How to produce the next startup unicorn with patents and growth
Let’s talk about a data storage startup called Infinidat and how they used patents to tie together a strong business and technology strategy in order to produce a data storage unicorn.
Infinidat is a unicorn. On April 29, 2015, the Wall Street Journal reported that the data storage startup Infinidat raised $150 million at a valuation $1.2 billion. That welcomed Infinidat to the tech unicorn startup club.
Infinidat was founded in 2011 by Moshe Yanai, who is also its CEO. He had two previous data storage startups, both of which were bought by IBM — the last one in 2008. So he has a lot of experience in the data storage world — and he knows what the big guys are up to.
Infinidat’s strategy has been to create super reliable combined data storage hardware and software — claiming 99.9% up time. It spent a lot of time and money developing its superior product, so Infinidat certainly didn’t want to allow any of its competitors into its market.
To combat copycats and protect its radical new technology solutions, Infinidat has filed more than 100 patents. By filing so many patents, Infinidat has locked down its market and technology niche. Competitors simply have no room to get in because with all of those patents, Infinidat has created a patent thicket.
The phrase “patent thicket” is actually used by lawyers and patent attorneys. It refers to a collection of patents that is so massive and covers so much technology, that it is almost impossible for any competitor to get around them. It represents the “holy grail” of patent protection — and Infinidat has achieved it.
Now rivals can’t copy Infinidat’s technology in software or hardware. Infinidat also blocked new entrants to its market — which helped it to achieve that high valuation with only 100 customers.
You read that correctly — only 100 customers!!!
Of course business is growing because Infinidat makes great products with fantastic reliability. Already a growing proportion of its business are repeat customers. But for the very large customers of Infinidat, like for example Bank of America, buying from them brings peace of mind and stability. If they tried to buy from a competitor with a similar product, they’d have to worry about all of those Infinidat patents. For them, it just makes business sense to buy from Infinidat.
So what if you want your startup to be like Infinidat? Well for starters, you need to file early and often for patent protection. Infinidat filed for over 100 patents in the past 4 years, covering every aspect of its technology. If a competitor might want to copy some part of its technology, Infinidat has already filed a patent for it.
Also super important to mention, Infinidat coordinated its patent, business and technology strategies. Patents are ultimately a business tool so they are only useful as far as they support your startup’s business goals. Patents should protect the great solution that you bring to your customers, not just some cool technology.
One way to test whether a patent is useful? Ask whether a patent that you want to file would protect the heart of your business — the core of business that if you lost it, your startup would fail. If the answer is yes, then you should file for that patent as soon as possible. Remember, the more patents that your startup files, the harder it will be for rivals to steal your market. And of course, increasing your startup’s valuation by a million dollars or more with a patent doesn’t hurt either!