Andrew Kazlow: Russ, thank you for being with me today.

Russ Krajec: Good to be here. Love looking forward to it.

Andrew Kazlow: Okay. So Russ, we are here to talk today about a topic that to me feels like one that most angel investors, if we are honest with ourselves, don't really know what to do with. And that is patents. It's either, you know, really nice to or it's a distraction or it's. It's an amazing part of the thesis, like there's so many varying views on the power and the importance of patents for startups, especially very early on at the pre seed, seed stage.

You have dedicated your entire career to this sector, to this category. You have [00:01:00] produced, I think I saw over a thousand patents, like you have personally written over a thousand patents. Is that right?

Russ Krajec: Um, I don't know. It's up there. Um, a lot of them don't have my name on them, you know, when, uh, as the drafting attorney, but yeah, I've, I've been doing this for a little while.

Andrew Kazlow: Okay. So the point is, you know, something about patents. Here's where I want to start, Russ, explain to me what a patent is at the fundamental level, so that we're clear on what that actually means. And then I'd love to ask a couple follow up questions.

Russ Krajec: Um, we'll start with the follow up questions. I'll give it, give you more flavor on it. What kind of, what direction do you want to go with it?

Andrew Kazlow: So where I want to go with this is, what's the point? Like, should, should startups think about patents? Should we worry about patents at all? And if Yes. At what point? If no, why not?

Russ Krajec: [00:02:00] Um, So here's, you know, patents are, we all kind of have this thing in our mind or what patents are because Thomas Edison got a patent on the filament to a light bulb. He didn't get a patent on the light bulb. He got a patent on the filament to the light bulb. And. It was something that kept other people from using that same filament.

And he was able to sell more light bulbs. Um, because of that patents are, you know, this thing that the, that the government grants you, that gives you this right. And some people mistakenly think about it as a monopoly. It is not a monopoly. It is the exact opposite of a monopoly. It is the right to keep others from doing your thing. So Thomas Edison had the right to keep others from [00:03:00] using his filament. Now, they could use a different filament. They can come up with a different way of making a filament or a different material for the filament. They can sell lightbulbs all day long. Just because you have a patent on a fil on a one specific filament, it doesn't mean anything unless it is the absolute best way to do something.

And if you got a patent on the thing that is the best way to do something, not just another way, you know, one out of ten different ways to do something. then the patent will be meaningful. Patents, um, have been in the U. S. Constitution before the freedom of speech. Okay. Before your, you know, the right to, to bear arms and all that kind of thing. It's, it's way down deep as the, as a [00:04:00] core element that promotes the progress of, of science and technology, because we can get a patent that excludes other people from copying our idea, we can get that idea to market. Presumably make, you know, have a competitive advantage, but at the same time, we have to tell other people how we're doing that.

So we're going to exchange a trade secret, and we're going to get back this right to exclude. And trade secrets are the most important thing that, that is your competitive advantage. Um, and it, and there's a lot of times that patents hurt. A startup, they heard a startup when I have a patent [00:05:00] on a method to manufacture my little filament. And that method is performed inside a factory that's locked. Nobody else can see it. And consequently, if my filament competitor down the street is doing the exact same thing, I'll never have access to their factory. And I'll never be able to tell, Oh, You're using the same feeds and speeds and temperatures and pressures that I'm using. Therefore you infringe and, and we have to come to some license agreement. And so what often happens in the startup space is That you come up with some idea, you rush to a patent attorney who's more than happy to take your money, and they're legally obligated to do that. We could talk about that a little bit too, the ethics around that. [00:06:00] Um, and, and they write you, they write, they document this trade secret, they write you a patent and you go forth. And. You know, great, right? That, that works for some technologies really, really well. Consumer products that are going to be on the store shelf at Walmart, absolutely you want to patent on it, right?

