Your Team Is Not A Cost, It’s An Investment

Jeffrey Madoff: This is Jeffrey Madoff, and welcome to our podcast called Anything and Everything with my partner, Dan Sullivan. Today we thought that it might be really interesting to pinball around some of the ideas and concepts that we've talked about over the past couple of years, really, and go into them. We have no idea, Dan has no idea what I'm going to pull up, but somehow I think he's going to manage to respond anyhow. So Dan, you know, you and I, as we normally do, let's say already it's been like 40 minutes that we've been talking before that we even did this. And you had started off as we were talking, we were talking about individuals we know in business and how they look at things. And you had a great quote. And I'd like you to explain where the quote came from. But the quote was looking at something as a cost rather than investment.
 
Dan Sullivan: Yeah, well, for me, it usually comes up where entrepreneurs are not good managers of people. They're not good leaders of people. It's not a question of managing people. They're not good leaders of people. And periodically they'll come to a conference. And oftentimes, you know, I can remember people coming to a Strategic Coach workshop and they're saying, yeah, it was a so-so quarter. I had to fire my whole staff. And we're not talking about 500-person companies here. We're talking about, you know, 10, 15 people. And they didn't fire everybody, but in their minds, they wanted to. And what I've noticed, and we're sort of in the opposite boat because The Strategic Coach right now, we're more than 25 who have more than 20 years, and we're starting to get some of them. You've met Shannon Waller. She's 33 years.
 
And as a matter of fact, we're doing a book project. You and I are doing a book project. And we had three constants of my team on the interview, the Zoom interviews, where we're developing the book content. And I remember the person who records the Zoom and make sure that the Zoom gets properly processed, she was talking about she had been 24 years. And he said, you've been there 24 years. And then my cartoonist who does my quarterly books, he's 26. And then Shannon Waller, who was doing the interview, was 33 years.
 
So it strikes me as there's a different approach to human beings taking place here. This is a long-time thought. I said, you know, when it comes to human beings, I never associate the word cost with human beings. Human beings can only be investments. Having said that, you can make bad investments in people, okay? So they're either a good investment or bad, but they're never a cost. And the reason I say that, Jeff, just as my first volley back, is that if you're thinking they're a cost, you'll communicate that to them. You'll communicate to them. And if they feel they're a cost, you've just deprived them of all their creativity.
 
Jeffrey Madoff: That's right. And that takes us, I think, right smack to the next question, which is our concept. I believe that the main enemy of creativity and what creative people never want to deal with, it's the most insulting thing to deal with, is indifference. You know, if you are creative and people are indifferent to your work, you're either doing the wrong kind of work or you're around the wrong people. And a lot of people, of course, are competing for attention all the time. But creative people do want you to pay attention to their work. So we all do it. I want audiences in the theater to see my play. And so creative people compete with other creative people for attention. But what is your thought about indifference? Or do you think you have to love something or hate something and it's binary? Or what do you see as the most damaging response that a creative expression can get?
 
Dan Sullivan: Well, I mean, if you're on the receiving end of indifference, then you feel taken for granted. In other words, you can't shine. People want to shine, you know, and I think that's it. Noticing people doesn't take a long time. I mean, you can just make a real comment about the quality, you know, of how impressed you work, and it can take you 15 seconds to say it. That's like a full tank of gas for three months. When you have people on your team as an entrepreneurial owner and founder, they watch you like a hawk. They watch you. You are under observation 100% of the time when you're the owner and the leader. I think there's a point of that what you're looking for is great performance, and it comes in many different forms. Great performance comes in many different ways. You would never look at a cost as a great performance.
 
Jeffrey Madoff: But yeah, I'm proud of what we paid for that.
 
Dan Sullivan: Yeah. Yeah. Yeah. You cost me a lot, but I think you did a good job. You know, I mean, somehow the second part of the compliment is missed. I only remember if nobody nobody wants to be considered a cost. Nobody wants to be thought of as a cost, and they never want to tell it. But I would say that if you even mention to someone that you're seeing them as a cost, you've lost about 80% of their value as an investment.
 
