What Investors Want in Patents With Sridhar Iyengar.
The following is a computer-generated transcript from the Patently Strategic Podcast. The results aren't always perfect, but we will continue working on improving the quality of the automation.
1 00:00:00,410 --> 00:00:00,960 Good day
2 00:00:05,090 --> 00:00:06,318 and welcome to the
3 00:00:06,324 --> 00:00:08,366 Patently Strategic Podcast, where we discuss all.
4 00:00:08,388 --> 00:00:11,386 Things at the intersection of business, technology and patents.
5 00:00:11,498 --> 00:00:15,210 This podcast is a monthly discussion amongst experts in the field of patenting.
6 00:00:15,290 --> 00:00:19,946 It is for inventors, founders and I P professionals alike, established or aspiring.
7 00:00:20,058 --> 00:00:24,802 And in today's episode, we're taking a look at what investors want in patents.
8 00:00:24,986 --> 00:00:31,362 Patents can have many audiences, and folks from our industry tend to focus most on the Patent office and the courts.
9 00:00:31,506 --> 00:00:36,194 But for inventors, they often care more initially anyway, about investors.
10 00:00:36,322 --> 00:00:41,498 And investors are going to look at patents in a very different way than an examiner or a judge would.
11 00:00:41,664 --> 00:00:44,710 That's the perspective we're hoping to offer in this episode.
12 00:00:44,870 --> 00:00:52,454 What do investors want in patents? And what do investors wish inventors knew before coming to them? This is a topic domain.
13 00:00:52,502 --> 00:00:58,954 We've gained a fair amount of insight into having worked with many startups at various stages of finance and funding rounds.
14 00:00:59,082 --> 00:01:06,606 Rather than pulling from that and filtering with any sort of bias that may come from a practitioner's point of view, we've decided to turn to the experts.
15 00:01:06,718 --> 00:01:11,950 So you can hear this straight from the source, directly from the perspective of accomplished investors.
16 00:01:12,110 --> 00:01:15,630 One of my favorite podcasts for a long time was Masters of Scale.
17 00:01:15,710 --> 00:01:25,794 It features intimate interviews with so many of the greats who have done it, and with the insights from their successes and failures comes quite literally billions of dollars of free advice.
18 00:01:25,922 --> 00:01:30,502 It's hard to imagine the magnitude of the positive impact that's had for startups in tech.
19 00:01:30,636 --> 00:01:33,350 It's in that spirit that we take on this topic.
20 00:01:33,510 --> 00:01:42,990 Innovation is best when it's efficient, and one of the best ways to be more efficient is to not make all of your own mistakes and instead benefit from the hardearned wisdom of others.
21 00:01:43,140 --> 00:01:48,458 Inventors are served by being armed with insights from investors before speaking with investors.
22 00:01:48,554 --> 00:02:00,366 And investors are best served when approached by inventors who are prepared and have a more strategic understanding around the role that their IP, and particularly patents, can play in their overall business strategy.
23 00:02:00,478 --> 00:02:02,322 This is a big topic with many.
24 00:02:02,376 --> 00:02:07,286 Different angles, so we plan on this being a regular format that we come back to from time to time.
25 00:02:07,388 --> 00:02:10,594 But I couldn't be more excited about this first installment.
26 00:02:10,722 --> 00:02:15,602 Our guest today brings the unique perspective of both inventor and investor.
27 00:02:15,746 --> 00:02:18,754 We're thrilled to be joined by Sridhar Iyengar.
28 00:02:18,882 --> 00:02:25,382 Sridhar is the CEO of Elemental Machines, makers of smart IoT products for the life sciences industry.
29 00:02:25,526 --> 00:02:31,494 Sridhar has a long history as a serial entrepreneur in the world of connected medical devices and wearables.
30 00:02:31,622 --> 00:02:39,162 His first company, AgaMatrix , a blood glucose monitoring company, made the world's first ever medical device to directly connect to the iPhone.
31 00:02:39,306 --> 00:02:56,142 Under his leadership, AgaMatrix achieved remarkable growth, securing FDA clearance for over 15 medical products, forming strategic partnerships with industry heavyweights such as Apple, Sanofi and Walgreens, and shipping 2 billion biosensors and 6 million glucose meters.
32 00:02:56,286 --> 00:03:06,246 For his second act, Sridhar teamed up with John Scully, former CEO of Apple and Pepsi, to create Misfit Company, known for creating sleek and stylish wearable products.
33 00:03:06,428 --> 00:03:11,514 Misfit was acquired by Fossil in 2015 for $260,000,000.
34 00:03:11,712 --> 00:03:23,178 Sridhar holds over 150 US and international patents and received his PhD from Cambridge University as a Marshall Scholar in addition to his work as a prolific inventor and founder.
35 00:03:23,274 --> 00:03:32,602 Because who needs sleep? Sridhar is also an angel investor who has invested in over 50 startups and venture funds with an inclination towards science based ventures.
36 00:03:32,746 --> 00:03:34,894 Sridhar and I are also joined today by Dr.
37 00:03:34,932 --> 00:03:38,882 Ashley Sloat, president and Director of Patent Strategy here at Aurora and Dr.
39 00:03:41,806 --> 00:03:45,554 Before taking you into our discussion, we do have one exciting announcement to make.
40 00:03:45,592 --> 00:03:54,130 First, every year since the start of the Pandemic, aurora has offered something we call the Rise Award, or Recognition for innovative startup excellence.
41 00:03:54,290 --> 00:03:59,590 And starting now, we're officially accepting applications for its fourth annual installment.
42 00:03:59,750 --> 00:04:12,202 For the selected applicant, we will work closely with you and your team of inventors to provide one of the following a free provisional US patent application or $5,000 towards a non provisional US.
44 00:04:13,584 --> 00:04:18,190 The only requirement is that you must have an impactful innovation that you want to share with the world.
45 00:04:18,340 --> 00:04:22,234 We welcome applicants from all subject matter areas and Zip codes.
46 00:04:22,362 --> 00:04:27,966 Past recipients include solo inventors, college based teams, as well as more established startups.
47 00:04:28,078 --> 00:04:37,438 Eligible applications will be reviewed by an internal panel based on equal weighting of technology, maturity, market relevance, economic impact, and societal impact.
48 00:04:37,614 --> 00:04:39,594 Winners will be announced this summer.
49 00:04:39,662 --> 00:04:47,030 If you'd like to learn more about the history of this award and some of its past winners, I recommend listening to our Inventor Stories episode from season two.
50 00:04:47,180 --> 00:04:50,586 To apply, please visit Rise Up with Aurora.com.
51 00:04:50,688 --> 00:04:52,950 We'll also have this link in the show notes.
52 00:04:53,110 --> 00:04:57,334 Now, without further ado, here's our conversation with Sridhar Iyengar.
53 00:04:57,462 --> 00:05:02,406 You've seen this from all relevant angles inventor, founder, and investor.
54 00:05:02,518 --> 00:05:05,550 So I can't think of a better background for this conversation.
55 00:05:05,970 --> 00:05:11,920 On behalf of the many who are going to benefit from your hardearned insights, thanks for taking the time and joining us today.
