The Art Of Context: An Entrepreneur's Guide To Price And Value

Jeff Madoff: This is Jeffrey Madoff, and welcome to our podcast called “Anything and Everything” with my partner, Dan Sullivan.
 
Dan Sullivan: Hi, everybody. It’s Dan Sullivan here, and it’s Sunday afternoon, and I’m in my basement in Toronto and Jeff is in his penthouse overlooking the City of New York, Central Park, that area, and we’re back for “Anything and Everything”.
 
Or is it “Everything and Anything”?
 
Jeff Madoff: Anything and Everything. All at once.
 
Dan Sullivan: That’s “Anything and Everything”, and we’re gathering a following who talk to me about the conversations here, and they say it’s the most unpredictable podcast. They never know what’s going to be said next. They never know what topics are going to come up next, and I think we’re developing a reputation, Jeff. And I think we have to live up to it.
 
Jeff Madoff: Well, considering that you and I don’t know what we’re going to talk about from one moment to the next, how would they know?
 
Dan Sullivan: Yeah.
 
So we were on the subject of pricing. It’s the first stage, I think, of capitalism. Actually, I just wrote a little book and it’s getting a lot of play. It’s called Capitalism and Everything Else.
 
I said, “There’s capitalism, and then there’s everything else that isn’t good at capitalism.”
 
And I said, “Capitalism isn’t an ideology, it’s a methodology. And it’s where an individual—always starts with an individual—decides that they’ve got something that would be of value in the marketplace, and they have to hit the marketplace head-on. They can’t have someone else negotiate for them or guarantee them employment. So they’ve got to become their own employer, and they have to go out, and they have to get some cash flow, and therefore they have to name a price on what their time and talent is going to garner.
 
And I think it’s hundreds of thousands of years old. I think the whole process here started a very, very long time ago. There’s a wisdom to it, but the first stage is you don’t get to any of the later stages until you get a handle on pricing.
 
Jeff Madoff: Yeah, and I think one of the things with entrepreneurs, or what you’re selling anything, is, especially when you’re starting out, you don’t want to scare off your potential consumer. Yet you don’t want to undersell yourself. And so at that very beginning, before you’ve established anything, how do you determine what your goods or service that you’re selling, how do you establish their, that price? Because there’s, you know, there’s value, there’s worth, but that value and worth are determined by the marketplace.
 
So how do you even determine where to start? Especially when you’re afraid that you’re going to possibly scare off the potential customer at the beginning, which you do need to build your business.
 
Dan Sullivan: Well, I think, first of all, that you’re always in the, I think throughout your career, you’re always in the situation where you’re taking calculated risks as an entrepreneur, you know. And what I mean by that is that you’re balancing a whole number of factors. And I think you’re a not a prudent new entrepreneur if you don’t have some of your own savings in the bank, you know, that guarantee a couple of months or two or three months, you know and you have other things to factor into it, is how much of your time can be spent on marketing and how much of your time can be spent on actually delivering what it is. So I think the early days…
 
One of the things in Strategic Coach, we’re never open for business to people who are just starting off as entrepreneurs.
 
In Toronto, when I first started the company in Toronto, I said, “You have to have gone through three Canadian winters. You know? You have to know the business cycle because there’s real cycles every year when you’re planting and when you’re harvesting, and that breaks down a lot away. And you get help from anyone you can get help from. You get financing from anyone you can.
 
But I think you have to be a good talker. I think you have to tell a good story about what it is, but the number one story is that you have to understand why it is that people would value this and why would people see this as a capability that’s different from any capability that’s out there. So you really have to differentiate yourself.
 
Jeff Madoff: Well, that differentiation, I agree with you, because there’s so many choices on any particular area that you talk about.
 
But the question I have, and you know I have a a real life example, which is probably one of the tougher things, which is a painter.
 
Zaria Foreman is a terrific painter. I may have referenced her in a previous podcast. Her work is amazing, but when she was starting out, of course, nobody knew who she was and she was actually making jewelry. That’s how she was supporting herself, barely, doing craft shows and stuff like that. But she had gone to school for painting. Painting is what she loved doing. And at one point she had the opportunity to show somebody who liked her jewelry, her paintings, which are photorealistic, they’re amazing. And I said, “How did you determine what to charge?”
 
And she said, “You know, I looked at paintings of not-famous artists that were around this size, so if somebody wanted something to fit over their couch”—‘cause she does fairly large-scale paintings—“I looked at how much those things cost. So I knew I didn’t have any reputation or anything, and I knew I wanted to sell something. So I established the price.”
 
And I said, “What was that price based on?”
 
She said, “Just that: going into some stores and just seeing paintings by unknown artists that were about, you know, 5 feet long by two feet high or three feet high, this is what you come up with.” And she said, “Hey, you know, they were selling for like $5000.”
 
I said, “OK. And what happened?”
 
She said, “Well, she bought it.”
 
And I said, “Did you have to negotiate?”
 
She said, “No, actually, that made me wonder”—and this is another thing for you, Dan—she said, “It made me wonder, ‘Should I have asked more?’”
 
And I think there’s a a myth out there, by the way, that if you get an early sale, you should have held out for later, and that might have been the highest bid you’d ever get. You don’t know. And it’s not like they line up in order of how much they’re willing to pay, but she did that.
 
And I said, “What was your biggest fear?”
 
And she said, “That the $5000 price tag would scare her off. And so when I said 5000, it’s not like I thought, ‘This is a sure thing, It’s 5000’. She might thought it was worth $1000.”
 
Dan Sullivan: Yeah, yeah.
 
Jeff Madoff: So it’s just out of curiosity, now that it’s 12 years later, what would that same painting sell for now?
 
And she smiled and said, “$150,000.”
 
Dan Sullivan: Yeah, yeah. But The thing is that the first sale, now you have proof from the marketplace that probably the low price is just the one that you just got. OK, ‘cause you did that without confidence and now you have confidence, you know?
 