Jeffrey Madoff: Yeah, because another phrase that comes right after cost in business is cost-cutting.
 
Dan Sullivan: Yeah, cost-cutting, yeah.
 
Jeffrey Madoff: And all of that is devoid of the humanity that you want people to be able to express. And people complain, a lot of business owners complain that there's no loyalty. Well, obviously Coach is a counterexample to that. But I think it's because of the way you treat people. And nobody wants to be around people that always blame others for the problems and fail to recognize their own contribution to it.
 
Dan Sullivan: I'm going to ask you a counter question on this. You've met great talented people who on their own are seen as real stars, but they never have stars around them. In other words, in their company. What I'm talking about here is there are people who are real genius. They have genius-level talent. And they've made their way in the entrepreneurial world because they do have genius talent. But if you look back stage at what's happening, it's very toxic. I mean, front stage, it's exhilarating, but backstage, it's toxic. Can you think of a situation, I mean, just you've got a half a century of experience in the entertainment world and the production world and everything else. Have you known people that somehow you say, if only the excitement that the customer or the audience feels front stage, they could have moved that back stage too so that people were, there was that same sense of excitement backstage, but it isn't, it's toxic.
 
Jeffrey Madoff: Yeah, I've seen that a few times with major global companies. And I think the one thing is the counter to what I just said is, well, but look how successful they are. So it's a legitimate claim, but it doesn't mean that's the kind of environment that you'd want to be in. And what could it have been if there was more encouragement? So on, you know. So I think that, yes, I have worked with companies that the front stage presentation is really good. And back stage, there's so much competition for approval that many company heads that I have seen, they mistake silence for agreement because they don't want to be called out in front of others in these major meetings that I've been in.
 
And then there are companies that, and since this is a high praise, I can mention the name, a company like Patagonia, where the mission was clear from the beginning for Yvon Chouinard, what he was going to do, what he was going to do with the company. And so there was highly motivated staff because he walked the walk, talked the talk, and their front stage messaging was the same back stage. And I think that's harder to find. But one of the main differences between, for instance, Patagonia and many other companies that I've worked with is, they're privately owned. So they don't have to deal with …
 
Dan Sullivan: Quarterly.
 
Jeffrey Madoff: That's right. That's right. Because all growth isn't good. Tumors grow too. And so I think that it can be both highly profitable and not toxic, but that cuts to something else, which I'd like to toss back to you, unless you wanted to comment on what I just said.
 
Dan Sullivan: Well, I think it's a crucial distinction between privately owned and publicly owned. Okay. Because publicly owned companies want to see scaling and why they became important enough, important to be a public corporation was probably because of quality. Okay, they were profitable and they were quality, and everybody says, well, I can see 10 times here, I can see 50 times if you do this and this and this. But invariably, the venture capitalists, the Wall Street in general, the public markets, their first thought is, we're not seeing enough profit, so we're going to have to cut spending to get more profit. And short-term, it works, but beyond short-term, it not only doesn't achieve quantity, but it destroys the quality that got the thing going in the first place.
 
First of all, I think there's a right size for every company. You know, not every company is scalable in terms of its operational company. Like, ours is not scalable. I mean, we've grown a lot. We're 35 years in, and we're about 250 times bigger than we started. But you have to do that on the basis of the first year. We've been profitable. We've had two years when we were even, but all the other years have been profitable. But our chief condition or chief thing is we want to grow unless we lose quality. And then we won't grow until we can find a new way to expand the quality. And that might take a year, that might take two years before you can do that. I don't wanna be answerable to anyone outside of the company for that decision.
 
Jeffrey Madoff: Right. Yeah, well, I think, you know, you and Babs are the company.
 
Dan Sullivan: Yep.
 
Jeffrey Madoff: And that makes a difference.
 
