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Watch me struggle my way through a licensing deal

A detailed account of a Fastlane process...

ThirtyOne

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Come watch me attempt my first licensing deal.

Here's the plan:

Get with a specific popular esport game developer and license a property from them (it's a tiny property within their game, but with good traction among their base).

Then, take that to a manufacturer and get quotes on what it would take to bring this digital product to the real world (the thing itself already exists in the real world, but the game has a unique design for it).

Test the demand with an MVP.

Take all this to online retailers and a few brick and mortar stores to see if I can get a P.O.

Take that back to the manu, and see if they'll sign a licensing deal with me.

Sit back. Pass Go. Collect $200.

The first step for me today is to call a few manufacturers for quotes on a design similar to the one I want to license (not my actual design).

The next step will be to get with the game dev and see if we can make a deal that doesn't hurt too much.

I'll be posting updates every step of the way.

If you see me taking some missteps or have advice and want to help, please, feel free.

Either way, I hope it's informative for someone who is interested in the licensing game.

13mGuOo
 
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Merging Left

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Good luck! Will be following along here as I'm working on something similar as well. Will you be working with local or overseas manufacturers?

Does the brand you're trying to license from have a history of licensing their properties already?
 

ThirtyOne

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Good luck! Will be following along here as I'm working on something similar as well. Will you be working with local or overseas manufacturers?

Both. What I did was find the top three sellers of the product on Amazon and looked up who manufactures for them. Then I went to their sites and found out that they happen to all be operate in the U.S., but one of them manufactures overseas for sure.

Does the brand you're trying to license from have a history of licensing their properties already?

They do. However, currently, they only have a few properties licensed out in two categories (a one off and a bunch of t-shirts).
 

ThirtyOne

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UPDATE:
The first step for me today is to call a few manufacturers and their quotes on a design similar to the one I want to license (not the actual design).

I reached out to three manufacturers today. Two of them didn't answer their phones at all. So I emailed them. The third answered and got me to someone in sales so I could ask them for the quote. They wouldn't give me a quote unless I was registered with them as a distributor. I said, I didn't want to be a distributor, but that I was a licensor/product developer looking to find a distributor eventually. That got them to give me their email so I could give them details for the quote.

Keep in mind, I haven't pitched them anything yet.

However, I don't hold much hope for either of these. In 7-10 days, I'll follow up with them. If they aren't interested, I'll try to contact someone at the top, which is what I should've done from the beginning.

I'm going off of knowledge shared by @Vigilante and Stephen Key in his book, One Simple Idea, but I'm beginning to think I might need to get Key's course because I screw up on little things here and there.

After today's efforts, I took another look at Vigilante's thread on Licensing, and found this. Whoops.

Anytime you call corporation for any purpose from now on, research the company… Find a senior-level executives… And dial them directly.

Told you guys there would be failure.

If anyone is following and wants to offer qualified advice, I'm all ears. I'm acting, but I'm new to all this and have a lot to learn.

Tomorrow, I approach the CEO of the game developer to see if he's interested in making money off of my licensing deal.
 

MattR82

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Stephen Keys course is quite expensive, although I know people who have done it and found it great, especially access to skype with one of their few coaches anytime.

However, he is also the first to say you can easily do it on your own.

I don't know if I'd get too hung up on the quote yet to be honest. Although it's handy info to have to give to a potential partner and also get an idea if it's viable. But they also know they can probably manufacture for a better price through their own sources. That's with the larger companies I would assume anyway. Or are you planning to do some kind of pull through marketing thing? I'm still new to this myself but am really interested in open innovation licensing.

Edit: just saw you mention it's a digital product. I'm a little confused. Maybe you can forget what I wrote above :p
 
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iizu

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I'm confused slow-witted :D.

So..

-You are trying to make physical product

-Physical product is based on digital product, like a weapon in the game or something like that.

-You need permission from the game company to use their design(license)

-You are now asking quotes from potential manufacturers of the physical product?
 

ThirtyOne

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Don't embrace failure. Failure is part of the process but not something that you should be proud of.

I'm not setting out to fail, but I'm willing to fail until I eventually win.
 
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ThirtyOne

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I'm confused slow-witted :D.

So..

-You are trying to make physical product

-Physical product is based on digital product, like a weapon in the game or something like that.

-You need permission from the game company to use their design(license)

-You are now asking quotes from potential manufacturers of the physical product?

You seem like you got it all correct.

