Patent quality is key in driving valuation and defensibility in the courtroom. Although the subject matter (the essence of invention) itself is important, the quality of the patent application will drive a significant portion of the value. Factors, as simple as number of words, or citings influence your patent value, and therefore, it is crucial to read the following five factors when drafting your application.
Disclosures – The more thorough your patent disclosures are, the higher your patent will be valued at. Often, the mere number of words contained in patent specification and the number of figures described will drive up valuation. So, keep the words flowing.
Claims – The breadth and quality of the claims made, as measured by the number of words per claim, and the number of independent and dependant claims, influence the patent quality. The more words and the more claims you have, the better your patent is deemed. More surprisingly, the choice of words can enhance or detract from its value. Words, such as “means” are regarded as limiting language, and if used in a patent application, it negatively impacts value.
Inventors and Ownership – Although the more inventors listed correlate with higher value, it is interesting to note that patents that are assigned tend to have higher valuations than patents owned by the inventor. Of course, the larger the entity they are assigned to, the better are their valuation prospects.
Prior Art or Backward Citations – The number of cited prior art references, and the average age of the references enhance value. Backward citations and number of claims have been related with the novelty of the patent, i.e. technological distance between the protected invention and the prior art.
Forward Citations – Although cannot be controlled at time of application, if you have a portfolio of patents, keep in mind that future citations of your already existing patents, enhance their economic value.
Read more about patents: "When is it a good idea to patent your invention" and "Get patents cheaply and don't worry about quality."
Showing posts with label rosette melikian. Show all posts
Showing posts with label rosette melikian. Show all posts
Saturday, September 17, 2011
Wednesday, June 22, 2011
GroupOn is like “dating in NYC”…therefore, every merchant’s nightmare!
Well, you can replace “NYC” with “LA” or any other major metropolitan city that offers too much of a good thing – a proliferation of single eligible men & women (which is a paradox in itself.) The simplistic theory that explains this paradox is the non-committal factor, since everyone is waiting for the “next best thing.” Why commit to a relationship when you are swimming in a sea of options? Too much of a good thing can be dangerous for commitments.
And this is the story of the avid GroupOn user. For GroupOn to succeed, it needs to generate excitement and loyalty to its business. However, GroupOn loyalty outrightly means non-commitment to a merchant, the merchant that GroupOn is designed to serve … and hence, the nightmare of the small business begins.
Loyalty is what most businesses thrive on. Loyalty makes a business sell not 1, but 100 widgets to one consumer, increasing profits. But, the case with GroupOn is a bit more complex. When GroupOn creates loyalty to its business model, it creates a vulture who thrives on deals…a vulture that is waiting for the next best deal…this vulture is not the ideal customer that the small business had in mind when signing up for GroupOn. The merchant’s viability and interest in GroupOn is to attract a new user base who will eventually become loyal customers of its establishment and not of GroupOn. But, that is in absolute contradiction with what will make GroupOn thrive & explode in success.
The conflict of interests is deepened by competition that has innovated in the deals space to further shape the future phsychology of this vulture to become even fiercer deal hunter. Such recent innovation is the “instant deals.” With instant deals, the consumer can plan its day around the deals available to him on that day.
Although, the instant deal can be a fantastic “just-in-time” inventory clearing mechanism, or extra capacity management for a merchant, when adopted by the majority it will become the merchant’s nightmare. Everyday, one of your competitors, featuring the deal, will be stealing your customer base, who now have become GroupOn loyalists.
Of course, this theory is only valid if GroupOn and the deals industry become really successful. So, let’s revisit the numbers from GroupOn. In my first blog of this series -“GroupOn’s valuation myth debunked!!! A cautionary tale of the deals industry…” I visit GroupOn’s valuation. The $30 billion valuation for GroupOn tells us how optimistic investors are about the industry. For GroupOn to be worth that, it needs to become at least a $15 billion business, therefore, needs to sell at least 600 Million deals a year (based on average revenue of $23 per deal see S-1 filings). Either U.S. will more than double its population or GroupOn will have to create a lot of loyal customers who will buy quite a few deals per year. Now if we add Living Social, Facebook’s deals, we can picture the gigantic success investors expect.
Unfortunately, the small/local business who is the GroupOn user is so fragmented that they will not have the typical power to restrain GroupOn’s empire. The death of the small business will come slowly and ‘unexpectedly’ by the vulture that GroupOn will create. “Unexpectedly,” because a small local merchant will fail to see beyond the short-term effects, meanwhile the downfall will be building up and will be macroeconomic in nature.
GroupOn creates a conflict between its success and the success it promises to the small business. However, GroupOn has a potential to succeed, which is not based on “rational” theory, but the pshychology of the merchant and consumer. Read “Why will GroupOn succeed?” for more.
