Inventors-for-hire can take your brilliant germ of an idea and transform
it into a market-ready product

Inc. Magazine in November 1999 on Page 94
by Charles Wesley Orton, Special to Response

In a nondescript conference room within an undistinguished office building in Woburn, Mass., inventor George Freedman demonstrates the solution to a problem that has annoyed humankind for decades. With a dramatic flourish he spreads out time sheets on a table, so an observer can appreciate his breakthrough: a rest-room hand dryer that cuts drying time by two-thirds without melting the user's fingers.

The dryer testifies to Freedman's indomitable refusal to accept life's irritations, a denial common among members of his profession. What is unusual about this inventor is that his talents are for hire. Almost everything Freedman and the three other principals of Invent Resources do is at the behest of corporate clients that lack the resources necessary to bring their own brainchildren to life. For example,
Freedman invented the fast-drying wonder for an established manufacturer that doesn't have enough in-house scientific expertise to design such an animal. Invent Resources -- and other businesses like it -- is proving that nothing about a company, not even its basic products, has to be homegrown.

Think of Invent Resources as an invention nursery, a place where a new idea is planted, briefly nurtured, and then shipped to someone else's farm, where it will be cultivated into a cash crop. Invention nurseries have been around for some time and include such distinguished independent research-and-development organizations as Arthur D. Little,
based in Cambridge, Mass.; SRI International, in Menlo Park, Calif.; and Battelle Memorial Institute, in Columbus, Ohio. Fifty years ago the not-for-profit Battelle invented the electrophotographic copying process that was later brought to market by an upstart called Xerox Corp.

These days the nursery business is thriving. The demand for innovation is strong among a range of customers, including smokestack industries in need of pollution-control equipment, hospitals looking for medical devices that will lower costs, and catalog companies hoping to entice stock-market-rich consumers with ever more thrilling novelties. At the same time, maintaining an in-house R&D function is expensive. Scientists and engineers command high salaries, and many products require a diversity of specialists -- metallurgists, say, as well as physicists and chemists.

Consequently, outsourcing the invention process may be "the next hot technological trend," as editor-in-chief Tim Studt wrote in a recent issue of R&D Magazine. Increasingly, both large and small companies are farming out all or part of their R&D, just as they've outsourced manufacturing, information technology, and other functions that were once considered core. Many companies turn to one of the foremost nurseries, the 20 or so distinguished independent labs with total annual revenues of $3 billion. Others, particularly more diminutive, less well heeled organizations, seek out moonlighting university professors or fired or retired engineers.

Invent Resources' clients range from such corporate stalwarts as toy manufacturer Fisher Price to start-ups that have yet to earn their first dollar. Even the big nurseries, it seems, are increasingly willing to accommodate small and medium-size projects. Battelle, for example,
continues to work on cancer therapies and fuel-efficient cars but is also the proud inventor of LavaBuns, a pad to keep rear ends warm in cold football stadiums, which was commissioned a few years ago by the R.G. Barry Corp., in Columbus, Ohio. SRI International, well known for its work in robotics and artificial intelligence, was approached two years ago by a businessman from Hawaii who wanted to build a company around a new way to make coffee. So SRI created for him a household coffeemaker that can be adjusted to make the brew strong or weak regardless of the amount of beans and water.

Not surprisingly, invention nurseries generally spring up near organizations that train the talent required to staff them, such as universities and high-tech companies. Silicon Valley is fertile ground.
"This is the third wave of outsourcing here," says Bret Herscher,
president of Pacific Consultants, a three-year-old nursery in Mountain View, Calif. "In the first wave companies outsourced the manufacture of subassemblies but still had plants where they would put the parts together. In the second wave they turned the assembly over to subcontractors as well. In the third wave they are moving even R&D and design outside."

One of Pacific Consultants' several specialties is electronic tools,
including surgical devices. An entrepreneurial physician can walk through the door with an idea for a medical device and some financial backing, and Pacific Consultants will take it from there, designing the device, building a prototype, and arranging to have the item manufactured and distributed. The company handles everything but the marketing.