Dan Sullivan: We're certainly the bank.
 
Jeffrey Madoff: Uh-huh. Yeah. There's one side we're looking at it from, which is the business owner. And then there's also the side of those creatives who are involved in a company. And I remember when I was a kid, I would be asked, not by my parents, most often by certain teachers that I didn't get along with, you know, the phrase was, why did you do that? And there's different ways, you know, to say that, but it always seems kind of accusatory. And why you did something speaks to the issue of motivation. You know, it's internal. Like why did you fire your staff? And well, if the objective, which is cut costs, that's external. But I think it's one of these things where the internal happens first, things aren't going right, you feel they're not going right, and motivations are only internal, objectives are external. So how much do you think, and I'm trying to form this question now, figuring out somebody's motivation for doing what they do? I mean, I'll ask you, what was your motivation for creating Coach?
 
Dan Sullivan: You know, and that goes back way before I started a business. You know, you worked for your family when you were in your teens, you know, when you did that. But as soon as you left home, you were an entrepreneur very, very quickly after you left home. I mean, you went through college, but then you started your first company. I'm asked this a lot, not so much anymore because I don't give public speeches to groups who aren't target market for us, so everybody that I'm talking to—it's been years since I've been in a presentation where the people in the audience were not entrepreneurs. But a statement was made that the only thing that entrepreneurs care about is money. And yeah, that's not been my experience at all of good entrepreneurs. I mean, there's always proof that they can find to justify their claim.
 
But what I've found is that the entrepreneurs want freedom. And the first thing you want freedom of is your time, okay? And what you realize is that time has to be very valuable that you have, and so it has to make money. So you have to have freedom of time, and then you want freedom of money to free yourself up, and then freedom of relationship so that you enjoy who you work with, and you also enjoy who you're selling to, and then freedom of purpose. But going back, you know, I mean, you really introduced a major subject in the difference between public and private. When you said that, that's a vital distinction. Fortunately, we live in a country where a lot of encouragement is given to people to leave large organizations and start their own company. I mean, there's massive rewards in American culture for doing that. But oftentimes they get so hardwired into the money aspect of their business that they actually get trapped by their business.
 
So we were talking about people who, you know, it was sort of a trigger for this conversation that I fired all my staff. Well, they feel trapped. They want to grow, but they haven't understood that the staff they're firing was the only possible resource they had for freeing themselves up. So they think a new set of people coming in will free them up, but it never happens. The other thing is I'd like to introduce a concept here is, what is the overall endpoint for the entrepreneur? What is the overall endpoint? You know, what is it that you're striving for, period? You've had the experience and I've had the experience. There's two big ones that I notice that you're motivated by.
 
One of them is you're motivated by status. You're very, very motivated by status and you were born without any. So, you live in a part of town and you know what the really good part of the town looks like, and you weren't born into it. You know, the neighborhood, the homes, the clubs that go with it, and all the perks that go along with living on the right side of town. So you've got a standard in mind that you've made it, but it's a status measurement. It's not actually a creative goal. It's not a value creation goal. It's a status goal, and you want to be there, and you want to be invited to the right clubs, and you want to be able to join the right clubs, and club being a general term for a lot of different rewards. And once you get there, life stops. Life stops. And then the business that allowed you to do that is seen as a bit of a burden, a bit of a weight. And you would like to spend more time on the development of your social world than you would your economic world.
 
I had a hedge fund manager in Toronto who just sold his company, he's mid-seventies, and he sold his company. He was an early investor in things like BlackBerry, which was a big, major corporation, and Apple did them in. But BlackBerry was on the way to being a major company. And I said, did you lose money on BlackBerry? He says, no. He says, I did really well on it. And I said, it was really growing when I exited. And he says, why? He was talking about buying a professional hockey franchise. And I says, the moment anybody starts talking about owning a franchise, you know their growth stage is over because they're looking for the status of owning a, you know, for a Canadian especially, that would be a big deal. And I've noticed that too when I first started coaching in the 70s, I'd see people and they grew and grew and grew, quarter after quarter, year after year. And let's say I had two of them and one of them at a certain point just stopped. And they drop out of Coach really quickly after they do that.
 
