Business Plan Idea

For those that are struggling to come up with a business idea, Prof. Richards has an opportunity to work with a business restart that needs help with a business plan. The following PDF explains more about the opportunity. Contact Prof. Richards (john.richards@byu.edu) for more information.

Click here for the PDF

Announcement from Prof. Richards

To: Creating New Ventures Class students

This article is interesting. This is precisely where you need to find your business ideas. For example, as I read this article, I am thinking that an entrepreneur could set up a web site with a good URL name, have it be a centralized repository for legal consent for organ donation. Hospitals and others would consult this database to see if a recently deceased or artificially preserved person is on the list and has given consent. There are lots of ancillary revenue centers that could be built off this.

OrganRegistry.com would be, for instance, a name. Or OrgansRUS.com, or even some crazy name.

I have done no Google searching, domain look up, or anything for this.

But, this is an example of a low capital business where you make a free service and get it to go viral on the net and then start introducing revenue streams as you get to some critical mass on usage. this company could lead the young people of the world to register in droves. Eventually deals could be had with governments, corporations, the medical community, pharmaceutical companies, etc. Big money.

I am not sure of the laws surrounding this, but it's worth some research.

This took me about 15 minutes of thought. Just wanted to share my thought process.

- Prof Richards

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September 27, 2009

Economic View

OPTING IN VS. OPTING OUT

By RICHARD H. THALER

WHEN Steven P. Jobs, Apple’s chief executive, appeared in public recently for the first time in months, he revealed that he had received a liver transplant from the victim of a car crash. “I wouldn’t be here without such generosity,” Mr. Jobs said, adding that he hoped that many people would become organ donors.

With the help of a little behavioral economics, it is possible to make that hope a reality.

More than 20,000 organ transplants take place every year in the United States, with a vast majority coming from deceased donors. Demand greatly exceeds supply: in 2006, for example, 3,916 patients died while waiting for kidneys, according to the National Kidney Foundation.

Some economists have come up with a simple solution: a market allowing the buying and selling of organs. Because people have two kidneys and need only one to live, a robust market could greatly increase supply.

The idea may have some merit, but it is spectacularly unpopular. As the Harvard economist Alvin Roth has noted, many people consider it “repugnant,” mainly for two reasons. First, they object to the possibility of rich people buying their way to the front of the line. (The hospital where Mr. Jobs’s procedure took place said he received the liver transplant because he was the sickest person on its waiting list who matched the donor’s blood type.) Second, they object to incentives that would induce the poor to sell their kidneys.

These objections can lead to some logical quandaries. Why, for example, is it O.K. for a parent to donate a kidney to save a child’s life but not for her to sell her kidney, thereby also saving a life? And why is it acceptable to risk your life for money, say, by becoming a coal miner, but not by selling a kidney?

Still, whether you think a legal market for organs is a brilliant or a dreadful idea, it’s a political nonstarter, so it is important to obtain donors from another possible source: patients who have been declared “brain dead” but are being kept alive temporarily.

Nationwide, roughly 12,000 to 15,000 people fall into this category each year, but only half end up as donors. Because each such donor could supply an average of three organs, having another thousand donors could save 3,000 lives. We need more people to agree to be donors in advance.

One strategy is to alter the default rules for signup. Most states, as well as many other countries, use an “opt in” or “explicit consent” rule, meaning that people must take a concrete action, like going to a public library or requesting and mailing in a form, to declare they want to be donors. But many who are willing to donate organs never get around to such steps.

An alternative approach, used in several European countries, is an “opt out” rule, often called “presumed consent,” in which citizens are presumed to be consenting donors unless they act to register their unwillingness.

In the world of traditional economics, it shouldn’t matter whether you use an opt-in or opt-out system. So long as the costs of registering as a donor or a nondonor are low, the results should be similar. But many findings of behavioral economics show that tiny disparities in such rules can make a big difference.

By comparing the consent rates in European countries, the psychologists Eric Johnson and Dan Goldstein have shown that the choice of opting in or opting out is a major factor.

Consider the difference in consent rates between two similar countries, Austria and Germany. In Germany, which uses an opt-in system, only 12 percent give their consent; in Austria, which uses opt-out, nearly everyone (99 percent) does.

Although presumed consent is generally accepted in countries that have adopted it, the idea can bring strong opposition. Many people object to anyone presuming anything about their organs, even if the costs of opting out are low. In Britain, a proposal by the Labour government to adopt an opt-out system was opposed by Muslims who objected to organ removal on religious grounds.

Fortunately, there is another possibility, called “mandated choice,” under which people must indicate their preference. In Illinois, where I live, this system has been in use since 2006 and doesn’t seem to have ruffled many feathers.