And this is the story of the avid GroupOn user. For GroupOn to succeed, it needs to generate excitement and loyalty to its business. However, GroupOn loyalty outrightly means non-commitment to a merchant, the merchant that GroupOn is designed to serve … and hence, the nightmare of the small business begins.
Loyalty is what most businesses thrive on. Loyalty makes a business sell not 1, but 100 widgets to one consumer, increasing profits. But, the case with GroupOn is a bit more complex. When GroupOn creates loyalty to its business model, it creates a vulture who thrives on deals…a vulture that is waiting for the next best deal…this vulture is not the ideal customer that the small business had in mind when signing up for GroupOn. The merchant’s viability and interest in GroupOn is to attract a new user base who will eventually become loyal customers of its establishment and not of GroupOn. But, that is in absolute contradiction with what will make GroupOn thrive & explode in success.
The conflict of interests is deepened by competition that has innovated in the deals space to further shape the future phsychology of this vulture to become even fiercer deal hunter. Such recent innovation is the “instant deals.” With instant deals, the consumer can plan its day around the deals available to him on that day.
Although, the instant deal can be a fantastic “just-in-time” inventory clearing mechanism, or extra capacity management for a merchant, when adopted by the majority it will become the merchant’s nightmare. Everyday, one of your competitors, featuring the deal, will be stealing your customer base, who now have become GroupOn loyalists.
Of course, this theory is only valid if GroupOn and the deals industry become really successful. So, let’s revisit the numbers from GroupOn. In my first blog of this series -“GroupOn’s valuation myth debunked!!! A cautionary tale of the deals industry…” I visit GroupOn’s valuation. The $30 billion valuation for GroupOn tells us how optimistic investors are about the industry. For GroupOn to be worth that, it needs to become at least a $15 billion business, therefore, needs to sell at least 600 Million deals a year (based on average revenue of $23 per deal see S-1 filings). Either U.S. will more than double its population or GroupOn will have to create a lot of loyal customers who will buy quite a few deals per year. Now if we add Living Social, Facebook’s deals, we can picture the gigantic success investors expect.
Unfortunately, the small/local business who is the GroupOn user is so fragmented that they will not have the typical power to restrain GroupOn’s empire. The death of the small business will come slowly and ‘unexpectedly’ by the vulture that GroupOn will create. “Unexpectedly,” because a small local merchant will fail to see beyond the short-term effects, meanwhile the downfall will be building up and will be macroeconomic in nature.
GroupOn creates a conflict between its success and the success it promises to the small business. However, GroupOn has a potential to succeed, which is not based on “rational” theory, but the pshychology of the merchant and consumer. Read “Why will GroupOn succeed?” for more.
Thursday, June 16, 2011
GroupOn’s valuation myth debunked!!! A cautionary tale of the deals industry…
GroupOn’s ability to survive lies solely in its ingenious appeal to the psychology of the consumer and merchant – its valuation is outrageously irrational; its business model equally flawed from “rational” economic players perspective, yet I will confidently say it has high chances to succeed, as long as the psychological game persists and remains unchallenged. In a series of blogs, I will debunk the valuation of GroupOn and the deal industry, in general.
Since its IPO announcement, a lot of investor mania has surrounded GroupOn. But, is its value of $30 billion justifiable?
The true value of an asset, theoretically, equals how much cash it can generate in the future. Using this simplistic theory, GroupOn’s $30billion valuation assumes that the company soon will grow to at least $15B in revenue (estimate arrived using 10% discount rate, 20% margin and other projections by GroupOn). Given its revenue growth and consumer’s willingness to pay, such projection seems aggressive, but well within the realm of reasonableness. However, the challenge lies on the supply side. $15 billion of GroupOn revenue equates to $45 billion a year that small/local businesses will have to part with and hand it to GroupOn as marketing expense. (GroupOn keeps 1/3rd of the deal)
As all valuation models are based on the assumption that decisions are purely “rational”, a merchant shall accept a deal with GroupOn only if it can generate positive ROI. From the macroeconomic scale, the GroupOn model simply crumbles.
The fundamental question to ask is if GroupOn actually contributes to value creation or redistribution of funds? Are you, as a consumer, spending more of your income or simply allocating your disposable income differently because of GroupOn? The simple answer is the latter. GroupOn has no capacity to create economic value, but it merely redistributes revenue from non-GroupOn merchants to GroupOn merchants. The question that bags itself is: If all merchants participate in a GroupOn offering, then where will the redistribution come from?