And the other one, I had Thanksgiving dinner a week late, American Thanksgiving. Then I had a financial wealth manager there, and he started with me, and I've seen him every quarter since July of 1987. 37 years, and he's just growing and growing. He's about 72, 73 now, and it's nothing but growth. So the difference is status or growth. If you're a status entrepreneur, at a certain point, you'll see your staff as costs. You'll want to sell your company and have them be someone else's problem. But if you're growth, you keep reinvesting, you keep reinvesting, you keep reinvesting. So they can't be costs. They can only be an investment. And they respond. They respond.
 
Jeffrey Madoff: How do you mean they respond?
 
Dan Sullivan: No, they grow. If your goal is growth and you treat them as an investment, they'll grow. Or they'll go through the same status thing. They'll get to a point where they think they have status, and then they don't have to grow anymore, and then they go.
 
Jeffrey Madoff: Well, so the status metric that you're putting into that, which I agree with you, is consistent with what we've talked about in terms of how you evaluate where you're at in your life. And it's not what have you achieved in terms of status, it's where are you today as opposed to where you were five years ago.
 
Dan Sullivan: And that's the important… It's always self-measurement backwards. It's always self-measurement.
 
Jeffrey Madoff: Because status, there's always gonna be somebody with more money. And what is power? What is power when you get it? Is status power? Is power status? Because to me, power's got two components. And it's the ability to either produce change or to prevent it. Both of those are power. And I think when you are, I'll say this dramatically, but hopefully it makes a point, when you are at war with yourself, that you want status so you have achieved power, you're no longer looking at that measurement compared to your past self and what you might desire for your future self and how you'll get there. It all becomes a game of manipulation because you are more interested in the exercise of power. And my motivation is gratification for what I do, that I feel good about what I'm doing, that I'm excited about the work that I do, the people that I meet. There's nothing Pollyanna about that. That's been my entire career. And that's fun. I've never thought about status. That just wasn't a thing to me because I saw it as kind of hollow. But do you see the same connection that I was saying in terms of comparing yourself only to yourself? Because you speak about that a lot, which I think is a great insight.
 
Dan Sullivan: Yeah, I'm the only measurement. It's a major theme in Strategic Coach. We call it The Gap and the Gain. We have to measure achievement. We have to measure progress as humans. It's just built into our brain. We're spurred onwards by our circumstances and we’re spurred onward, you know, by necessity. I had a writing, you know, collaboration with another person. And the nature of the collaboration was to get that talent and to get it focused. All the money that would come in for the successful project, I gave to the other person because I wanted the capability. So I would say I'm motivated by greater capability. Capability is the ability to do things more.
 
We have a formula for that, that you see a new capability, you commit to it. But between the commitment and actually having the capability is a period of courage. So it's commitment, courage, capability. And then as a result of having the new capability, you have greater confidence. And with the greater confidence, you can make an even bigger commitment to a higher capability. And it's, you know, lather, wash, rinse, re-lather, you know. And that's my whole life. It's a constant. And it's my capability. It's my teamwork capability. It's the collaborative capability that I have with people outside of Strategic Coach. And all my satisfaction and all my measurements and my comparisons is within that framework. Right now, I think I may be seen as the early pioneers of entrepreneurial coaching. And I'm seen that way mostly because the rest of them are dead. I can't remember a single person who was doing anything that looks like what I was doing in the 1970s who's still around.
 
Jeffrey Madoff: Well, just the mere fact that you're breathing and they're not, that's a distinct advantage.
 
Dan Sullivan: Yeah. And the reason is there's a stopping point where they are appearing in conferences all the time and they're being televised or being interviewed and everything else. And I know that all the time that they're spending doing that, they're not growing anymore.
 
