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Invention

The art of realizing value from an idea


By Guy McIlroy Founder, Koliada, LLC

Copyright 2011 Koliada, LLC - 1

Guy McIlroy
Systems Architect
This presentation abstracts a process of invention and gives some specific examples to illustrate.

Copyright 2011 Koliada, LLC - 2

Where it all begins


It all begins with an idea

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Some Important Characteristics


? ? ? ? ?
Ideas are; everywhere cheap ephemeral intangible Ideas have little value Ideas CANNOT be patented

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Where it all ends


It all ends with an invention

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Where it all ends


It all ends with an invention

?
$$
An invention is the embodiment of one or more ideas (that realizes value)
(realized value is not always $$) Copyright 2011 Koliada, LLC - 6

- Invention Getting from an idea to realizing some value

?
$$

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- Invention Getting from an idea to realizing some value

Market
$$

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- Invention Getting from an idea to realizing some value

Market
$$

Idea Validation Existing Products/Patents Product Limitations / Failures

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- Invention Getting from an idea to realizing some value

Market
$$

Idea Validation Existing Products/Patents Product Limitations / Failures > Use Cases > Product requirements

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- Invention Getting from an idea to realizing some value

Market
$$

Embodiment
$$

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- Invention Getting from an idea to realizing some value


Use Cases & Requirements!!
Clarify Validate Rinse and Repeat

Market
$$

Prototypes
Proofs of concept Capability validation Design validation Usability testing

Embodiment
$$

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- Invention Getting from an idea to realizing some value


Protection
$$

Patents
Prior Art Provisional Patent Utility Patent Design Patent

Market
$$

Embodiment
$$

Trademarks Copyright Branding US/International Chutzpah, Smart & Fast

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- Invention Getting from an idea to realizing some value


Protection
$$

Analyze the risk / cost profile


Buying protection is like buying insurance Low risk of loss, low cost High risk of loss, high cost Manage process for low risk

Market
$$

Embodiment
$$

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- Invention Getting from an idea to realizing some value


Protection
$$

Market
$$

Business
$$

Embodiment
$$

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- Invention Getting from an idea to realizing some value


Protection
$$

Match to nature of market and ambition Business


$$

Market
$$

Start-up
Gold rush / Race

Lifestyle
Good revenue, poor scale

Licensing

Embodiment
$$

Limited Product Scope Individual capabilities Market dynamics

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- Invention Getting from an idea to realizing some value


Protection
$$

Identify & Characterize


Partners Distribution Channel

Market
$$

Business
$$

Size the business


Potential Volumes Costs of goods sold Revenue. Profit, Loss

Embodiment
$$

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- Invention Getting from an idea to realizing some value


Protection
$$

Product Design
Business
$$

Market
$$

System Industrial Electronic Mechanical Packaging

Embodiment
$$

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- Invention Getting from an idea to realizing some value


Protection
$$

Product Manufacture

Market
$$

Business
$$

Manufacturability Logistics Distribution

Embodiment
$$

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- Invention Getting from an idea to realizing some value


Protection
$$ Booty Pop an enhanced behind has become a must have accessory... "We didn't realize what we didn't know, the licensing, the legalities The partners had to learn about things such as manufacturing, packaging, importing and landing costs, "things that aren't as much fun as the creativity," http://www.usatoday.com/money/smallb usiness/2011-06-26-turning-nicheproduct-into-riches_n.htm

Market
$$

Business
$$

Embodiment
$$

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- Invention Getting from an idea to realizing some value


Protection
$$

Market
$$

Business
$$

Embodiment
$$

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- Invention Getting from an idea to realizing some value


Protection
$$

Market
$$

Business
Market Validation

$$

Embodiment
$$

$$

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Zen of Invention
Invention has many paths
The landscape is continually moving
Your true path depends on circumstance and the players There is no one right way

Many have traveled the many paths


Talk to all of them and make your own path Understand and weigh risk / cost / benefit

Success is mostly insight & luck


Understanding makes its own insight Persistence makes its own luck

Copyright 2011 Koliada, LLC - 23

(Some of) Guys Maxims


Customer 'lock-in' is the key barrier-to-entry
Three barriers to entry:
Brand Recognition (good) Product Utility (better) Customer vested time/collateral (best)

Hardware only businesses do not scale


If you want a business to scale, make your hardware integrate closely with value add software / services Hardware as a Software / Services enabler does scale

Hardware businesses are roulette players


house always wins >unless< smart enough to figure the arbitrage and quit while ahead
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Some Examples From Our Past

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Airport
First successful consumer Wifi products
www.apple.com # 34 of PC World Top 50 products of all time http://www.pcworld.com/article/id,130207page,8-c,technology/article.html

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Airport
Market
Key failings
Fragmented (incompatible) market offerings Complexity of operation Poor standards unification Expensive