To answer your question, I am seeking a quote for a similar physical product so I can familiarize myself with the category. I am completely new to it, and have no idea about landed costs, and so wouldn't know what numbers make an acceptable deal for me. Ultimately, I'll need a landed cost/retail price for the actual digital-turned-physical product, but if the game dev wants an upfront payment, I have to kind of know how long that'll take to recoup.

That's my thinking anyway.
 

ThirtyOne

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Stephen Keys course is quite expensive, although I know people who have done it and found it great, especially access to skype with one of their few coaches anytime.

However, he is also the first to say you can easily do it on your own.

I don't know if I'd get too hung up on the quote yet to be honest. Although it's handy info to have to give to a potential partner and also get an idea if it's viable. But they also know they can probably manufacture for a better price through their own sources. That's with the larger companies I would assume anyway. Or are you planning to do some kind of pull through marketing thing? I'm still new to this myself but am really interested in open innovation licensing.

Thanks for the insight. Yeah, it's expensive. So, the only reason for me to do it is to learn the ins and outs of licensing Fast and with Quality (can't be Cheap then, eh?) Otherwise, I learn all this stuff on my own through my wins and failures, making it Quality and Cheap for me, but not necessarily Fast.

I've read his book, but it's somewhat of a reference book too, meaning my brain can't recall all that info on the spot when I need it (say, during negotiations, cold calling, etc) and sometimes I can't even remember that he talks about those specific tasks before I do them.

Edit: just saw you mention it's a digital product. I'm a little confused. Maybe you can forget what I wrote above :p

The intellectual property owned by the game developer is a digital item. I want to own the license to make that digital thing a physical product people can buy, handle and use in the real world.
 

iizu

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You seem like you got it all correct.

To answer your question, I am seeking a quote for a similar physical product so I can familiarize myself with the category. I am completely new to it, and have no idea about landed costs, and so wouldn't know what numbers make an acceptable deal for me. Ultimately, I'll need a landed cost/retail price for the actual digital-turned-physical product, but if the game dev wants an upfront payment, I have to kind of know how long that'll take to recoup.

That's my thinking anyway.

Thanks for spelling it out for me :D
But if this is the case, I don't think you need any course at the moment. Stephen Keys course is aimed for people who want to license their invention.

Vigilante has a GOLD-thread about your subject, which is licensing someone else Intellectual Property/Brand.
The Licensing game
 
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ThirtyOne

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Thanks for spelling it out for me :D
But if this is the case, I don't think you need any course at the moment. Stephen Keys course is aimed for people who want to license their invention.

Vigilante has a GOLD-thread about your subject, which is licensing someone else Intellectual Property/Brand.
The Licensing game

I've read Vigilante's informative thread. But it's a wealth of information that's hard to absorb and recall when I need it since I'm new at this.

Maybe I'm going about this all wrong, but I want to do what his client did. License the property from the brand/game dev, then turn around and license that product design to a manufacturer who already makes those kinds of things. The brand takes a percent, I take a percent, and the manufacturer gets the lion share.

In other words, I don't wanna become the manufacturer. I want to become the licensor.
 

Merging Left

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I understand now. You want to be the middleman. You want to basically connect the IP holder with a manufacturer. Do you want to design the product or just hand the IP over to the manufacturer and tell them "go nuts"?

In general, if that manufacturer was interested in pursuing licensing deals, they would probably be doing that. Sure, they might not know about this particular property, but they're in the business of manufacturing other people's designs. I think a better option for you would be to license the IP from the holder, and then use the manufacturer to create a product that you will design and sell. It's more expensive that way, but you have a lot more control and way higher margin potential.

A licensing agreement is not a life-long contract. What's to stop the IP holder from cutting you out at the end of the contract? On the other hand, if you own the physical design of their product, it would be a lot harder for them to steal your design specifications.

Regarding cold-calling and not being able to recall information that you need... write down some points/reminders before you make the call. The more calls you make, the more things you'll know you need to remember, and you'll get a lot better at it.

You should simultaneously reach out to the company you want to license from and start to get an idea for what kind of terms they look for, what the minimum guarantees are, royalty rates, etc. If the minimum guarantee is $30k, you might not want to pursue this any further and save yourself a lot of time getting quotes from manufacturers.
 

ThirtyOne

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I understand now. You want to be the middleman. You want to basically connect the IP holder with a manufacturer. Do you want to design the product or just hand the IP over to the manufacturer and tell them "go nuts"?