56 00:05:12,370 --> 00:05:13,986 Sure, thanks for having me out.
57 00:05:14,088 --> 00:05:15,940 It's a pleasure and honor to be here.
58 00:05:16,310 --> 00:05:23,140 So, first question, and we say this all the time, but patents aren't right for every situation.
59 00:05:23,590 --> 00:05:39,814 Who should and who shouldn't be pursuing patent protection? So it's interesting because I've seen the value, or lack of value as well, of patents across three very different industries.
60 00:05:39,862 --> 00:05:50,060 So the medical device industry, the consumer products industry, and now the enterprise b two b SaaS industry that I'm doing now with my current company.
61 00:05:50,910 --> 00:05:59,310 And it's interesting because the value of patents and I should say more broadly, value of intellectual property.
62 00:05:59,380 --> 00:06:07,890 And and just to be clear, in my mind, patents are one part of intellectual property along with trademarks, copyrights, trade secrets, and so on and so forth.
63 00:06:09,430 --> 00:06:22,280 It really depends on the market and what your competition is like and also what is the basis for the moat you are trying to build.
64 00:06:22,650 --> 00:06:35,962 If the basis of the moat is something that is scientific or technologically very difficult, then patents could be a very good strategy if the moat you're trying to build is something else.
65 00:06:36,016 --> 00:06:47,806 For example, many, many times in pure software businesses, the moat is just building a great UI, getting a lot of users and running really fast.
66 00:06:47,988 --> 00:06:52,430 And there, it's a very marketing oriented moat.
67 00:06:53,010 --> 00:06:58,290 And there's other, especially in consumer products, it's really good design.
68 00:06:58,360 --> 00:07:05,634 And in that case, trademarks and copyrights and design patents might be better.
69 00:07:05,832 --> 00:07:19,950 But the bulk of the work that I've done historically in my career has been in very science driven industries and in my investing side have a propensity to really value hardcore science startups.
70 00:07:20,050 --> 00:07:26,134 So in a roundabout way, the way that I would answer that is it depends on a number of factors.
71 00:07:26,262 --> 00:07:37,840 And if the moat you're trying to build is actually around scientific invention, discovery and all that, then patents are almost a must have.
72 00:07:38,450 --> 00:07:44,446 It's very hard to keep all of that as trade secret and still get investors on board with it.
73 00:07:44,468 --> 00:07:45,478 And they're going to get skittish.
74 00:07:45,514 --> 00:07:47,250 If you don't have a patent portfolio.
75 00:07:47,830 --> 00:08:07,590 Do you have kind of a follow up? Do you have any extra filters on that in terms of looking at things like enforceability ability to actually prove infringement, things of that nature? Yeah, and we ran into this in both of my first and second companies.
76 00:08:07,660 --> 00:08:14,700 My first company, as you mentioned, was a blood glucose monitoring company, and my second one was a fitness tracker company of consumer products.
77 00:08:18,190 --> 00:08:28,080 One rule of thumb that I have is you should really not file a patent if the thing you're trying to protect.
78 00:08:29,570 --> 00:09:03,674 If it's hard to find an infringer, if you protect, like, for example, a manufacturing process, how are you going to know if somebody's infringed that unless it's obvious from the product that's the output of that? And flip side is if you make a product and it's really, really hard for somebody to reverse engineer or figure out how you've done it, then there's no need for you to publish in a patent filing what it is you've done.
79 00:09:03,792 --> 00:09:17,114 And so really the rule of thumb is can you spot an infringer or can somebody reverse engineer you from the product or object that you're selling? If the answer is no, then I would steer away from patents.
80 00:09:17,162 --> 00:09:22,506 Because you're telling the world what you're doing behind closed doors, right? Yeah.
81 00:09:22,548 --> 00:09:24,642 That being the fundamental deal, right.
82 00:09:24,776 --> 00:09:27,410 The public disclosure, the enabling public disclosure.
83 00:09:29,190 --> 00:09:49,260 All right, so next one is just roughly, as an investor, what percentage of folks coming to you have first filed for IP before doing so? I'd say north of 90% of the companies that piqued my interest.
84 00:09:51,150 --> 00:10:03,070 Some of the early stage funds that I'm an LP, and they're almost entirely focused on deep tech or things that would benefit from patent protection.
85 00:10:03,490 --> 00:10:15,550 I do get spammed a lot with unsolicited emails and folks like hey, I made this app and hey I'm going to create this marketplace.
86 00:10:16,470 --> 00:10:19,486 Those could end up being very amazing businesses.
87 00:10:19,518 --> 00:10:25,800 But I just don't have the intuition or the level of comfort to be able to judge whether that's a good investment or not.
88 00:10:26,490 --> 00:10:49,130 But my personal interest and my personal long term belief is there's tremendous value creation that if you base a new venture on something that is fundamentally difficult and oftentimes things spun out of universities will have 510 15 years of R and D of research going into it before it gets spun out.
89 00:10:49,200 --> 00:10:58,000 And those have a very high, much better chance of being a successful venture and creating real value in this world.
91 00:11:00,130 --> 00:11:15,422 I guess if I could fuse those two answers, the last two answers together, then it's not necessarily a requirement for somebody to have filed for IP before coming and talking to you, but it's common and oftentimes preferable depending on the case.
92 00:11:15,576 --> 00:11:20,306 Yeah, and I have one investment.
93 00:11:20,418 --> 00:11:32,570 Actually my most successful investment to date that I made almost ten years ago was a, I'll tell you who the company is, you'll know who it is in a minute.
94 00:11:32,910 --> 00:11:37,606 They came to me and they had absolutely no IP filed.
95 00:11:37,638 --> 00:11:39,770 It was not a technology company.
96 00:11:39,920 --> 00:11:44,918 Their whole differentiator was going to be ease of use and good packaging.
97 00:11:45,014 --> 00:11:47,120 Like literally good packaging design.
98 00:11:49,970 --> 00:11:50,686 That was the thing.
99 00:11:50,708 --> 00:11:54,098 And I'm sitting there going, I totally get the problem.
100 00:11:54,264 --> 00:11:57,522 I've experienced, I know the problem space.
101 00:11:57,576 --> 00:12:04,610 I'm like, it's a great solution, there's absolutely no moat and your differentiator is better packaging.
102 00:12:07,210 --> 00:12:13,586 So I finally understood what their moat was and it was not IP, it was operations.
103 00:12:13,778 --> 00:12:21,482 And I won't get into all the details of that, but they had three years ahead start on everyone.
104 00:12:21,616 --> 00:12:25,338 And that company got bought by Amazon for a billion dollars.
105 00:12:25,504 --> 00:12:28,330 And that company was pill pack.
106 00:12:28,480 --> 00:12:30,910 And today that is Amazon Pharmacy.
107 00:12:33,970 --> 00:12:36,686 It took me a while to figure out what their moat was.
108 00:12:36,708 --> 00:12:39,600 And it wasn't IP and it wasn't a technology company.
109 00:12:39,970 --> 00:12:52,830 It was a fact that one of the founders TJ his father's family business was in the online with mail order pharmacy.
