Stone Soup entrepreneurs

Do you remember the Grimm’s fairy tale about stone soup? It’s the story of an itinerant wanderer looking for a meal in a village that had seen better days. The hobo fools the villagers into believing he can make soup from a stone. The wanderer starts with a stone and a large kettle of water which he puts to boil. In fits and starts, villagers contribute an onion, carrots, a soup bone, and potatoes until the end when everyone partakes of the soup. The take away being that everyone benefits through communal contribution. While a pleasant lesson for small children, it rarely works for apparel entrepreneurs. It’s a myth. I think the Tom Sawyer version of the Stone Soup story is more illustrative of what the myth means; namely that one person is likely to benefit at the expense of everyone else:

Tom gave up the brush with reluctance in his face, but alacrity in his heart. And while the late steamer Big Missouri worked and sweated in the sun, the retired artist sat on a barrel in the shade close by, dangled his legs, munched his apple, and planned the slaughter of more innocents. There was no lack of material; boys happened along every little while; they came to jeer, but remained to whitewash. By the time Ben was fagged out, Tom had traded the next chance to Billy Fisher for a kite, in good repair; and when he played out, Johnny Miller bought in for a dead rat and a string to swing it with–and so on, and so on, hour after hour. And when the middle of the afternoon came, from being a poor poverty-stricken boy in the morning, Tom was literally rolling in wealth. He had besides the things before mentioned, twelve marbles, part of a jews-harp, a piece of blue bottle-glass to look through, a spool cannon, a key that wouldn’t unlock anything, a fragment of chalk, a glass stopper of a decanter, a tin soldier, a couple of tadpoles, six fire-crackers, a kitten with only one eye, a brass doorknob, a dog-collar–but no dog–the handle of a knife, four pieces of orange-peel, and a dilapidated old window sash. He had had a nice, good, idle time all the while–plenty of company– and the fence had three coats of whitewash on it! If he hadn’t run out of whitewash he would have bankrupted every boy in the village.

The last line says it all. I run into a lot of Stone Soup entrepreneurs, most of them have patents, a patent in the making or the Greatest Idea EverTM. They think these are like the proverbial stone in the stone soup story. Unfortunately, there’s quite a few people out there who make a business of telling people this story will work in real life. There’s a whole culture around it. There’s lots of reasons this won’t work. Here’s a few:

  • It’s dishonest
  • It presumes others are just as desperate.
  • Unequal contribution of resources
  • Attempting to appeal to the greater good
  • Mismatched expectations
  • Subsidizing bad decisions

It’s dishonest:
It’s dishonest because you are the only person who believes this will work. Expecting others to believe it implies you think others are foolish enough to fall for it. That’s an indirect insult to someone you’d hope would invest in your enterprise. You can’t build meaningful relationships by misleading anyone including yourself. If you will deceive yourself at the outset, why or how could you be truthful with others later?

It presumes others are just as desperate.
In real life, others aren’t as hungry or as bereft of resources as you are. If they were, you wouldn’t want them. They’re not wandering, they have homes, so an outsider coming in trying to outsmart everyone by reallocating resources is likely to draw suspicion, not cooperation. In real life and trying times, the villagers would have the cooperative thing worked out already for a member of their community.

Unequal contribution of resources
This nearly always applies to patent holders, patent seekers or others with the Greatest Idea EverTM. Here’s an example:

My wife and I have started a denim jean line that derived from the most popular trends worn today. We are currently searching for an Investor Licensing Manufacturer to develop, market and distribute these jeans that will take over the industry once produced. The line contains multiple styles for men, women, and kids. Should this be of interest to you we would like to speak to you in more detail about your company and how you plan to make this happen.