Jeff Madoff: Right.
 
Dan Sullivan: Yeah. The other thing is, is that the person who buys it, if you handle it right, is also becomes a future marketer for you, OK? So you’re actually investing in a future marketer.
 
Jeff Madoff: Absolutely. I was going to bring that up. Absolutely. I think that you’re not just selling.
 
Dan Sullivan: No. You’re creating a relationship with the marketplace. They’re putting in the time to actually check you out.
 
But one of the things that I have learned, you know, because we all are in a learning thing, is that I ask the person a lot about them when they come in, and I’ll take you back to a story that you told me.
 
Your play is opening in Chicago, OK? You had sort of a solid center of your cast from the New York and Philadelphia, you know you brought them along, and I think just one, maybe just one actor that you brought along, but you had the sourdough to create more sourdough. But one of the factors is that if an actor came in and they were all full of themselves, but they didn’t really know who Lloyd Price was, they really hadn’t checked out what the play is really about, they hadn’t checked out anything, and they didn’t know what you were about, they didn’t know what this program was about, and someone came in and showed that they had done a lot of homework. I mean, given that the talent is equal, you’re going to favor the one who was interested rather than the one who was trying just to be interesting.
 
Jeff Madoff: Absolutely. Absolutely cause that tells you a lot.
 
Dan Sullivan: Yeah. And I think that that you, being the asker of questions, actually gives you a sense of confidence about the situation because you’re not just trying to, in the case of the artist, you’re not just trying to sell a painting, you want to understand where this painting fits in this person’s future.
 
You know, I always tell people, and now is a really good time for this because with the economy being very uncertain right now, people are, you know, if you’re going to spend, let’s say, money on our program, you know, you got a lot of other things in your life that you’re writing checks for. So you have to balance this against—I mean, if money is easy and it’s times are booming that you have a different psychology. And psychology is what it’s all about.
 
And what I tell my entrepreneurs in the Program, I said, “Is cash good?” And I said just for the next quarter, go out and pick your top 25, depending on the business, some people have lots of clients and customers, and some people have fewer, and I say, “Go out and talk to them and say ‘A year from now, if you were having this discussion and we’re looking back to today, what has to happen for you to feel happy about your progress over the next quarter, you know in your business?’”
 
So this is my customers talking to their customers. And I say, “So you know what dangers do you have that you have to eliminate in the next year?” And what I say is, “Before you can sell them anything, you have to sell them on a future where the thing that you’re selling fits into that future.”
 
Jeff Madoff: So explain that a little more.
 
Dan Sullivan: Yeah. Well, it was like me asking you the question, you know, we could use opening night, you know, if we go forward to the conversation that you have the preview on the 30th of May, and you say “It’s the 30th of May. What’s happened, as you know, all this work now has been presented in a really significant theater in a really big city and you got a 12-week run. And think about when it was just a bunch of actors doing a read-through of the play and where you are now. So what has to happen for you to feel happy with the progress?“
 
And then you start talking, and I said, “Are there any dangers you have right now that have to be eliminated between now and the 30th of May, you know?”
 
And they say, “Well, we got to do this. We got to do this. It’s all a scramble,” and everything else. But you can’t ask those questions for yourself. So I’m asking the question.
 
And then what’s the big opportunity if we have a really knockout first night? And then you say, “Well, if the word’s really going to go around, Chicago is the second city, and the word’s going to go out to all the other cities, including the first city. You know, and what’s the strengths that you have?” And then you can just recount, you know, all the strengths.
 
Well, what’s happened now is that you’ve, through my help, have created a whole new future between now and basically two months to the opening night. Or you could do it, “We’ve just finished the 12-week run and this is what’s happened.”
 
So you can pick any point in the future that’s a very meaningful point in the future. So if I’m talking to the person who’s buying the painting and says, “Can I ask you a question? Where does this go? If you buy the painting, where does it go? You know, where does it go?” OK?
 
So Ken Arlen is really a master at this, because he never talks about his orchestra. He never talks about his music. There’s always an event that people have. It’s a big party, it’s an annual conference, it’s the high-rollers night at the Bellagio, and he just zeroes in on what the event is all about and how do they know, you know, that the event’s been successful, and everything like that. And that’s a $15-million party that the Bellagio puts on for its high-rollers.
 
And so I asked Ken, I said, “Did you ask him how long it gets for them to get the money back?”
 
And the general manager of the Bellagio said, “We try to keep it under an hour, that we get the 15 million back.”
 
Yeah, you know. These are 747s flying in from China or from, from, you know, I mean these people pride themselves on losing large amounts of money and and being treated as honored guests on the planet.
 
Anyway, the more questions you asked them about what they’re going to do it, the more they see other possibilities for what you do. But you’re not talking about the artwork, see? Selling something without talking about the something, OK? So you’re talking about their future because the painting is the center of your life, but it’s not the center of their life. You have to know more where this fits in with the rest of the life that they already have, you know?
 
Jeff Madoff: So there’s a couple of things you brought up. One of the things you brought up is Vegas, which is gambling. How much do you think the seller should gamble with the price of what they’re setting in order to sell what it is they’re doing.
 
Dan Sullivan: Yeah, well, I’ve got a formula that “It scares you plus 20%”, OK? And the reason is, between the two of you, you are selling the painting and the other person who’s buying it, you’re the only one scared about the price because you’re the only one who knows the price, OK? They’re not scared about the price. It’s just a good price or it’s not a good price. So it’s a yes or no.
 
And I think a lot of entrepreneurs never get started as entrepreneurs is that they try to keep things in the realm of “Maybe”. Somebody will walk away, and they’ll say, “I have to talk to some people about this and I’ll be back to you.” Well, that’s you haven’t won anything. You haven’t learned anything. OK? So I think yeses it’s reward. Nos teach you, OK?
 
And even if the person says “No,” you say, “Is there anything else that could be combined with this that would make it a yes?” OK? That could make it a yes. So it’s a negotiation. Everything in the marketplace in negotiation.
 