110 00:12:52,910 --> 00:12:57,438 So they had all the automation, infrastructure, capital, everything was already there.
111 00:12:57,464 --> 00:13:02,326 He was just going to be the marketing front end, the customer acquisition front end.
112 00:13:02,508 --> 00:13:15,754 But the other thing was, because he was leveraging his father's family business, they already had all the paperwork and permits to distribute pharmaceuticals, drugs in all 50 states.
113 00:13:15,952 --> 00:13:19,178 Those two things alone, they're at least three years ahead of anyone else.
114 00:13:19,344 --> 00:13:21,626 And it wasn't a first to market idea.
115 00:13:21,728 --> 00:13:29,600 I think Walgreens and CVS had a very, very similar thing where they, they packaged pills, individual package, tell them what time to take it.
116 00:13:30,290 --> 00:13:40,066 But we knew that that was not going to be an issue because folks like Walgreens and CVS, they want people to come in, they don't want to be sending pills out.
117 00:13:40,088 --> 00:13:42,754 So there was a conflict of interest over there.
118 00:13:42,792 --> 00:13:47,770 And so it was my first unicorn exit.
119 00:13:47,870 --> 00:13:49,094 So it was great.
120 00:13:49,132 --> 00:13:54,342 And again, there's a great example of where they had absolutely no IP and yet they created tremendous amounts of value.
121 00:13:54,476 --> 00:13:55,160 Yeah.
122 00:13:56,890 --> 00:14:07,334 In terms of the deal on that, then they really were, from an acquisition perspective, really purchasing the know how in that infrastructure from Amazon's perspective.
123 00:14:07,382 --> 00:14:07,594 Right.
124 00:14:07,632 --> 00:14:11,894 Because you typically think of MNA as purchasing IP, right.
125 00:14:11,952 --> 00:14:16,478 So that company can then go and do the thing or stop the process.
126 00:14:16,564 --> 00:14:24,660 And so in this case, the purchase was really about that infrastructure, the operations, the licensing that they had across 50 states.
127 00:14:25,350 --> 00:14:29,700 Yeah, it was all that plus I'd add in the customer base.
128 00:14:30,630 --> 00:14:37,106 So for them, I wasn't obviously not involved at all on the deal side of this.
129 00:14:37,208 --> 00:14:39,666 I was just an angel investor.
130 00:14:39,778 --> 00:14:44,262 But if I had to look at the logic behind it, it was a buy versus built.
131 00:14:44,316 --> 00:14:50,678 How can Amazon get into the pharmacy and healthcare business quickly? It's by acquiring somebody who's already derisked.
132 00:14:50,694 --> 00:14:57,254 It had the operations in place and had the customer base and had the brand, quite honestly.
133 00:14:57,302 --> 00:15:02,718 So that's no, that's how I looked at it.
134 00:15:02,884 --> 00:15:04,800 I like that buy versus build.
135 00:15:08,130 --> 00:15:09,278 I have a question.
136 00:15:09,364 --> 00:15:21,940 Do you have another NGO investing cases where the IP is so important and vital for its success? So it's interesting.
137 00:15:24,970 --> 00:15:43,290 I'll actually say not so much an angel investing case, but actually, if I go back to my first company, Agametrix, I can tell you we had hundreds of patents filed, us and International.
138 00:15:44,430 --> 00:15:51,280 We had an interesting situation where we had a Big Pharma company.
139 00:15:53,330 --> 00:16:00,990 Actually, it's no secret it's Sanofi or Sanofi, depending on whether you're German or French.
140 00:16:02,710 --> 00:16:09,780 Sanofi was looking to potentially be our customer and take our products to market.
141 00:16:10,470 --> 00:16:16,382 But at the same time, we were also competing for that same business with one of our suppliers.
142 00:16:16,526 --> 00:16:23,238 One of our suppliers supplied as a component, but they also have their full glucose monitoring system.
143 00:16:23,404 --> 00:16:34,220 And so when you look at it, for obvious reasons, our price was going to be higher because we're buying a component from our supplier versus all that.
144 00:16:35,710 --> 00:16:45,280 And Big Pharma is notorious for being very conscious about supplier relationships, let's put it that way.
145 00:16:45,970 --> 00:16:50,634 And we ended up ultimately getting that contract.
146 00:16:50,682 --> 00:16:58,482 And actually our supplier also benefited because they ended up getting the supply through us as well.
147 00:16:58,616 --> 00:17:08,090 But one of the things that set us apart is that we had a much, much more robust IP portfolio that our supply.
148 00:17:08,110 --> 00:17:19,990 I mean, they had their own IP around their chemistry and all that, but we probably had pick a number six to seven times more patents filed than they did.
149 00:17:20,060 --> 00:17:28,554 Now what was interesting about this is the folks at Sanofi who were doing the due diligence, they're not going to be experts in our field.
150 00:17:28,752 --> 00:17:31,930 They're not going to know the ins and outs and that this claim is super strong.
151 00:17:32,000 --> 00:17:33,406 This claim doesn't make no sense.
152 00:17:33,508 --> 00:17:34,720 They're not going to do that.
153 00:17:35,090 --> 00:17:49,634 But they came at it from a macro perspective and they said, look, if we Sanofi get into the blood glucose monitoring field, it's going to raise eyebrows from Abbott, Roche, Bayer and J.
154 00:17:49,672 --> 00:17:50,050 And J.
155 00:17:50,120 --> 00:17:58,962 You know, we as I can matrix a small startup, you know, we, we cause a little bit of nuisance in the market to these folks, but you know, we were not the 800 pound gorilla.
156 00:17:59,026 --> 00:18:13,366 So Sanofi comes in, they were concerned that there would be quite a bit of attention on this and there'd be a lot of potential resistance from the other major players.
157 00:18:13,478 --> 00:18:23,760 And so for them, having a very large IP portfolio gave them confidence that if needed, there could be cross licensing opportunities and things like that.
158 00:18:26,770 --> 00:18:38,642 The bottom line, patents you file are only very rarely are you going to assert them and throw a lot of money behind suing someone.
159 00:18:38,776 --> 00:18:41,780 It's just not economically sound.
160 00:18:43,910 --> 00:18:48,286 But you get IP in place for strategic reasons, not necessarily operational reasons.
161 00:18:48,318 --> 00:18:58,006 And this was a perfect example of where, and I won't say the IP portfolio was the only thing, but it was a large factor in us securing that large partnership with Sanofi.
162 00:18:58,038 --> 00:19:03,690 So I see IP as a much more of a strategic asset than an operational asset.
163 00:19:04,350 --> 00:19:06,540 Yeah, that makes a ton of sense.
164 00:19:07,790 --> 00:19:18,682 One tie in, you're talking about the packaging component not being necessarily like a hugely strategic differentiator.
165 00:19:18,746 --> 00:19:27,158 I was just reading a post you had on Medium though, about how people choose cars based on cup holders.
166 00:19:27,354 --> 00:19:35,966 And it was the color aspect of the packaging on the competitors monitor that actually ended up being a pretty big strategic differentiator.
