Posts Tagged: "Business"

Although some tech companies publishing earnings reports had rockier third quarters than others, performance was very good almost across the board, making now a very good time to be in the consumer or high tech industries. The third quarter of 2015 is the first one for which Google reported its earnings under the name of its new parent holding company, Alphabet Inc. (NASDAQ:GOOG). The early returns are showing that the new structure is a profitable one for Alphabet, which beat analyst estimates for earnings per share (EPS) by almost 15 cents per share. It was a much different story for IBM (NYSE:IBM) of Armonk, NY, when its earnings report missed on the low side of analyst expectations, marking the 14th straight quarter for which the enterprise tech developer has reported falling revenues.

In response to all of these body blows to McDonald’s, CEO Steve Easterbrook announced a number of changes that he hopes will set the corporation on a much more successful course. Easterbrook promised investors after the earnings report was published Wednesday that the company would be making meaningful changes to its menu within the month. Easterbrook has also proposed a major restructuring to the corporation’s global operations that would split the company into four segments: one focused on lead markets like Britain and Australia, a high growth division including Russia and China, a U.S. domestic division and one focused on McDonald’s activities in the 100 other countries where the fast food restaurant operates.

The vast majority of the assets developed and owned by technology companies are intangible assets, i.e. they reside in their internal information and employees’ brain (Intellectual Capital or “IC”) and the output thereof (Intellectual Property or “IP”). It is estimated that in excess of 85% of the valuation of the NASDAQ Index companies (and of the new global wealth being created) lies in intangible assets. With smaller technology companies, this percentage is sometimes close to 100%. Nowadays, most technology based companies eventually fail or succeed in large part because of the way they handle their intellectual capital assets and convert those into strategic intellectual property assets.

There is nothing wrong with dreaming, but there is an extremely important cautionary tale to be told about the tremendous harm that can be done to opportunity when inventors exaggerate the market size for their invention. People with money or those who control distribution channels don’t usually prefer to do business with those who are not professional. They also don’t appreciate exaggeration because it screams that you are unrealistic, which means you will be difficult to work with in the long run. Nobody enters a business deal with someone when they think they will only create a headache.

They use early IPOs as an alternative to traditional venture funding. But one of the things that the investors place a huge importance on is a very sophisticated, robust patent operation. So whereas it used to be you’d have a new company and it could take years even to get some sort of sophistication, we’re now doing it on day one. And the results have been great to see. Over the last few months we have filed close to a hundred patent applications for these entities. We’re able to do that because we have been able to negotiate favorable deals with the law firms we use and we can pass that on to the clients. So our goal is to really be creating companies and crafting their portfolios from day one. Essentially, my partner and I work to insource a very sophisticated patent operation for a company that ordinarily wouldn’t have had that capability.

David Morland, a partner with 3LP Advisors, moderated the first panel. He lead off the segment by pointing out that in the United States patents are being both applied for and issued in record numbers year after year. He also started the substance of the program today by pointing out that the people who own patents in the United States do not seem to believe that the asset class has been devalued. “Maintenance fee payment rates have raised, particularly with respect to the twelve-year payment, which suggests that those who own the assets do not think they are diminishing in value,” Morland explained.

Licensing is relatively easy and potentially less risk financially and less time consuming, but licensing also has its negatives. So I went to Surf Expo with my wife to help us decide what to do… At the tradeshow, we found that the President of the Water Sports Industry Association loved our product, but he warned us that if we were to license this product into the existing market that what we would find was two-fold: one, they wouldn’t do it with the same heart, they wouldn’t have the same passion as the inventors and the team that created it and, two, they wouldn’t potentially invest the right amount of money into it and in some cases they may actually bury the product concept and prevent it from coming into the market, because they may see our product as competition to their market. It could have a potentially negative impact on say kneeboards. I was warned to stay away from licensing, in this particular case, and if we really wanted to see it grow, to go full-time into it. So I asked my two friends if they really wanted to take this on and I would be their mentor as they go through the process of beginning a company. So that took the stress off of me. I gave them equity in the new venture, which owned a full utility patent. They showed what they were made of and created a very successful business with a simple concept, “to help lots of people enjoy their time on the water!”