Keeping it in the family
By Simon Young,
How Grant Ryan uses licensing to build companies and partnerships
Grant Ryan admits he has a short attention span. He just can’t stop starting businesses. Those businesses license ideas and technology from each other in order to grow.
It started with GlobalBrain, the company Ryan sold to US broadcaster NBC for US$32 million and then bought back again (for a song) a few years later. That company is now called SLI Systems. Ryan also co-founded another business, Eurekster, the power behind the Swicki search widget on many websites. “Recently Eurekster licensed some technology from SLI Systems that enabled Eurekster to create a niche,” says Ryan. “We’ve subsequently been able to raise $10 million. Licensing has proven a nice enabler.”
In fact, Eurekster was built with two licensed technologies—social networking IP from RealContacts and search technology from SLI Systems. “If we hadn’t licensed technology from SLI and RealContacts it wouldn’t have been able to start,” says Ryan.
Ryan sees patented technology as just another asset. “In the case of SLI Systems it was making good money using that asset in a particular part of the market,” he says. “There was another opportunity in a completely different part of the market that SLI wasn’t set up for. We saw the opportunity for them to potentially gain some benefit out of licensing in a different subset of the market.”
It’s important to clearly define the boundaries of a licence, otherwise licensing partners run the risk of competing where they should be partnering. “There are certain businesses Eurekster is restrained from operating in,” says Ryan. “We use licensing to partner with others in a lot of cases. It’s mutually beneficial.”
Ryan says he’s still trying to figure out when is the best time to license. “When I started my first company, I thought it was just a matter of writing up a patent and then licensing,” he says. “We found that companies are too busy, they want to buy something that works. They didn’t just want the product, they wanted the team that was working on the product.”
In the case of GlobalBrain, that meant selling rather than licensing. But it’s up to you to decide what kind of business you want, advises Ryan.
He also warns against expecting too much from licensing. “The skills required to innovate and create something new and interesting are quite different from the skills needed to turn them into an economic engine,” he says. “Ultimately the organisations that can commercialise the idea end up making the majority of the money—and they should.”
On the other side of the coin, licensing can effectively create passive income from IP that would otherwise sit on the shelf. “The vast majority of patents earn zero revenue,” Ryan says. “If you can generate revenue from licences, it’s fantastic.”