Because it works in a certain way and it's easy to define. Patents on some AI blockchain nonsense that happens in the cloud somewhere. I can never tell that a competitor is doing that, right? The practicality of enforcement means that that patent tends to not have value. Um, uh, I was on a due diligence team for an angel group. Um, and we looked at it at a [00:07:00] company that had a, um, a cybersecurity offering, and they had this, this, this. thing that they put in the, in your, on your desktop. And then when these certain events happen, they triggered this one thing. And they, they caught the, the, the person who's, you know, infiltrating your, um, infiltrating your computer. And the guy went to an angel group and some angel investor sat in the back row and said, wow, that's really smart. Do you have a patent on that? And the guy said, nah, you know, I don't think, oh, I think you ought to have a patent on that. And so he goes and gets a patent application on it. And I, I asked to look at that as part of the due diligence and it actually explained exactly, this is exactly what we're doing in the, in [00:08:00] the, Um, you know, inside your computer, this is exactly how we implement it. And so somebody, you know, the, the bad guy who's trying to get into your computer, he's got a roadmap for knowing if you, you know, if your stuff is in there looking for them and it completely eviscerated the value of that company. And so as a, as a condition for us to invest. We told them you have to abandon that patent before it gets published and before Anybody ever before it ever sees the light of day and these kind of mistakes happen all the time, right? Especially in the startup space. Um, the, you know, the other mistake I see people make is [00:09:00] getting a patent on the grand idea. You know, wouldn't it be cool if I had this big system that had all these components that served, you know, that address a customer need. And so they lay out the entire architecture of how this, of how, how they're going to solve this problem. And, and these are kind of the grand idea patents. Um. These, these kind of, I, you know, first there's two problems with it. One, a practical problem is we're not in the market yet. We don't know what customers really want, what they like or anything, right? We have no data, no feedback. And it's arrogant to think that I can write down the exact solution in totality at the beginning. Because I have no [00:10:00] feedback and everybody knows that, you know, no plan will, no business plan ever survives contact with a customer. You're always. You know, thinking of your, your learning as you go, right? The, you know, the best example that is this thing here, the iPhone, the iPhone was the first phone that the first cell phone that did not have a red button and a green button. Remember back, they all had the red button for, for hanging up the green button for answering the call. And. iPhone was the first one that said, I'm going to do a touch screen interface and therefore, what am I going to do with the red button and green button? And so they had to develop [00:11:00] something that worked in, you know, in the touch screen environment that substituted for that. And what they did was This thing called slide to unlock slide to unlock was the way you answer a phone. Okay. It was not any big, super sexy, a hundred PhDs laboring, you know, it was the simplest answer. To the question and they were going down a road that nobody had been before and so because they had is a problem that nobody had seen before they were able to capture and define this is the best way to answer to answer this, solve the solution and. You know, the proof is in the pudding when Samsung [00:12:00] sued Apple, Apple countersued, Apple asserted their slide to unlock patent against Google, well, Samsung, right, the Android platform, as kind of the key Patent that defined that product. It was not a touchscreen device that had all these icons and all these tiles, and all these apps and you know, the what, the apps and the extendability and all that. That's what made a smartphone good or smart or made it a platform slide to unlock, define the device. And really as, as patent owners or as investors, the, we don't need a patent on the grand idea of touchscreen phone and tiles and icons and all, you know, all that nonsense. [00:13:00] We just need a patent on slide to unlock and we can define the whole, the whole marketplace.

Andrew Kazlow: Russ, I love something you, you said in there and I want to double click on it. The example you gave of somebody, some angel in the back saying, do we have this patented? I feel like there is this thing in the angel ecosystem. It's just a very simple framework, right? We all love frameworks because they help us think more quickly and make snap judgments.

It seems to me like there's this framework 

Russ Krajec: You lost me at make snap judgments, but keep going.

Andrew Kazlow: Think a little bit quicker think a little bit quicker. I'll say that shortcuts I think there is this framework in many investors minds whether we're honest or not patent good no patent bad patent defensible no patent not defensible Help me evolve this framework

Russ Krajec: [00:14:00] So, I mean, there's some, there's some truth to that, that, you know, if I have, if I have a company that has a patent, it sounds like somebody thought through the process of, you know, That maybe I have something that will build a moat around us. Maybe I'll have something I can keep people from competing with me.