167 00:19:35,998 --> 00:19:43,400 So it's crazy that sometimes that stuff, even though maybe it's not the patentable aspect, can still play a huge role in the overall success.
168 00:19:44,650 --> 00:19:50,342 I'm really glad you brought this up because here's the reality versus perception versus reality.
169 00:19:50,486 --> 00:19:57,850 As an investor, you can't come and say, well, our differentiator is that we have better colors, we have more colors.
170 00:19:58,590 --> 00:20:08,986 And yet if I go back to my second company misfit, the thing that really accelerated our growth was the fact that we had different colors.
171 00:20:09,178 --> 00:20:23,006 Now and I'll tell you a little bit there's more to the story on this, but going to an investor and saying we're going to make a consumer product and our differentiator is it's going to look pretty and have multiple colors.
172 00:20:23,118 --> 00:20:26,070 How's that sound? You're not going to get investment.
173 00:20:27,210 --> 00:20:41,420 So we had to actually file IP on, we actually did some machine learning and AI work on the algorithm side on the fitness trackers to actually understand when somebody's taking steps and when they're sleeping and all that.
174 00:20:41,790 --> 00:20:57,166 But if you look at reality, for every dollar that we spent making a new color, we were able to get about $100 back in revenue within a year.
175 00:20:57,348 --> 00:21:02,880 It was like 25 $30,000 to make a new color and about two to 3 million in revenue per color.
176 00:21:03,730 --> 00:21:11,006 Because it wasn't just about the colors, and because what the colors allowed us to do is to form very, very strong brand partnerships.
177 00:21:11,198 --> 00:21:12,866 And I can't take any credit for this.
178 00:21:12,888 --> 00:21:19,480 This was all my business partner, Sonny, who's brilliant at these kinds of these marketing things.
179 00:21:20,250 --> 00:21:27,510 So, for example, Best Buy, they ended up getting two colors, blue and yellow.
180 00:21:27,850 --> 00:21:32,438 They're corporate colors, or I believe we called them Champagne and Topaz.
181 00:21:32,534 --> 00:21:36,518 Again, this is Sunny's brilliance in marketing and positioning.
183 00:21:40,880 --> 00:21:50,714 So a lot of these major brands, we gave them exclusive rights to a particular color that that resonated with their brand, and that's what really grew.
184 00:21:50,842 --> 00:21:56,482 That was a big part of our distribution and awareness through that.
185 00:21:56,536 --> 00:22:09,234 But if you go to an investor and say, well, that's what we're going to do, that doesn't seem defensible, and yet it is from an execution standpoint.
186 00:22:09,282 --> 00:22:15,350 So not from a patenting standpoint, but it is yet another barrier, another moat.
187 00:22:16,170 --> 00:22:18,140 Sure makes a lot of sense.
188 00:22:18,910 --> 00:22:26,810 So you've talked about value several times, and the value that patents can bring.
189 00:22:26,960 --> 00:22:29,450 Big part of investing is valuation.
190 00:22:30,590 --> 00:22:38,240 That valuation happens at a time, unfortunately, though, when very little is known or certain, but a patent is an asset in hand.
191 00:22:39,090 --> 00:22:48,370 How do you go about placing a value on a patent when assessing the overall valuation? So we kind of don't.
192 00:22:48,710 --> 00:22:55,534 We don't place value on the patent itself because a lot of times the patent is still pending.
193 00:22:55,582 --> 00:22:56,850 It's still an application form.
194 00:22:56,920 --> 00:22:58,520 It hasn't been granted yet.
195 00:22:58,890 --> 00:23:04,258 So, again, our sweet spot on the investing side is seed and precede.
196 00:23:04,274 --> 00:23:14,374 So at that point, unless it's come out of a university and there's a licensing arrangement in place, most of the startups we work with have a handful of patents they filed but haven't been granted.
197 00:23:14,422 --> 00:23:18,250 So it's hard to place value on the patent before it's granted.
198 00:23:18,590 --> 00:23:24,560 But what's far more interesting and far more important is their thought process around intellectual property.
199 00:23:25,090 --> 00:23:48,946 So what we end up doing is we review the patents, we look at some of the landscape, we see what are the other folks in this area doing and how are they thinking about what their core value is? Some folks say, well, here's a core invention, but it's so hard for anyone to reverse engineer or find that we're going to keep this as trade secret.
200 00:23:49,058 --> 00:23:54,054 And instead, we're going to patent all the outward facing applications that we've built on this.
201 00:23:54,172 --> 00:24:01,786 And that shows a level of sophistication whereas you have other folks that say we invented this, we found one patent on this.
202 00:24:01,888 --> 00:24:09,594 And we look at that and we say that's it kudos to them in creating something.
203 00:24:09,632 --> 00:24:19,386 But are they sophisticated in their thought process and how they're going to protect their core value? I think that's the more important thing that we focus on at this early stage.
204 00:24:19,418 --> 00:24:29,906 Now, if you go down to Series B and Series C investors, they're going to look at it very differently and say how many patents have been granted? How many times have they been cited or this or that and all that.
205 00:24:29,928 --> 00:24:40,600 But at the early angel stage and at the early seed and precede stage, it's more how are they thinking about protecting their intellectual property? That's far better indicator than the actual patent itself.
206 00:24:41,050 --> 00:24:47,750 With that, do you think then there's value? Because I know there's obviously expedited processing that companies can go through.
207 00:24:47,900 --> 00:25:01,498 Do you think for the relative cost versus value, do you think companies should be trying to do expedited processing or do you think it's not worth the juice, isn't worth the squeeze? Again, it depends on the nature of the business.
208 00:25:01,584 --> 00:25:09,360 But if there is something worth protecting, then I would say spend the extra, what is it, $1,000 to get it ahead of the queue or something like that.
209 00:25:15,170 --> 00:25:16,900 So the simple answer is yes.
210 00:25:18,870 --> 00:25:19,874 I would encourage that.
211 00:25:19,912 --> 00:25:20,802 It's not a lot of money.
212 00:25:20,856 --> 00:25:27,000 But again, if you only have $100,000 in the bank, then 1000, 2000 per patent is a lot of money.
213 00:25:27,370 --> 00:25:48,890 But I would definitely say if you have the budget and the kind of invention or a discovery you have is very scientifically novel, then spend the extra one, or thousand, $2, get accelerated so you have it when you go to investors.
214 00:25:51,330 --> 00:25:52,590 I think there was a really interesting.
215 00:25:52,660 --> 00:26:15,722 Point in there too, about a patent really kind of being a material manifestation of a company and an inventor's values versus not just what you want to hear as a particular investor with a particular angle, but it's very much a material stake in the ground around what they're prioritizing.
216 00:26:15,806 --> 00:26:16,840 It's very interesting.
217 00:26:18,170 --> 00:26:30,170 Yes, it reveals a lot about the founders and how they think about the value that they're creating.
218 00:26:30,750 --> 00:26:51,070 Are they really thinking about this strategically and deeply? Are they playing checkers? Are they playing chess? And there's all these different ways of really extracting patents sorry, extracting IP and value out of someone's invention.