Here is how it works: When you go to renew your driver’s license and update your photograph, you are required to answer this question: “Do you wish to be an organ donor?” The state now has a 60 percent donor signup rate, according to Donate Life Illinois, a coalition of agencies. That is much higher than the national rate of 38 percent reported by Donate Life America

The Illinois system has another advantage. There can be legal conflicts over whether registering intent is enough to qualify you as an organ donor or whether a doctor must still ask your family’s permission. In France, for example, although there is technically a presumed-consent law, in practice doctors still seek relatives’ approval. In Illinois, the First-Person Consent Law, which created this system, makes one’s wishes to be a donor legally binding. Thus, mandated choice may achieve a higher rate of donations than presumed consent, and avoid upsetting those who object to presumed consent for whatever reasons. This is a winning combination.

THE key, however, is to make signup easy, and requiring people to make a choice is just one way to accomplish it. The private sector could help create other simple methods. Here is a challenge to Mr. Jobs: Why not create a Web site — and a free app for theiPhone — that lets people sign up as organ donors in their home states?

At the same time, he’d need to work with the states to create the technology for a secure, simple signup procedure. Social networking sites like Facebook could also help, by encouraging signup campaigns.

Many Americans say they want to be organ donors, but they just don’t get around to acting on their intentions. Helping these potential good Samaritans overcome their inertia could prolong thousands of lives a year. Signing up to be an organ donor should be at least as easy as downloading a song to your iPhone.

Richard H. Thaler is a professor of economics and behavioral science at the Booth School of Business at the University of Chicago.

9 Steps/Strategic Plan Assignment

Because Dr. Strong has not been able to complete the lecture concerning the 9 Steps/Strategic Plan assignment, the due date has been extended until next Monday, Oct. 5. He will finish lecturing on it on Wednesday. For those who have already turned it in, you may resubmit it after Dr. Strong's lecture if you would like to do so.

Type of Entity

Because the Type of Entity lecture was not completed on Monday, the due date has been extended to next Monday (Sept. 28). Also remember that the Founding Capitalization Table is also due on that day.

Prof. Richards wanted me to forward this article to the class.

- John Jr, TA

September 21, 2009

Patent Auctions Offer Protections to Inventors

By STEVE LOHR

The world can be a rough place for independent inventors. They can often find themselves in court, battling big corporations, spending piles of money on lawyers and leaving it up to judges and juries to determine the value of their hard-won patents.

That could be changing. Wrangling over patents is beginning to move out of the courtroom and into the marketplace. A flurry of new companies and investment groups has sprung up to buy, sell, broker, license and auction patents. And venture capital andprivate equity is starting to pour into the field.

The arrival of these new business-minded players, according to patent experts and economists, could lead to a robust marketplace for patents, where value is determined not so much by court judgments but by buyers and sellers, perhaps, someday, likeeBay.

And patents, after all, are ideas. Any market mechanisms that speed up the process of figuring out what a patent is worth should hasten the flow of ideas into the economy, accelerating the pace of innovation, policy experts say.

“What you want is a market that can promote innovation and reduce the huge costs of litigation,” said Robert P. Merges, a professor at the University of California, Berkeleyand a director of the Berkeley Center for Law and Technology. “And that market is starting to take shape.”

A classic small-inventor firm, Zoltar Satellite Alarm Systems, is planning to sample that market by auctioning off its patents next month. Professor Merges and other patent experts point to it as an intriguing case to watch.

To date, the Zoltar story has been one of innovation, persistence and litigation. One founder of the company, Dr. Daniel Schlager, got his inspiration nearly two decades ago, crouched in medevac helicopters flying over Northern California. Locating people in distress was often difficult and costly, in time and lives. What was needed, he figured, was some sort of personal alarm device that transmitted a person’s location.

He sought out an old high-school classmate, William Baringer, a computer scientist and telecommunications expert. Using global positioning technology seemed promising, even though it was clunky and expensive at the time. They came up with a solution, and filed their first patent application in 1994 for a “personal alarm” device that used GPS technology. A year later, Zoltar was founded, and it filed for a patent on personal alarms with navigational receivers in cellphones that was granted in 1997.

Zoltar’s prospects got a lift after the Federal Communications Commission in 1996 required most wireless phones to be able to identify their location during 911 calls by 2001. The move opened a large potential market for Zoltar.

The two men designed and built prototypes, hired a patent licensing expert and showed their technology to cellphone equipment makers in the late 1990s in the hopes of licensing it. “It’s an industry with huge companies who crosslicense patents with each other and tell little guys to take a hike,” said Robert Megantz, a former general manager of licensing for Dolby and the consultant who worked with Zoltar in the late 1990s.

Eventually, Zoltar’s founders say, their ideas and designs started to turn up in big companies’ products. They raised money, mostly from friends and family, hired lawyers and went to court.

In 2001, Zoltar sued Qualcomm, the cellphone chip-set maker. After three years, a jury found that Zoltar’s patents were valid, but that Qualcomm was not infringing on them. The two sides settled in 2006.

In 2005, Zoltar sued several handset makers including Motorola, LG and Samsung, and settlements were reached with all of them by 2007.

By now, Zoltar has spent millions in legal fees, and collected millions in settlements. The company is ahead financially, Dr. Schlager said, but some of its 60 investors have not been paid back. Mr. Baringer remains a full-time consultant engineer, and Dr. Schlager is still an emergency-room physician, though he does not practice full time.

