Tim Ferriss's 4-Hour Workweek and Lifestyle Design Blog. Tim is an author of 5 #1 NYT/WSJ bestsellers, investor (FB, Uber, Twitter, 50+ more), and host of The Tim Ferriss Show podcast (400M+ downloads)
The Slingshot Monkey is guaranteed to make anyone a 6-year old. What could be better?
I love Christmas.
Bright colored lights, snow, butter cookies, multicolored socks, scarves, pine trees, garland, the warmth of flames in the fireplace and uplifting cheerful music that gets everyone tapping and smiling… ah, X-mas!
Indians have founded more engineering and technology companies in the U.S. during the past decade than immigrants from Britain, China, Taiwan and Japan combined (Source: Where The Engineers Are, Vivek Wadhwa, 2007).
The entrepreneurial abilities of Indians in general has amazed me for years. It seems that Indian culture produces an uncommon blend of innovative thinking, business-minded aggression, and comfort with numbers. But there is another ingredient…
Two weeks ago, I saw a screening of the film 2 Million Minutes, a new comparative documentary that examines education in the US, China, and India. The filmmaker, Bob Compton, also wrote a book titled Blogging Through India, which I thumbed through before the movie.
Lo and behold, it contained this great little description on one of the greatest skills Indians bring to the table:
In India, every transaction — EVERY transaction — is negotiated. Merchandise, cab fare, restaurant bills, wedding doweries — the list is endless.
As our guide Vishnu explained, “In India, we bargain to the level of the individual vegetable purchase.”
While awkward and uncomfortable to most Americans, that level of negotiating can be quite valuable.
Hotmail founder Sabeer Bhatia, a CA transplant from Bangalore, credited the bargaining skills he learned in vegetable markets at home for getting Microsoft to push its acquisition price for his company from $160 million to $400 million. Bill Gates’ eye teeth were floating in tea with that deal.
The below article, titled “Fail Better” and written by Adam Gottesfeld, explores how I teach Princeton students to connect with luminary-level business mentors and celebrities of various types. I’ve edited it to be shorter and clearer in a few places.
People are fond of using the “it’s not what you know, it’s who you know” adage as an excuse for inaction, as if all successful people are born with powerful friends.
Here’s how normal people build supernormal networks…
Most Princeton students love to procrastinate in writing their dean’s date [term] papers. Ryan Marrinan ’07, from Los Angeles, was no exception. But while the majority of undergraduates fill their time by updating their Facebook profiles or watching videos on YouTube, Marrinan was discussing Soto Zen Buddhism via e-mail with Randy Komisar, a partner at the venture capital firm Kleiner Perkins Caufield and Byers, and asking Google CEO Eric Schmidt ’76 via e-mail when he had been happiest in his life. (Schmidt’s answer: “Tomorrow.”)
Prior to his e-mail, Marrinan had never contacted Komisar. He had met Schmidt, at Princeton University trustee, only briefly at an academic affairs meeting of the trustees in November. A self-described “naturally shy kind,” Marrinan said he would never have dared to randomly e-mail two of the most powerful men in Silicon Valley if it weren’t for Tim Ferriss ’00, who offered a guest lecture in Professor Ed Zschau ’61’s ELE 491 “High-Tech Entrepreneurship” class. Ferriss challenged Marrinan and his fellow seniors in the class to contact high-profile celebrities and CEOs and get their answers to questions they have always wanted to ask.
For extra incentive, Ferriss promised the student who could contact the most hard-to-reach name and ask the most intriguing question a round-trip plane ticket anywhere in the world.
“I believe that success can be measured in the number of uncomfortable conversations you’re willing to have. I felt that if I could help students overcome the fear of rejection with cold-calling and cold e-mail, it would serve them forever,” Ferriss said. “It’s easy to sell yourself short, but when you see classmates getting responses from people like [former president] George Bush, the CEOs of Disney, Comcast, Google, and HP, and dozens of other impossible-to-reach people, it forces you to reconsider your self-set limitations.”… Ferriss lectures to the students of “High-Tech Entrepreneurship” each semester about creating a startup and designing the ideal lifestyle.
