TECH/BIZ: Idea Auction

From: Chris Rasch (
Date: Sun Apr 22 2001 - 10:41:32 MDT

-------- Original Message --------
Subject: An Idea Auction. Sort of...
Date: Sun, 22 Apr 2001 08:00:16 -0400
From: "R. A. Hettinga" <>
To: Digital Bearer Settlement List <>

April 22, 2001

Click and Win: Inventors Cash In on Their Ideas


ichael Smithson'S epiphany came about 10 minutes into his career as an
inventor. While reading about a Coca-Cola contest to dream up an
entertaining and healthy drink for children, he recalled how his
grandson had trouble keeping track of his tackle, rods, snacks and
sunscreen on a fishing trip last summer. Because children are prone to
losing things, Mr. Smithson suggested a frozen drink in a container that
children can wear on their wrists, as they would a bracelet, and sip as
thaws. He found out a few weeks ago that he had won the $5,000 prize.

Albert Muller struck pay dirt, too, but it took 28 years. Mr. Muller, a
retired Boeing engineer, spent that time perfecting a better nozzle for
heavy-duty vacuum cleaners, but he dreaded the process of selling his
invention to appliance makers. Then he heard that Sears, Roebuck was
offering $5,000 for the best idea for "the next hot tool," and he
the nozzle. Sears bought it.

Both men connected with the companies through, a Mountain
Calif., company whose Web site helps people who fancy themselves as the
next Thomas Edison to send their ideas directly to corporate decision
makers. Mr. Smithson and Mr. Muller are among the first winners of
innovation contests that began when it went online in
November., one of several new sites that buy, sell or solicit
property, may be a win-win solution for companies and inventors.
are scrambling all the time to come up with new ideas" because of faster
product cycles, said Sanjay Goel, the site's founder and chief
The Internet is a natural place to look, because many people who use it
technologically knowledgeable and naturally curious. And the sites
an easy way to gauge consumer trends.

"It used to be we would come up with an idea, and consumers would help
evaluate it, refine it" in focus groups, said Tom LaForge, director of
innovations at Coca- Cola. "Now we're getting to consumers one step
earlier, and they're coming up with the ideas."

With the economy slowing, the time is certainly ripe. "In many ways,
companies are going to be trying to sell themselves out of this
said John Fontanella, an analyst at AMR Research in Boston.

Mr. Goel started a year ago after struggling to find a home
his own idea for a new car gadget. He envisioned a site where large
corporations could collect ideas from people around the world, saving
individuals the headache and expense of patenting and developing ideas
their own and sparing companies the bother and potential legal liability
sifting through a flood of unsolicited ideas.

There is a tradeoff. On the site, would-be inventors must accept an
agreement intended to protect companies from lawsuits accusing them of
stealing inventions. Steven L. Smith, a Sacramento patent lawyer,
that inventors might be relinquishing the rights to their ideas simply
submitting them, and said he advises inventors to require companies to
nondisclosure and noncompetition agreements.

Mr. Goel quit his job as an investment banker at Citibank in late 1999
after receiving a $1.2 million investment from Venky Harinarayan, a
classmate at the University of California at Los Angeles, and Anand
Rajaraman and Rakesh Mathur. The three men were among the founders of
Junglee Corporation, which made software to help consumers find the best
prices for products on the Internet; Junglee was sold to in
for about $250 million.

Mr. Goel then persuaded a former New York University classmate and
skydiving pal, Sharat Singh, to quit his job as a lead program manager
Microsoft and to become president and chief technology officer of They secured the backing of Coca-Cola, Sears, Roebuck, S. C.
Johnson & Son and International Paper, which agreed to pay an
membership fee. also receives a commission of about 30 percent
from the idea contest awards, paid by the companies.

Coca-Cola and Sears said that they were impressed with the quality of
from the first contests.

A Coke competition seeking innovative ideas in packaging, for example,
won by Spencer Wolf, who proposed a drink container that illuminates
when squeezed. Mr. Wolf, who studied mechanical engineering at Cornell
is now pursuing a master's degree in business administration at
said his idea went back to when he asked his father what caused
to glow without the benefit of electrical outlet or batteries. The
invention uses piezoelectricity, a mechanical phenomenon that replicates
that effect with crystals.

Coca-Cola said that it was evaluating Mr. Smithson's idea for the
wrist-worn container and that Mr. Wolf's proposal for the self-
illuminating container might be explored later. Other ideas, from
college students, professors, children and parents, have confirmed some
consumer trends that the company is exploring.

"A lot of consumers were asking for healthier drinks that had to do with
soy," Mr. LaForge said. "I didn't realize how many people would be
interested in that type of product." Other ideas, like packaging drinks
with tablets that add vitamins or flavors, suggest "people are really
looking for more customization," he said.

In judging the ideas for drinks, Coke was looking for a unique, healthy
product with innovative packaging. Entries in a separate packaging
had to be cost-effective, technically sound, easy to make and use, and
safety, health and environmental standards. Judges included employees
Coke's legal, marketing, technical engineering and new product
departments. The company plans to post all 889 contest ideas on its
internal Web site.

Mr. Smithson, 46, an insurance salesman from Leesburg, Fla., is among
people who have submitted ideas but have not previously considered
themselves professional inventors. "In day-to-day life, you don't really
get poked and prodded into having a lot of ideas," he said. "Something
this, it makes you think."

But Mr. Muller, who lives in Houston, has long taken innovation
He belongs to the Houston Inventors Association, whose members share
experiences and tips on developing ideas into products.

He noted that raking leaves 28 years ago, on the patio of his former
in Southern California, spurred him to look for an easier solution. "I'm
always looking at things to see how they work," he said.

Sears said it was reviewing patent documents and prototypes of Mr.
invention to help decide if it wants to sell the product.

The Sears contest, which drew 135 entries, was also a way to channel
of the thousands of unsolicited ideas that the company receives each
Invention proposals sometimes arrive on handwritten letters and home
addressed to the chief executive's office, on scraps of paper handed to
sales representatives or - in the case of a pink lawn mower designed as
part of a lawn-and-garden set for women - carried into the company's
headquarters in Hoffman Estates, Ill.

"In the midst of that disorderliness, we have the sense that there may
some terrific ideas out there," said Steve Kirn, vice president for
innovation and organizational development at Sears. In October, Sears
sought refrigerator improvement ideas through a competing site, Companies pay the site $50,000 to be the host of

Other sites that solicit consumer ideas, like and, are developing a few of them into products, offering
inventors a stake if the idea turns into a new company or a share of
royalties or sales. Ideadollar said one idea, for waterproof shower
posters, has been turned into a product that will be in stores next
Among ideas it received, said its chief executive, Mark Turrell, "we are
probably sitting on the next Razor scooter."

Business-oriented sites, like and, operated by
the Patent & License Exchange, also function as marketplaces where
companies buy and sell intellectual property. Honeywell International,
example, lists almost 100 technologies on, hoping to attract
licensing revenue.

At, which has grown from 2 to 10 employees in the last year,
biggest challenge is to persuade more companies to conduct idea contests
and to pay membership fees. The site is also trying to license software
that will let companies collect ideas from their employees.

Mr. Goel asks companies to use his site to contract out some of their
innovation, just as they might rely on outsiders for public relations or
market research. They may find the next multibillion-dollar idea there,
said, reeling off a list of possibilities. "It could be the new Coke,"
said. "It could be a new way of distributing foods. It could be a new
of energy."

Copyright 2001 The New York Times Company | Privacy Information

R. A. Hettinga <mailto:>
The Internet Bearer Underwriting Corporation <>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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