In general, if that manufacturer was interested in pursuing licensing deals, they would probably be doing that. Sure, they might not know about this particular property, but they're in the business of manufacturing other people's designs. I think a better option for you would be to license the IP from the holder, and then use the manufacturer to create a product that you will design and sell. It's more expensive that way, but you have a lot more control and way higher margin potential.

You are correct. I want to be the middleman. However, I do want to design the product and prototype it, and then give it to the manufacturer.

I'm currently in a full-time job that I'm trying to break away from, otherwise, I might be the vendor. I'm not sure I wanna take that risk yet...that's why someone else should be getting the lion's share, while I just take a percent for bringing them the idea/property.

A licensing agreement is not a life-long contract. What's to stop the IP holder from cutting you out at the end of the contract? On the other hand, if you own the physical design of their product, it would be a lot harder for them to steal your design specifications.

Nothing would stop them. That's okay, most licensing deals only make money for a few years anyway from what I've heard.

However, what do you mean "own the physical design"? Patent it? This idea probably isn't big enough for that upfront cost.

Regarding cold-calling and not being able to recall information that you need... write down some points/reminders before you make the call. The more calls you make, the more things you'll know you need to remember, and you'll get a lot better at it.

Great point. I should slow down just enough, to take a look at the reference material and make some notes. This seems so obvious now that you point it out, that I'm face palming.

You should simultaneously reach out to the company you want to license from and start to get an idea for what kind of terms they look for, what the minimum guarantees are, royalty rates, etc. If the minimum guarantee is $30k, you might not want to pursue this any further and save yourself a lot of time getting quotes from manufacturers.

Again, great advice. I'm not going to get caught up with manufacturers until I have the rights to the IP. If that costs too much, the deal is dead to me.

I was kind of just hoping it would be a like an auto body shop, where you can call and say, "How much to replace the entire bumper on a 2012 Toyota Camry?" and they come back with quotes. Get a few shops to do this and then choose the lowest and go back to them and say, this is what I'm wanting to pay for my actual bumper.

However, it looks like product manufacturers are a little more withholding than that.
 
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Merging Left

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However, what do you mean "own the physical design"? Patent it? This idea probably isn't big enough for that upfront cost.
What I mean is that if you know the design specifications, it would be hard to create an exact replica. I'm not sure you can patent a design based on an IP that you don't own. I just meant from a production perspective, I'm not sure that the manufacturer can make your exact design without you being involved. I'm not a lawyer, so I might just be pulling that out of nowhere.

I was kind of just hoping it would be a like an auto body shop, where you can call and say, "How much to replace the entire bumper on a 2012 Toyota Camry?" and they come back with quotes. Get a few shops to do this and then choose the lowest and go back to them and say, this is what I'm wanting to pay for my actual bumper.

However, it looks like product manufacturers are a little more withholding than that.
I wish it were that easy, but each design requires a unique mold, and so it's quite complicated. I've had good luck approaching a manufacturer and asking for an estimate based on something they already make. Another thread was talking about custom-making CS:GO knives, so we'll use that as an example. You can approach a manufacturer that already makes very similar knives (but perhaps the artwork on the blade is slightly different) and ask for a quote on that. It won't be exact, but hopefully ballpark enough to help you run some numbers.

If your product is totally unique and doesn't exist anywhere, you'll have to do some work up front before you can get an accurate quote. Just try to leverage what already exists as much as possible.
 

ThirtyOne

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What I mean is that if you know the design specifications, it would be hard to create an exact replica. I'm not sure you can patent a design based on an IP that you don't own. I just meant from a production perspective, I'm not sure that the manufacturer can make your exact design without you being involved. I'm not a lawyer, so I might just be pulling that out of nowhere.

From what I know, I could own the design patent if the game developer was willing, which makes sense to me because they aren't in the business of manufacturing this physical product, so what good will it do them to own the design patent? Also, they don't actively seek licensees for digital-to-physical products based on their IPs, so I don't see them wanting to pay for the design patent in the first place.

However, I don't think this idea is big enough for the cost of filing a design patent and the costs to enforce it should a manufacturer buy my product for the purpose of creating a mold and competing.

I wish it were that easy, but each design requires a unique mold, and so it's quite complicated. I've had good luck approaching a manufacturer and asking for an estimate based on something they already make. Another thread was talking about custom-making CS:GO knives, so we'll use that as an example. You can approach a manufacturer that already makes very similar knives (but perhaps the artwork on the blade is slightly different) and ask for a quote on that. It won't be exact, but hopefully ballpark enough to help you run some numbers.