“I participate in this contest every day,” said Ferriss. “I do what I always do: find a personal e-mail if possible, often through their little-known personal blogs, send a two- to three-paragraph e-mail which explains that you are familiar with their work, and ask one simple-to-answer but thought-provoking question in that e-mail related to their work or life philosophies. The goal is to start a dialogue so they take the time to answer future e-mails – not to ask for help. That can only come after at least three or four genuine e-mail exchanges.”
With “textbook execution of the Tim Ferriss Technique,” as he put it, Marrinan was able to strike up a bond with Komisar. In his initial e-mail, he talked about reading one of Komisar’s Harvard Business Review articles and feeling inspired to ask him, “When were you happiest in your life?” After Komisar replied with references to Tibetan Buddhism, Marrinan responded, “Just as words are inadequate to explain true happiness, so too are words inadequate to express my thanks.” His e-mail included his personal translation of a French poem by Taisen Deshimaru, the former European head of Soto Zen. An e-mail relationship was formed, and Komisar even e-mailed Marrinan a few days later with a link to a New York Times article on happiness.
Contacting Schmidt proved more challenging. For Marrinan, the toughest part was getting Schmidt’s personal e-mail address. He e-mailed a Princeton dean asking for it. No response. Two weeks later, he e-mailed the same dean again, defending his request by reminding her that he had previously met Schmidt. The dean said no, but Marrinan refused to give up. He e-mailed her a third time. “Have you ever made an exception?” he asked. The dean finally gave in, he said, and provided him with Schmidt’s e-mail.
“I know some of my classmates pursued the alternative scattershot technique with some success, but that’s not my bag,” Marrinan said, explaining his perseverance. “I deal with rejection by persisting, not by taking my business elsewhere. My maxim comes from Samuel Beckett, a personal hero of mine: ‘Ever tried. Ever failed. No matter. Try again. Fail again. Fail better.’ You won’t believe what you can accomplish by attempting the impossible with the courage to repeatedly fail better.”
Nathan Kaplan ’07, another participant in the contest. was most proud of the way that he was able to contact former Newark mayor Sharpe James. Because James had made a campaign contribution to Al Sharpton, the website www.fundrace.org listed James’ homes address. Kaplan then input James’ address into an online search-by-address phone directory, through which he received the former mayor’s phone number. Kaplan left a message for James, and a few days later finally got to ask him about childhood education.
Ferriss is proud of the effort students have put into his contest. “Most people can do absolutely awe-inspiring things,” he said. “Sometimes they just need a little nudge.”
Adam Gottesfeld ’07, a Woodrow Wilson School major, is from Los Angeles.
Here’s how impressive networks are built: one superstar at a time.
It’s another case of working smarter and not harder. Readers will recognize that I discuss this topic of contacting mentors at some length in The 4-Hour Workweek, using John Grisham as an example.
Forget about your 500+ connections on LinkedIn. More is often less.
If you could choose only five people in the world to get to know in the 2008, who would they be?
First, the 4-minute mile couldn’t be broken. Then, men couldn’t land on the moon. Now, most have accepted e-mail as the permanent bane of their working existences.
But not all of us.
The following came to me via the prodigal Cameron Johnson, originally in USA Today. Below it are my recommendations for making this weekend one to remember:
SAN FRANCISCO — Overwhelmed by e-mail? Some professionals are fighting back by declaring e-mail-free Fridays — or by deleting their entire in-box.
Today about 150 engineers at chipmaker Intel (INTC) will kick off “Zero E-mail Fridays.” E-mail isn’t forbidden, but everyone is encouraged to phone or meet face-to-face. The goal is more direct, free-flowing communication and better exchange of ideas, Intel principal engineer Nathan Zeldes says in a company blog post.
E-mail-free Fridays already are the norm at cell carrier U.S. Cellular (UZG) and at order-processing company PBD Worldwide Fulfillment Services in Alpharetta, Ga.
Prominent techies are tackling the problem individually by declaring “e-mail bankruptcy” — deleting or archiving an entire in-box and starting over. Among them: prominent tech bloggers Jeff Nolan, Michael Arrington and Vanessa Fox, and venture capitalist Fred Wilson.
E-mail overload is caused by the sheer volume of messages zipping around the globe. Each day, about 39.7 billion person-to-person e-mails, 17.1 billion automated alerts, and 40.5 billion pieces of spam (unsolicited commercial e-mail) are sent worldwide, researcher IDC says. White-collar workers often receive 140 messages a day, executive coach Marsha Egan says.