And, and, you know, what do we want as, as angel investors or as entrepreneurs? We want, we want to keep competition out as much as we can to highlight our competitive advantage. If Apple could come in and copy exactly what you're doing and, and roll it out and, you know, you're hosed cause you'll never, you know, you can't fight those guys, but if you have something that keeps them away and gives you a competitive advantage, you want it, [00:15:00] um, it's. It's the devil's in the details though. It, it, in a five minute pitch, you go up there. Oh yeah, we have three patents and, and the, the investor in the back goes, Oh yeah, that's great. You know, that's not real due diligence. That's, it's interesting. Um, one thing I try to get entrepreneurs to do is to not answer the question of, Oh, do you have a patent on that? I, what I want to hear from them is here's my IP strategy. This is the way I'm thinking about it. This is kind of the way I'm progressing as an angel investor. Do not ever presume to know what the answer is, [00:16:00] right? We're not hiring this guy, this girl to steward our grandchildren's inheritance through, through their company. And then tell them, Oh, you have to do it this way. You have to do it that way. We're, we're hiring them because they are capable, competent, they make good business decisions. So they're going to be good stewards of our capital. And so when we as angel investors presume that they should, Oh, you should advertise on Facebook or you should do this or you should do that, we're usurping that and we're, we're creating an environment where we're hemming that person in. And not letting them run with their talents, right? What we want to hear is here's my strategy for that. Here's how I see [00:17:00] these elements. Here's what's important to me. Here's how I think about it. And if they have a well articulated strategy, whether it's getting patents or not getting patents or whatever, then I want to hear it. Um, but anybody who presumes to say you should have a patent. Oh, do you have patents on there? Don't ask that. Say, what's your IP strategy?

Andrew Kazlow: So, so let's say that that's the question that's been asked. Someone says,

Russ Krajec: I get, I get hack up along here. Okay. Keep going.

Andrew Kazlow: so let's say that someone's taking your advice and they evolved their question. Instead of asking, do you have patents? I'm now asking, can you tell me more about your IP strategy? What are you hoping to hear? How do you evaluate that response?

Russ Krajec: You know, you evaluate it two ways, right? One, one way you think, well, did they get the answer that I want them to [00:18:00] have? Right. And if they say, oh yeah, you know, we were, we're filing like hundreds of patents or whatever as a patent attorney, I think, wow, that's cool. Um, but what I really want to hear is. Are they making reasonable decisions? What's their thought process? How are they approaching this? What input are they taking in and what decision, you know, are they making a rational and thoughtful decision? We as angel investors are not going to be sitting there all day long telling them that they should be using 20 pound bond paper in their printer instead of 14 pound. We're just not. We need to let them You know, make good decisions and be comfortable with with them as stewarding our capital. It's really easy for angel investors to put a gear in that wrench or put a wrench in [00:19:00] that gear. And and. And mess up that thought process. What I'm, what I want to hear, I want to hear thoughtful, reasonable business decision or an argument. That's all I want to hear.

Andrew Kazlow: I wonder if you could give some examples, like bring this from kind of theory to practical, real world, early stage company, you know, young founder, maybe they've raised 500k. Any examples like that in your recent portfolio you can talk about?

Russ Krajec: You know, I'm what I usually get is, um, I'm on a screening committee for a couple angel groups. And what I usually get is answers that I don't like is, for example, you know, somebody says, Oh, I have, we filed four provisional [00:20:00] patents. And so I asked him, well, what's your strategy behind that? Why did you do that? Um, excuse me. I know that provisional patent applications are always wrong. There is never a good, never a good strategy that uses a provisional patent application. Uh, the whole point of a provisional is to delay getting your patent, right? And so if you delay getting your patent, you delay getting the benefits of it.

