Flipping Design to pump out $73M in royalties
R&D, not new product development is a lengthy effort in any companies growth. Typical large scale pharmaceutical and manufacturing firms have between a 10% and 13% investment of net revenue back in to R&D and a team of individuals who convert R&D into patented and legally defendable intellectual property securing these products positions in the creation of platforms and future products. And that’s exactly how Lonnie Johnson was able to create 73M in total royalties on his initial manufacturing partners revenues of almost 1B in revenue from his Super Soaker line.
The Super Soaker Product Development Story follows the pattern of movie-esque arcs: a NASA engineer, 6yrs of prototype development and finally a manufacturer and marketing firm who (based on product design and mold costs) must have invested at least 2012 $300K in the creation of the 1st run, 1st item production models which went on to sell almost 1B in product sales. Johnson’s typical 2% royalties earned him $20M in royalties on Larami’s $1B in sales and a further 7.3% or $73M more in royalties after the acquistion of Super Soaker from Larami by Hasbro and clearly this is before legal fees. And all of this based on the idea of pumping air into a water vessel just as Lonnie pumped out of his design almost 100M in royalties from his design.