E-mail can be a useful communication tool, and people who write a lot of it are more likely to receive it, IDC (IDC) tech analyst Mark Levitt says. But it can quickly get out of hand.
“I didn’t even have time to figure out where to start,” says Edward O’Connor, a Web developer from San Diego who declared e-mail bankruptcy two weeks ago. O’Connor had about 750 messages dating back three years, almost all of which needed a reply. “I was completely overwhelmed,” he says.
Egan says even the busiest e-mailers can, with care, keep control of their in-boxes. Her tips:
•Don’t use e-mail to avoid unpleasant tasks. “I couldn’t believe people who had never talked to each other but worked in the same office,” says Scott Dockter, CEO of PBD. Dockter started e-mail-free Fridays about a year-and-a-half ago. Since then, the number of messages his 400 employees send has dropped by about 75%.
•Don’t constantly check for new messages. It can take four minutes to refocus on work after checking an e-mail, Egan says. Jay Ellison, chief operating officer of U.S. Cellular, estimates that his 7,000 employees spend about 1½ hours a day on their in-boxes. E-mail-free Fridays give them more time to solve customers’ problems, he says.
•Respond to important messages first — even if they’re difficult. Less-pressing issues can wait until a free moment, Egan says.
So, how to save your weekend from e-mail or — worse still — the mediocrity of “what should I do?” and having it end before it starts?
I’m just as lazy as the rest of the world about weekend planning, so here’s the trick: I asked people to describe dream “dates” in detail in the second-to-last post. Now, in the comments, you have beautifully detailed itineraries for having an unforgettable 24 hours in dozens of cities and states, including:
New York City
Raleigh, North Carolina
Here’s the challenge: using the comments as samples, create at least one day this weekend that is truly amazing and put it in the comments here.
The reader whose description I like the most will get at least 36 copies of the 1st printing of The 4-Hour Workweek as early X-mas presents. First-edition manuscripts have sold for more than $1,500 on eBay, so these are nice stocking stuffers 🙂
Photos on Flickr, videos on YouTube, and such are not required, but some evidence will help prove the experience wasn’t just your imagination.
So, make haste — plan now and play hard!
[P.S. The winners of the dream date competition are mthorley, malia, AF, donovan, andrewrogers, ryanmcknight, macewen, and adam (seattle date). Please check your inboxes for further instructions.]
This past Tuesday, I was part of a segment on the CBS Early Show on personal outsourcing called “Average Joes, Janes Outsourcing Tasks.” Check out the video, one of the best I’ve seen on the topic, here. It includes case studies.
Two of my favorite articles on personal outsourcing — one from The Wall Street Journal and the other from the NY Times — compare different tasks and common problems.
There is an eight-foot stretch of shelves in my house containing nothing but full notebooks.
Some would call this hypergraphia (Dostoevsky was a member of this club), but I trust the weakest pen more than the strongest memory, and note taking is—in my experience—one of the most important skills for converting excessive information into precise action and follow-up.
Simple but effective note taking enables me to:
-Review book highlights in less than 10 minutes
-Connect scattered notes on a single theme in 10 minutes that would otherwise require dozens of hours
-Contact and connect mentors with relevant questions and help I can offer
-Impose structure on information for increased retention and recall
I fashion myself a note-taking geek of the first class. How dare I self-appoint myself into this priesthood? Relax, script kiddies. I’m using a much broader definition of “geek,” this one borrowed from “Understanding Geeks” in the current issue of Inc. Magazine (that said, I was recently on Geekbrief.tv, birthplace of the ubercool iYule.tv):
“Someone with an intense curiosity about a specific subject. Not limited to tech–there are also gaming geeks, music geeks, etc.”
Here are a few recommendations from inside the world of a compulsive note taker, including both the macro (books and notepad principles) and micro (page features and formatting):
1. Create an indexing system:
Indexing AJ Jacobs’ latest book (click to enlarge all thumbnails)
Information is useful only to the extent that you can find it when you need it. Most of us have the experience of note proliferation—notes on the backs of envelopes, billing statements, hotel paper, etc.–that somehow never gets consolidated. Consolidate and create an index.
