“Nick, I have a great idea for an innovation, but I am scared someone is going to steal it!”
I hear this from fear from entrepreneurs all the time.
And it’s a tough problem to solve.
Especially as it has become so incredibly easy to just copy what is working for other people.
Or in some cases, like the one outlined here, even beat someone to market for their own product! And the patent laws which used to protect inventors may now actually have the opposite effect.
In the video above, we hear the cautionary tale of what happened to Matthew and Mark McLachlan, creators of the massively successful Kickstarter campaign for the Fidget Cube.
One of the most successful Kickstarter campaigns in history, the Fidget Cube is a small device designed for people who often fidget [Ed: like myself!], to give their fingers a number of different things to do discreetly, instead of clicking pens, tapping fingers etc. It really resonated with people, going viral and raising more than $6 million.
In almost every sense, it was a blockbuster success.
Apart from one small problem.
Because it was very obvious how successful the campaign was, other people could see that this product was going to be a huge success, with lots of demand. And this showed other people who didn’t have the idea itself that if they could get the same product to the audience first, then they could profit from this demand.
This is exactly what happened to the Fidget Cube. In the video above, we see how another anonymous entrepreneur called “Jack” found manufacturers in China who had already copied the design of the Fidget Cube (where the original was also being manufactured), and bring his copied version called the “Stress Cube” to the market before the original, and using social media to sell to the already-proven demand.
It’s not really who got there first. The whole goal of this model is to just find products that people love and sell them in a better way. You got to use the power of the internet. When that clicked and I realised that, I was ready to move on to the next product – “Jack”
By shipping the Stress Cube before the Fidget Cube had arrived (and after only spending around $5,000), Jack and his team made more than $345,000 in just 2 months.
Now, if you go onto Amazon, you will see a huge selection of knockoff products, many being sold for less than $10 by various companies for what is an identical product (well below the Fidget Cube’s roughly $25 price).
This wasn’t the first time Jack (and many others like him) has sold copied products from China by importing and reselling them. The other example was a plethora of companies selling inflatable chairs, which Chinese manufacturers began producing after the original idea was seen on a Dutch TV show about inventors. These manufacturers would advertise their no-name product on Alibaba, the huge online wholesale storefront. Now, numerous companies sell what is essentially the same inflatable chair, with different names printed on them.
Where is the protection?
One of the things which the original creators had hoped would protect them was that their design was patent pending. This means that if their patent is approved, it could stop sales of the knockoff products. But unfortunately patents aren’t as useful as they used to be. In this previous article, I examined how the modern patent system is actually bad for innovators, since it has changed so rapidly to combat patent trolls that it can become much more difficult and expensive for small companies to actually enforce the patents they have.
Not only that, the patents would likely not protect them from Chinese manufacturers producing the copied versions since they are in a different jurisdiction. This is one of the reason why China is actually able to innovate so quickly and has become a hub for hardware innovation.
And even if Jack’s sales were shut down, he has a very interesting view on what he would do next:
The world is filled with products. I don’t need to sell Stress Cubes. I just want to sell things that people like, so I’ll move on to the next thing.
As far as I’m concerned, we’re not doing anything wrong selling something that people love that’s being sold on the open market.
And here is the most difficult point for a lot of people to swallow:
He kind of has a point.
In today’s world, with interconnected manufacturing, design and logistics, it has become possible to create and bring products to market in a matter of weeks, which would previously have taken months (or years!). Combine this with the challenge of enforcing intellectual property rights not only in your region but globally, and it becomes almost inevitable for products to be copied, especially if they are popular. This will lead to manufacturers supplying those products.
This will lead to manufacturers supplying those products on the open markets like Alibaba, and people being able to sell them (unless laws prevent them in a region).
So how can innovators, inventors and creators ensure that they still benefit from their creation?
Well, here are some simple tips:
How to make sure you don’t lose all your business to copycats
- Make it obvious you are the original creator: There is one thing that copycats cannot make a big deal of, and that is that they created the product. And for many people, having the original is an important aspect of their value perception, allowing you to market it more genuinely and charge a higher price (as long as the quality is worth it).
- Get to market ASAP!: The story above is a cautionary tale about how a public funding campaign allowed other people to see that something was going to be successful, and manoeuvre faster to reach the market first. If you are the creator of something, often there is a desire to wait for something to be “perfect” before releasing it to the market. But this can have a lot of danger. What successful innovators often do is work on getting a product out there, and then rapidly iterating and improving it in front of the audience. Some products, like Toys or fashion fads, rely heavily on a first mover advantage, and every company which releases after them might realise that all the demand has already been satisfied.
- Get your messaging and audience interaction right: Copycats often have a mindset of “cheap and fast”. Sell as much of something as cheap as possible, and then when demand drops move on to the next thing. This means they are unlikely to invest much into things like branding, communication with customers or building a reputation. If you want to build a long-term business, each of these is also vital, so make sure they are part of your ongoing strategy.
- Innovate outside the product: A lot of companies think that the only innovation that needs to happen is by improving the product itself. But if Chinese manufacturers can create a perfect copy of the product in a matter of weeks, then those improvements will instantly no longer be an advantage. Instead, think about all of the other ways you can innovate, such as by using the fantastic Ten Types of Innovation framework.
There is good news at the end of this story though. The creators of the kickstarter campaign did indeed get the $6 million in sales, so they benefited even though their idea was copied.
But it should be a lesson to everyone. Just having a great idea isn’t enough, you need to actually get it to market as well.