Based on data provided by the SBA and Economic Census Bureau, it is estimated that small businesses, at best, in the consumer sector, generate about $1-$2 trillion in annual sales. Assuming 10% profit margin, all consumer small business profits are around $100-$200 billion. For GroupOn to generate the revenue it forecasts, at least, ALL small businesses shall sign a deal with GroupOn and decide to give away $45 billion out of $100 billion profits they make. Wow, that’s a whopping 45%.
If not all merchants participate, the story is even more bleak. The $45 billion will have to come from smaller number of merchants.
Aha, two fallacies in the valuation are exposed. Is it reasonable to assume that ALL small businesses will sign up? And second, will a rational business owner simply give away a quarter, or half, of its net cash receipts to GroupOn, when there is no promise of true revenue growth or positive ROI? Let’s remember that GroupOn’s valuation of $30billion requires that almost all small businesses sign up for a deal with the Company…therefore, no net redistribution of revenue will be possible. Month 1, one merchant will pocket more revenue as a result of its GroupOn deal; however, in months 2-12 it will forgo its revenues to fund the redistribution of industry receipts to its rivals featuring a GroupOn deal.
And of course, let us not forget the copy cats proliferating the market. One might ask if international expansion is their basis for growth…that sounds too optimistic - China alone has already launched over a 100 GroupOn competitors. It’s an industry with zero barriers to entry, and therefore, competition is rampant.
If GroupOn’s valuation appears so optimistic, the entire industry taken together appears highly speculative. I would highly caution any venture capitalist, and investor pouring funds into the industry.
But, where did this all start? The deals industry… The power or bargaining power… The concept of offering a deal to seduce customers… Read “The myth of the deals industry” for more.
Since its IPO announcement, a lot of investor mania has surrounded GroupOn. But, is its value of $30 billion justifiable?
The true value of an asset, theoretically, equals how much cash it can generate in the future. Using this simplistic theory, GroupOn’s $30billion valuation assumes that the company soon will grow to at least $15B in revenue (estimate arrived using 10% discount rate, 20% margin and other projections by GroupOn). Given its revenue growth and consumer’s willingness to pay, such projection seems aggressive, but well within the realm of reasonableness. However, the challenge lies on the supply side. $15 billion of GroupOn revenue equates to $45 billion a year that small/local businesses will have to part with and hand it to GroupOn as marketing expense. (GroupOn keeps 1/3rd of the deal)
As all valuation models are based on the assumption that decisions are purely “rational”, a merchant shall accept a deal with GroupOn only if it can generate positive ROI. From the macroeconomic scale, the GroupOn model simply crumbles.
The fundamental question to ask is if GroupOn actually contributes to value creation or redistribution of funds? Are you, as a consumer, spending more of your income or simply allocating your disposable income differently because of GroupOn? The simple answer is the latter. GroupOn has no capacity to create economic value, but it merely redistributes revenue from non-GroupOn merchants to GroupOn merchants. The question that bags itself is: If all merchants participate in a GroupOn offering, then where will the redistribution come from?
Based on data provided by the SBA and Economic Census Bureau, it is estimated that small businesses, at best, in the consumer sector, generate about $1-$2 trillion in annual sales. Assuming 10% profit margin, all consumer small business profits are around $100-$200 billion. For GroupOn to generate the revenue it forecasts, at least, ALL small businesses shall sign a deal with GroupOn and decide to give away $45 billion out of $100 billion profits they make. Wow, that’s a whopping 45%.
If not all merchants participate, the story is even more bleak. The $45 billion will have to come from smaller number of merchants.
Aha, two fallacies in the valuation are exposed. Is it reasonable to assume that ALL small businesses will sign up? And second, will a rational business owner simply give away a quarter, or half, of its net cash receipts to GroupOn, when there is no promise of true revenue growth or positive ROI? Let’s remember that GroupOn’s valuation of $30billion requires that almost all small businesses sign up for a deal with the Company…therefore, no net redistribution of revenue will be possible. Month 1, one merchant will pocket more revenue as a result of its GroupOn deal; however, in months 2-12 it will forgo its revenues to fund the redistribution of industry receipts to its rivals featuring a GroupOn deal.
And of course, let us not forget the copy cats proliferating the market. One might ask if international expansion is their basis for growth…that sounds too optimistic - China alone has already launched over a 100 GroupOn competitors. It’s an industry with zero barriers to entry, and therefore, competition is rampant.
If GroupOn’s valuation appears so optimistic, the entire industry taken together appears highly speculative. I would highly caution any venture capitalist, and investor pouring funds into the industry.
But, where did this all start? The deals industry… The power or bargaining power… The concept of offering a deal to seduce customers… Read “The myth of the deals industry” for more.
Sunday, December 5, 2010
5 Tools to save your business time & money
You wake up in the morning, get ready for the million things you have to do today and before you know it, the sun has set and your to-do list has gotten longer.