If the entrepreneur's idea falls outside Pacific's domain of expertise,
the nursery will refer him or her to one of five partner companies with which it has formed a consortium called the 100% Solution Alliance. No assignment is too grand or too frivolous. Another member of the consortium, Design Partners, in Concord, Calif., is an industrial-design firm that has done projects for such companies as Procter & Gamble and Siemens Medical. Michael Sullivan, executive vice-president of Design Partners, says an entrepreneur once walked through the door, looked at the wall displays showing previous successes, and announced, "I must be in the wrong place." His plan was for a humble tote case that a college student could use to carry toiletries between the dormitory room and the shower. Sullivan assured the visitor that Design Partners would be happy to help him.

The Boston area is another breeding ground for nurseries. One example is Pragmatic Vision, which a year ago spun off from Invention Machine, a company that made its name translating the invention process into a software product. (See "What You Don't Know Can't Help You," below.)
Pragmatic Vision, with revenues of $6 million, is composed of 14
engineers and one accountant. President Tom Lewis says his company differs from competitors in that it not only improves on existing technology but actually takes the technology apart and thinks it through again.

As an example, he offers Pragmatic's work for Air Concepts Inc., a one-year-old San Diego company that plans to make specialty fans. "Fans have been around for a long time, so improvements in efficiency are generally small," says Lewis. Air Concepts was struggling with a particularly stubborn limitation: the conventional placement of the motor makes it difficult to shrink the size of the fan without sacrificing cooling power. So Pragmatic invented a fan that uses a cleverly placed array of magnets to turn the blades. A possible application that Air Concepts will pursue: miniature fans that cool microprocessors inside computers, making really small notebooks possible.

Costs for invention services vary widely, with many priced beyond the reach of the proverbial two guys who aren't getting anywhere by tinkering in their garage. Battelle, by far the largest nursery, has revenues of more than $1 billion but declines to disclose its fee scale for competitive reasons. A relatively simple solution at Design Partners starts at $25,000 to $30,000. Pragmatic Vision charges $1,000 to $2,000
a day for each consultant on a project, although Lewis would prefer to be paid in equity, up to 80% of a chancy new company.

For those reluctant to put a lot of money at risk or to give up a share of their companies, organizations like Invent Resources may be the answer. Invent Resources, which is based in Lexington, Mass., and last year had $500,000 in revenues, charges nothing up front for its services. But if one of its products comes to market, the nursery takes a royalty of 4% to 7%. The four partners can afford to wait for their money because their overhead is so low. Generally, they work independently at their own homes, coming together once a week in a rented meeting room in Woburn. Their only support staff is a receptionist they share with other tenants. They have no technicians, no patent lawyers, no laboratory, no workshop -- none of the tangible tools of invention (although they engage the services of all those from time to time).

Invent Resources' total assets are the brains of its principals, all of whom boast imposing resumes that include study and teaching tours at MIT and comparable institutions. Richard Pavelle, Invent's president and managing partner and the most reserved member of the group, is the father of the credit-card-size calculator, a creation that has kept him financially comfortable for 20 years. Sol Aisenberg, owlish and extroverted, helped pioneer films made of diamondlike carbon that protect computer hard drives. Then there's Ze'ev Hed, who speaks excitedly in strongly accented English and will occasionally spring from his chair to act out, say, how an agricultural worker might use a particular kind of sprayer. Born in Belgium and educated at Hebrew and Technion Universities in Israel, Hed invented a medical instrument that locates and destroys an unusual defect in malfunctioning hearts. George Freedman, who looks more like the insurance agent next door than any Hollywood conception of a scientist, is a metallurgist by training and was once in charge of a new-products department at Raytheon that counts among its inventions a supermagnet used in missiles.

