Entreprecurious

Scott Amron has made a living out of selling his wacky-inventions-turned-working-prototypes to companies such as OXO and Polder Home Tools, but Scott’s approach to his latest invention caught my eye in this Wired Magazine article. The invention, known as the Split-Ring Key-Blank is an almost head-poundingly obvious hybrid of a standard front door key and a key chain ring. But important to note is the fact that Scott’s approach to the invention is also a hybrid: half  inventor/half entrepreneur.

Scott Amron is a professional inventor. He invents things in his head (where else would you invent something) and then spends the next several weeks trying to turn it into a working prototype, then patent it, and finally, sell it to the highest bidder–payday! But this time ’round, Scott decided to just draw up a sketch and put it on his website to feel out the market’s reaction–and what a reaction he got.

Within the first month, Scott had 25,000 preorders. At $3.50 a piece, that’s a whopping $87,500 in pre-sales…only problem was, he hadn’t actually made one yet. A few quick calls later, Scott had a manufacturer in place and you too can now order yous right on his site.

But there’s something missing…

I did my homework on this one, and found some curious things about Scott’s approach to the keyring invention. First, you’ll notice on the link above, that he is taking inquiries for investment on the patent. A) shouldn’t he have enough money by now to fund a patent (roughly $25,000 to prepare)? And B) why would he choose to release such vivid details of the invention to the public before getting such a patent?

To be honest, I have no idea why he’s going about it the way he is. Even if he for some reason didn’t have the $25,000 personally, he certainly could get a bank loan, considering the simple prototype did $87,500 in presales in the first 30 days! And I also have no idea why he went so public with it before protecting himself intellectually.

An idea is just an idea…unless…

As the saying goes, “In America, if your idea is one-in-a-million, then there are 300 other people out there with the same idea.” Thus, most seasoned entrepreneurs will tell you that they’d gladly present any idea they come up with to as many people as possible, regardless of whether they’ve got IP protection yet or not. The theory behind this, of course, is that an idea is just that–an idea. And ideas aren’t worth anything because the real value isn’t in the idea itself, but rather in bringing that idea to market, which is (usually) no small feat.

But this idea is not just another idea. This idea has more things going for it:

• Proven market demand. Again, not to beat a dead horse here, but a simple picture of this thing on Scott’s website pre-sold 25,000 UNITS IN A MONTH. This proves market demand. Proving market demand is critical because what good does a great invention do if people don’t want to buy it?
• The price is right. $3.50 per unit at retail probably means that a buyer could get these from Scott for around $2.50-2.75 when bought in wholesale quantities (e.g. a local key shop. And even lower still, if the buyer was interested in getting a lot a lot of them, in the case of a major key manufacturer such as Schlage. This low price point means that the product could draw both individual small-order buyers, as well as the big guys.
• Sold! The nature of the key-making industry is conducive to buyouts of small startups such as Scott’s. Here’s why: How many keys have you ever had in your life? Probably in the 10’s or 20’s, at least. Keys come and go; you switch apartments, offices, have your locks changed, etc. frequently throughout your life. This means return buyers, which increases future revenue projections and thus increases Scott’s valuation. Thus, Scott’s idea is prime for a buyout.
• Novelty. This product is just plain obvious. It’s got a “duh! appeal” to it. That catches attention. That sells units. Scott did almost no advertising for this thing, but had hundreds of thousands of site visits in addition to the number of pre-orders.

Given all this–and many more reasons I’m sure you could think of–I don’t know why Scott’s positioning the product in the way that he is. But it is how it is, which means I’ve either got to get involved in Scott’s investment offer, or I need to get $25,000 and an IP lawyer on the phone immediately.