My favorite notepads (covered below) generally don’t have page numbers off the shelf. Here’s how you progress with a non-paginated pad:
A. Put page numbers on the upper-right of each right-hand page but not on the left (e.g., 1, 2, 3, etc.). I do about 30 pages at a time, as needed.
B. Whenever you complete a page, put the page number in an index on the inside cover (front or back) and a few words to describe the content.
If it’s on the left-hand page, just take the prior page and add “.5” to it. Thus, if you flip over page 10, for example, and write on the back, that second page is “10.5” in the index.
Brainstorming blog post topics and paginating on the right-hand pages
The page numbers in the index do NOT need to be in order, as you’ll be scanning for content, then referring to the page. If you write on the same topic again, simply put that page number next to the previous index entry.
Creating an index like this for non-fiction books I read allows me to refer back and review key concepts in 5-10 minutes without rereading the entire book and searching for underlined sections.
Notes from “The Biology of Sleep” at Stanford University (Notice the bottom-right square allocated to follow-up questions, which is standard)
2. Choose the Proper Pad for the Job:
My current repetoire of active notepads.
Not all notepads are created equal.
This doesn’t mean that one is better for all things, just that you should match the form factor and durability of a notepad to the content.
Below is a photo of several different notepads I use:
-I use the big notebook, which contains graph paper, for larger projects such as future books, TV programs, feature-length articles, LitLiberation, conference panel notes, etc. I don’t want to turn 10 pages to get an overview of all the pieces of a single topic/event. Cons: terrible for traveling and intimidating for interview subjects. The larger the pad, the more reserved interviewees will be.
Notes from my first SXSW (Notice the bottom-right follow-up, in this case, people to contact)
SXSW panel titled “Blog to Book”; Notice the bottom panel and how I number the participants so I can just label comments/notes with each respective number. No spacial guessing required.
-I use the hard-backed red rectangular notebook, bought in Milan, as a default notepad. It is the perfect fits-in-ass-pocket checkbook size. Telephone interview notes, lists (dreamlining, asset assessment, cash-flow projections), projects requiring less than 3 hours to complete, random observations about emotional state or internal problem solving, random silliness like songs (think Adam Sandler), etc. Here is one beauty, written at 4am during an airport layover after a sleepless red eye:
The fattest midget I ever met
Some called him the triple threat
Ugly, dirty, and smelly yet
The fattest midget I ever met.
Hey… if you’re bound to have rare flashes of insight/stupidity, you might as well capture them on paper.
-The flexible softcover moleskine is excellent for interviews, especially if you are in motion or in the field. I’ve found, however, that if that is the only notebook I carry, I put in material I would prefer to preserve for months or years, and the soft moleskine gets ripped to pieces in backpacks, luggage, and pockets over just a few weeks. There are hardback versions, but they tend to be square-ish and fit poorly in pockets. I limit this format to interviews, contact info when on the run, and temporary to-do/not-to-do lists.
I don’t use digital notetaking tools. Call me old-fashioned, but I’ve noticed that some of the most innovative techies in Silicon Valley do the same, whether with day-planner calendars, memo pads, or just simple notecards with a binder clip. It’s a personal choice, and I like paper. It can be lost, but it can’t be deleted, and I find it faster.
Quite a few of you have asked, so here’s the scoop. The $2,600 date took place this past Saturday, and we had an AWESOME time. I promised I wouldn’t show pictures, but the smart young lass looks a lot like Natalie Portman, so the night immediately started off on a much-relieved foot. She’s a veeeery pretty girl.
Big smiles all around.
Festivities began at the famous Alfredo’s Steakhouse in SF, where Marco made the meal one to remember. The delicious medium-rare Chicago steaks were matched with wine I brought along, in this case, a particularly sentimental and special bottle: Rombauer Vineyards’ Proprietor Selection 2004 Zinfandel (think of it as this wine on steroids).
Bigger smiles all around.