The four, drawn together by their complementary skills and breadth of scientific inquisitiveness, founded Invent Resources six years ago. The idea was to offer a make-it-happen service for companies that had ideas for new products -- many of them in the "would it be possible to do this?" stage -- or for innovations in existing ones. The no-fee-up-front policy has great appeal for small and fledgling businesses, although it also attracts some flakes, like the guy who needed just a little help with his perpetual-motion machine. "He came from Canada," Aisenberg recalls. "The rule of thumb is that when someone comes from a long distance he is either very serious or out of his mind."

Most clients find Invent Resources on the Internet; their initial call begins a consultation process that can last for years. The partners make sure the prospect is aware of the costs that will likely be required to proceed to market, and then they make their best call, from a technical point of view, about whether the product has a shot at succeeding. The quick hand dryer, for example, has great potential, says Freedman; the company that wants to market the product projects sales of tens of thousands of units a year. Although reducing hand-drying time may not be as momentous as, say, shortening the flight time over the Pacific Ocean, it's a big deal to rest-room operators, who lose money when impatient patrons turn to paper towels. The manufacturer will likely sell the dryers to distributors for about $200 each, and Invent Resources will collect about $10 a dryer. In addition, Invent will ask for a onetime license fee of 1% of revenues in the peak year of sales,
generally about five years after a product's introduction.

Of the hundreds of ideas that are brought to Invent Resources'
attention, fewer than 10% ever make it to market. Before they pay off,
even those often require many months of tearing up designs and manufacturing and marketing plans and starting again. A device that can be made at a workbench cannot necessarily be manufactured in volume at a realistic cost. And where will that new combination corkscrew/wineglass be sold? Consequently, the invention game has not been a road to quick profits for Invent Resources. Only in 1996, three years after its inception, did the company's cash flow turn positive.

Anyone who doubts that invention -- even in so commercial a form -- is a purely creative activity needs only to sit in on one of Invent Resources' weekly meetings. As the partners toss around ideas like pillows, their drab conference room is transformed into a playroom of the intellect, seemingly a thousand miles from the workaday worlds of manufacturing and marketing.

On this day the partners' client is Ed Brookmyer, president of the Catalog Source, in Framingham, Mass. Brookmyer's company supplies more than 100 consumer products to approximately 300 catalog merchandisers,
including Neiman Marcus and L.L. Bean. When the Catalog Source acts as middleman between manufacturer and cataloger, it gets 7% or 8% of a product's retail price; when it participates in a product's development and manufacture, that figure can double. Brookmyer, consequently, likes to sell products that he has helped create.

Brookmyer first stumbled across Invent Resources in a Boston Globe classified ad five years ago and since then has introduced the partners to half a dozen prospective customers from among his manufacturing peers. He also brought along a small dream of his own that Invent Resources turned into a moderate success: a U-shaped plastic clip that fits into the bottom of the nose and prevents snoring. "If you have two or three successful ideas over a career, you're doing well," says Brookmyer.

Today Brookmyer thinks he has another winner, an electronic luggage tag that signals its location on the airport baggage carousel, making it easier for travelers to find their bags. He envisions a retail price somewhere between $14.95 and $19.95. "That means it must cost no more than $3 or so to make," says Hed. "We can do it."

The partners are enthusiastic. The basic technology is no more complicated than that behind the key-chain feature that lets you unlock your car door from afar. But Hed raises a question: Will the metal frame of the carousel interfere with the signal? Then Aisenberg ponders whether the tag should light up as well as send an audio cue. Brookmyer isn't sure. The air buzzes with talk of active and passive transponders,
fractal antennae, and diodes.

After half an hour the inventors promise to give further thought to the tag, and Brookmyer says he will speak to a Taiwanese company about manufacturing it. They move on to the next order of business: a bottle of a brownish fluid called Bare Ground. A pair of Hungarians discovered Bare Ground while distilling vodka: the nonalcoholic runoff coated the pavement in a way that kept snow from bonding to it. Brookmyer wants to sell the product to homeowners who could spray it on driveways and walks before snowstorms.

