invention advice

October 1, 2006

Rocky Mountain News
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URL: http://www.rockymountainnews.com/drmn/tech/article/0,2777,DRMN_23910_5001298,00.html

Idea is just a startResearch firm Umbria shows that startups must be flexible to thrive

By Jeff Smith, Rocky Mountain News
September 18, 2006

It takes more than the flash of a lightbulb to turn an idea into a successful technology company.And the industry is littered with failures and false starts.

Take it, however, from Howard Kaushansky, president of Boulder-based Umbria, a consumer market research company that analyzes the stuff people talk about on 50 million-plus blogs on the Internet.

“I’m a strong believer that anyone with a good idea (and drive) can make it a success,” said the 48-year-old Kaushansky, attorney turned entrepreneur of several technology businesses over his career.

But an inventor also must have the necessary resources around them, he said. Depending on one’s background, that might mean “surrounding yourself with people who have had experience marketing new products, raising capital, all of the critical elements that go into the long-term success of a business.”

Umbria is one of 45 homegrown companies being showcased during Colorado Tech Week. The companies come from a range of industries, including aerospace/satellite, biotechnology, data storage, information technology, software, forensics and health care.

While some cater to business customers, others have a decidedly consumer bent, and many are Internet-related, such as Mania TV, which operates live TV on the Internet; Net Devil, creator of the online game Auto Assault; and Photobucket, a video- and photo-sharing site.

Rini Paiva, spokeswoman for the Akron, Ohio-based National Inventors Hall of Fame, agreed that a major challenge facing an independent inventor is gaining the know-how and financial support to be successful.

“It’s not enough to simply come up with a good idea,” Paiva said.

That’s in part because it’s difficult to compete with corporations, which devote a lot of time and money to research and development of new ideas, she said.

Colorado, for example, ranked 13th in the country in 2004 with 2,290 patents, according to the U.S. Patent and Trademark Office, co-founder of the National Inventors Hall of Fame. The number has been relatively stable at around 2,000 a year since 1998. But IBM as a corporation alone received nearly 3,000 patents in 2004.

Many entrepreneurs also have worked for large corporations before starting out on their own.

The good news, Paiva said, is that inventor groups are sprouting up nationwide that provide resources and networking opportunities to independent inventors.

Inventors also must be flexible.

“(Our) original product idea was something different,” said Kaushansky, who co-founded Umbria with Ted Kremer and Dave Howlett in 2003.

He said they set out to use text- analysis technology to make Internet content more personalized for the consumer.

“There wasn’t a television moment” when the focus shifted, he said, but rather just a recognition that the blogosphere was exploding.

“There were a number of possible avenues, creating a search engine (for blogs), creating a blog-hosting company. But nobody at that time was really focused on analyzing the information for market research companies,” Kaushansky said. “We started focusing on that.”

Umbria uses something akin to Internet search engine technology to collect the blogs and other postings, then its own sophisticated data-mining software to analyze what’s being discussed.

That software, which translates key words and phrases into math, even predicts the demographics, such as gender and age, of a blogger, based on the language they use. A teenager, for example, uses different words than does a middle-aged person. Kaushansky said Umbria has applied for patents based on its technology.

Umbria’s stiffest competitor in the Internet consumer market research space is Nielsen BuzzMetrics, a merger of BuzzMetrics and Intelliseek.

Some experts have expressed skepticism about the ability to accurately identify bloggers, but a certain error rate is the “reality with any predictive science,” Kaushansky said. “No mathematical model is 100 percent right.”

To get Umbria off the ground, Kaushansky worked full time for free. Howlett, a marketing specialist, and three software engineers including Kremer worked nights and weekends in exchange for some equity in the company.

An undisclosed amount of seed financing by Sequel Venture Partners enabled the team to develop its first prototype in early 2004. Kaushansky said the company started with prototypes and mock-ups of what its results would look like, tested those in the marketplace, got feedback and then shaped that into its first generation of technology.

“We put a lot of thought into the concept before testing it,” Kaushansky said. “And getting it in front of a potential client can be a challenging undertaking, so you want to make sure you’re making (their) experience valuable.”

Umbria raised $6.7 million of venture capital in March 2005 based on its early commercial successes, and that led to the first big burst of hiring. The company now employs 27 people, all but three in Colorado.

While the testing process and financing needs vary depending on the nature of the idea, Kaushansky said it’s important to protect one’s ideas through confidential agreements when sharing sensitive information with others.

Umbria analyzed what bloggers were saying during the 2004 presidential race in 2004, and its current clients span a range of industries including consumer electronics, online gaming, consumer products, telecommunications and banking.

For example, a company hired Umbria to analyze what people were saying in the blogosphere about the Motorola RAZR, a thin camera phone launched in late 2004.

CNN.com has used Umbria, most recently this summer in a story about rising gas prices. Umbria found that between March 12 and May 28, when gas prices soared about 50 cents a gallon, the issue was talked about on blogs about four times as much as Sen. Hillary Rodham Clinton, though only half as much as Microsoft’s XBox gaming system.

As for Umbria’s initial business idea? “That’s on the back burner,” Kaushansky said, but it may eventually see the light of day as well.

Bringing an idea to life

To be a successful technology entrepreneur, it takes more than a brilliant idea. Turning ideas into dollar signs requires research, patents, a business plan – and, yes, money.

1. Define your idea or invention – in writing, drawings, calculations, etc., to prove it works.

2.Compare your idea or invention with others in the marketplace. Do you have a good idea? Is there a need for it?

3. Search existing patents and literature related to your idea, and keep records that document your discovery. Preliminary research can be done for free at the U.S. Patent and Trademark Office (. Delphion is another useful site, although it charges a fee (.

4. Decide whether you want to spend the money and time to apply for a patent. Patent attorneys charge around $2,500 to $6,000 or you can try to do the patent yourself. The U.S. Patent Office also has a Disclosure Document Program that will help protect your discovery for two years.

5. Consider teaming up with experts or financial partners – it’s tough to start a business alone. (A confidential, nondisclosure agreement should be written before sharing the details of your invention/idea with others.)

6. You’ll need to try to raise capital for your business if you don’t have financial partners. If you haven’t done it yet, you’ll need to write a detailed business plan.

7. Test your idea or invention with potential customers or industry experts. (Testing also may occur earlier in the process.)

8. Launch your venture. Promote your successes and build relationships with your customers through various promotions and nonprofit events.

Copyright 2006, Rocky Mountain News. All Rights Reserved.

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