Jeffrey Madoff: Well, so that raises another key point to me, is that whether you're the kind of person that decides to fire everybody in your company, or doing some kind of a purge of what you're doing or whatever, oftentimes those people don't look at other people in terms of thinking, what do they need? What are they getting out of this? They only look at what they're not getting from these people. And so there are different reasons why you're not getting what you need from somebody. Maybe you're not communicating clearly. Maybe the environment has become so toxic that people only do what they need to do to maintain their job, and you don't even know it, they already have a foot out the door. How important is it, do you think, is the ability to get out of your own head, and into the heads of others? And I'm not thinking about just how to sell them something, but how to create that kind of collaborative team where there's a longevity to the people in the company. Because as you said, I mean, just to give somebody a compliment, just to acknowledge their presence, but how important do you think it is to get into their heads and have an idea of what that is?
 
Dan Sullivan: Yeah, there's a scientist, he's a very interesting man, his name is Joe Heinrich. I can't tell you which university he's actually at because he's fully tenured at four of them at the same time. And he's got this idea that why humans are different from all other species. And he said, if you look at animals, let's look at animals that kind of look like us, apes, monkeys, gorillas, you know, they're kind of on the way to being human, but they're not human. And he says the reason is that their entire capability of cooperating with each other is hardwired for them to birth, but it never really changes during their entire lifetime. They can work in groups, they can do things like that, but from one generation to another, you don't see any change.
 
And he says humans it's always unpredictable what humans are doing. And he says sometime in the past, the individual intelligence of humans got to enough that they could make a jump and they could see, you know, If I can think like this other person, we can collaborate in a way that we haven't been able to collaborate before. If I can just see what this other person's after, and we take what they're after and what I'm after, we can create something new. And that's collaboration. And he said, it's a long time. He thinks it started a million years ago, where you can see a distinct separation between humans.
 
Well, I see it in the entrepreneurial world because you're told that entrepreneurism is all competition. You know, you're competing here, you're competing there and competing there. And yet, where we have our top entrepreneurs in Coach, it's all collaboration, that you've taken care of your business, it's profitable, it'll go on being profitable, it'll grow the way it is, and they're doing something different for the same customer that you're doing. You're not competing with them for the customer, but each of you are doing something that if you combined and created something entirely new, you could create even more value for the customer, okay?
 
Those individuals have great teams back in their company. They don't see their employees as costs. They see them as investments so that they can be freed up for these kind of collaborations with other entrepreneurial firms. And I think it's a scarcity versus abundance sort of distinction that we're making here. They're seeing growth before the growth is even possible. They're seeing new breakthroughs before the breakthroughs are even possible. But going back to the cost investment, you can only do that with teamwork inside your company and you can only do it with collaboration outside of your company. So you got to treat people really nice.
 
Jeffrey Madoff: Well, and what happens in businesses where there is the cost.
 
Dan Sullivan: And you own your business. That's the other thing, right?
 
Jeffrey Madoff: You have the power to either do something or say no to something.
 
Dan Sullivan: Yeah, the greatest capability is that you own it.
 
Jeffrey Madoff: Right. If you truly understand that. Yeah. You know, cause it's also, we know people that are great connectors and that's a gift and it's really, really good. But I know a lot of people on the receiving end of a connection, they're thinking basically, how can I use that person to their ends? You know, what can they get from that relationship? And I think that most people, when you're talking about business to business, and even individuals high up in those companies, is they're gonna base their decision on whether they think your project or service or product is gonna somehow benefit their own career. Because if not, why should they take the risk? So that leads me back to thinking you got to get into their heads too. What are they looking for?
 