You know I can’t run through, because different situations have different people. Maybe it’s a bad buyer, you know, maybe it’s a bad customer, you know?
 
Jeff Madoff: And trying to find, in talking to investors, when I first started doing that, but of course didn’t know as much as I know now. But one of the things that happens, and it’s characteristic, especially in the entertainment business, but it’s characteristic, basically, to not necessarily say no, because you don’t want to be the person that passed on something that turned out to be something quite valuable. And it’s what I call “The long no”. Because, after the second or third meeting, and I went through this a couple of times, then all the signals became very clear to me. Where I said to this investor, who supposedly was very interested, but by the third meeting I said, “You know, we’re repeating ourselves. There’s nothing new to say. You know, you just need to decide whether you’re in or not.”
 
“Well, you know, I’d like us to have another meeting.”
 
And I said, “There’s no point. You won’t learn anymore than you already know.”
 
Dan Sullivan: That’s not a good situation.
 
Jeff Madoff: That’s right, that’s right. But the no, I believe, getting a no is better than another maybe.
 
Dan Sullivan: Oh yeah, yeah, I tell my salespeople, like every quarter, “Why don’t today you get rid of all your maybes? OK, because you’ll buy back about 40% of your time immediately for the next quarter for the yeses and nos.” You know? And the really good ones follow, and the other ones say—and we’ll go back with our sales people, because we have a complete record of every conversation that they’ve had with any prospect, and I said, “Twenty-three emails, what’s that about?” And a lot of our sales people are women, you know? and a lot of the prospects are men, and we had one before we were really good at getting very, really clear about our salespeople and what they’re up to and how they’re spending their time over a four-year period, there were 60 interchanges. And I said, “I don’t know what you think’s happening, but he’s having an affair. He’s just enjoying it. He just enjoys ‘I can always call her and we have a nice conversation,’” right? And everything like that.
 
That time is so precious. I mean, that first sale is, you know, crucial and your time has really crucial too. You gotta, you know?
 
There’s only one right way to start your career as an entrepreneur is, and that’s to make sure that that the check clears.
 
Jeff Madoff: Right. Well, Lloyd Price used to say, “There’s a million ways to say no, there’s only one way to say yes, and actually get the check and deposit it.”
 
I don’t care what business you’re in, that’s true, you know? And that also establishes what’s, you know critical, which is proof of concept. That somebody who is not your family or friend is willing to pay for some things.
 
Dan Sullivan: Stranger. Yeah, strange.
 
Jeff Madoff: That’s right.
 
And I think that you know, that’s something to to keep in mind because, you know, friends want to support you and help you. But if you really want to know that there’s a real market for what you’re doing then what you need to do is put it out there and those strangers, as you’re calling them, are willing to pay for that. Because otherwise it doesn’t make any difference if your mother tells you it’s a good idea, or your friends say, “Oh, this is really cool.” What do they really know? If they’re not in that world, what do they know about it?
 
Dan Sullivan: It’s absolutely true. And yeah, this is kind of the, you know how mother eagles treat their little eagles, how to fly.
 
Jeff Madoff: Out of the nest.
 
Dan Sullivan: They throw them out of the nest and the ones that don’t hit the ground know how to fly. And I think pricing is getting thrown out of the nest.
 
But you’ve been through this in many, many different situations in many different areas. I mean, you’re whole career has been about this.
 
But I would say that you never get away from the fear, but you have to work out…
 
And the other thing is that selling in any time is a numbers game. You know, if you’re gonna get 10 sellers, you need 100 prospects, you know? And people have their own timing on things and you don’t know what the timing is, and some are tire-kickers, and some have identified that that person who bought that first painting, I suspect was not a transactional person. I bet that was a…
 
There’s two types. There’s transaction and there’s transformation. You know? And I bet the early backers of this film wanted to have a relationship with this project. They wanted to have a relationship with the person who had created the project. They wanted to have a relationship with the whole journey. They wanted to have a relationship with the journey, and the people who are transactional, and I think that you’ve given me names of people who—they weren’t even long nos. They were long maybes. They’re transactional, they’re not transformational.
 
Jeff Madoff: And give me the distinction. Define that distinction.
 
Dan Sullivan: Well, we’re a good case. I mean, we’re we’re rounding error investors in your play. You know, you can you can possibly round off with the amount of money that we’ve given you and—oh, by the way, we’re filling in the paperwork this week, you know.
 
Jeff Madoff: And and and you’re not rounding errors, by the way, but…
 
Dan Sullivan: No.
 
Yeah, but I wanted a relationship with the adventure. I wanted a relationship with you as you’re going through the adventure. That’s what both Babs and I really, really wanted. OK? And there was an entry fee for getting involved in that, and we were happy, and we’re happy today. You know we’re delighted with the progress.
 
But every sale you get smarter.
 
Jeff Madoff: Well, as you said, yes is a reward and no-
 
Dan Sullivan: Is learning.
 
Jeff Madoff: Yeah, not in all cases. There are just some people that run you around the block so you’ll learn, you’ll learn to avoid that, you know, people that confuse motion with progress and having a meeting with something actually happening.
 
But you know, you bring up an interesting point, to quote you, Dan, you said, “Price is psychological.” Well, I think. In the case of our relationship around the play, you know, there was a psychological component to you. Both you and Babs love theater. And theater is something that you considered going into. You know, so there is a psychological connection.
 
Dan Sullivan: Yeah. And you’re a friend, you know? And the world I live in lives totally in this world. You know, the entrepreneurial world.
 
You get smarter and smarter. You know, you get smarter and smarter about how you set up the situation where you’re even talking to someone. And you know there’s been screening that, but you don’t know that until you’ve had the first situation out there, you know? Your friend that you know who’s just taking another jump in her entrepreneurial career as a great chef with restaurants. I gotta believe that opening a new restaurant, you just go through all of this.
 
