In 1980 a certain 25 year old young man who had just began making inroads into the computer business struck a deal with a tech giant to develop an operating system. After adapting the operating system for what was to become the personal computer, he sold it for a one-off fee of $50,000. But guess what? He did not transfer the copyright of the tech giant believing that other hardware vendors will clone the product. And so they did and he became the sole provider of operating system for major PC manufacturers for decades. Today, he is one of the richest men in the world.
Around that time too, a young man, after taking a degree in engineering, went into making components with a lucrative premise “your music doesn’t sound as good as it could”. He re-imagined, redesigned and manufactured speakers, cables and other awesome musical instruments. With the emergence of his son, about two decades later, things were to change quite remarkably.
His young son Lee, would go on to meet a very influential music mogul and another, a Grammy award-winning producer, well known for making impressive hip hop beats. He had to harness the entertainment value and sporting contact of the duo so as to launch his father’s company into the mainstream. He was in such a hurry he will then fly to LA to negotiate a deal with “nothing but a bachelor’s degree and no business experience except working for his dad”. He had no lawyer, financial advisers or accountant.
In the end he and the duo will go on to revolutionise the headphone industry and oversee a $300m business. But today that collaboration is no more. Out of naivety in negotiations, he not only relinquished ownership of the headphones business to the music moguls, copyright and trademark also belonged to them. Lee had signed his world away and now the services of he and his father is no longer required.
The story above is a paradoxical example of how a business idea will go on to make one person the richest man in the world and the other a demonstration of how not to lose the world. So many of us dream up ideas that will either go on to become reality or just fizzle away into obscurity. For the former, sound decision-making is crucial.
To bring such dreams into reality most of us place a lot more emphasis on sourcing for funding without realising the need to protect the idea itself. In Nigeria, copyright and trademarking of ideas and products cost no more than N200,000 collectively. Understandably, many would rather just use the money to develop the idea further rather than pay it to some government agency.
While funding is essential for product development, marketing and sales promotion, are equally important and needed to ensure that intellectual properties are rightly owned and jealously guarded. It is often the difference between making money today and making money tomorrow.
Venture capitalists do not see intellectual property rights as a barrier to funding projects especially if that was already in place before they were approached. However, in performing due diligence, venture capitalists will more often than not acquire ownership of intellectual property where there is vacuum of ownership.
What’s the point singing a hit song today and in the next ten years when the artiste or writer of the song does not have any claim to royalties. In striking deals with moneybags or financiers it is important to engage services of professionals no matter how financially burdensome it might be. You can employ several means of protecting your interest even when there is no money to pay professional advisers. How about hiring them as retainers, such that you agree to pay them periodically for services rendered for a year? By signing an agreement with them, you can commit to spreading payments for over a year in exchange for calling up your advisers anytime you need to negotiate or make an investment decision.
It is also important to know at any one time whose advice you actually need. A business idea with budgetary inadequacies and the stage of seeking trademark and copyright registration will be better off hiring a lawyer than an accountant as having both might not be financially expedient. What about the funding stage? There is little value hiring marketing or public relations experts when the services of financial advisers and lawyers are more suitable.
There was also this story of a popular online trading platform in Nigeria that had the domain names of various spelling of their often-misinterpreted names secured. I would imagine if I owned a website called desuwa.comthen buying domain for deswa.com,it may not be such a bad idea too. A competitor may acquire deswa.comand redirect intending customers to my site to his.
No matter the money making potential of a business idea, it is very important to first and foremost protect your interest via intellectual property and brand propriety. Spending a few bucks on professional advice is a sacrifice worth making.
Follow me on twitter @ugodre
* You will receive the latest news and updates on your favorite celebrities!