Dan Sullivan: Yeah. Yeah. It's really interesting. More and more, I would say in the last five years, I've seen this where we have major collaborations between our entrepreneurial owners and highly placed people in large corporations. Okay. At first I was saying, what are you doing that for? And then you begin to realize that there are people in corporations who treat their career like an entrepreneurial company. And what you're offering them is a capability of collaboration with them. And this is what you're offering them, that you have a special skill. And they want to have that capability, which is a secret capability, inside their own company. And they're in major competition with everybody else in their corporation because corporations get scarcer as they get higher in the corporation. And what the deal is for the entrepreneur is enormous amounts of capital to do what they're doing with the collaboration. In other words, they're tapping into all sorts of resources that the entrepreneurial company could never provide for themselves.
 
And the other thing is this, a person in the corporation is not seeing the corporation as their future. They're seeing the next five years of the corporation as the furthest that their career is going to develop. And then they're going to go to another corporation, and they're going to bring the entrepreneurial capability with them. But the interesting thing about it is how the entrepreneur talks about this and how the corporate person talks about this. And they tell very different stories. And how the entrepreneur talks about it and says, yeah, I've got this great guy and he's really there. And you should do the same thing. You should find the corporations that are involved in your marketplace and you should see if you can find somebody and do that. And the entrepreneurs talk about it all the time. The corporate person never talks about it.
 
Jeffrey Madoff: Never talks about. What, it never shows the excitement of that individual's accomplishment?
 
Dan Sullivan: No, it never talks about where he's getting his secret powers from the entrepreneur. And the big difference there is the entrepreneur owns his world and the corporate guy doesn't own his world. He's hired again. I mean, he may have a good payout, he may have a good benefits package, he may have a share package, but he doesn't own it.
 
Jeffrey Madoff: And ownership, ownership is everything. Well, one of the things that always amazed me, and I have seen this numerous times over my career, is that people that come into a company, they come into a company and they have a, basically their termination clause, and …
 
Dan Sullivan: They're a prenup. They're a prenup.
 
Jeffrey Madoff: That's right, that's right. And they walk away with, in some cases, tens of millions of dollars, basically, so they'll leave and not fuck it up anymore.
 
Dan Sullivan: Yep, yep.
 
Jeffrey Madoff: But then nobody talks about it. You know, and so sometimes in the business, people know what happened, but I think it's incredible that I've seen people walk away after less than two years with a $27 million parachute. And I think, how do I actually make that kind of money? By fucking things up, you know? Because it'd be a lot easier than doing what I'm doing. And I just find that amazing. I guess there's a real talent in that.
 
Dan Sullivan: Well, you know, my sense is that there's a whole industry that provides consultation in how you're going to do that. I'm sure there's lawyers and accountants, specialized lawyers and accountants. Financial advisors and everything, that's the whole game. But no value is created. Except for the one exiting.
 
Jeffrey Madoff: No, no, that's not value. So value has to go beyond you.
 
Dan Sullivan: That's a cost.
 
Jeffrey Madoff: Right, right, right. Yes, you could argue there is a value in getting rid of the person. So the cost of getting rid of them.
 
Dan Sullivan: I'm still a Cleveland Browns fan. And about four years ago, there's this quarterback from another team who had been injured. And while he was injured, and he was an all-star, he was all pro and he was great. I mean, in his prime, he was a phenomenal quarterback. But in the meantime, while he was injured, a year and a half, he had to go through the surgery and everything else. He became a free, no, he didn't become a free agent and that's the problem. And Cleveland, once they lost their team to Baltimore because the Browns, you know, the franchise was moved to Baltimore, and Baltimore has done extraordinarily well since the former really successful Cleveland team went to Baltimore, they really did. And Cleveland's done, they got a new team, but it's not done well for the last 25 years.
 
So they gave enormous number of draft choices. Five year’s worth of first round draft choices and more, like it added up to 10 new players for the other team. And they got the quarterback. But in the time that they were negotiating, he was hit with 27 sexual assault, the quarterback, by massage therapists, you know, whatever the word massage means. And he had to pay millions and millions and millions, you know, in settlements as they do it. And when he got there, he was penalized for all this sexual activity. For two-thirds of a year, he had to miss 10 games or something like that. Whatever magic he had before, he didn't bring it with him. But they have a five-year commitment, and it was like a $250 million guaranteed contract for him. And he's just not produced whatsoever.
 