You delay the ability to license it. You delay the ability to raise money against it. You delay the ability to get acquired. You delay everything. And so either that asset was a good asset and you think it's going to be valuable and so you're going to get it as fast as you can. Put the money into it and do it right. Or don't [00:21:00] do it at all. Right. Like kind of one or the other and trying to walk, you know, walk the line between there, there's really no gray area, but anyway, somebody says they have a provisional patent. I just want to know what's your patent strategy. And based on the, the detail that they give based on kind of their, you know, they explain their thought process and their decision making, you know, you kind of come up with an opinion as an angel investor of whether, whether they're going to be able to, You know, pick between the 14 pound and 20 pound bond paper too, right? This is just an example of, will they hire the right people? Will they find the right vendors? Are they going after the right product? Are they the input that they get from their customer? Are they digesting it well and making good decisions based on that? Um, the patent [00:22:00] strategy is just one element of, or one example of how their thought process is. Give me a second here. I got, I got a whole thing of hauls to get through this, so.

Andrew Kazlow: A little post holiday recovery plan.

Russ Krajec: It's Post Consumer Electronics Show.

Andrew Kazlow: Ah, post CES recovery plan. That's 

Russ Krajec: 141, 000 of my closest friends. Every one of them sticks as a dog and I had to go through the petri dish, so.

Andrew Kazlow: I 

Russ Krajec: Alright. 

Andrew Kazlow: So I want to talk more about this provisional patent hatred that you have. And I love this because anytime someone gives an absolute response, I'm intrigued.

Explain more about the difference between a provisional patent and a non provisional patent. And [00:23:00] just, yeah, double, double click on what you said earlier for me.

Russ Krajec: so provisional patent applications, um, came about in 1995 in the U. S. when the law changed. Um, and it was perceived that, um, well, let me back up one more time. There's this gigantic international, um, treaty. That I think every country in the world, like a hundred and ninety countries are party to is called the Paris Convention and it happens and it deals only with patents. But what it says is that if you file a patent in your home country and you want to file a patent in my home, in my country, you can do so within a year. So this, so I can file in, you know, if I lived in France, I can live, I can file in France, a year later, I could come to the [00:24:00] U. S. and I can file in the U. S. It's reciprocal. Every country in the world is part of it. Even Taiwan, like Taiwan's an exception to the, the patent cooperation treaty, but everybody does this. And there's this perception back in the early nineties that foreign country, foreign companies could file in their home country and delay a year and then file in the US and then their patent timeline shifts a year. So back then, patents had a 17 year lifespan. And there were some strategies where you want to delay that, delay that, delay that, delay that forever. And then the patent will issue and it pops up out of nowhere because we didn't have this publication thing. And you'd play gotcha with your, with your competitors. So [00:25:00] I, you know, if I could delay, delay, delay, and then my patent pops up. Now it's, you know, we've got all this infringement, we can go after people and license it. And, um, Jerome Lemelson, um, with the barcode scanners in the 80s and 90s, like, had this to a T. And he made hundreds of millions of dollars licensing barcodes. Um, say way provisional patents were a way to delay that to for effectively for the U. S. applicants get that same advantage of a one year delay. Um, what has happened is that, uh, patent attorneys have used this as a club to beat up their clients. And the scam that patent attorneys run [00:26:00] is Hey, I'll file a provisional for you and 1500 bucks, right?

And no money like, Oh, you think about an invention? Let's file as cheap, cheap, provisional. And then a year later I have a completely arbitrary. an unrelated time, but it's one year date. Oh, you, you want to lose, you're going to lose all your patent rights if you don't file. And so now we got it. Now I can charge for a complete patent application. And this notion of doing a thin patent versus a thick patent is absolutely without question malpractice on the part of the attorney. They are not getting the customer's need. They'll, there's a lot of scamming that goes around this, but a patent application is a patent application has to have the [00:27:00] same information in it. And whether I file it as a provisional or non provisional, I checked the box on the filing form provisional or non provisional. And. But it has to have the same information. So the patent attorney has to do the same amount of work for a provisional or for any patent application. The only thing is the provisional cost you more, right?

Cause I got to file a provisional and then I have to go back and file the same thing that I could have filed the first time. But the thing from the angel investor standpoint is that this, this inventor. went to the patent office with this patent application and knowingly, intentionally, and deliberately check the box provisional versus non provisional. And the only difference is the cost. Which is about [00:28:00] 600 bucks between a cost for provisional cost for non provisional plus or minus, right? Whatever 600 bucks. So what that, what that inventor is telling you, the angel investor is that, Hey, I went to this, I went to the patent office and I looked at spending 600 bucks to get this patent or. Spending less than, you know, for 600 bucks, I could get this patent faster. I can have it available for licensing. I can loan against it. I can get acquired faster. All this, you know, better things happen. If I had this patent, they're like, nah. I don't think this patent is worth 600 bucks. And so every time you hear somebody say, I'm doing a, I did a provisional, it means the price different.