One of the top challenges for small business owners is time management. In the recent past, several online companies have popped up with fabulous innovative tools to help you manage your time more efficiently. Here are a few:
1. NeatReceipts
http://www.neatco.com/.
Ever wish you no more had to sort through the pile of receipts in shoe boxes? NetReceipts allows you just that. You can scan your receipts with your mobile phone or a scanner and the software will index, categorize and file your receipts for you. For a small investment ($199), you no more have to dread that meeting with your tax accountant since all your receipts will be digitally filed and categorized.
2. EverNote
http://www.evernote.com/
What use is information if you cannot access it when you need it? Whether it was an inspirational idea you jot down on a post-it or an image you saved on your desktop, EverNote makes that information easy to find at any time from any device. You can capture business cards, jot down ideas, save trip information direct from the internet or through your scribbled notes, and the software will organize, index and make the information searchable for you either on your PDA or your desktop, accessible from any device at anytime.
3. LastPassword
http://www.lastpass.com/
The old adage used to be to use the same password for all your log-ins. Unfortunately, that is no longer possible with websites increasing password scrutiny and requiring/disallowing the use of special characters, small caps, large caps, etc. If you are tired of the dozen variations of your password to access websites, LastPassword can save you that headache. It is a password management tool, which is easy to use and above all, is free. All you have to remember is ONE password for you lastpassword account and the software will manage the rest for you. Above all, if you kept all your passwords on post-its attached to your monitor, it will help increase password security by no longer needing to parade your passwords openly.
4. Virtual Assistant
http://www.yourdailytask.com/
http://www.bpovia.com/
If your business is not large enough to hire a full-time assistant, or wish you could hire one person with many skills, think about renting one virtually. Websites like YourDailyTask.com and Bpovia.com help you offload tasks ranging from word processing, email management, to product research. You tell them the task you need to be completed and they match you up with a virtual assistant for you. Not only you can keep costs down, but you can tap into specialized knowledge.
5. Freedom
http://www.macfreedom.com/
Many of us are guilty of falling prey to the information web of the internet. If you feel you get distracted by the internet and are constantly tempted to be online to check the latest news, or research any word that pops into your head, Freedom.com can come to your rescue. It locks you off the internet for up to eight hours at a time, helping you stay focused.
These are my Top 5 tools. If you like to share yours, post your comments.
One of the top challenges for small business owners is time management. In the recent past, several online companies have popped up with fabulous innovative tools to help you manage your time more efficiently. Here are a few:
1. NeatReceipts
http://www.neatco.com/.
Ever wish you no more had to sort through the pile of receipts in shoe boxes? NetReceipts allows you just that. You can scan your receipts with your mobile phone or a scanner and the software will index, categorize and file your receipts for you. For a small investment ($199), you no more have to dread that meeting with your tax accountant since all your receipts will be digitally filed and categorized.
2. EverNote
http://www.evernote.com/
What use is information if you cannot access it when you need it? Whether it was an inspirational idea you jot down on a post-it or an image you saved on your desktop, EverNote makes that information easy to find at any time from any device. You can capture business cards, jot down ideas, save trip information direct from the internet or through your scribbled notes, and the software will organize, index and make the information searchable for you either on your PDA or your desktop, accessible from any device at anytime.
3. LastPassword
http://www.lastpass.com/
The old adage used to be to use the same password for all your log-ins. Unfortunately, that is no longer possible with websites increasing password scrutiny and requiring/disallowing the use of special characters, small caps, large caps, etc. If you are tired of the dozen variations of your password to access websites, LastPassword can save you that headache. It is a password management tool, which is easy to use and above all, is free. All you have to remember is ONE password for you lastpassword account and the software will manage the rest for you. Above all, if you kept all your passwords on post-its attached to your monitor, it will help increase password security by no longer needing to parade your passwords openly.
4. Virtual Assistant
http://www.yourdailytask.com/
http://www.bpovia.com/
If your business is not large enough to hire a full-time assistant, or wish you could hire one person with many skills, think about renting one virtually. Websites like YourDailyTask.com and Bpovia.com help you offload tasks ranging from word processing, email management, to product research. You tell them the task you need to be completed and they match you up with a virtual assistant for you. Not only you can keep costs down, but you can tap into specialized knowledge.
5. Freedom
http://www.macfreedom.com/
Many of us are guilty of falling prey to the information web of the internet. If you feel you get distracted by the internet and are constantly tempted to be online to check the latest news, or research any word that pops into your head, Freedom.com can come to your rescue. It locks you off the internet for up to eight hours at a time, helping you stay focused.
These are my Top 5 tools. If you like to share yours, post your comments.
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