So what I'm saying is, he got a big reward. He got a really big reward, but it didn't create any value. The search goes on for the next quarterback who's going to do it. But these are billionaires who own these clubs and they can write this off as a tax loss and everything like that. Well, that happens in the corporate world all over the place. On Wall Street, they'll tell you that probably 90% of corporations are mediocre at best as an investment. You just don't know how it sorts itself out from quarter to quarter, which 10% are worth investing in, and that's why it's guesses and bets. That happens politically. It happens in Hollywood. It happens all over the place, you know?
 
Jeffrey Madoff: Yeah. Well, because when it comes down to it, you're dealing with people. And so how do you get into the heads of those people to either motivate or compete or understand for your marketplace or whatever?
 
Dan Sullivan: You make them feel special.
 
Jeffrey Madoff: Yeah. Yes, the term being schmooze them.
 
Dan Sullivan: Well, no, I don't think so. You want to develop their talent. You want their time because it's not permanent anymore.
 
Jeffrey Madoff: You know, if you started with those who work with you.
 
Dan Sullivan: Yeah. Yeah. Great coaches. You know, the players would die for them, you know, to be with a great coach and spend your career with a great coach. That's just the greatest thing you could ever do.
 
Jeffrey Madoff: Do you ever have coaches that at a certain point figure you know, I've built up a certain clientele, they have faith in me and so on, and I don't really need Strategic Coach as the base anymore, I can create my own business and exercise my own entrepreneurial skills? That's happened one time, you're saying?
 
Dan Sullivan: One time, yeah.
 
Jeffrey Madoff: Really, okay. Out of curiosity, did you ever talk to that person, or?
 
Dan Sullivan: Not since he left, yeah. But he had a surprise on the other side, all the clients stayed. Well, I don't know that for a fact, you know, I mean, maybe. But it wasn't noticeable, let's just say this, it wasn't noticeable. Because we've created a system, you know, we've created a system here, and we have other good coaches, and those, if he wasn't their coach anymore, then there was another coach there, and then they liked their new coach, you know. So I made a decision, this was a decision that I made, when the company got going, that I had a choice of taking one road or another, how we're going to develop this company. And most coaches develop it on their personality. They become famous.
 
I saw it, it was an article, the top 10 business coaches in America. I wasn't on the list. I was not on the list, but I was successfully coaching before they were, and I'll be successfully coaching after they were. Because being on somebody's list isn't really an aspiration of mine. But the thing about a good coach, and this is what we look at, because they have to go through auditions, I mean, to become a coach, you have to have a relationship with us as a client for probably a minimum of five years. You have to be in the Program, you have to be interacting with our team, you have to, you know, the coach who's coaching you has a good assessment of who you are. And one thing that we're looking for is people who have really, really used the tools to build their own business, the Coach tools. And the other thing is, their greatest source of enjoyment is helping other people grow.
 
Jeffrey Madoff: Would you define that as creating value?
 
Dan Sullivan: Oh yeah, enormous value.
 
Jeffrey Madoff: So it's not just necessarily the dollars and cents aspect of value, it's the human capital and investment in that is another way to create value.
 
Dan Sullivan: Yeah. Yeah, and money's a part of it. Money's a part of it. I mean, it's like theater business. You want great teams, you want a great cast, you want great enjoyment, but you want the box office to be good too.
 
Jeffrey Madoff: Well, otherwise you can't sustain the other activities that …
 
Dan Sullivan: Can't keep the game going.
 
Jeffrey Madoff: That's right. That's right.
 
Dan Sullivan: Yeah. So, have we uncovered any new territory with our talk today yet?
 
