fine. Your prototype must be refined to make an old beat-up prototype with a few bits of cardboard. It's not going to get you very far.

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Tom Gray: to 3D print it and have it working, that's fine, to 3D print it and have an SLA, which is a refined, beautiful 3D print of beautiful plastic, have it painted, get decal stickers professionally made, put it in an attractive box.

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Tom Gray: Now that's what I'm talking about. Right. That, you know, refining it so a buyer can pull it out or the person who's trying to license it to, the brand can play out of a box and like, I get how this works. This works really well.

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Kevin Mako: That's even fine, you know. Well, and sometimes they'll probably want to, you to leave the samples to say great you know i want to we're going to take three of these and play around with them for a month we'll get back to you and that's you know you've got to be ready right yeah yeah

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Kevin Mako: they have to do that so that goes to go back again to when you make your product yeah you got to get a price and make half a dozen of them because that will happen where you're going to give them somebody

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Tom Gray: or ship them to somebody um yeah we regular have clients you know they'll have one because you know they've been building up to this one prototype and it's be you ready to go near manufacturer maybe even a manufactured sample or whatnot.

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Tom Gray: And there's no way that you're going to afford to do five more. So I've seen it quite a few times where they'll say, okay, look, I'll give this to you for a month. But A, please don't break it. B, I'm going to need that back. And that's our one and only for our marketing materials for this and that. And you know what?

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Tom Gray: That is one way to do it.

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Kevin Mako: But realistically speaking, if you've gone that far and you've got some serious folks,

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Tom Gray: you may want to have these products sitting in, two, three, four different hands of decision makers while you're trying to, you also are trying to vet the best person. I think that's also important to keep in mind, too. This isn't a one-way street, right?

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Tom Gray: They are also competing in a way for your business

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Kevin Mako: because the reason they would be signing an exclusive is because they think it's going to be a big product and something they're going to be able to outsell their competitive retail outlet or manufacturer or whatever else is on that. So I think it's important for inventors also to remember that,

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Kevin Mako: you know, not forget all that you've put into it and the value that you've created and understand that it really is, although they are, are, you know, they're the big fish. It is still a two-sided negotiation, and you by no means

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Kevin Mako: should just be giving away the lot on the first deal that comes across your table if you don't like what you see. So, Kevin, a really good success I've had over the years is, you know, where do you find

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Kevin Mako: these people? How do you know who's trusted? Some companies are pretty ruthless. Some are real friendly. You just don't really know. You can't really tell that from the internet, right, unless you Google them and find a bad story. But think of trade shows. Go to the trade show.

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Kevin Mako: that makes sense for your product category and walk the floor and they're going to see all the big brands they all have to sell their goods anyway as well right so they're going to be there and just

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Tom Gray: walk into a booth and ask to speak to the head of innovation they'll often be at the trade show or they'll they'll pass on a name and just question them don't take your prototype don't show them

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Tom Gray: anything and just get a feel for the company and if it's a smaller company is it a family company that's really friendly that wants to chat to you or is it a big company that you're just a number you know

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Tom Gray: because finding the right partner will be a big deal for you, you know, for not just the deal,

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Tom Gray: but to have a nice working relationship is so much nicer than having a ruthless contract, that that's what they go by. So you must find the right company and be happy with them too.

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Tom Gray: That's great insight.

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Kevin Mako: What are some of your favorite trade is? I know a lot of our client, pretty much every year, we've got a number of clients that are

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Tom Gray: either showcasing or just walking the floor at CES. That's always been a huge one for us. It's always a big deadline come January every year. We've got to get those prototypes or get those production samples out or even some production units by then. It's always been a huge deadline and pretty much in the industry across.

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Tom Gray: What are some of the other trade shows that you like? You know, personally, I've always been in the hardware slash gardening, that kind of thing,

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Tom Gray: even farming. You know, my big passion is farming.

