Cool Tool tv show, Transformers Episode (7/1/09) on the DIY Network

Loved mobile work table episode and the interview with the creator of the Leatherman, Tim Leatherman.

A brief summary of the Leatherman bit…

Tim Leatherman created the concept of a Leatherman traveling though out Europe in the 70s with a boyscout knife.  He used the knife for everything from eating to fixing the car but was often wishing he had pliers too.  When Tim returned to the US he designed and prototyped a concept that incorporated a set of pliers with a knife.  The product remained in the prototype / pitching phase for 3 years until the Leatherman was picked up by a catalog.  Once the product was picked up, a sales goal was set for 4,000 units and by the years end they had surpassed their goal and sold 30,000 units.

Tim uses the TI Charge, but their most popular model is the Wave which allows the user to access two knife blades while closed.  Other popular models include the slimlined Juice and the Crunch with locking pliers.  Leatherman now sells 21 models in total.

A recent article in Mass High Tech turned me onto Hammerhead Sleds. These $350 sleds are the next generation of sledding fun. Based out of Vermont, the founder received $300,000 from angle investment from Boynton Angels (and perhaps other sources) to design the sled and build the manufacturing tools to start selling. From the Mass High Tech article, the company has sold approximately 4,000 units and is looking for additional investment to nationalize their sales.

The first thing I would like to highlight is that they share some of their product development process on their website.  On the page they show their sketches, Industrial design, computer aided design, scale models, feasibility prototypes and a final prototype.  Through a few pictures you can see where they came from and how they came to their ultimate design.   Worrel was the design firm that was used and the sled won a Silver IDEA (Industrial Design Excellence Award) in 2005.

Lessons:

The early design concepts from Worrel were used help solicit their round of angel investment.

Even if you get to market with a product, you will probably need funding to expand operations.

A fellow inventor turned me onto Lucky Break Wishbone a company that produces plastic wishbones just like your turkey. Now everyone around the table, even vegetarians can take part in the tradition of the wishbone. While this product is appropriate because of Thanksgiving, it also provides an interesting product protection case, without patents.

Check out a quick video

First a little background. The idea for a plastic wishbone that mimicked the breaking of a turkey wish bone was conceived in 1999. In 2004, the Lucky Break Wishbone was in a market test with 10 retailers. In 2005 the website was launched and sales channels were opened up.  And this is where the story gets very interesting.

In June of 2005, Y+R the promotional firm for Sears expressed interested in supplying Lucky Break Wishbone’s as a promotional product around Thanksgiving.  On August 4th they had agreed on 1.3 million wishbones in the Sears blue color.  But in 9 days, on August 11th Y+R said that they were going offshore.  Sears did do the promotion in November with their off shore version.  Lucky Break filed a copyright infringement case.

Why a copyright, when everyone is talking always talking about patents?  Well from IPWatchdog “a copyright is provided to the authors of “original works of authorship,” including (1) literary works ; (2) musical works, including any accompanying words; (3) dramatic works, including any accompanying music; (4) pantomimes and choreographic works; (5) pictorial, graphic, and sculptural works ; (6) motion pictures and other audiovisual works ; (7) sound recordings; and (8) architectural works.”  While many focus on copyrighting protecting the language around the product, the design is actually a form of the pictorial, graphic and sculptural category.

The case took a very interesting turn when Sears argued that the copyright did not apply, the wishbone was from nature and therefore God’s art.  However, with the help of some bird bone experts, Lucky Break was able to prove that their design differed significantly from the actual turkey bone in order to re-create the breaking with plastic.  Furthermore, the Sears knock off had incorporated these differences within their bone with no proof of independent creation.

In July of 2008 Lucky Break was awarded $1.7 million.  And now the company is looking to rebound as sales throughout this long legal battle had cut in half.

I heard about Jibbitz from my mother and thought it would be an interesting company to look at for this blog. A good new product company that made it all the way from idea (2005) to market and to an exit in 2006.

In general it is a great story. From the Jibbitz Website, Sheri Schmelzer, and her three children were inspired to decorate their collection of 12 pairs of Crocs™ shoes in the basement of their Boulder, Colorado home. With clay and rhinestones, Schmelzer developed unique charms that fit into the holes of Crocs. Sheri’s husband, Rich, saw the potential to create a unique accessory brand with colorful snap-on products specifically suited for Crocs™ shoes.

Beginning with a home equity loan and small assembly line in their basement, the Schmelzers launched Jibbitz, whose name is derived from Sheri’s nickname “Flibberty-Jibbit.” The Schmelzers began work on a few designs to share with family and friends and launched a website on their wedding anniversary, August 9, 2005. Within 1-year, Jibbitz were offered in thousands of stores and had sold over 8 million pieces worldwide.

Rich had experience as a serial entrepreneur in the internet and software industry that he translated into the business development of Jibbitz. . Rich’s inventor experience and business mindset helped bring Jibbitz out of the basement and into the market. One of Rich’s previous ventures, WorldPrints.com was purchased in 2000 by Excite@Home.

In December 2006,Crocs acquired Jibbitz LLC for 10 million dollars with an additional 10 million if Jibbitz meets sales projections. Jibbitz currently operates as a wholly owned subsidiary of Crocs, Inc., and Founders Rich and Sheri Schmelzer have remained with Jibbitz as President and Chief Design Officer.

How strong is the IP? They have a design patent: D554847 S filed originally on April 17, 2006.

Despite the design patent, several knock offs appeared on the market as soon as the success began. So what makes the company worth buying if Crocs could just rip them off too? Their market strength. The key to real idea protection is marketing.

Post acquisition, with Croc’s backing they pursued these knock off artists and won a serious claim for 56 million dollars.

So what is the lesson? Check out the time line below:

What stands out to me is that they waited on filing the patent until after they had set up operations, had initial sales and launched a website. Often inventors believe that the first task is to file a patent. This 20 million dollar deal provides a different road map.