219 00:26:52,130 --> 00:26:59,934 And there's all these different strategies to try and kind of put barricades around it's, kind of like an onion layer after layer after layer.
220 00:26:59,982 --> 00:27:07,814 You can keep the core as a trade secret, but then the applications, you start layering on top of that.
221 00:27:07,852 --> 00:27:14,070 So the way they think about it, I think, is far more important, at least to me.
222 00:27:14,220 --> 00:27:14,920 Absolutely.
223 00:27:15,690 --> 00:27:41,120 So can I ask two questions here? So you mentioned about university spin out, right? So most of these spin outs basically have exclusive licensing from the school of core invention, right? So it's like a new process or new engineering products.
224 00:27:41,810 --> 00:27:46,570 So in those cases, this kind of fits into the one that you mentioned of.
225 00:27:46,740 --> 00:27:48,770 They patent their core.
226 00:27:49,190 --> 00:28:21,280 So in this case, what should these people be thinking about in terms of building their IP strategy and how to align their business model with it? Again, the question for a founder or entrepreneur to think about is why do they need to protect their invention or their core value? What is it? Again, patents aren't the answer to everything.
227 00:28:21,890 --> 00:28:28,174 Oftentimes it could be branding, it could be copyrights and trademarks and all that.
228 00:28:28,212 --> 00:28:49,430 But from I think the theme in this discussion here is that how should we look at this from an investor standpoint as well? What do investors care about? And I'm going to be a little rogue here, most investors aren't going to understand a damn thing about your IP.
229 00:28:50,970 --> 00:29:12,286 And I'd like to think that I know a little bit of something about life sciences, but there's so many patents, and so many companies I come across when I try to read their patents, I'm like, kind of makes sense, logically, but I have no idea what the other 1000 patents in this field say.
230 00:29:12,468 --> 00:29:26,740 And so to actually go through and say, well, this invention is so much heads and shoulders better than everything else out there that takes weeks, if not months of diligence, and no investor is going to do that.
231 00:29:27,270 --> 00:29:48,274 And so I think a much, much better use of time is to patent what you think can be stolen through reverse engineering, or that way you can infringe what you can spot in an infringer very easily.
232 00:29:48,402 --> 00:30:06,254 But then when it comes time to pitch this to the investor, to really talk about the rest of the landscape and I think so many times I've seen a pitch deck and they talk about their invention and they talk about, oh, we're better than the other competitor because of this data set and this data set.
233 00:30:06,292 --> 00:30:07,280 This data set.
234 00:30:07,650 --> 00:30:11,386 But nobody talks about the IP landscape.
235 00:30:11,418 --> 00:30:12,522 They always talk about the data.
236 00:30:12,596 --> 00:30:18,146 Well, our data is at 85% and everyone else is at 30%.
237 00:30:18,248 --> 00:30:21,490 Okay, well, you have three patents you filed.
238 00:30:23,030 --> 00:30:35,158 Do you have freedom to operate? Have you even thought about that? And what did you have to navigate around? And who else is working in this space? They could have absolutely no data at all.
239 00:30:35,244 --> 00:30:48,538 You can invent something or discover something, and then there could be nobody else on the market that has something similar, but there could be hundreds of patents that are kind of surrounding what you're doing.
240 00:30:48,624 --> 00:30:54,638 So do you have room to expand your invention? Are you blocked? Nobody really talks about that.
241 00:30:54,724 --> 00:30:59,438 And I don't expect a first time entrepreneur to even think like that.
242 00:30:59,604 --> 00:31:10,734 But from an investor standpoint, understanding the IP landscape around your discovery is something that I rarely see in pitch decks.
243 00:31:10,862 --> 00:31:16,258 And if there's one thing that I like an entrepreneur to do yes, I get the data is great.
244 00:31:16,344 --> 00:31:20,370 Tell me about your IP in the context of your IP landscape.
245 00:31:20,530 --> 00:31:26,406 Yeah, I feel like a lot of inventors put in a competitive landscape from a product perspective correct.
246 00:31:26,588 --> 00:31:28,182 Which I get.
247 00:31:28,236 --> 00:31:31,334 But I also feel like it's a little it can be skewed.
248 00:31:31,382 --> 00:31:31,546 Right.
249 00:31:31,568 --> 00:31:37,258 Because I can focus on whatever aspects of whatever other products I want to show that we're different.
250 00:31:37,344 --> 00:31:37,882 Right.
251 00:31:38,016 --> 00:31:41,098 But the patent landscape doesn't lie.
252 00:31:41,194 --> 00:31:41,840 Right.
253 00:31:42,210 --> 00:31:44,846 Because it's the written description that's out there.
254 00:31:44,868 --> 00:31:47,214 It's what people spelled out.
255 00:31:47,252 --> 00:32:00,740 And so yeah, having that going through that thought process and really convincing yourself that there's something more there than what exists currently, at least in the landscape, I think is really important.
256 00:32:01,110 --> 00:32:02,500 Yes, 100%.
257 00:32:04,230 --> 00:32:05,554 I think it's a pretty good segue.
258 00:32:05,602 --> 00:32:15,554 And this might be a smidge redundant, but I'm going to ask it anyway, just depending on how this actually plays out post production.
259 00:32:15,602 --> 00:32:21,622 But you mentioned that not all investors are going to be particularly IP savvy.
260 00:32:21,766 --> 00:32:53,410 It's hard to be an expert in all of the subject matters, but what sort of diligence do you perform with regard to IP and how do you assess the quality of a patent? And the for instances on that are claims that are too broad and the application is going to be more vulnerable to prior art, too narrow, and can easily be designed around well crafted patents a lot more likely to hold up to the scrutiny of courts in the PTAB.
261 00:32:54,470 --> 00:33:08,054 How do you go about separating the pretenders from the contenders? So, again, one of the big challenges at early stage investing is many patents aren't granted yet.
262 00:33:08,172 --> 00:33:31,454 And so the best you can do is read through the spec and say, is the specification written in a way that allows multiple claims and multiple inventions to be drawn out? I mean, there's a pretty there's a very well trodden path where you put everything in the kitchen sink into the spec to save on filing fees, and then you break those out into different claim sets down the road.
263 00:33:31,492 --> 00:33:33,540 So it's just a way to save money.
264 00:33:33,910 --> 00:33:45,602 So one thing that I look for is, is spec written in a way that potentially different inventions are all clumped together.
265 00:33:45,736 --> 00:34:01,930 And that's something that I ask the entrepreneurs directly as well and say, hey, how have you written your patents? Do you have everything in one they can break off later? And I'd say half the folks understand that strategy and as a cost saving measure, and they do that and I'm like, great, at least you're thinking about it.
266 00:34:02,000 --> 00:34:04,700 And the other half haven't learned that yet.
267 00:34:08,270 --> 00:34:16,560 For me, reading a set of claims is not very useful because you could tweak one or two words and maybe you could work around it.
268 00:34:17,250 --> 00:34:22,286 What I end up doing is I try to match what they're pitching in terms of their.