Today, the fast-growing makers of smartphones like Research in Motion, Apple, HTC andNokia have no agreements with Zoltar. Dr. Schlager said he did not plan to sue them. Instead Zoltar will sell its patents in an auction, hoping for a faster, simpler and less risky payoff.

“We felt this was the way to go,” Dr. Schlager said. “It’s an option that wasn’t available a few years ago.”

The auction will be run by Pluritas, a patent broker based in San Francisco. Robert Aronoff, its managing director, says Zoltar has strong, court-tested patents that apply to a huge industry, at a time when there is an increasingly brisk market for intellectual property. “They are entering into this vastly changed marketplace with a hot property,” he said.

Whether the patents will prove to be a hot property is not clear. “They were certainly innovative over the years, but I do think there is a question here if the industry and technology has passed them by,” said Professor Merges of Berkeley.

Mr. Baringer insists this is not the case. “We continue to see our designs and concepts implemented every day” in smartphones, he said.

In an auction, of course, the patents’ value will be judged by bidders, which could be handset makers, but also patent-buying groups like Intellectual Ventures and Rational Patent Exchange and Allied Security Trust, a nonprofit organization.

Other players in the emerging patent marketplace are specialized investment banks, brokers and licensing companies including Acacia Technologies, Altitude Capital Partners, Intertrust, IPotential, Ocean Tomo, Rembrandt IP Management and Thinkfire. Venture capitalists are also interested in this field — Kleiner Perkins Caufield & Byers, for example, is backing Rational Patent Exchange, a company that buys reservoirs of patents in crucial fields and charges fees to corporate “members,” who participate as a defensive tactic to limit potential patent litigation costs.

The long-term vision at Rational, said Randy Komisar, a partner at Kleiner, is to become a marketplace or clearinghouse, perhaps the way Ascap is for copyrighted music, collecting fees and distributing payments to artists.

“The goal is to be a place where the patentholder is fairly compensated, but the corporate users have access to technology with minimal transaction costs,” Mr. Komisar said. “It has the potential to make innovation more efficient and less risky for both sides.”

But some patent experts question how far the marketplace model can be extended to patents. They note that patents are typically trickier to value than financial investments like stocks or bonds.

“Yes, you can move in the direction of trading markets for patents, but these are complicated assets that are individualized and hard to value,” said Josh Lerner, an economist at the Harvard business school. “They are more like works of art than stocks.”

Syllabus Due Date Mistake

There is a mistake on the syllabus. The "Founding Capitalization Table" assignment is listed as being due on Wed, Sept 23. This is incorrect. This assignment is due Mon, Sept 28. Sorry for the confusion.

Assignments

Just a reminder about submitting assignments.

Remember to follow the naming conventions in the syllabus for both the subject of the email as well as the name of the file. This helps a lot with the organization of the emails and helps get grades online faster.

Also, remember that if you did not receive a confirmation email a few minutes after submitting your assignment, then something got messed up. Either the email never reached the mfg479@gmail.com account OR there was nothing attached to the email. In either case be sure to double check the attachment and email address and resubmit it.

Sorry Blackboard is being crazy with course files. Hopefully they can fix it over the weekend.

- John Jr, MFG479 TA

Utah Student 25 - Volunteers Needed!

The Utah Student 25 awards program that Prof. Richards announced earlier is looking for student volunteers to help with various aspects of the event. If you are interested check out the following means of communication:

Website: http://utah25.siliconslopes.com/

Blog: http://utahstudent25.wordpress.com/

Youtube: http://www.youtube.com/utahstudent25

Facebook: http://tinyurl.com/utahstudent25facebook

Twitter: http://twitter.com/utstudent25

You could also ask Prof. Richards to get you in touch with those in charge of the event.

Crunch Lunch Event at Novell Sept. 10

Prof. Richards asked me to announce this to the class.

When: Thursday, Sept. 10

Time: 12pm-1:30pm

Where: Novell Cafeteria

Cost: Members free, Visitors $25, Students, $10

Crunch Lunch is an event where 10 presenters discuss in rapid-fire, 5 minute intervals about business ideas, topics, advice, etc.

The theme tomorrow is Starting a Business From Start to Finish, which might help with writing your business plans later this semester.

They are allowing students in for only $10, price includes lunch at Novell cafeteria and raffle drawings.

See the flyer for more information like individual presenters.

MFG479 Blog and RSS Feed

I have created a class blog at mfg479.blogspot.com. This is for the benefit of those who use news readers and subscribe to RSS feeds. This is not meant to replace Blackboard, but simply supplement Blackboard's lack of RSS support. Only Blackboard announcements will be posted on the blog. You may comment on these announcements, but do not expect the comments to be checked on a regular basis, it would be best to still use the mfg479@gmail.com email to receive the quickest response to questions or concerns.

Confused about what I am even talking about? Read about RSS Feeds at www.whatisrss.com.

Thanks

- John Jr, TA