The State of the American Dream
Diversity extended to the level of development as well. Some people had little more than some hand drawn sketches for their presentation. Other people had working prototypes, and a few had items already in production and on sale. One inventor had been on QVC a handful of times and another’s company already has product being test marketed at Walgreens.
Considering that we were all, in a sense, competing to grab the attention of Telebrands’ CEO Ajit “A.J.” Khubani, there was a palpable sense of camaraderie among the pitchers. After all, we shared the experience of creating and developing an idea, overcoming naysayers, and putting together a pitch. We all had similar dreams. Khubani is the inventors’ Simon Cowell. Unlike American Idol, we weren’t actually competing, though. At these periodic “inventors days” Telebrands has no quota to fill. They may buy no ideas at all or they may make a deal with more than one inventor. It’s all about the ideas and that better mousetrap. Most inventors are quick to recognize someone else’s good idea (and have their own ideas how to improve or compete with it). One inventor even bought a sample from another.
We sat in the lobby as inventors were called to the inner sanctum, which we could all see through the glass walls. Khubani, his wife Poonam, a former Bollywood actress, and Bob Pascatore, an associate of Khubani’s, sat in front of the inventors as they pitched their products. If it looked like they were interested, either asking questions or keeping the inventor beyond the five minute limit, a buzz of excitement went through the small crowd. The inventors who emerged victorious were congratulated, and those who were turned down were consoled.
The one clear hit that day, the one that got the Telebrands’ crew so excited that they didn’t want its inventor to leave the premises without making a deal (Khubani’s main competitors are his two brothers and their companies’ headquarters are also in New Jersey, not far away) was a clothes hanger. Hangers and closet organizers are big sellers in the direct marketing arena. Some people may drop stuff in their garbage disposal and not want to reach in there, but everyone has a closet and uses hangers.
Inventors aren’t the only ones still fascinated by the American Dream. Khubani (and his PR reps) love publicity. There were camera crews and reporters from local television stations, CNBC, Forbes, and the local Bergen Record. There was also a crew from Hand Made Films, filming Khubani and all the inventors, who were wired with mics before we started our pitches. Khubani had a recurring role on the first season of the Discovery Channel’s reality show Pitchmen that starred the late Billy Mays Jr. Discovery and the show’s producers have announced that a second season will be produced. It’s possible Hand Made was shooting for use in the upcoming season, or Khubani, a pitchman’s pitchman, is trying out a new televised venture.
Much of the drama in Pitchmen surrounded the efforts of inventors to get their products picked up and marketed on television. A successful “as seen on TV” product can mean millions in royalties. What is sold “if you call now” is only the tip of the iceberg. TV merchandise is a major revenue stream for most drug store chains. The popularity of Pitchmen and the fact that the show is surviving the demise of its star attest to the enduring appeal of those reaching for the brass ring. Billy Mays may have been the star, but people tuned in because of the earnest appeal of the inventors doing the reaching. In fact, Pitchmen inspired a couple of the inventors at Telebrands.
The current recession may in fact be spurring even more inventors to pursue their dreams. Michigan and Ohio contributed the largest number of people pitching Telebrands that day. Despite the growth of the public sector, Americans still love to tinker and invent in the hope of making it big or at least taking some control over their lives. As seen on television, the American Dream is still alive and well.
While the Pitchmen marketing model is ok for gizmos, the seed of American enterprise is the scalable product line. That dream has been severely diminished by the demise of venture capital, which was killed by “SOX”, the Sarbanes-Oxley Act. The entrepreneur used to look forward to the day when his product line of inventions would result in an IPO, a public stock offering, at which point real riches might be made, along with entry into the vast middle echelon of the business world. But SOX raised the ante so high that venture capital has virtually dried up. Now we see the advent of enabling corporations, as exemplified by the Khubani organization, which provide the framework for production and marketing, licensing the inventor’s gizmo and otherwise writing the inventor out of the rest of the erstwhile dream. Under SOX, as with much of the present Administration’s philosophy, if you aren’t big in the first place, then you have no place at the trough (private or public), so stay small, and be glad for the crumbs offered by those who already are big enough to deal with the red tape. Innovation may not be dead, but the path to riches is a lot harder these days.
What Myno said.
Through what avenue with the next semiconductor or internet boom take place? Not through direct sell late night TV with products that last half a year in the marketplace.
And not a small percentage of that ambition and creativity are going to be applied to avoiding taxes.
While the Pitchmen marketing model is ok for gizmos, the seed of American enterprise is the scalable product line.
The Pitchmen marketing model is just a tool, like any marketing model. While Telebrands and competitors may have a fairly rapid turnover of their product line, they are, after all, in the branding business and recognize the value of a good brand that can be extended into new products. The other day I was in a CVS or Rite-Aid and I was checking out the tv merchandise and I saw that Telebrands has expanded the Ped Egg line to include new products.
Now we see the advent of enabling corporations, as exemplified by the Khubani organization, which provide the framework for production and marketing, licensing the inventor’s gizmo and otherwise writing the inventor out of the rest of the erstwhile dream.
The inventor cares about two things, proof of concept and money. Sure, some may want to be entrepreneurs and masters of their own destiny, but mostly they want to convince folks that their idea is sound and earn some coin off that idea. After seeing that clothes hangers are a big thing with Telebrands, when I got back from New Jersey I designed an adjustable hanger (with the avg woman in America being a size 14/16 and the number of men who wear XXL and larger shirts, most standard hangers are actually too small for many garments). Now why would I want the hassle of trying to raise tens, maybe hundreds, of thousands of dollars for production molds, and even more for marketing, when I can let someone else deal with those headaches and get a royalty check? There are reasons why most musicians don’t start their own record companies.
Rather than writing inventors out of the scene, the tv marketers often return to their successful inventors for new product ideas. Success feeds on success.
Through what avenue with the next semiconductor or internet boom take place? Not through direct sell late night TV with products that last half a year in the marketplace.
Selling to consumers is different than business to business. Pitching Telebrands (or their competitors) on a product needs a different pitch than selling the same product on an infomercial. Still, sales is sales. I’m sure that the late Billy Mays would have been successful as a manufacturer’s rep, selling business to business.
It should be noted that the most successful items direct marketed on tv can transcend the “half year half life” of most of that merch. Mays helped establish Oxy-Clean as a nationally recognized brand, growing their sales to hundreds of millions of dollars annually. One of the majors, like Proctor & Gamble or Lever, bought out the family business that created the brand.
While inventors realize that a deal with a tv marketer most likely will not be a long term arrangement, they hope that their product will be the next Oxy-Clean or Ped Egg, an evergreen brand that can be extended.
Goody, goody, goody. I’ve seen the future, and it’s crap that’s not good enough for Walmart. If this is the best we can do…