Jeff Madoff: Well, I’m sure. Absolutely.
 
Dan Sullivan: And there’s such a high capital cost beforehand.
 
Jeff Madoff: That’s right. But you know, you talked about “There’s no such thing as the right price.”
 
Dan Sullivan: There’s just the price that gets negotiated.
 
Jeff Madoff: Right.
 
And so take me through that a little bit, because it also depends on how many people desire to pay that and how scarce is the product or service.
 
Dan Sullivan: Well, it would depend on how many other paintings you have. Do you have any other paintings?
 
I mean, I would say that, first of all, you have to have goals way beyond the first sale.
 
I would say this, that after you get the first sale, you then make it the right price, in other words, by what happens afterward, OK? So I would say use the first experience to get yourself in the game, but have ten of these sales planned. In other words, you’re gonna have 10 sales, and this is gonna be the first one.
 
I think the risk is psychological. I don’t think it’s actually financial. No one likes getting rejected, but they’re not rejecting you. It’s just that this particular thing just doesn’t fit into their future. They’re not rejecting it.
 
You’ll know yourself from your class at The New School and also all the work you’ve done in, you know, the show business and the documentaries and the fashion business and everything that, you know, you’ve recounted, is that the price of anything is changing from day to day.
 
Jeff Madoff: That’s right. And I would add to that, it’s interesting…
 
A revenue stream for me in my video production business, and a very nice and profitable revenue stream, was duplicating tapes. So you know when Victoria’s Secret or Ralph Lauren, when we’re doing multiple projects for them and then, you know, Victoria’s Secret’s going into 1400 stores. Ralph Lauren, it’s also being distributed globally and that’s all gone. There isn’t any that they get a link, you know? It’s a downloadable link. That whole business doesn’t exist anymore.
 
Before social media, there were decent budgets for projects ‘cause they expected a lifespan out of it. With social media, you know, somebody’s smartphone, then a young person on the staff who can get some behind-the-scenes pictures and you’ve got a social media campaign. They’re paying next to nothing for it because it’s essentially disposable. You know, there’s an appetite you gotta keep posting sometimes a few times a day. But certainly with any significant business multiple times during the week. So that means the budgets are much smaller, you know? Because there’s so much product that they need, they’re going to stay the same. So pricing changed because, yeah, the, actually, I started basing some of the pricing on usage. How’s it going to be used?
 
And now I’ve been around long enough that now I’m licensing, you know, footage for documentaries. I’ve got four or five documentaries that have my footage coming out that is stuff you know that I shot 30-40 years ago that has a whole new value.
 
Dan Sullivan: Yeah. I would say that artwork more than almost anything else, the range between top offer and a thing that’s almost unlimited.
 
One of my clients in London, his father was considered probably one of the finest abstract painters over the last 40 years in London. John Hoyland. If you look it up on Google, you can see all of his paintings. I really love them.
 
You know, he was featured at the Tate Modern. He had three shows going at one time in London, you know? Two galleries and then a special exhibition at the Tate Modern. And one of the funny things is that his paintings were selling about 50-60 thousand, you know, depending on the size. And he had big paintings. I mean, some of the paintings were six feet by 10 feet, you know, they were big horizontal paintings. I mean, great craftsmanship, you could tell. But just a really terrific sense. I’m not really into abstract painting very much.
 
Actually black and white photography is what Babs and I collect, is black and white photography from the Forties and Fifties. You know Margaret Bourke-White, and you can’t get the originals anymore, but you can get from the original-
 
Jeff Madoff: Negative.
 
Dan Sullivan: …Original plate. A lot of stuff.
 
But you can tell, I think, whether anything that people have, it has a personal value to them or not. They’re not just collecting a whole bunch of stuff.
 
So I think pricing is psychological because there’s a hundred different reasons why the person is doing it. The person who’s producing the paintings, and there’s a hundred different reasons why somebody’s buying it, so… It takes a lot of courage to be in the business, but. It takes a lot of courage for the buyer, too, you know, the buyer in this situation. OK?
 
But I remember, Harry Rosen, I asked him, you know, “What are the biggest problems in selling menswear?”
 
And he said, “It’s two problems. Man walks into the store. The wait-staff doesn’t immediately go up to him, and he’s insulted by it, the not being approached and asked something and they get mad and they leave the store.”
 
And I said, “That’s the first one. What’s the second one?”
 
He said, “Second one is man walks in the store, salesperson comes right up to him, and the man is insulted because he feels that the salesperson is being pushy and he leaves the store.” And he says, “Aside from that, there are no problems selling mens’ clothing.”
 
So I was watching him one day and this guy came in and he picked up a tie, and Harry without talking to him at all, just came over and he says to him, c”Can I tell you how this tie is made?” And he says, “This is from very, very rare silk.” And he says, “You can tell this,” he says, “you know, you fold this silk up and you could put a weight on it over the weekend and there’d be no wrinkles on Monday.” And he says, “It’s just some of the finest silk in the world.” You know, and he says, “These are very, very interesting printing process.” So he’s getting a little tutorial on it. He says, “Let me let me put this on.” He says, “Oh yeah, hold it there.” He goes over and he picks up a shirt, and within about a half-hour it was a five-and-a-half thousand dollar sale.
 
Jeff Madoff: In that sale, would you credit that to-?
 
Dan Sullivan: Pure psychology, pure psychology, yeah.
 
Jeff Madoff: And what was the psychology at work there?
 
Dan Sullivan: Well, first of all, men are not great shoppers for the most part. There’s a few who are, and there’s the most who aren’t really good shoppers. We don’t really like shopping, and we don’t necessarily, are the best judge on what looks best on us. But he didn’t approach it that, he just approached on the product, so it was a neutral territory. He could just talk about the uniqueness of the product and everything like that.But he got the person to actually feel it. And then he says, “Come on over, stand in front the mirror here,” and said that. And he says, “Look at that guy,” he says, “OK, let’s just look here.” And he had a jacket over and he says, “See how that goes together?” And he says, “Yeah, the slacks with this would be something,” you know. And he brought the whole thing over. And he was butter in Harry’s hands.
 
