Chocolate and Gold Coins

Thursday, November 02, 2006

Pumpkin Carving Kit Part II

A year ago, I wrote this nice piece about my son’s Halloween pumpkin and the nice pumpkin carving kit (Pumpkin Masters) he used to carve it. In that piece, I wrote of the reasons why an entrepreneur might have a great idea (like the idea to create a pumpkin carving kit) but still be reluctant to turn it into a business. I wrote:

It seems easy to believe that this was an obvious winner now but there are always a lot of questions to answer before a person with an idea becomes an entrepreneur:

  1. Is there a market here? In this case the market is extremely seasonal – this makes it risky.

  2. Do I have the lowest cost technology? If a competitor can make hand jigsaws for one-half the cost your supplier charges, you will be out of business quickly.

  3. Do I know how to market this product? Will supermarkets stock this item? You might produce a quality product that languishes in obscure shops for years until some bright fellow sees it, sees no patent, and makes a knock-off that he successfully markets in every supermarket.

Well, just this week I had to buy another pumpkin carving kit (we lost last year’s). I went to store to store looking for this nice kit we had last year. All I could find was a cheap knock-off. It cost only $5 instead of $10 but it wasn’t as good. Some of the patterns were of very poor quality and would have been impossible to create: the pumpkin would have collapsed. The carving saw was not the same quality as last year’s saw. It was just a cheap knock-off that was successfully marketed by CVS (the big drug store chain) and perhaps some other big chains to take over this market.

Next year I will plan ahead and get the real kit if I can find it. But it may be that Pumpkin Masters will be out of business by then. They did the hard work of showing that there was a market for pumpkin carving kits only to find that it will be the knock-offs that will get the market.

I feel that there might be an intellectual property right that is missing here. A firm that creates an entirely new good (not a minor improvement in an existing good) that nevertheless is not completely patentable should be given a short period – maybe five years – to market test their product before the knock-offs sweep in and enjoy the fruits of that hard work. This would give the creators of entirely new markets a brief moment of protection before the competition gobbles them up. Otherwise new markets never get created.

I wrote that there were never pumpkin carving kits when I was a kid. Now I know why. It is only just dumb luck that they exist for my son.


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