This past week, I looked at a couple companies and their IP. Both had an interesting but fundamental problem that made their IP worthless. We will talk about one of them in this post.
I have a great technology – does anyone care?
There are lots of companies with various air filtration/disinfectant patents. These are an interesting corner case where the company’s value proposition is not their IP, and this creates problems for their patents.
Years ago, I worked for WaterPik, which had just been acquired by a private equity firm. They were investing heavily in new products, including a product that created ozone-infused water.
Ozone-infused water was far more powerful as a disinfectant than bleach, yet it was odorless, tasteless, and colorless. It was safe enough that you could drink the ozone-infused water, but still disinfects better than bleach.
The problem with the product was that it had no discernable effect.
You put a carafe of water on a stand, it hummed for a few minutes, and then you used the ozone-infused water to disinfect a countertop or whatever. We even went to the trouble to make the little stand buzz and vibrate so you thought it was doing something (even though it was, indeed, creating the world’s most powerful disinfectant).
The ozone product was a complete failure. Not because of the technology, but because nobody could tell that it worked. Customers wanted the smell of bleach or the smell of a cleaning product. They were fundamentally unsure about whether our product was even working.
Last week, I looked at an air purifier company’s patents and it reminded me of the WaterPik ozone machine.
The air purifier patent.
The air purifier company had a disinfectant system that cleaned air in a building’s HVAC system. It was a unit that is built into the bowels of the HVAC system. The problem was that this invention may have been the single greatest method of disinfecting, but nobody could tell if it worked.
The air purifier device was deep inside the air handler system and impossible to see or hear.
In the business scenario of selling a ‘better’ air purifier, is there an incentive for a building owner to pay a premium to install the ‘best’ filtration/disinfectant system when nobody can even tell that it is turned on? Yes, having the ‘best’ disinfectant system would make for interesting and maybe even compelling advertising copy, but the office workers could never test for themselves whether their air handler was spreading disease.
The inventor’s (presumably) more-expensive air disinfection system could be installed but never even turned on – and nobody would ever know the difference. Or, the inventor’s air disinfection system could *never even been installed* and nobody would ever know. This is not a compelling business scenario if you are holding a patent on the greatest air purifier technology ever.
In this business scenario, the only real reason why a customer (the building owner) would require an air disinfectant system would be to satisfy a local regulatory requirement. Their only incentive would be to buy the lowest cost system that meets the regulations – and buy anything more.
In other words, this is an example of a business model where great technology does not matter.
This business is a race to the bottom in price – just so long as you meet the minimum regulatory requirement.
The patent we were evaluating was for a more expensive, more elaborate disinfectant system. The company has spent lots of research and development money to fine tune and improve their system for maximum disinfection, but the technology doesn’t make a difference to the customer and end user.
They simply cannot tell that the patented invention makes their life better. So, we don’t invest when the technology doesn’t matter.