The value of having a patent and having a patent quickly was not [00:29:00] worth the $600. A lot of people say, well, I do provisional so that I could delay the cost of the patent. There are ways that you can delay the cost of the patent. Um, provisionals one way. But you know, at the end of the day, if you, if the patent is going to have value, don't you want to have it sooner rather than later? The other question is if, if you think it's so expensive, why invest in it? If it's too expensive, don't do it, right? You capitalize on one of your, on your go to market strategy, capitalize on your customer list, capitalize on your marketing, capitalize on your, on your supply chain and manufacturing, capitalize on your distribution. If you don't think the patent's worth it, don't do it. Right. Put that, that capital takes forever to actually mature into actual dollars. Cause it's [00:30:00] a sunk. So it's a sunk cost that takes forever to recoup. Put it in something meaningful. Wouldn't you be better off like dumping it into advertising or, or, or whatever to grow the customer base, grow the revenue stream faster. And then just keep ahead of the competitors that way. Do you have to do a patent? You know, those are a few ideas for what I don't like about the provisional patent applications.

Andrew Kazlow: Well, for the sake of time, I'll, I'll direct our listeners to your book, which I'd love for you to tell us about, uh, for more, I'm sure you go into much more detail on provisional patents in that book. Tell us a little bit about your book and then I'll ask 

Russ Krajec: Oh, well I wrote the, I wrote this book, um, investing in patents as kind of, um, um, as kind of the handbook [00:31:00] for as well as investing in patents, everything startup investors need to know about patents. And so it, it's really designed for. An angel investor to, you know, what is this asset? How do I deal with it?

How do I, what, what are best practices around it? Then, um, since then, you know, it's probably, you know, it was a few years ago. Um, we've been doing, we blue iron, my company have been doing IP back to lending. We've been doing this for about 10 years or so. Um, where we look at patents and we loan against those. And so, you know, our business is about trying to figure out, do these patents have value? Um, and just to cut you off on your next question was what is, what makes a patent valuable? It's just like in real estates, three things, revenue, revenue, [00:32:00] revenue. If you got revenue. And the patents protect that guard, guard that revenue, protect it. You got a valuable patent. If you don't have revenue, it has potential value, but not realized value. You know, wouldn't it be cool if a billion people were using my, you know, my patented cell phone app? Yes, it would be, but they're not. And, and so most startup entrepreneurs and most angel investors look at. at patents and try to figure them out in terms of valuation. And they're thinking about them in terms of potential value and not realized value. The way I look at it for startup companies is that [00:33:00] patent patents are value. They're valuable when they capture The reason why somebody bought your product, not just, Oh, it's got this patented feature over here by bought it for some other reason. The patents irrelevant. It's not. It's that I really want to capture the reason why somebody bought that product. If I can, and I have a patent around that. Now I have a defensible marketplace, right? Or a defensible investment,

Andrew Kazlow: So in the Apple example, that would be kind of this slide to unlock feature representing the touch screen functionality, which was totally different from what everyone else was doing.

Russ Krajec: right? And it also, it's more than just the touchscreen is kind of the vibe of the, of that device. [00:34:00] Right. It's, it's a cool little, it's a funk. It's, you know, it, it just has this, this feeling that it gives you when you use slide to unlock that, that no phone had ever had before it was engaging. It was tactile.

It was cool. It was brilliant. And that's why Google had to copy it because Google could have put a green button and red button on every one of their Android phones, but they chose not to and slide to unlock was so good that they chose to infringe instead of doing it the other way.

Andrew Kazlow: So Russ, I think my next question is really for the average angel out there. Clearly you guys are deep into this and your whole job is to tear up patents and what is this worth? And you know, you guys have very thoughtful in depth frameworks. [00:35:00] So if somebody wants the best, they should call you. For the average angel, considering an investment where there is some, let's call it a thoughtful IP portfolio, which includes patents.