When I went into, and I was his last new customer because he was 80 when I started working with him, and he came in and he was showing me, he said, “Well, the first suit is navy. You got to have a navy suit.” “Now,” he says, “I’m going to show you some fabrics here.” And he says, “Ordinarily we’d start somebody out here, but,” he says, “Dan, where you are in your career and everything else, I think you got to start with this one, which was the high price one.” And he said, “This will last for 20 years,” he said. “This is a great, great fabric.” And then he did the whole thing, shirts and everything.
 
And I was sitting there and, you know, this was meeting a kid’s greatest star that you’ve ever had, you know, kind of thing.
 
But I think a lot of being a seller and becoming a buyer is you’re inside the other person’s head. And your understanding what the plans are that this person has for you. Well, this is psychology. This is not, you know, this is not scripted. You can’t script this. It’s mostly inquisitive. “Why do you want to buy it?” You know, I mean, “Are you in the art world?” I mean, you kind of feel them out. But the more interest you show in them, the better the price is.
 
Jeff Madoff: And so does that mean that you create the narrative that you’re hoping for the outcome, which is a sale. But they’re the main character in that narrative, or the product is the main feature of that narrative.
 
Dan Sullivan: Yeah. Yeah, yeah, yeah, yeah.
 
Jeff Madoff: So then how do you separate they hype from what’s authentic about that product or service? I mean, for example, you know, you can buy a pair of black slacks for anything from $22.00, you can go to Brunello Cucinelli and spend $800 on a pair of slacks.
 
At a certain point, I would defy anyone to start finding the distinguishing differences between those, especially if you took out the labels. Then you didn’t know what was Ralph Lauren Purple Label. What was Cucinelli and what’s something that’s just well-made in a good fabric, but not necessarily carrying the status or caché those have. How do you separate hype from authenticity?
 
Dan Sullivan: Well, I think, yeah, you’re a real person or you’re you’re you’re not. People are not authentic are hypers, you know, they’re… And I think it’s the, are you interested in the person as a person? You know? I mean, I think I think the authenticity is established of your interest in them as a person. OK? And they don’t want to answer any of those questions. They’re just looking for a deal. You know, they’re looking for a deal of some sort.
 
You know, for example, you’re in the situation now where you’re pitching in the seven figures now for people to get on board, but they are people who have multiple seven figures to give meaning to their money. You’re in the market right now where people are buying meaning, they’re not buying an entrepreneurial investment. I can’t believe at the level you are right now…
 
I mean, there’s some people and you’ll get them, but you’ll see it as the hit goes on. I mean, I think it’s going to be a big hit, and I think Chicago is the perfect city to start with it, actually, OK? And the reason is that Chicago is going through turmoil now. It’s a city that more people are leaving than are coming, OK?, for a lot of reasons, you know? One of them is the perceived danger of being in the city.
 
It’s a bit like New York in the Seventies. I remember walking in Bryant Park in the Seventies, and you really had to watch where you walked. There were needles, there were condoms, you know, and this is a major park right in the Midtown of New York. There was a police transformation that had to happen in the city. There was a political transformation that happened in the city, and I think it was eventually, it was all the corporations got together and formed a council. And I think that’s happening in Chicago right now. I think that they’re getting to the point they said, “Look, we have to have people who want to work downtown. We have to have people who feel good about going and shopping downtown,” and everything like that. So I think if there’s a larger issue and my sense is if you go back afterwards that you were actually the buyer here. You weren’t the seller.
 
Jeff Madoff: Tell me what you mean by that.
 
Dan Sullivan: I think the city needs some real hits. They need people to come downtown. You know?
 
I think Chicago now is in a situation where it wants to show that it’s a different city from the one that’s appeared in the media. We’ve been there for, this is 30 years that we’ve been there, so we’ve lived through the city and it was fun to go downtown, you know the-
 
Jeff Madoff: Miracle Mile there.
 
Dan Sullivan: …Miracle mile. Yeah. And the museums and that was the center of Chicago, right where that theater is. And that’s why all the theaters are there.
 
Jeff Madoff: So you mentioned something I want to dive a little bit deeper into, where essentially you said people are investing in meaning. You know, which is very interesting because of course, how do you gauge the return on—what’s the ROI on meaning, right?
 
Dan Sullivan: Only the investor can tell you what the return is.
 
Jeff Madoff: And I would posit that return is fulfillment, connection, feeling a part of something.
 
Dan Sullivan: I’ll just use someone who, let’s say, is second or third generation big money. OK? In other words, same family second or third generation, and they’ve developed charitable organizations around that. They’re still a major player in their marketplace, you know? The business that created all the money is still a major player and they have an involvement in that, but they’ve got a lot of history that they want to shine up. So there’s all these issues, I mean, the person who made the money is very, very different than the second generation down or the third generation down, OK? Because to a certain extent, they have lived a kind of protected life, you know, and they need to differentiate themselves from the, not compete with, but to differentiate themselves from…
 
I mean if you go back and you look at the Lehman trilogy play, what it looked like in the 1850s, because that’s when they came over. They came over in the 1850s and then they decided that supplying plantation owners with all the goods, hardware store goods, was a better bet than competing with hundreds of hustlers from their own culture, so they went South and then the Civil War came along. So they had to switch. And by that time they had already, you know, developed an off-ramp from where they were. And you know, they got involved more and more in the financial business and everything else.
 
And take it forward to where the scene where all the numbers are flying by, there’s a disconnect at a certain point between the money and what the money represented. You know?
 
So just think about that person who wants to have another life, in other words, wants to have a social life, wants to have a cultural life. They’re looking for meaning, and they’re putting their finger up and testing the winds. You know? And your play solves a lot of cultural issues right now. Huge. I mean, I got that right off the bat. I got that in the script when I read the script. I don’t think you were trying to solve these issues. I just think you were trying to tell a great story, but the person that the story was about was a transformational person, not just in, you know, his business career, but I think he was a transformational person in just who he was.
 