Once full and well buzzed, we set off for the beginning of entertainment: seats 10 feet from the main platform at Cirque du Soleil’s Kooza. It was incredible, and as an acrobatics fetishist, it was in seventh heaven. Hard drumming, aerials, gainers, wheels of death… Here’s just a taste of what we feasted our eyes on:
After Cirque du Soleil… well, I’ll leave the rest of the date to your overactive imaginations! It’s entirely possible nothing happened, but if it had, I wouldn’t be one to kiss and tell. Some things are more fun left unexplained 🙂
The Dream Date Challenge:
What would your dream date look like?
Pick a city anywhere in the world, and for a budget of no more than $500, describe your dream date in 300 words or less (bullet points are fine). My favorite 5 will get at least 12 copies of the 1st printing (it’s now in the 25th) of The 4-Hour Workweek to give away as X-mas/Festivus presents.
Kurt Vonnegut is one of my few idols, an elegantly simple poet-philosopher of the first class. I grew up near where he lived in Sag Harbor, and I’ve enjoyed his writing since I was in junior high, where I silently hoped to one day have the courage to visit him.
Alas, I am too late. He passed on April 11, 2007.
I was very fortunate, however, to stumble upon the best interview I’ve ever seen with him, and it also happened to be his last.
I’ve edited J. Rentilly’s piece from US Airways Magazine for length to take two minutes at average reading speed, selecting the questions and answers I found most relevant to designing a rewarding life (the first half) or thought-provoking (the second half).
I believe this is two minutes very well spent.
It covers his views on creativity, seriousness, the power (or lack thereof) of the written word, and more. I hope you enjoy it as much as I did…
Tell me the reasons you’ve been attracted to a life of creation, whether as a writer or an artist.
I’ve been drawing all my life, just as a hobby, without really having shows or anything. It’s just an agreeable thing to do, and I recommend it to everybody. I always say to people, practice an art, no matter how well or badly [you do it], because then you have the experience of becoming, and it makes your soul grow. That includes singing, dancing, writing, drawing, playing a musical instrument. One thing I hate about school committees today is that they cut arts programs out of the curriculum because they say the arts aren’t a way to make a living. Well, there are lots of things worth doing that are no way to make a living. [Laughs.] They are agreeable ways to make a more agreeable life.
In the process of your becoming, you’ve given the world much warmth and humor. That matters, doesn’t it?
I asked my son Mark what he thought life was all about, and he said, “We are here to help each other get through this thing, whatever it is.” I think that says it best. You can do that as a comedian, a writer, a painter, a musician. He’s a pediatrician. There are all kinds of ways we can help each other get through today. There are some things that help. Musicians really do it for me. I wish I were one, because they help a lot. They help us get through a couple hours.
“A lack of seriousness,” you wrote, “has led to all sorts of wonderful insights.”
Yes. The world is too serious. To get mad at a work of art — because maybe somebody, somewhere is blowing his stack over what I’ve done — is like getting mad at a hot fudge sundae.
Nearly forty years after Slaughterhouse-Five, people still love reading your books. Why do you think your books have such enduring appeal?
I’ve said it before: I write in the voice of a child. That makes me readable in high school. [Laughs.] Not too many big sentences. But I hope that my ideas attract a lively dialogue, even if my sentences are simple. Simple sentences have always served me well. And I don’t use semicolons. It’s hard to read anyway, especially for high school kids. Also, I avoid irony. I don’t like people saying one thing and meaning the other.
When Timequake was published ten years ago, you said you were basically retired as a writer. You’ve published two essay collections since then, God Bless You, Dr. Kevorkian and the best-selling A Man Without a Country. I wonder if the visual arts have become a substitute for writing in your life.
Well, it’s something to do in my old age. [Laughs.] As you may know, I’m suing a cigarette company because their product hasn’t killed me yet.
Is it a different creative process for you, sitting down to write or picking up a paintbrush?
No. I used to teach a writer’s workshop at the University of Iowa back in the ’60s, and I would say at the start of every semester, “The role model for this course is Vincent van Gogh — who sold two paintings to his brother.” [Laughs.] I just sit and wait to see what’s inside me, and that’s the case for writing or for drawing, and then out it comes. There are times when nothing comes. James Brooks, the fine abstract-expressionist, I asked him what painting was like for him, and he said, “I put the first stroke on the canvas and then the canvas has to do half the work.” That’s how serious painters are. They’re waiting for the canvas to do half the work. [Laughs.] Come on. Wake up.