What are some of the frameworks and maybe a few of the specific questions you would encourage an angel to spend their few hours of diligence time poking on? Like, what are the things that you would point people towards?

Russ Krajec: Um, I want to, I would spend more time looking at the business and, you know, do the economics work out? Are we capturing real value? Does. Is there a customer out there that wants to pay what it costs for us to deliver that solution? Is that solution real? Right? And do we [00:36:00] like that whole? You know, do we like, are the right people doing the right things at the right time for this company? Um, patents are one, they're, they're not a cure all. They don't, they don't mask over any of that. Um, if, if they, you know, if something, if something's missing in the business plan, the patents aren't going to solve that problem. Um, in all likelihood, if the company or not, if when the company fails and it's liquidated, will those patents have any value?

And the answer is no, unless they're infringed. Oh, excuse me. Um, if they're infringed, the patents may have some value. But that value is not going to mature [00:37:00] until typically 12, 15 years after the patents filed. That's when patents tend to have their maximum value because it takes that long for infringement to come around, takes that long for the market to adopt the idea. And so the, You know, in the short term for, for the angel investor, it's far more important that the company start making some money and can start to sustain itself.

Andrew Kazlow: So let me 

Russ Krajec: can't, then we're, then the patents might, might be interesting.

Andrew Kazlow: Russ, let me make sure I heard what you just said right.

What I just heard you say is a patent is typically a 10 to 15 year investment, meaning that I'm going to invest material, dollars, time, energy, attention to protect and create some exclusionary power around this technology today [00:38:00] for a potential payout in average 10 to 15 years from now if I'm able to successfully.

Litigate, 200, 000

Russ Krajec: Well, or license it, whatever it, every patent needs to be able to be litigated. Now, a lot of people, you know, justifiably so, like, that sounds really expensive, it's really hard, it's really painful, yes it is, okay, and that's why you have to buy insurance. And you are ten times more likely to have a patent related lawsuit than a director's and officer's claim on your insurance. Ten times more likely to have patent related lawsuits. Do startup companies go out and get patent insurance? No. But do the, do the angel investors who sit on the board say you have to get DNO insurance? Absolutely. Right. And [00:39:00] the, you know, patent enforcement insurance, patent defense insurance is commercially available. It can 200, 500, 000 a month, depending on how much coverage you get. So it's not like,

Andrew Kazlow: to 500, 000 a month 

Russ Krajec: no, no, no 

Andrew Kazlow: not bad at all.

Russ Krajec: I mean, 200. 500 or 1, 000 a month. Okay, thanks for clarifying that. It's, um, yeah, it's, it's reasonably affordable,

Andrew Kazlow: So it sounds like, I mean, what's the point of having a patent if I'm not going to have insurance around it? Because the only way you actually generate value from that patent is to either license it or pursue infringement, which is going to get expensive.

Russ Krajec: right? And, and then here's the other kind of the, [00:40:00] you know, when it comes to infringement, a lot of people think, well, I'll just my patent attorney will do it on contingent contingency. There are plenty of people that will do contingency litigation. First off, you should never, never, never have the person or the firm who wrote the patent to be involved in litigation. You need, you need a, a separate litigator or licensing professional or attorney who has no connection to that original firm because I'll tell you, I've written plenty of patent applications and you always kind of know where the skeletons are buried or where you wish you'd done a little better. And you know, you, but it's really hard to tell your client, Hey, you know, I got you this patent, but it's really weak in this area.