Jeff Madoff: Well, I think that you’re right and I think he is still an unsung hero.
 
Dan Sullivan: Oh yeah.
 
Jeff Madoff: People don’t know that story. They know his music. They don’t know the story. And the story is quite fascinating and unique. Which is why I think some of the actors were just wonderful are so committed to it.
 
Dan Sullivan: Yeah. And, you know, they’ve got their own reasons for wanting to be part of this. You know, your very, very talented backstage team. You know the-
 
Jeff Madoff: Great team.
 
Dan Sullivan: They were buyers in their own rights. I mean, they could have had any play, and they stayed with you, I mean. All the crucial people stayed with you when they had many, many offers, you know?
 
Jeff Madoff: That’s one of the things to me, is, and it relates back to you know that you’re kind of selling without selling. When they became familiar with the story, it’s something they wanted to be a part of.
 
Value is an interesting proposition, you know? Because value is “What is something worth?”, which means who’s willing to pay for it. That’s one kind of value. Another kind of value is how does that, does that enrich you as a person in ways that it’s really you can’t put a price tag on it. To undertake a project like this, it’s daunting. But it’s also, there’s been so much good around it that you can’t put a price tag on. I mean, I do, people say to me, “Is this a passion play, or is this a commercial endeavor?”
 
And I said “Both.”.
 
Dan Sullivan: Yeah, the answer is always yes for both, you know? Yeah.
 
Jeff Madoff: Yeah. And I never understood that proposition, because my mind doesn’t work in such a way as, “Well, no, this is how I’m going to make money, but-“
 
Dan Sullivan: Well, it tells you more about the person asking the question than it does…. What kind of division is that? I don’t see the division.
 
Well, it’s not only that, but it’s a talent play. There is this, I forget who it was. It was one of the speakers at Abundance360 is one of the AI guys, and he says, “I only do concrete projects.” You know, there’s all this philosophizing and prophesizing that this is a game-changer.”
 
And I said, “Well,” he says, “since I’ve been involved in technology, there’s been about 25 game-changers,” he says. “I find it just screws up your mind, but there are concrete projects that we can take this new technology now and we can actually utilize it and I’m only interested in concrete projects that can be more or less implemented within the next year. Then you’re getting the payback within the next year.” And he said, “You know, the biggest fallacy that we’re giving to young people is to follow your dreams.” He says, “You don’t follow your dreams, you follow your talent. Because your talent is deliverable, your dreams are not deliverable.”
 
Jeff Madoff: I don’t know. It’s an interesting question.
 
Dan Sullivan: Well, your talent allows you to dream. I think your dream, I think you have a talent and your your talent can project images of where this talent can go. But if you start at the other end with the dream, you may be devoid of talent.
 
Jeff Madoff: That’s right. That’s right. But yeah, well, that’s right. But yeah, can you, in a sense, reverse-engineer your suggest? I don’t know. But I do think that, yeah, if your talent is that you are a, somehow you have figured out a way to create systems and to help people in their entrepreneurial journey, and your dream, you know, although it was maybe originally theater, your dream became, you became a director of your ongoing narrative and your ongoing production. And it’s rewarded you financially, but it’s also rewarded you by giving meaning. It’s what you do and had impact on so many other lives. And you didn’t know that was a business or wasn’t even a business you could have compared what you were doing.
 
Dan Sullivan: I did know I was unemployable.
 
Jeff Madoff: Yes, we share that. We share that. That’s why we’re entrepreneurs. That’s right.
 
Dan Sullivan: Well, you know, that clarifies your future quite a bit.
 
You know, when I worked for BBDO, I was a writer with BBDO, you know, was one of the big ten, anyway, ind advertising, and this was the Toronto, but it was a relationship with the creative director who happened to be the, you know, BBDO works on, they look for agencies all over the world, ad agencies, and they look for them and, you know, they have a deal with the agencies, and then you become part of their network, and there’s a cost and a benefit to doing this. But it was because of that relationship that I got hired, because I had no writing experience in the marketplace before that. And you know what he got fascinated with was actually my Great Books education, because he was up from the streets. His father had been a member of the Purple Gang in Detroit. The Purple Gang was to Detroit what Al Capone was to Chicago, and they had a rule in Detroit, because Detroit was one of the great bootleg importers during Prohibition.
 
You know the Canadians, you know, are clever people, so they had Prohibition, too. You couldn’t buy and drink alcohol. But Canadian alcoholic producers could make all the liquor they wanted as long as they could find a buyer. Somebody said, “Well, if we can’t sell in Canada, where can we sell?”
 
And somebody said, “I don’t know if you’ve looked at the map, but there’s another country just south of, you know, and they have 10 times the population.”
 
So Detroit was one of the big import areas, and it came into the Ford factory at River Rouge—biggest car factory in the world at that day, and it came on barges behind speedboats. The speedboats had plugs in them, so if the police came out they just pulled the plug and everything… There’s a lot of liquor sitting at the bottom of the Detroit River.
 
But his father was involved in that, and they had one rule is that you can’t hold up gas stations. OK, so “We’ve got an agreement with the police. You know, we got an agreement with the police. We can do this and this, but we can’t do that.” And then they couldn’t help themselves. They were coming back from a project and they stopped at a gas station and they just decided not to pay. And then they went in and they stole all the cigarettes and they took all the cash out of the cash register. And so he went off to prison for about 10 years.
 
So my creative director, Bob MacAleer, was the court battle between his grandparents and his mother and everything else, and kind of missed the whole educational framework of life and just worked his way up. And then he became the vice president and creative director of the second-biggest ad agency in Canada.
 