We live in a very visual world today. Do words have any power left?
I was at a symposium some years back with my friends Joseph Heller and William Styron, both dead now, and we were talking about the death of the novel and the death of poetry, and Styron pointed out that the novel has always been an elitist art form. It’s an art form for very few people, because only a few can read very well. I’ve said that to open a novel is to arrive in a music hall and be handed a viola. You have to perform. [Laughs.] To stare at horizontal lines of phonetic symbols and Arabic numbers and to be able to put a show on in your head, it requires the reader to perform. If you can do it, you can go whaling in the South Pacific with Herman Melville, or you can watch Madame Bovary make a mess of her life in Paris. With pictures and movies, all you have to do is sit there and look at them and it happens to you.
Many years ago, you said that a writer’s job is to use the time of a stranger in such a way that he or she will not feel the time was wasted. There are a lot of ways for a stranger to pass time these days.
That’s right. There are all these other things to do with time. It used to be people would wonder what the hell they were going to do for the winter. [Laughs.] Then a big book would come out — a big, wonderful book — and everybody would be reading it to pass the time. It was a very primitive experiment, before television, where people would have to look at ink on paper, for God’s sake. I myself grew up when radio was very important. I’d come home from school and turn on the radio. There were funny comedians and wonderful music, and there were plays. I used to pass time with radio. Now, you don’t have to be literate to have a nice time.
You’ve stated that television is one of the most viable art forms in the world today.
Well, it is. It works like a dream. It’s a way to hold attention, and it’s awfully good at that. For a lot of people, TV is life itself. Churches used to provide people with better company than they had at home, but now, no matter what your neighborhood life or family life is like, you turn on the television and you get relatives, family. I don’t know if you’ve heard about this, but scientists have created baby geese that believe that an airplane is their mother. Human beings will believe in all kinds of things that aren’t true, and that’s okay. And TV is a part of that.
Is there another book in you, by chance?
No. Look, I’m 84 years old. Writers of fiction have usually done their best work by the time they’re 45. Chess masters are through when they’re 35, and so are baseball players. There are plenty of other people writing. Let them do it.
So what’s the old man’s game, then?
My country is in ruins. So I’m a fish in a poisoned fishbowl. I’m mostly just heartsick about this. There should have been hope. This should have been a great country. But we are despised all over the world now. I was hoping to build a country and add to its literature. That’s why I served in World War II, and that’s why I wrote books.
When someone reads one of your books, what would you like them to take from the experience?
Well, I’d like the guy — or the girl, of course — to put the book down and think, “This is the greatest man who ever lived.” [Laughs.]
[For the complete interview, including background on Kurt’s writing, please click here.]
I recently came across this article in Princeton Alumni Weekly magazine, edited here for length. How would your life change if you bought nothing new for a year? How much of it would be good change vs. bad?
Princeton friends John Perry and Sarah Pelmas had debated repeatedly with their San Francisco buddies about the impact of the U.S. consumer lifestyle on the planet and on their own quality of life. In late 2005, they decided to do something about it: The 10 friends challenged each other to see if they could all go through the whole of 2006 without buying anything new.
The group called themselves The Compact, after the Mayflower Compact, and pledged that for the entire year, they would purchase secondhand or borrow everything they needed, except for food and essentials like toiletries and medicine.
“We thought that if we stopped participating in the cycle of disposable consumption and empty shopping, we could tread a little more lightly on the planet,” says Perry, a communications director at a high-tech company, who majored in English at Princeton.
Sounds hard? They say it wasn’t. They shopped less overall and got creative when they needed specific items. They reserved “shopping” for times when there was something they really couldn’t do without. When Perry needed a pressure cooker to prepare vegetarian dishes for his partner and their two children, he found a used one on the Internet. Pelmas and her husband, who are renovating their home, found secondhand appliances and recycled wood for baseboards and cabinets. But they were stumped by how to find used nails, screws, and hinges, and broke down and bought them new instead — the only time they cheated. Pelmas also struggled with finding sports sunglasses for rowing. Never able to find a used pair, she taped up her old ones and kept using them instead.
“It seems impossible and daunting, but it really isn’t,” says Pelmas, who studied English and creative writing at Princeton and now works as a school administrator. One of the benefits of ditching recreational shopping was more time for friends and family. “It’s completely changed the way we look at things,” Pelmas says. “Most things don’t seem necessary anymore.”