269 00:34:22,308 --> 00:34:41,366 Data and their product and their invention and match that to how have they protected that, at least in the specification side? And then the next question is, if you didn't exist as an organization or a company or your technology or science didn't exist, what's the next best thing that's out there? You invented something and you're trying to sell this to your customers.
270 00:34:41,468 --> 00:35:04,286 If you didn't exist, what would your customers do or buy if you didn't exist? And then I'll go into a narrative about, oh, will they be doing XYZ and say, okay, well, how much better is your invention than this? And where have you show me where you've protected it? Now, that of course, takes a lot of time to do.
271 00:35:04,308 --> 00:35:09,134 So in this day and age, I don't do a lot of direct angel investing because it takes time.
272 00:35:09,252 --> 00:35:19,010 But a few years ago, that was more my approach was matching what they've written in their patents.
273 00:35:20,070 --> 00:35:34,374 If they had claims that are granted great otherwise in the spec with what they're claiming the product that are invention can actually do and see, is there some level of traceability between them now? Are there any red flags you look.
274 00:35:34,412 --> 00:35:48,250 For on the patenting side? I'd say the main red flag would be if they filed one patent, say, yes, we've patented our discovery.
275 00:35:50,430 --> 00:35:55,994 And then when you dig into it, it turns out that it's a narrow claim set or narrow invention.
276 00:35:56,122 --> 00:36:04,494 Again, going back to what I just said before, some people will say like, yeah, there's five inventions we've credited into one patent to save on filing costs, so that makes sense.
277 00:36:04,532 --> 00:36:09,330 But if somebody said, yeah, we invented this thing and we just filed one patent on it, that's all they have.
278 00:36:09,400 --> 00:36:10,878 Then you can do a little bit more digging.
279 00:36:10,894 --> 00:36:12,210 It's just a one trick pony.
280 00:36:12,950 --> 00:36:17,058 But more often than not, there'll be two or three that's filed.
281 00:36:17,074 --> 00:36:32,202 And they'll say, okay, they'll talk to me about, well, here's thing that we've discovered and we filed this part of it over here, we filed this part of it over here, this part of it we're going to file and we're still trying to put the pieces together.
282 00:36:32,256 --> 00:36:37,050 So if they can articulate the division for a portfolio, that's great.
283 00:36:37,200 --> 00:36:44,378 But if somebody says, oh, we filed a patent on it, and then you hear crickets, they're not really thinking about it strategically.
284 00:36:44,474 --> 00:36:50,254 And I have come across several folks who kind of think, oh, I just need to file a patent and I'm done.
285 00:36:50,292 --> 00:36:51,518 I'm like, not really.
286 00:36:51,604 --> 00:36:55,300 What's your patent strategy? And if they can answer, that great.
287 00:36:56,070 --> 00:37:03,410 But sometimes they ask me, what do you mean by patent strategy? And that's a little bit of a red flag.
289 00:37:08,490 --> 00:37:18,360 It sounds like it from prior answers, but it does sound like you do like to see freedom to operate opinion and potentially a patentability search.
290 00:37:18,810 --> 00:37:26,150 Yeah, the patentability I'm less concerned about the freedom to operate or FTO.
291 00:37:26,310 --> 00:37:32,426 It's not a must have, because again, doing an FTO will take time and cash away from the startup.
292 00:37:32,538 --> 00:37:36,222 But you don't need an independent FTO done.
293 00:37:36,356 --> 00:37:41,278 If they themselves have done an FTO, at least they can talk about it.
294 00:37:41,284 --> 00:37:47,202 It won't be an official council generated FTO document, but at least they're aware of it.
295 00:37:47,256 --> 00:37:54,286 I mean, there's folks who are not even aware that they need to look at an FTO.
296 00:37:54,318 --> 00:38:02,742 And even just understanding what a patent is, a patent doesn't give you the right to do something.
297 00:38:02,796 --> 00:38:04,566 It it stops other people from doing it.
298 00:38:04,588 --> 00:38:09,846 And even understanding that the definition of what and what a patent is helps.
299 00:38:09,878 --> 00:38:16,102 And you'd be surprised how many first time founders and inventors don't actually understand that concept.
300 00:38:16,166 --> 00:38:20,730 So those are some, again, some additional red flags.
301 00:38:21,710 --> 00:38:23,150 We wouldn't be surprised.
302 00:38:24,290 --> 00:38:25,694 You see it all the time.
303 00:38:25,892 --> 00:38:38,420 It's a huge part of the educational things that we do on our webinars and even on this podcast is like breaking down that distinction because there's a lot of nuance, but it is huge difference.
304 00:38:40,150 --> 00:38:54,086 So this next question, this is largely an inventor education piece, so I know the answer to this question for most investors, but I think it comes as a surprise to many inventors newer to the process.
305 00:38:54,268 --> 00:39:03,580 Are you willing to sign NDAs when inventors and startups come to you with pitches? So me personally, never.
306 00:39:05,070 --> 00:39:17,150 Most of the funds that I'm an LP in, never or rarely, certainly not on the first meeting.
307 00:39:20,930 --> 00:39:36,230 Usually when people ask for that what I say or what the funds I'm involved in say is that, well, can you share something that's non confidential? And the answer is no, we have something that's so proprietary we can't share with you, then we'd say, okay, well, thanks, good luck.
308 00:39:36,970 --> 00:39:58,810 And part of the reason is, if you need an NDA at this stage to protect your invention, then what you're signaling is that once you tell somebody what it is, it's pretty easy to copy that's what you're signaling.
309 00:40:00,450 --> 00:40:20,930 Or on the flip side, on the investor side, we see so many pitch decks and all that, that if you come to us and we sign an NDA, and then two months later, we come across another pitch deck from somebody's doing something competitor, and we invest in them.
310 00:40:21,000 --> 00:40:27,218 And there's a potential risk that we've a liability that we've opened ourselves up to.
311 00:40:27,304 --> 00:40:28,790 So the simple answer is no.
312 00:40:28,860 --> 00:40:30,982 Now, that being said, you go further down.
313 00:40:31,036 --> 00:40:36,354 You go to the Series B and Series C investors, many of them will sign NDAs.
314 00:40:36,482 --> 00:40:47,130 I've had folks in my current company, I've had investors who later stage investors who without me even asking, said, can you give us access to your data room? And we'll sign an NDA.
315 00:40:47,470 --> 00:40:59,534 And then what we've done, what we did here was because we just closed the Series B, we just had the NDA as part of the login or the sign in for the data room.
316 00:40:59,572 --> 00:41:12,980 And at later stage, it's a lot more expected and accepted, mainly because you're sharing a lot of more sensitive financial information, competitive information, customer information.
317 00:41:13,670 --> 00:41:17,862 Honestly, it's not about the IP, not about the invention at that point.
318 00:41:17,916 --> 00:41:23,080 What you're protecting in an NDA is commercially sensitive information, not scientifically sensitive information.
319 00:41:24,090 --> 00:41:25,480 Makes a lot of sense.
320 00:41:26,250 --> 00:41:31,974 So there's the vetting of the portfolio, but then there's the vetting of the owners of the IP.