I met him at a party and we got talking and I told him what I did in the Army career and you know where I’d come from and that I was going to this Great Book school. But I had started the school newspaper. They didn’t have a school newspaper. So I wrote editorials and everything else. I’d learned how to type. The Army taught me how to type.
 
And he said, “What are you gonna do after you graduate from college?”
 
And I said, “Who knows what they’re going to do after you graduate from college?”
 
And he said, “Well, I’ll tell you,” he said, “something about you just strikes me as right.” And he said, “Tell you what. I’ll give you 6 months. I’ll give you a letter. It’ll get you across the border. Six months. If you don’t make it, I’ll fire you. And if I fire you, you’ve got six months’ experience, you’re in the country.” You got a Canadian green card in about six weeks in those days.
 
And I came across and first two days I wrote a couple ads that just sealed the deal, and I was there. But about two years in, I said, “I don’t think this is going to be my life.”
 
So that’s when I got the idea of coaching, because I had always been good at helping people get clear about what it was they wanted to do and how they were going to do it. So I just told them, I said—long story; I won’t tell the story here, but I had already worked with some of the clients from the agency who were small businesses. So every agency has the big ones. We had Kodak, we had Chrysler. There were a couple of other big ones. They went through a lot of mergers and you had all these little mom and pop businesses that came along, and they were fee-for-services, and they consolidated them all and they made me as the head writer of that.
 
So I would, you know, as families, you know, family-owned businesses, you know, “Where are you going next?” They didn’t need advertising advice as so much as they did just getting clear about where they wanted to go, and I really enjoyed it. So I told them, “You know, this is what I’m thinking about doing.”
 
And he said, “If I say no, does it make any difference?”
 
And I said “No.”
 
He said, “OK.”
 
And I said, “The question is, the clients of the agency, can they be some of my first clients if I go out for the business?”
 
And he says, “Well, it can only do them good, so why not?” And he gave me his blessing, you know.
 
That’s how it went up.
 
Jeff Madoff: Did you follow your own advice in building your own business?
 
Dan Sullivan: Oh sure. Yeah.
 
Jeff Madoff: So were you in a sense, the first test case, if you will?
 
Dan Sullivan: Oh yeah. Yeah, I was very confident. I think I have a lot of built-in confidence. And the other thing is, once I really lock on to something, I’ll go through whatever I have to go through to get there.
 
I was pushing 30 at that time so. No, I was 30. I think I was 30 when I started.
 
But the big thing that I really mastered, and to this day I think I’ve mastered, is knowing what kind of future the other person’s planning. And it’s not for me. It’s just generally what are they trying to plan and then you say, “The thing that I can do, where does that fit in? Why do you need that?” You know? And a lot of people don’t have the guts to ask that question.
 
Jeff Madoff: Your question about where do you want your life to be?
 
Dan Sullivan: No, “Why are we talking? That you’d be interested in what I do for your future.” You know, a lot of new entrepreneurs don’t have the… Because they think they’re killing the sale that way. Actually, you’re helping the sale.
 
Jeff Madoff: In asking that question.
 
Dan Sullivan: Yeah, they’re not doing it for me. They’re doing it for something that they’re planning in their future.
 
Jeff Madoff: Do you think they know that?
 
Dan Sullivan: They do after I asked the question.
 
Jeff Madoff: Right. But do you think that they even felt that was a necessary question before then?
 
Dan Sullivan: Well, people can’t avoid a question. They have to think about it. You know, they say, “Well, you know,” in case of your artist, “I’m kind of late getting into the art business here, and a lot of my friends are developing it. And I thought I would start with a first painting, and I I don’t want to pay 50,000 for it.”
 
So but again. It’s really unique. This is what big data cannot predict.
 
Jeff Madoff: Well, it’s right. And the reason that I was pressing have been on that question is it’s interesting because everybody thinks pricing is about a dollar amount. And in fact, pricing as you said is psychological.
 
Dan Sullivan: And it isn’t even about the marketplace. It isn’t about what other people are doing. You know, I mean, that’s. And check this out for yourself. So the first thing we buy before we buy anything is we buy a relationship.
 
Jeff Madoff: Yeah. Which is also interesting in these times.
 
Dan Sullivan: Except for a purely transactional, people don’t buy—they don’t want any relationship, I mean. And it’s gonna be an unhappy experience anyway, if you you subordinate yourself to being somebody else’s transaction.
 
Jeff Madoff: Yeah. And that gets into something for future discussion, which is how much do online businesses short-circuit the opportunity to build a relationship?
 
Dan Sullivan: Oh yeah, totally.
 
Jeff Madoff: Know and how do you build any kind of customer loyalty without a relationship? I don’t think you can. I think it’s all then transactional and about price.
 
Dan Sullivan: Yeah, and I would say the major power out there, that’s probably done this better is Amazon. And the way they communicate with me on Google, or on Kindle, OK, not not on Google. On Kindle. And it’s always “Dan this”, “Dan that”, “The book that you’re buying right now, a lot of people have bought three or four more book in this series,” and everything else, and they give me these little messages all the time.
 
I used to go to Barnes and Noble and Borders and everything else. They never knew my name. They never called me, you know, “Dan, you glad you’re in again. You know, you’d be interested, you know, there’s a couple of books here that are a lot like the ones that you seem to be interested.” They have no record of me. Kindle knows every book I’ve ever bought and their algorithms are saying, you know, “I think he kind of goes in this direction, kind of goes in this direction.”
 
So there I think for a lot of people, that’s the deepest relationship they have in their life.
 
Jeff Madoff: Yeah, that and QVC, you know.
 
Dan Sullivan: Yeah.
 
So what have you gotten from the discussion, I mean, but this is a major, major, major topic in our Program. So the big thing you have to understand is that it’s all psychological and you ask the seller have to become a buyer. Those are the two main things that like you to take—you’re buying, you know, and the thing is you’re restricted on the first sale, but on the tenth sale you’re developing standards about whether you want to—I mean, just look at yourself now, year four or five of the process of, like, we just discussed, a potential prospect to kind of it disqualifying himself with his approach to you. But it’d probably be very different if he was the first person you approached.
 