During an earlier visit Brookmyer had asked Invent Resources to help reduce the viscosity of Bare Ground so that it could be squeezed through a conventional sprayer. That problem solved, he now wants to reduce the solution to a lightweight concentrate that can be sent cheaply through the mail. Again, the ideas bounce around the table, from boiling down Bare Ground on a stove top (no good -- it might damage the product) to blowing cool air through it, as is done with freeze-dried coffee (a possibility).

The inventors' versatility is remarkable. In addition to Brookmyer's luggage tag and anti-ice formula, they are working on a dozen major projects, including a device that warns residents of tornado zones when a twister is within 10 to 15 miles. The client, $5-million Spectrum Electronics Inc., of McLean, Va., already markets a product that detects lightning within 60 miles, but the tornado version requires Invent Resources' help.

Half a dozen other projects are on hold while the clients decide whether or not to go ahead with them. Those who hesitate but don't want to lose their projects sign an option agreement to pay Invent Resources from $2,000 to $7,000 a month not to take the technology elsewhere. In addition, the nursery has an inventory of about 500 ideas in various stages of development, many of them abandoned by clients who for one reason or another lost interest. "Not all of these are great ideas,"
Aisenberg acknowledges, "but about 10% are gems."

When an idea is orphaned, Invent Resources looks for other companies that might be in a position to bring it to market. Most of the time,
though, companies or individuals in search of a product come to Invent Resources; if those seekers show the requisite finances and zeal, the partners may let them choose something from Invent Resources' inventory,
which is essentially a shopping list of ready-for-market inventions. The partners themselves are emphatically not interested in building companies around any of the inventions. "We all have line experience in companies," says Aisenberg. "Managing other people is aggravating."

Although customers abandon ideas for many reasons, it is more often a failure of imagination than of feasibility, according to the partners.
"An idea needs a champion within the client company," observes Pavelle.
Aisenberg adds that most people who work for companies are very dull:
"Only one in 20 has a creative spark." Once the champion leaves the company, the idea may die. A former president of Arm & Hammer asked Invent Resources to create a simple gauge that would signal when the box of baking soda in the refrigerator had lost its power to absorb and destroy smells. His successor apparently did not consider the gauge a priority, but Invent Resources went ahead and invented the product on its own in the hopes of finding another buyer.

"And whatever became of the guy who wanted glowing golf balls?" asks Freedman. Pavelle explains that a golf-products manufacturer wanted to produce a luminous ball that duffers could easily find in the dying light of evening. The client has set the project aside temporarily. "We have also invented a way of keeping your tennis balls from bouncing all over the court after they hit the net," says Aisenberg. Pavelle silences him. "Let's not talk about that," he says warily. "We don't have a patent on it yet."

Patents are another part of Invent Resources' service. The partners draw up the specs and then apply for the patent in their own company's name.
Then, for no additional fee, they license the patent to the client: the whole thing if the patent is very specific; only part if the patent is generic and they can apply it to future projects.

Have the inventors ever encountered an idea they didn't like? "One of our clients wanted to create an antisplash urinal," says Pavelle. "It wasn't his best idea." Hed points out that such a product is within the reach of science. "Theoretically, we could freeze the urinal," he explains," but it's not very practical."

The partners also have original ideas spun from their own dreams, which they would love to see brought to market -- by someone else, of course.
Aisenberg's "wet baby" project, for example, an inexpensive diaper tab that signals when junior needs changing, was inspired by his infant granddaughter. Freedman wants to create a microwave-oven container that keeps any meal from overheating. Hed hopes to replace the inefficient gas-compressor refrigerator with one based on magnets and superconductors.

Watching the endless whirl of inspirational thinking can be dizzying,
but it also creates an itch for innovation. A visitor at Invent Resources who started the day complacent in his belief that the world is amply stocked with gadgets may suddenly find his brain humming with ideas. After all, if we can have a better hand dryer, why not a soap dispenser that would never run out of soap?

For entrepreneurs, novelty has always represented potential riches. A lack of technical expertise is no longer an excuse for not testing that brilliant idea. If you come, an invention nursery will build it.

Lee H. Smith is a freelance writer based in New York.