321 00:41:32,022 --> 00:41:54,330 And we've talked about this some for sure, but what sort of questions do you ask inventors in sort of trying to suss out their relative level of sophistication around IP? Again, at very early stage companies, I don't expect a lot of sophistication, but I expect some base level.
322 00:41:54,500 --> 00:42:17,250 One of the things we asked them, not about the IP, but just about their discovery invention, is we ask them, why is this hard? Tell us why this is really hard, and why was it hard for you to discover or invent? And why is it going to be hard for somebody else? Then we try to tie that back to say, okay, well, how have you protected that hard thing or hard things? So again, it's that traceability.
323 00:42:17,330 --> 00:42:26,602 If they say this is hard and they protected this, it's like, okay, why now? It could be that this is really hard and we're keeping a trade secret and we're protecting this over here.
324 00:42:26,736 --> 00:42:29,226 That's fine, as long as they have logic around it.
325 00:42:29,328 --> 00:42:32,390 So a large part of the evaluation early stages.
326 00:42:32,550 --> 00:42:39,566 Are you thinking about this the right way? Are you thinking about the strategy around how to protect it doesn't mean that you invented this.
327 00:42:39,588 --> 00:42:40,734 You got to protect this.
328 00:42:40,852 --> 00:43:05,350 It's what's the risk reward? What's your real value? And how are you looking at the risk of either exposing that real value to the public via patent or keeping it trade secret? And so have they thought about it? Have they thought through the risk reward? That's probably the most important thing for me I look at.
329 00:43:05,500 --> 00:43:26,720 So if we haven't covered it already, what's the one piece of IP related advice you wish you could give to every inventor before pitching to you? So this is gonna this is gonna sound kind of funny, because I it's gonna be counterintuitive to what I just said.
330 00:43:27,330 --> 00:43:32,270 It is generally better to have more patents than less patent headcount.
331 00:43:33,990 --> 00:43:45,246 And the reason I say that is many investors aren't going to understand the ins and outs and in depth implications of your IP.
332 00:43:45,358 --> 00:43:55,078 So if you got two companies that kind of look the same, and one's got two patents, one's got 15, there's obviously something more appealing over here.
333 00:43:55,164 --> 00:44:01,142 That could be that these 15 are just total nonsense patents, and these two here are the core.
334 00:44:01,206 --> 00:44:04,246 But at first glance, that helps.
335 00:44:04,278 --> 00:44:11,690 I mean, having an IP portfolio is a marketing exercise at the very, very early stages of fundraising.
336 00:44:11,850 --> 00:44:19,530 And I think that's something to be aware of and the fact that intellectual property is not just patents.
337 00:44:19,690 --> 00:44:29,662 And I think that's entrepreneurs need to realize that when they talk about their IP portfolio.
338 00:44:29,726 --> 00:44:32,786 Patents is one item out of all that.
339 00:44:32,888 --> 00:44:39,186 And if you just have two patents, but it covers ten inventions, then that's how you should write it.
340 00:44:39,208 --> 00:44:43,830 You should say, our IPS, these ten inventions, these five are covered by patent number one.
341 00:44:43,900 --> 00:44:45,510 These five are covered by patent number two.
342 00:44:45,580 --> 00:44:46,806 Put a table out there.
343 00:44:46,908 --> 00:44:49,722 Otherwise you got two patents and you're like, all right, that's it.
344 00:44:49,776 --> 00:44:57,430 But now you have ten inventions that you've packaged into two patents for cost purposes.
345 00:44:57,510 --> 00:44:59,638 But then you have trade secret secrets.
346 00:44:59,814 --> 00:45:02,622 List what your trade secrets are without giving them away.
347 00:45:02,676 --> 00:45:11,198 Things like, we have unique expertise in XYZ manufacturing technique or something like that, without saying what it is.
348 00:45:11,284 --> 00:45:16,290 Then you have trademarks, you have design sorry, utility patents and design patents.
349 00:45:17,030 --> 00:45:19,970 Then another part of intellectual property is any proprietary data.
350 00:45:20,040 --> 00:45:22,434 You have a lot of AI driven companies.
351 00:45:22,552 --> 00:45:28,278 A huge part of their secret sauce is a proprietary data set.
352 00:45:28,364 --> 00:45:35,080 So really, instead of saying your IP, we have these two patents you list at a table of 25 things.
353 00:45:35,690 --> 00:45:45,750 Here's our ten inventions, here's our two patents covering, here's trademarks, here's trade secrets, here's copyrights, if it makes sense, and here's all of our different data sets.
354 00:45:45,830 --> 00:45:56,378 So presenting that as a comprehensive intellectual property portfolio comes across as far more sophisticated than saying, here's a couple of patents we filed.
355 00:45:56,474 --> 00:46:13,454 So think about your IP portfolio as a marketing tool when you go to pitch to early stage investors, because I can tell you right now, early stage investors, because they see so many different companies, they're not going to have time to dig into the ins and outs.
356 00:46:13,502 --> 00:46:16,790 So think of it as a narrative and as a marketing exercise.
357 00:46:17,690 --> 00:46:19,800 Sure makes a lot of sense.
358 00:46:21,370 --> 00:46:34,810 So, flipping the perspective just a little bit, what IP related advice would you give to those newer to investing? Don't place too much emphasis on patents at that early stage.
359 00:46:36,910 --> 00:46:45,066 And the reason for that is, very often companies will pivot when you come in as a seed or a precede investor.
360 00:46:45,098 --> 00:47:03,214 By the time they get the Series B, they may have pivoted, but I think to sort of qualify that a little bit, it's less about what they've actually protected and far more about are the founders thinking strategically.
361 00:47:03,262 --> 00:47:10,150 And intellectual property and patenting is one of those dimensions, but there's obviously multiple dimensions.
362 00:47:10,650 --> 00:47:27,446 If it is a very scientific endeavor, like something that's being spun out of a university research, then looking at the licensing arrangements and whether or not those royalties are going to how they're structured.
363 00:47:27,558 --> 00:47:29,340 So the business implications of that.
364 00:47:30,770 --> 00:47:41,760 The other thing that you watch out for is university related patents often are not written the best.
365 00:47:45,010 --> 00:47:47,146 They're often kind of rubber stamped.
366 00:47:47,338 --> 00:47:55,646 So I know that from a previous life where we were trying to license something from a university.
367 00:47:55,678 --> 00:47:57,926 And I'm looking at that going, that's not how I would have written it.
368 00:47:57,948 --> 00:48:05,814 And the main inventor there said, yeah, the Technology Licensing Office have their own IP agent, patent agents who draft it.
369 00:48:05,852 --> 00:48:11,580 And it's just like, all right, you're not thinking about the business simplification, you're just kind of rubber stamping it.
370 00:48:11,950 --> 00:48:24,346 No, but but all joking aside, I think the biggest red flag would be a science and technology based startup that says, well, we're not filing patents.
371 00:48:24,378 --> 00:48:26,106 We want to keep everything as trade secret.
372 00:48:26,298 --> 00:48:34,510 That's a red flag because first of all, they don't understand how to play the IP game, and keeping it all is trade secret.