The Compact unexpectedly morphed into a national — and international — phenomenon after the media in San Francisco caught wind of the project. Before the year was out, stories about it had run in dozens of U.S. and international media outlets. The Compactors started hearing from people around the country and around the world, including environmentalists and people concerned about global warming, but also from parents worried that their children were becoming too materialistic, and people troubled by the consequences of U.S. oil dependency.
About 8,000 people have joined the e-mail list The Compact created to discuss the project, and groups modeled after The Compact have sprouted in 38 communities across the United States and in countries including Romania, New Zealand, and Japan. You can read more about The Compact on its blog at sfcompact.blogspot.com.
The project was supposed to wind down at the end of 2006, but Perry and Pelmas plan to continue living in the spirit of The Compact. “When you stop engaging in ‘retail therapy,’ you realize how much you have and how little you really need,” Perry said.
By E.B. Boyd ’89
E.B. Boyd ’89 is a freelance writer in San Francisco.
This bear scared me when I was little, but it made $1,000,000 per month in royalties for the inventor. Stephen worked on it.
This is a continuation of my previous Q&A with Stephen Key, who has licensed to companies ranging from Coca-Cola and Disney to Nestle. He was also involved with the design of both Teddy Ruxpin and Lazer Tag. This second and final part will cover royalty rates, negotiation, and how he calls into companies to sell his concepts (including actual call scripts).
Before we get started, here are a few other resources that I have in my licensing and product design library, which really focuses on deal making and arranging revenue splits:
Inventing Small Products (Stanley Mason, like Stephen, is a specialist at tweaking/combining existing products as a lucrative shortcut to successful deals)
-How much money does it take to license your idea? How much time does it take?
In review, I spend $100 on a provisional patent application so I can legitimately claim “patent pending” status for a full year, $80 or less on a sell sheet that I have created by a graphic design college student. My third cost is the cost of making phone calls to manufacturers. So for many simple products your total costs are $200 to see if your idea has legs. Of course there are always exceptions. Some products will cost more, but you’d be surprised at how little you can spend to be “pitch ready.”
Sample Sell Sheet
-What is a typical royalty rate?
Royalty rates can range from .0001% to 25%. Royalties are usually based on the wholesale price. This is the price the manufacturer sells to the retailers for, or that they sell to a distributor for.
A very general rough way of figuring out the wholesale price of an item is to just cut the retail price in half. This doesn’t work for all industries or product categories, but it’s a nice way to get a rough estimate of what your royalty might be for your idea.
If you think your product is going to sell for $10 at a retail store. You half that, to get a wholesale price $5. Your royalty would be on this $5 wholesale price.
So why would you ever want a .0001% royalty rate? Well if your invention went of every bottle of Coca-Cola that sold worldwide. That might not be a bad royalty rate. Or if you had a software product that only aardvark researchers bought, 25% might be very fair, since the manufacturer isn’t going to sell many units.
In my experience a 5% royalty is most common for consumer goods. I usually ask for 7% and settle on 5%.
I’ve licensed many novelty products that have sold in stores for one or two years and then never sold again. That can be fun, and I wouldn’t discourage people from licensing novelties, but that’s not where I made my millions. I’ve made serious money by selling ideas that I knew could sell 100,000’s or millions of unit every year.
My advice is to pick a product area that does high unit volume. This way that 5% of the wholesale price on every unit can really add up.
To further illustrate my point, I’ll tell you a little story. I had a student that had already filed a patent when he came to us. My approach, as you know, is to use provisional patents that only cost $100, so you don’t need to spend a bunch of money in advance of selling the idea.
It was to late for this particular student. He’d already spent about $6,000 on a patent. His invention was a drum key that made tightening the thumbscrews on a drum easy, so drummers don’t have to hurt their thumbs to get their drums tuned up.
Drummers loved it. He took our inventRight course and licensed his idea to a musical instruments manufacturer. The manufacturer was already selling another drum key and gave him an idea of how many of his drum keys they thought they would sell each year.
So he did the numbers, then realized that it would take a year just to earn back in royalties what he had spent on the patent. It was a low volume product. The lesson – pick high volume products and you’ll make much, much more money.