If you have a patent (or the Greatest Idea EverTM), you already have several strikes against you. This is not the proverbial stone in stone soup. The costs of executing an idea -what you’d like a contractor or pattern maker to help you with- are far greater than the costs of idea creation [strike one]. If you understood this, you would have worked on execution before the patent (98% of patent holders never make money on their patent)[strike two]. But the biggest problem of all can be self deception if you think you’ve accomplished something like “successfully” patenting. Thinking your strategy has been successful thus far virtually ensures you will continue on the same path [strike three, you’re out]. Relying on the stone soup model is not a partnership if the contribution of resources is not equal.

Attempting to appeal to the greater good
This is usually the last ditch effort attempting to appeal to one’s higher nature. If someone were a good person (which questions the morality of profit), they should partner for what amounts to nothing in the interests of the greater good. This is a contradiction because they do think it’s okay for them to make a profit and certainly intend to. The contradiction lies in tentatively holding out the carrot of potential return on profits but ever ambiguous and never specifically defined.

Mismatched expectations
It plays out well on paper. You beg or borrow fabric, get a contractor to kick in free labor and you promise to pay a rep when your ship comes in. The problem lies in assuming everyone has the same revenue model you do. Contractors and reps need cash flow now to keep the doors open; this isn’t their part time job they do on the side. Anything else amounts to a risky long term investment when working with DEs under typical circumstances can be risky enough. If they want to invest in something, they likely have ideas already. Partners are reluctant to commit to a percentage of profits or shares in the company because there’s too many ways to cook the books even if sales came through.

Subsidizing bad decisions
Your partners have little control over how you manage the effort. Somewhere in your journey before reaching this point, someone told you most of these things. If they didn’t, you need better friends (which calls your own credibility into question). It’s more likely someone did and if you didn’t listen then, how can others be assured you will in the future? In affect, partners become bill collectors, someone you owe money to. People hang up on bill collectors. But most of all, working for free -because it’s not costing you anything at present- amounts to a subsidy on future wasteful decisions. Without financial commitments, it permits you to waste money on other aspects of the project that in our estimation are best delayed.

Summary:
It’s not that you can’t find people to help you but be aware they need money to stay afloat to remain in a position to provide services to you. The best strategy is to listen readily, implement those suggestions and when they see you have, they’ll see you’re worth the investment and trust you more. You’d be surprised what could come your way. Lastly, don’t overplay your hand; patents aren’t a negotiable instrument.

Related entries:
How to find investors for a clothing line
Investing in a clothing line
Investing in a clothing line pt. 2
Why contractors won’t partner with you
Interview with an inventor
Partnerships
Don’t borrow money to start a clothing line
Off site: Why I don’t want funding

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6 comments

  1. Lisa B. in Portland says:

    Good post, as usual, Kathleen! I remember the Stone Soup story and I just recently read Tom Sawyer and Huckleberry Finn. I thought it was rather clever, if not very nice, that Tom got all his friends to whitewash the fence. I think it’s lame that the denim guy said, “…how *you* plan to make this happen.” as if his designs were so awesome that you would be drooling all over yourself to get a chance to make the patterns or do whatever for him–as opposed to with him.

  2. Anonymous Coward says:

    Great post Kathleen! This general concept applies to “sewing enthusiasts/ home sew-ers” as well.

    How?

    Those (mostly) horrible “Fabric Co-ops” to whom enthusiasts blissfully fork over handfuls of their hard earned money, while the “Co-Op Leader” intimates that they make little to no profit, and are providing these fabrics virtually out of the goodness of their golden little hearts. Yeah Right. When the cutting fees, shipping fees, and other assorted add-on fees are assessed, the hapless “enthusiast” could have bought it retail, and not have had to wait weeks or often months, for delivery !

    I’m not against selling fabrics at a discount. I try never to pay retail for anything, LOL! But these Fabric Co-Op people who have their “members” believing that they only make teensy-tiny profits for the greater good of Home Sewing just disgusts me.

    I am not a fabric retailer. I just think it is wrong that (most) of these co-op “leaders” mislead their “customers”. And you know, that’s the real pity. Fabric Co-op “members” are made to feel so privileged and special to be buying from the co-op, that most really don’t think of themselves as “customers”.

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