Jeffrey Madoff: Yeah, I think so. I mean, I really think the insight of the cost versus investment and how you regard people is really important and a really important distinction. And we have all experienced the walking into the store that you can't find anybody to pay, that you've been on endless wait time for customer service, all these things that piss off consumers that are cost-cutting and counter to investment in building a good business. And it's the human aspect. The other thing that I think is really important in what you said is some businesses don't need to get that big. You can be profitable.
 
Dan Sullivan: Well, I think there's, given the industry and given, you know, the type of business approach you have, there is an optimum size. And that growth doesn't have to be perceived as endless. But you can always have a growth of reputation.
 
Jeffrey Madoff: That's right. That's right. And that gets down to a whole other area, which I'd like to take up in a future thing is, so many people think it's who you know, and I posit that it's actually who knows you and that's reputation and who knows you is going to carry you further.
 
Dan Sullivan: Yeah. I mean, you can say that in the luxury goods business, I can think of wineries. I can think of fashion designers. There are certainly entertainment companies. I was just so amazed because I just read the review of Clint Eastwood's latest movie. It's called The Second Juror. It just came out, and they said it may be the best movie he's ever made. What is he, 96, 95, 96, you know? They said it's just a sparkling movie. I think it was in The Wall Street Journal.
 
Jeffrey Madoff: I haven't heard of that one yet.
 
Dan Sullivan: It's called The Second Juror. So it's, you know, it's one of those. And it's a bit like the Twelve Angry Men, you know, it's an archetypal situation, you know, where only one person in the collective is holding out for a first principle. And then, you know, gradually, can move. I think it's along those lines, you know, but a lot of people haven't seen Twelve Angry Men.
 
Jeffrey Madoff: So it's a great film and worth seeing. Directed by Sidney Lumet, starring Henry Fonda and a great ensemble of New York character actors.
 
Dan Sullivan: Yeah. All in one room.
 
Jeffrey Madoff: That's right. That's right. And I think actually it may have started as a play. Yeah, because it's very much sort of you're in that room the whole time, essentially. That's good. What did you come away with today?
 
Dan Sullivan: Well, I'm more and more committed to really developing this cost versus investment theme as a tool. I kind of got twigged on this with the Sunk Cost Payoffs. And I said, yeah, these are costs, but, you know, they're also a capability. The question is, are you maximizing the value of the capability that these costs are enabling you to have? One of the interesting things that happened to us was the fact that we started in Canada. You know, we started the company in Canada in ‘89, you know, and we went across Canada. So we were in four cities in Canada. But what we noticed in the cities in Canada, they were filling up with Americans. And it wasn't just because of the exchange rate. So then we had a real opening in Chicago and we came to Chicago and the rest is history. You know, it's just Chicago and L.A., but it's been superb in the States.
 
It wasn't for a couple of years we began to realize the trick is, have most of your income in American dollars and have most of your expenses in Canadian dollars. And it's been $1.26 for 35 years, the average, if you average it out. Today it's $1.41, and I sit. This is a neat payoff, but it's dipped down, you know, it's dipped down, there's some years it dips down, but it's a really interesting fact. But there's all tricks, everybody's business has secret tricks that come along and, you know, but I've told people about it, but nobody's ever moved to Canada to have their operation here to do that, you know. But I'm more and more thinking that cost is a product of extreme competition. And investment is both a reward for great collaboration and teamwork, that you can look at humans as investments if things are really growing and it's profitable. And if it's highly competitive and the margins go away, you're going to look at everything as a cost.
 
Jeffrey Madoff: Right. Well, did we stay in the playground of anything and everything today?
 
Dan Sullivan: Oh, we were almost right in the center. There were vast areas that we could have gone further afield where the buffalo roam.
 
Jeffrey Madoff: Yes. Yeah. Thanks for joining us today on our show, Anything and Everything. If you enjoyed it, please share it with a friend. For more about me and my work, visit acreativecareer.com and madoffproductions.com. To learn more about Dan and Strategic Coach, visit strategiccoach.com.