Twice in my career, I’ve dealt with intellectual property (IP). Both times, I came out with one big realization: IP isn’t the holy grail investors think it is—especially when scaling hardware.
The first time, I was buying a license to manufacture wind turbines. It looked promising: a ton of encrypted files, sent to our HQ with much fanfare. But when we finally cracked open the IP treasure chest, we discovered it only explained how to build one wind turbine. The know-how to manufacture 100? Nowhere to be found. That, we had to figure out ourselves.
The second time, I was acquiring a lithium-ion cell company. This time, the IP was valuable—not because of patents alone but because the company had spent years running a factory, mass-producing cells using that IP.
Here’s the thing about IP:
🔑 It’s Not ManufacturingScaling isn’t about inventing—it’s about perfecting. Making something 1,000 times consistently, with high quality and low cost, is a skill that no patent can teach. This is where Chinese manufacturers dominate: not through flashy patents, but through relentless practice and operational expertise.
💸 Protecting IP Is ExpensiveThe more patents you file, the more likely you’ll face legal challenges. Patent trolls and competitors alike can bleed your company dry in court. Unless your IP is both groundbreaking and indispensable, the costs can far outweigh the benefits.
So, Is IP Useless?
No, not entirely. It has value in two cases: 1️⃣ When you’ve made a fundamental technological breakthrough—the kind that took millions to develop. 2️⃣ To boost your valuation at fundraising. Investors love a well-pitched “IP moat,” even if it won’t solve your scaling challenges.
The Takeaway
IP might impress investors, but it won’t build your factory or scale your startup. The real moat isn’t a stack of patents—it’s the skill, know-how, and operational mastery that comes from rolling up your sleeves and making things work at scale.
Are you navigating the tricky waters of IP, scaling, or manufacturing? Let’s talk!