373 00:48:34,590 --> 00:48:39,810 Whilst, for example, the Coca Cola formula, that's a trade secret.
374 00:48:40,710 --> 00:48:48,866 But the core value in Coca Cola is not their secret formula.
375 00:48:48,898 --> 00:48:50,440 It's their marketing engine.
376 00:48:51,050 --> 00:48:53,430 That marketing and distribution logistics.
377 00:48:53,770 --> 00:48:56,866 Because look at all the other products that Coca Cola sells.
378 00:48:56,898 --> 00:49:00,860 It's not just their Coke Classic, their engine.
379 00:49:01,710 --> 00:49:05,754 The core competence is marketing logistics and all that.
380 00:49:05,872 --> 00:49:29,554 So if a founder comes to you as an investor and says, hey, working everything is trade secret because we have very unique science, how is an acquirer going to get comfort with that? Because if it's such critical trade secret, they're probably not going to reveal it in enough depth and enough detail to an acquiring company.
381 00:49:29,592 --> 00:49:47,750 So you look at the exit and say, are these really the founders that are going to play nice with an acquirer? And will I get a return on my investment on this? And so, again, having understanding the intellectual property broadly is part of your company's currency.
382 00:49:48,090 --> 00:49:52,842 You obviously have your revenue, you have your customer base, you got this, you got that, but you have your intelligent property.
383 00:49:52,896 --> 00:49:55,654 It is an asset, and they need to treat it as an asset.
384 00:49:55,702 --> 00:50:09,390 And so having that sophistication and understanding is something that I would encourage early investors to look out for and probe with potential startups.
385 00:50:09,730 --> 00:50:19,714 It's a little bit of a tell on the chess versus checkers piece, too, around not thinking about using different offensive and defensive strategies as well as just protecting the idea.
386 00:50:19,912 --> 00:50:24,370 So we get a lot of questions about IP budget management.
387 00:50:25,510 --> 00:50:30,438 Someone with over 150 patents, you've definitely seen the good, the bad, and the ugly, I'm sure.
388 00:50:30,524 --> 00:50:45,580 Do you have any preference on the use of big name brand law versus potentially smaller, more cost effective firms? And do you have any thoughts on patent agents versus attorneys closest to subject matter, that kind of stuff? Yeah.
389 00:50:49,150 --> 00:51:02,000 At my first company, AgaMatrix, we had a boutique firm, two or three attorneys, and they had very, very good domain expertise in our field.
390 00:51:02,470 --> 00:51:14,740 And so I greatly benefited working with them because they were scientifically, they knew the science of what we were doing, and they operated in this field for a long time.
391 00:51:15,290 --> 00:51:20,102 And so had very good relationship with them.
392 00:51:20,156 --> 00:51:26,600 And then when we went off to Misfit, we went with one of the big name firms, and they're absolutely fine.
393 00:51:27,850 --> 00:51:28,854 No issue there.
394 00:51:28,892 --> 00:51:42,910 But one of the things that I found in those big name firms is for six months, you end up working with sort of like there's, like, the lead person, but then the junior person that you work with every six months or nine months, that person might change.
395 00:51:42,980 --> 00:51:51,840 So whilst you had the relationship with the lead attorney, the person you had a day to day relationship with may change after a year.
396 00:51:52,850 --> 00:52:02,722 And what I found there was if I didn't have to go very deep into the patent strategy, that was fine.
397 00:52:02,776 --> 00:52:10,562 And in our second company, Misfit, we were a consumer products company, our IP, we didn't have a very deep IP strategy, sort of deep patenting strategy.
398 00:52:10,706 --> 00:52:12,070 And that was absolutely fine.
399 00:52:12,220 --> 00:52:33,340 I don't want to say it was transactional because we obviously had a long term relationship with the senior person, but if you're filing a number of patents and you want these half dozen to mesh well with these half dozen over here, that can take three or four years to build.
400 00:52:33,790 --> 00:52:40,986 And having the same person who understands, oh, yeah, three years ago, you did this, and that means you should be doing this, and that gives you that other layer.
401 00:52:41,098 --> 00:52:44,640 That continuity was very important.
402 00:52:45,010 --> 00:52:52,782 And I've gotten back to my first firm, ad here at Elemental, because I value that continuity and the implications.
403 00:52:52,926 --> 00:53:02,210 So things that we thought about four or five years ago, we now can build on top of because we had the relationship with the same attorney.
404 00:53:02,290 --> 00:53:10,790 I've never used a patent agent, so I can't really comment on that because, again, we work with a very small boutique firm.
405 00:53:11,690 --> 00:53:12,226 Excellent.
406 00:53:12,258 --> 00:53:12,502 Yeah.
407 00:53:12,556 --> 00:53:21,802 We think of a lot about the domain expertise, but the continuity point is a great one, and I'm going to cut you loose so you have a chance to biobreak or something like that before your next stop.
408 00:53:21,856 --> 00:53:31,722 But if we ever have the opportunity, totally off topic for this, I would love to pick your brain on the opportunity to have interfaced with Steve Jobs and then to have worked with John Scully.
409 00:53:31,786 --> 00:53:36,820 That has to have been you have to have some really interesting perspective from that.
410 00:53:37,590 --> 00:53:38,578 There is.
411 00:53:38,744 --> 00:54:01,900 And I, unfortunately, have not actually met Steve Jobs, but I do know he used our product because our glucometer we got word from somebody who reported directly to him that Steve was impressed with the design of what we had done, because we use the same design language that the iPhone three iPhone four had back in the day.
412 00:54:03,070 --> 00:54:06,538 But, yeah, I would love to have a separate conversation about that as well.
413 00:54:06,704 --> 00:54:09,082 Yeah, look forward to that very much.
414 00:54:09,136 --> 00:54:10,970 Well, thank you so much for your time.
415 00:54:11,040 --> 00:54:12,714 Really appreciate it.
416 00:54:12,832 --> 00:54:13,210 Awesome.
417 00:54:13,280 --> 00:54:14,430 All right, thanks very much.
418 00:54:14,500 --> 00:54:14,990 Thank you.
419 00:54:15,060 --> 00:54:15,550 Take care.
420 00:54:15,620 --> 00:54:16,062 Bye now.
421 00:54:16,116 --> 00:54:16,880 Thank you.
422 00:54:17,250 --> 00:54:18,110 Bye.
423 00:54:18,450 --> 00:54:20,154 All right, that's all for today, folks.
424 00:54:20,202 --> 00:54:20,906 Thanks for listening.
425 00:54:20,938 --> 00:54:27,610 And remember to check us email@example.com for more great podcasts, blogs, and videos covering all things patent strategy.
426 00:54:27,690 --> 00:54:29,098 And if you're an agent or attorney.
427 00:54:29,114 --> 00:54:29,998 And would like to be part of.
428 00:54:30,004 --> 00:54:36,134 The discussion or an inventor with a topic you'd like to hear discussed, email us at podcast at aurora patents.com.
429 00:54:36,252 --> 00:54:39,026 Do remember that this podcast does not constitute legal advice.
430 00:54:39,058 --> 00:54:41,300 And until next time, keep calm and patent on.