Jeff Madoff: Well, yeah. I mean, I already have context, which you don’t have when you’re starting out. So you don’t really know where you are because there’s no map. You don’t know what the borders are, and so you don’t know.
 
And the other thing is keeping that person in the loop. What’s that cost me? So if it ends up inspiring an interest down the road. Fine. If it didn’t, it’s not really costing me anything. But do I go through and sort of prune those candidates and not communicate with everybody because some it’s just clear that that’s it, it’s not going to happen? Then I I don’t even bother.
 
But there are those that aren’t the people that get in early. I mean, I’m very fortunate. You and a number of the other investors who came in early have loved the process, loved the journey. One of our investors who upped her investment nicely, she said, “I’m feeling great. I’ve loved every minute of this. I loved coming in for the workshop. I loved coming to Malvern,” she said. “This has been so much fun. How do you have this kind of experience otherwise? I can afford it. I’ve loved every minute of it.”
 
Dan Sullivan: Yeah. And I would say that that’s as good a definition of ‘meaning’ as anything, as you’ve said. I’ve said that-
 
The biggest problem in the United States, and I think it’s gonna be even a bigger problem over the next 20, 25 years is that there are people with vastly more money than there is meaning in their lives. OK? And they’ve long passed-
 
Jeff Madoff: I agree.
 
Dan Sullivan: …Where they have some transaction that in any way can be meaningful, you know? One of the things I do is Babs and are very, very careful, you know, as we get more successful is that we have purpose for all of our money.
 
Jeff Madoff: I hear you, but what is your purpose? Well, how would you define that?
 
Dan Sullivan: No, no. Is that it’s the total impact on the world of our Strategic Coach client base in 2044—because I’m 100 in 2044—and I’m really getting everybody in the Program involved in taking all their experience and all the solutions they have and now transforming it into patents, you know?
 
Jeff Madoff: The IP work.
 
Dan Sullivan: For example, I would say that you have a whole number of patents just from the experience of the last five years, OK? How to put a play together, you know? Somebody would take it in dictation, and they would form it.
 
But right now, patents are disconnected from technology. The Patent Bureau about five years ago disconnected that you have to have a technology. It can just be a method, it can just be a process. It can just be a solution. So it’s more and more intangible as we go forward.
 
So we’ve started a whole optional program to the main programs, which is called Your IP Value Builder, and right now you get a patent back, I mean they’re looking for certain types of patents, but let’s say we have 25 in the runway right now that we’re running through our IP firm. We’ll get a $20 return in terms of asset value for every dollar we spend on this, you know, right now.
 
I have one client, and he hasn’t even gone to marketplace with his program, and he’s got 90 patents, and the value of those patents is, it’s close to a billion dollars just on the patents.
 
Jeff Madoff: Well, I think that would be an interesting future discussion is-
 
Dan Sullivan: Yeah. And it’s just based on what the world’s looking for right now. And I always tell people when you talk about intellectual property and you use typeface to put it out there, the typeface for intellectual is 6-point and the typeface for property is 60-point. This is like property. This is like your house. This is like the paintings on the wall.
 
And from 1980 to 2020, this Forbes magazine, the the valuation of the top Forbes 500 corporations has gone from 20% intangibles to 80% intangibles.
 
Jeff Madoff: Well, or as we call it, The Information Age, right?
 
Dan Sullivan: Yeah, but it’s not information, it’s solution. You know, it’s basically you got a solution, and you can move this property around the planet with a click.
 
Jeff Madoff: Right. Well.
 
Dan Sullivan: But I think this pricing, because I think it’s the one thing that is dealt with least in business courses, you know, “And you have to check out your comp-“. I never check out my competition. I mean, I never pay any attention to what the competition’s doing. But I’m deeply interested in where the person I’m talking to is going with their life and where they see that what we’re doing can actually accelerate their progress. It’s a fascinating world.
 
But pricing, you know, you you begin to think, “Well, this is what this goes for in the marketplace and you should start here.” And I think we have to have some sense of this. You know, you have to check out art stores, art galleries, and everything else, but really, when it comes down to the actual individual that you’re dealing with, they’re not looking at prices in the marketplace or anything. They’re just saying, “Is this really valuable to me in my future?”
 
Jeff Madoff: Yeah, “Do I want it? “
 
Just that another take-away is including that person in creating the narrative around how what you’re doing or offering fits into their story.
 
Dan Sullivan: “See this tie? You know this is-“ And Harry’s checking out, “Is this person someone who even responds to that?” You know, the quality of things. And to a certain extent, I learned a lot from him. Just an amazing, amazing—and he’s a tremendous psychologist. I mean, just really, you are too. I am, too, I mean.
 
Jeff Madoff: Right.
 
Dan Sullivan: Fortunately, without the degree.
 
Jeff Madoff: Actually I had a double major. One of them was psychology.
 
Dan Sullivan: And it just means that you attended.
 
Jeff Madoff: Well, in my case that’s not the case, but yeah. But I had friends that attended.
 
So this is, once again.
 
Dan Sullivan: “Anything and Everything.” Yeah, we’ve stuck pretty much to the topic this time.
 
Jeff Madoff: Yes, we did. Yes, the “Anything and Everything” topic.
 
Dan Sullivan: We’ll have to watch ourselves in the future that we don’t get too tied down.
 
Jeff Madoff: I have a feeling that won’t happen.
 
Dan Sullivan: I don’t think that there’s any topic that is so personal, certainly to every individual entrepreneur, that they grapple with, and that’s the whole issue of pricing.
 
Jeff Madoff: I agree, and hopefully we’ve shared some insights that are. Going to help people in that direction.
 
So what was that worth to you, listener?
 
Dan Sullivan: Yeah, yeah. Would you send this to 100 of your best friends?
 
Jeff Madoff: 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.