If your product is totally unique and doesn't exist anywhere, you'll have to do some work up front before you can get an accurate quote. Just try to leverage what already exists as much as possible.

This is exactly the route I was going. I sent them a picture of the product they already manufacture that is very similar to my idea. That sample is what I asked a quote for. But so far, one of them has been withholding, and the others haven't responded yet.
 

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This is exactly the route I was going. I sent them a picture of the product they already manufacture that is very similar to my idea. That sample is what I asked a quote for. But so far, one of them has been withholding, and the others haven't responded yet.
I had quite a bit of trouble doing this with some manufacturers in China. It took several back-and-forth conversations of "Just pretend this was my original design, what would it cost to make and cost/unit for 500pcs". They were really hesitant to share, and mentioned several times that the numbers are rough estimates, etc. Just keep pushing. It's really not a difficult request you're making.
 
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This is a cool concept, but I think the way you're approaching this is a little odd. Just the way you're wording it, it's as if you expect this to not work.

Don't embrace failure. Failure is part of the process but not something that you should be proud of.

Failing as an entrepreneur will never go out of style and it's a necessary part of the process. Even the greats fail, regularly.

The sooner an entrepreneur can accept failure, the sooner success will come.

However, it's important to take the necessary steps to avoid failure (which is why you pay attention to @Vigilante, Stephen key, and others - because they have already failed 100s of times for you), make peace with failure, and bounce back as soon as possible.

Like @AgainstAllOdds said, it's not something to embrace or be proud of.
 

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This is a cool concept, but I think the way you're approaching this is a little odd. Just the way you're wording it, it's as if you expect this to not work.



Failing as an entrepreneur will never go out of style and it's a necessary part of the process. Even the greats fail, regularly.

The sooner an entrepreneur can accept failure, the sooner success will come.

However, it's important to take the necessary steps to avoid failure (which is why you pay attention to @Vigilante, Stephen key, and others - because they have already failed 100s of times for you), make peace with failure, and bounce back as soon as possible.

Like @AgainstAllOdds said, it's not something to embrace or be proud of.

Two people have said this now--time to adjust. Thank you @Amon and @AgainstAllOdds for the feedback.

As a result, I've edited the original post to be less self-effacing.

My intent wasn't to embrace or be proud of failure. This whole thread was intended as a case study for a first attempt at the licensing game, documenting the steps along the way, including the wins and failures, so that people just starting out can see a narrative of the actual process unfold.

And the only reason I referenced failure as prominently as I did was because I was being realistic. A first-timer at anything is statistically ripe to fail, though there are exceptions.

The irony isn't wasted on me that I shouldn't have mentioned the f word so much in the OP.

However, I keep plugging away at it, doing my best to be prepared for the next step and then taking that step before too long.

Actions follow belief, and I'm still taking action.
 

ThirtyOne

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@MJ DeMarco is there a way for me to edit the title of my post to sound less "doomsday"? As other users have implied, people might be turned off by what is otherwise intended to be a helpful case study.

"Watch me attempt to strike a licensing deal" instead of the current title?
 
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ThirtyOne

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I had quite a bit of trouble doing this with some manufacturers in China. It took several back-and-forth conversations of "Just pretend this was my original design, what would it cost to make and cost/unit for 500pcs". They were really hesitant to share, and mentioned several times that the numbers are rough estimates, etc. Just keep pushing. It's really not a difficult request you're making.

At this point, I'm not going to worry too much about it. I'll see if I can get the game dev to play ball first.
 

ThirtyOne

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UPDATE:
After some research, no numbers were to be found anywhere, but I found the CEO's email address. So I sent him a short email telling him in the subject line that I wanted to license (aka make him money) and got a response!

The CEO himself didn't respond, and just as Vigilante predicted, he passed it along to the right person to respond... That person asked me some questions...basically seeking out a business plan, timeline, and seeing if I had prior work samples to show.

I'm nervous. Excited.

Tips?
 

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It sounds like it's time to draft up a business plan and put some serious thought into how you would actually execute this project.
 
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ThirtyOne

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It sounds like it's time to draft up a business plan and put some serious thought into how you would actually execute this project.

I spent a lot of time doing this today, even pivoting a bit based on newly discovered information.

Sent an email back. Will update soon.

Fingers crossed.


Sent from my iPhone using Tapatalk
 

ThirtyOne

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It sounds like it's time to draft up a business plan and put some serious thought into how you would actually execute this project.
This is what I sent to them, essentially. I sent it off Sept 13 (two days ago) and haven't heard back.
 

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