Six thousand a year in royalties just isn’t worth the time for me. It takes almost the same amount of energy to license a small idea as it does a big one, so why not go for the big one?
In my prior life, I worked as a product designer at Worlds Of Wonder (a now defunct toy company). I watched the inventor of Teddy Ruxpin, the talking teddy bear popular back in the late 80’s, make $1,000,000 in royalties a month!
I know that’s a long winded response to your questions about what a typical royalty rate is, but I wanted to give your readers some solid advice and examples that they can take and use when licensing their ideas.
-What should people consider when working on their first idea?
Most inventions are just slight variations of existing ideas. I’ve found it easier to sell ideas that aren’t too radically different. The easier it is for people to understand the idea, the better.
I prefer simple ideas, but I’ve worked on a few tough ones also. My Michael Jordan wall ball was super simple [a basketball hoop attached to a cut out of Michael Jordan, all of which was attached to a door]. I licensed the idea almost overnight and received royalties for ten years. It was a great product for me to start off with because it was so simple, required very little research and the manufacturing was easy. My spin label invention is much more complicated and after many years and millions of labels, I’m still working on getting it to where I want it to be.
My best advice is to make your first idea a simple one, so you can go through the whole process of selling an idea. Then work on the harder ones after you’ve gotten a little experience under your belt.
-Who do you call at companies when you try to license a new idea?
Sales guys are great, but my first choice is the marketing manager of a product line at the company that would easily understand your invention. Avoid purchasing. [Note from Tim: Find the manufacturers’ names by browsing the relevant categories in a department store, or online at a place like Amazon.]
For example, if you have a new comfortable grip hammer innovation, call and ask for the “marketing manager of the easy comfort grip hammer line” at Stanley. Use the product line name when you call. It’ll sound like you know exactly whom you are calling for. I think you get the idea. This is just one of many tricks I use to get into the decision makers at companies. If this doesn’t work, there are many other tricks you can use to get your idea in front of a decision maker.
You can license almost anything. You just need a new product benefit and some IP (Patent, Copyright or Trademark). In some industries like the toy industry, you don’t even need any IP.
However, I wouldn’t recommend licensing toys. It’s too competitive. You might have to show 200 ideas before you get interest in even one. I don’t like those numbers.
I prefer to sell ideas to industries that don’t see so many new ideas each year. I’m talking about industries that don’t currently have many innovative new products. The packaging industry is one of these industries.
I licensed my spin label invention to a packaging company. They thought I was a genius. I’m not a genius. I’m just more creative than they are, and they don’t see many new ideas.
I guess my little secret tip for you to contemplate is to consider coming up with new ideas in industries that may be a little stale. You won’t have much competition and they’ll think you are brilliant. [Note from Tim: a good method for examining industries is to browse categories or departments in a store like Wal-Mart and look for products that haven’t changed in a long time, or those where most products are nearly identical. Can you reinvigorate a commodity with a small tweak?]
-Do you have any words of advice regarding negotiating for those new to licensing ideas?
The ability to hold back information and dole it out in small intriguing bits and pieces is a critical part of my approach. It works almost every time. And more importantly, it keeps the dialog going. Once the dialog stops, the deal slows down and fizzles out.
If you keep the dialog going with a manufacturer, you’re more likely to close the deal. So don’t give them all the information up front. The manufacturer has no reason to call you back if you give them everything up front.
This is one of the biggest mistakes I see inventors make. They give up to much to soon and don’t know how to keep a dialog going with a manufacturer. [Tim’s note: Don’t oversell. This is as true for PR as it is for licensing — the goal isn’t to sell in one call, it’s to get a second conversation or spark questions that lead towards a deal.]
Odds and Ends: Hacking Japan and Living Like a Rockstar in Tokyo
A number of you have asked me to do a “How to Live Like a Rockstar in Tokyo” post like the how-to article I wrote for living large on little in Buenos Aires. Now you can get some of my top picks and tricks for Tokyo. I have a series of sidebars called “Tokyo Tips” in the debut issue of Everywhere magazine, which is out now. It’s a gorgeous magazine and one of the best I’ve seen in the travel genre. It should be available starting today in most bookstores.
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