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Tom Gray: But the National Hardware Show, I've been to that show pretty much since I've been to America, you know, as a vendor.

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Kevin Mako: You know, I had, I was selling my products there. Of course, we obviously display, Make48 there now.

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Tom Gray: But the National Highway Show is the coolest one I go to. House wears as fun.

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Kevin Mako: But, you know, it's very much a lot of the same stuff.

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Kevin Mako: But CES is a very, a very techy show. So you see some pretty elaborate stuff, as you know. Yeah, that's more of our electronic products usually go. It's all electronic. So it's really good to go see eye candy there. You know, to me, it's not my passion.

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Kevin Mako: So a lot of that stuff, you know, the technical side of it, I just don't understand a lot of it. But it's fun. It's all consumer stuff you're going to buy for your house eventually. But,

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Kevin Mako: yeah, I still think the National Hardware Show is one of the best ones. Yeah, it's a great show. Absolutely. Tom, really appreciate the advice. You know, just as a quick recap here,

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Kevin Mako: you know, first and foremost,

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Kevin Mako: the further you go with your product, the higher degree it is to license it. Second, think about your protection, of course,

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Kevin Mako: on the product, right? And then third, start small. You know, approach, the manufacturers that you like or the brands that you like on the smaller end, maybe in the hopes to get to the big fish that you eventually want

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Kevin Mako: to get to, think of it as a stepping stone as a growth of your product, as opposed to going for the big players right out of the gate. Yeah, exactly.

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Kevin Mako: That's a great summary of licensing. Tom, really appreciate you having on the show. We'll have to have you on again. I know you've got a whole library, a whole wealth of information in regards to the product industry in particular.

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Kevin Mako: Where should everyone go to check out the Make48 TV show? What's the easiest way to get access to it? what are some of the mediums to check out what's going on with May 48 and even maybe a lot of the inventors and product developers on the show maybe you should be looking into it

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Kevin Mako: to actually apply to be one of the one of the teams or individuals that actually come on to compete I totally agree Kevin you can get all that information at our website so make48.com

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Kevin Mako: the you've got the episodes you can watch that'll take you to the pbs.org to watch the episodes Google it on Amazon Prime on your smart TV or your Amazon TV and you can find us there but yeah there's a wealth of information on our website about brands

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Kevin Mako: that we use and have used over the years and trust

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Kevin Mako: and that's yeah you can apply online you can do it all right there we will soon be announcing our 10 city series so there's 10 cities there some are big some are small and if you're in that city we want you guys to apply

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Kevin Mako: and what types of people can apply to be on the show like what type of people are you looking for okay so the this is the best part about Make48 it's for everybody you don't have to have any experience at all because you're not

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Kevin Mako: physically building anything yourself so we get a lot of families a lot of friends school friends whatever um we've had grandparents we've had top design firms apply corporations you know if you're

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Kevin Mako: in a big corporation and you want to get your buddies together to put a team that's fine too but it's basically everyone and anyone and the only thing we must require is that if you do have some minors on your team, you've got to have at least one person

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Kevin Mako: over the age of 18 to be your team captain. So that's the only, that's the only deal. Sounds great. Make48.com. Tom, really appreciate you being on the show and taking your time to promote and give us this valuable insight. Much appreciate it. Thank you, Kevin, for what you're doing.

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Narrator: Appreciate it, buddy. See you next time. Thanks for tuning in to this episode of the Product Startup Podcast, the show that teaches you what it really takes to bring your product to market and

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Narrator: turn it into a big success. This podcast series is brought to you by Mako Design + Invent, the original and leading firm in North America to provide global caliber in-to-end physical

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Narrator: consumer product development to startups, inventors, and small product business clients. If you're looking for product development help on your invention, head over to Mako-design.com.

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Narrator: That's m-a-k-o-design.com for a free consultation from one of Mako-designs for design studios from coast to coast. Thanks for listening and see you next time.