I learned at a recent Board meeting, of a very successful company, that MVP also stands for Minimally Viable Product and that this MVP can be a better product to initially take to market than the more perfect one which some of the executives were willing to wait for. Overhead continues while the company waits for perfection to be developed. Pursuit of perfection delays product introduction and can be responsible for of missing market opportunities.

Therefore, as soon as the marketing of the MVP proceeds, the development of a Significantly Better Than Minimally Viable Product (SBTMVP) product commences. The path to a company’s success and a customer’s increasing product dependence, is the company’s development of a series of SBT’ products. Indeed, both commercial and individual success is assured if their actions result in a series of Significantly Better Than somethings.

Successful management of marketing and product development is an exercise in iteration. A software program 1.2 is usually a better product than 1.0 or even 1.1, as customer use produces the complaints and raves which allow the producer to improve the product, serving more users more completely.

What do the above observations have to do with the use of royalties by either investors or royalty issuing companies? The answer is that the validity of “Good is Good Enough” is a matter of defining “good”. The definition of good has to include the absence of the possibility of large loss of money or the loss of a business owner’s control of a business.

For the investor it is difficult, if not impossible, using our approaches, for there ever to be a large loss of capital resulting from the purchase of a royalty from an established company. It is possible for other forms of investment to be catastrophic. Royalties are not likely to produce Unicorn level results but are likely to generate highly satisfactory income level results, with far less risk of capital loss than in the case of other traditional or alternative investment offerings.

From the business owner’s perspective shares of the business should only be sold by the business owner if the buiness owner doubts the magnitude improvement in the valuation of the business being suggested to prospective investors. If there is confidence of valuation increase the owner should be willing to burden the company with a profit margin reducing royalty while the funds received for the royalty are being utilized. On the path to important wealth creation “good is good enough” in the obtaining of non-equity dilutive financing. The only type of funding better for a business owner that a fairly structured royalty is a grant or award, in other words, free money.

 

Arthur Lipper Chairman British Far East Holdings Ltd.
© Copyright 2019 British Far East Holdings Ltd.. All rights reserved.
June 11, 2019.

For more information contact – chairman@REXRoyalties.com

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