You can't say nobody can. Do that trustfully. So get, you have to get somebody who's separate. [00:41:00] So a different law, completely different law firm. But as far as contingency fee, the, the cost for litigation is so high right now in the U. S. that contingency fee litigation only is only interesting if they can recover 50 million. So that means the licensing revenue that I could, uh, that I could recover from an infringer needs to be 50 million. And when you, you know, the typical licensing rate might be 25 percent of profit. So you kind of do the math. Well, it's four times that, you know, they gotta be profit, profit 40 million. This is, this is a hundred million dollar product at an even bigger company. So, we do not go out, [00:42:00] contingency fee people just can't afford to go sue your competitors making five million dollars and eating your lunch in, in the marketplace, they just can't. Nobody cares. On an insurance plan, I can't. Contingency fee, you can't. And the likelihood that the patent owner ever winds up with a dime on contingency fee litigation is pretty close to zero. It's, um, you know, there's lit finance that comes in, they get three X return. The, the, the, you know, the, the waterfall capital stack on litigation is, is, brutal and they have zero interest in settling for more than what they're going to get paid anyway. So they're not going to fight for one extra dime that goes to the patent owner because they don't have an incentive to do that.[00:43:00] 

Andrew Kazlow: Charlie Munger's wisdom strikes again, show me the incentive and I'll show you the outcome. Okay, so Russ, my last question, and we'll need to drop for time, my last question Um, what are some practicals? So our audience, if somebody's made it to this point in the podcast, I think they should check out your book, your, your content, you're all over the place publicly, great content for actually evaluating a patent.

Doing a little bit of high level research on what an entrepreneur is putting in front of me in a data room. What are some of your favorite resources and practical places to point people?

Russ Krajec: You know, I'm a big fan of the idea that the best is yet to come when it comes to patents, right? I kind of coined this term, a data driven patent. And at the beginning of a startup's journey, we don't [00:44:00] have Data, right? The only data that really matters is what's the customer paying us. And if they're not paying us yet, we're guessing. And so from from an angel investors standpoint. And there's, there's certain exceptions, medical device, pharma, you know, the, the patents may be far more valuable, maybe far more important as the company matures, as opposed to a company that is likely to be shifting the product over time. If the company has a product that's going to roll out, And then based on feedback from the customer, you know, we may have a different, we may spin it this way.

We may do that way. We might bring out a whole bunch of other products, make sure that the, that the company can [00:45:00] get to product number two, right? Don't spend all the money on, on IP protection. If it's, if at the end, you know, 10 years from now, that product is a small percentage of the overall for med device where that product is the only product. And, you know, once it makes it through all the FDA hurdles, it's in production, patents gotta have them and, and get them if, if possible, have them, you know, it would be nice to have them evaluated by a third party, a disinterested third party. Um, it's not always possible and, uh, you know, a lot of patent attorneys are part of angel groups and those. You know, based on their pure qualifications as patent attorneys, they'll opine on whether or not the patents are good or bad. Um, [00:46:00] I don't happen to like that, but you know, I think there's problems with that, but still, um, make sure they get a company, make sure the company works, make sure the company can actually figure out who the customer is and what's their cost to acquire a customer. What's their lifetime value. You get those things figured out, you got a business and And then, you know, maybe you'll look back and say, you know, I kind of wish I had a patent. Okay, on the next product, do one. And, you know, and, but if you, if you plow all your money into filling up your patent attorneys. You know, corporate jet, you're not going to have any money to get there. And so, um, uh, I'm not, I think a lot of my patent attorney friends might not like me for that advice, but you got to invest in the business first. [00:47:00] So, I don't know. That was not very helpful, I don't think.

Andrew Kazlow: I love it. Well, Russ, I think one of my takeaways from this conversation is the importance of having a business. That is enduring, that is creating value, that is actually addressing a customer pain point. And that patents and everything connected to them are of secondary importance to actually delivering a good product and service.

Because if the company falls apart in a couple years, there's no value in having those patents anyway. Which would, in theory, only create value in 10 15 years. So.

Russ Krajec: Right. And those patents would get traded. You know, somebody, somebody might pick them up and for a song, right? Maybe, maybe I'll get 50, 000 bucks out of that patent. The cost that we, you know, what we invested in it, maybe we can sell them to get 50 grand back, but we're not [00:48:00] going to sell those patents and get 50 million back. You know, it's not a, it's not a backstop to a bankruptcy.

Andrew Kazlow: Yeah. I love it. Well, this has been super helpful, Russ. We will wrap there. Thank you so much for joining today. And I look forward to talking again soon.

Russ Krajec: Thank you very, thanks for having me. See ya.