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Airport
Market
Key Factors For Success
Ubiquity every device needs same capability Ease of use Effective standards unification Cost effective

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Airport
Embodiment
R&D
Extensive core R&D already available third parties Integration into products product design and features

Ubiquity
Huge software challenge multiple diverse groups in Apple, multiple departments to be aligned

Ease of use
Significant impact on user interface, system software, networking architecture

Effective standards unification


Closure of 802.11, emergence of WiFi

Cost effective
Volume manufacture (ubiquity) drove down costs
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Airport
Protection
Few early protections Depend on market presence and momentum Product design
UI, Integration, Style (these are all protections)

Apple Factor

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Airport
Business
Third party proxy selling
Initial market for an idea is internal This may be a big hurdle (why startups start)

The Apple Gladiator Effect


(SJ) Thumbs up everyone cheers (SJ) Thumbs dn everybody boos

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Poker Genie
Texas Holdem Game Timer
First standalone timer to accurately time Texas Holdem poker games. #1 best-seller Amazon gaming accessories www.thepokergenie.com

Copyright 2011 Koliada, LLC - 32

Poker Genie
Market
Key failings
Existing market offerings needed a laptop/computer Some complexity of operation Poor understanding of game mechanics

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Poker Genie
Market
Key Factors For Success
Utility device to use anywhere (lounge/pub/bar/) Ease of use Understanding of game mechanics Cost effective

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Poker Genie
Embodiment
R&D
From scratch development Define product design, features & requirements and use cases

Ease of use
Significant impact on user interface design and firmware design

Cost effective
How to be smarter in using low cost components Same CPU drives LEDs and does calculations
Elegant firmware / hardware combo design

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Poker Genie
Protection
Provisional Patent (self filed) Followed by Patent Application (Attorney) High risk, low exposure
Was copied by ESPN, little to no recourse due $$ Poker Genie has prevailed
Superior UI design Better understanding of the game Better product design

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Poker Genie
Business
Family and Friends test markets
Paper versions Little distributor validation (cause of some friction)

Started as a product business


Unqualified overly ambitious BUT a very good validation of market value

Evolved to a licensee business


Starting as a product validated the market
Improved licensing deals

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Peel Fruit

Entertainment Control for SmartPhone


CES 2010 Honoree http://www.youtube.com/watch?v=WWVBqRtahI http://online.wsj.com/article/SB100014240527 48704506004576174624099755848.html

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Peel Fruit
Market
Key failings
Content integration
Expensive & too complex OR Cheap and too simple

Emerging standards move slowly Content Discovery non-existent

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Peel Fruit
Market
Key Factors For Success
Ease of automating the mapping of digital content to device setup for view. Low cost device integrated into existing user devices and the internet
Smartphone integration Cloud Content & Discovery TV guide, online content, pictures, curation Cloud leverage of IR codes Online IR database reduces device complexity

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Peel Fruit
Embodiment
R&D
From scratch development Define product design, features & requirements and use cases

Battery life
Must be comparable to existing

Ease of use
Significant impact on user interface design and firmware design

Cost effective
How to be smarter in using low cost components

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Peel Fruit
Protection
Provisional Patent (self filed) Followed by Patent Application (Attorney) High risk, high exposure
Fast paced market Easy to replicate hard to defend

Primary defense:
Be smarter (product design) Be faster (bring products to market) Be cooler (real protection is your product in the basket over someone elses)

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Peel Fruit
Business
Family and Friends test markets
Little external validation Award winner very early

Started as a product business


Latest round $16M VC funded

Software /Service is core IP


Discovery, social & viewing data key to scale & $$

Hardware is an enabler
Key value delivered by software/services

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Conclusions
Invention has many paths
The landscape is continually moving
Your true path depends on circumstance and the players There is no one right way

Many have traveled the many paths


Talk to all of them and make your own path Understand and weigh risk / cost / benefit

Success is mostly insight & luck


Understanding makes its own insight Persistence makes its own luck

Copyright 2011 Koliada, LLC - 44

Koliada
Koliada exists to help large and small businesses leverage technology into products
We are in business to help your business to be successful We are not in business to create our own business based on your idea / invention

Copyright 2011 Koliada, LLC - 45

Koliada
Koliada exists to help large and small businesses leverage technology into products
We are in business to help your business to be successful We are not in business to create our own business based on your idea / invention
Services Collaboration
$$

$$
EQUITY

EQUITY
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Koliada
Bruce Lundeen
Hardware Logistics Manufacturing Industrial Design Unisys, Sun

Guy McIlroy
Software / Firmware Project Management Business development System Design Apple, Palm

+
=

Product oriented, end to end (Full Cycle) Product Design

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Some of Our Projects


Large
Aviat Networks TI Tivo Trimble

Small / Start-up
Fiddle Games Quidillum Peel Technologies Go-Kitty RadioLAN Weemote

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Bugs Life Clip

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Portfolio

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