Learning What It Takes To Be A Successful Entrepreneur, with Peter Diamandis
What is it really like to be an entrepreneur? What are the highs and lows? What does it take for great business success? How do you know if the lifestyle is right for you? In this episode, business coach Dan Sullivan and Peter Diamandis explain why some fail and some succeed on the entrepreneurial path.
Here's some of what you'll learn in this episode:
- Why it’s easier than ever before to find a problem and solve it.
- What keeps entrepreneurs in the game.
- Why entrepreneurs ask “Who?” not “How?”
- The biggest cause of failure for entrepreneurial companies.
- Why entrepreneurs need to choose their co-founders and team members wisely.
- Some of the surprises encountered when becoming an entrepreneur.
- Why only entrepreneurs love failure stories.
- Why entrepreneurs need to know what they don’t love doing.
Show Notes:
In 1804, an entrepreneur was defined as someone who takes resources from a lower level of productivity to a higher level of productivity.
Being an entrepreneur requires high risk tolerance because you could lose everything.
It’s easier to get a job and do what you’re told than it is to become an entrepreneur.
To be an entrepreneur requires passion for a subject, if not an obsession.
Entrepreneurs need self-confidence in bringing their expertise to the table.
Entrepreneurs don’t want a buffer; they want a direct relationship with the marketplace.
A great entrepreneur with a mediocre business will reinvent it into a great business, while a great business with a mediocre entrepreneur will fail.
Entrepreneurism isn’t a career choice; it’s a lifetime choice.
The only person who can tell you if your idea is good is someone who’d write a check for it.
The instinct for entrepreneurship often shows up very early.
Some people are forced into entrepreneurship because of the failure of large employers.
Most “overnight successes” happen after years of hard work.
All an entrepreneur’s money is in the aspirational future of their best clients.
All entrepreneurs have passion for freedom.
Resources:
Abundance: The Future Is Better Than You Think by Peter Diamandis
Who Not How by Dan Sullivan and Ben Hardy
Episode Transcript:
Dan Sullivan: I'd like to welcome you to a very, very special Multiplier Mindset. This is with Peter Diamandis, and Peter is, in my estimation, one of the greatest forward scouts in the world of advanced technology. And he created the XPRIZE that put the first private spaceship into outer space. He has many, many prizes for new technological breakthroughs. He had written a book in, I think it came out around 2011, and it was called Abundance, and it was reviewed in the Wall Street Journal. And I read it and I really loved it. And then very shortly thereafter, Joe Polish had Peter as a speaker at his annual Genius Network. So this is probably one of the best mastermind groups on marketing in the world. And Babs and I are clients of Joe in his program. And Joe's been in Strategic Coach since 1997.
I met Peter in New York. He just had gone through the roof with his book and he also had a TED Talk, which went worldwide. And all of a sudden he had huge speaking engagements all around the planet. But he had also just gotten married. And in the first year he had twin boys. So here he was, he was caught between red eyes around the planet and getting home and spending time with his family. And we connected, and it was just the right time, he really liked what Joe said about Coach, and he liked the conversation. So he signed up. And then within about three or four months, he had a video session going through all of his ideas on how you create an exponential company entrepreneurially.
So he had about 50 seats and we put 35 Coach people in. And I took on total reality with him with that. And he says, "Wow, you guys can really put customers into an event." And I said, “Yeah, we've been doing it for a long time.” And I said, “If I'd had six months, we could have gotten 200 or 300 people.” So we decided to create a collaboration between Peter's company and our company Strategic Coach. It's called Abundance360. We're in our 11th year right now. It's a big event. And 360 is the total number of people who can be there live every year. But then he's got a whole series of video workshops that go off, and we have hundreds of our Coach clients involved in that.
So this is a beautiful collaboration because we could never have his skills inside of Coach. That's not really the focus of what our program is, but there's a lot of our clients who really want access to Peter's knowledge. So we've created a way for them to do it. We also have a podcast series called Exponential Wisdom. We got the raw footage from that. So we just wanted to take it and put a Multiplier Mindset context around parts of our conversation. The topic of this particular podcast, what does it take to be an entrepreneur and then to be a continually successful entrepreneur? This is little bit of the interchange between Peter and myself. And one of the things that this points out is that there's a million different ways to be I'm an entrepreneur and there's a million ways to be a successful entrepreneur because it really depends upon what your Unique Ability is, but it takes certain kinds of capabilities to really, really be successful so that your decision to be an entrepreneur is a huge payoff. It's a 10 times payoff. It's 100 times payoff.
Dan Sullivan: I'd like to welcome you to a very, very special Multiplier Mindset. This is with Peter Diamandis, and Peter is, in my estimation, one of the greatest forward scouts in the world of advanced technology. And he created the XPRIZE that put the first private spaceship into outer space. He has many, many prizes for new technological breakthroughs. He had written a book in, I think it came out around 2011, and it was called Abundance, and it was reviewed in the Wall Street Journal. And I read it and I really loved it. And then very shortly thereafter, Joe Polish had Peter as a speaker at his annual Genius Network. So this is probably one of the best mastermind groups on marketing in the world. And Babs and I are clients of Joe in his program. And Joe's been in Strategic Coach since 1997.
I met Peter in New York. He just had gone through the roof with his book and he also had a TED Talk, which went worldwide. And all of a sudden he had huge speaking engagements all around the planet. But he had also just gotten married. And in the first year he had twin boys. So here he was, he was caught between red eyes around the planet and getting home and spending time with his family. And we connected, and it was just the right time, he really liked what Joe said about Coach, and he liked the conversation. So he signed up. And then within about three or four months, he had a video session going through all of his ideas on how you create an exponential company entrepreneurially.
So he had about 50 seats and we put 35 Coach people in. And I took on total reality with him with that. And he says, "Wow, you guys can really put customers into an event." And I said, “Yeah, we've been doing it for a long time.” And I said, “If I'd had six months, we could have gotten 200 or 300 people.” So we decided to create a collaboration between Peter's company and our company Strategic Coach. It's called Abundance360. We're in our 11th year right now. It's a big event. And 360 is the total number of people who can be there live every year. But then he's got a whole series of video workshops that go off, and we have hundreds of our Coach clients involved in that.
So this is a beautiful collaboration because we could never have his skills inside of Coach. That's not really the focus of what our program is, but there's a lot of our clients who really want access to Peter's knowledge. So we've created a way for them to do it. We also have a podcast series called Exponential Wisdom. We got the raw footage from that. So we just wanted to take it and put a Multiplier Mindset context around parts of our conversation. The topic of this particular podcast, what does it take to be an entrepreneur and then to be a continually successful entrepreneur? This is little bit of the interchange between Peter and myself. And one of the things that this points out is that there's a million different ways to be I'm an entrepreneur and there's a million ways to be a successful entrepreneur because it really depends upon what your Unique Ability is, but it takes certain kinds of capabilities to really, really be successful so that your decision to be an entrepreneur is a huge payoff. It's a 10 times payoff. It's 100 times payoff.
Peter Diamandis: Today we're going to talk about something that is near and dear to both of our hearts, and it's the entrepreneurial journey. We haven't had a chance to talk about this, Dan, but what makes an entrepreneur? What are the highs and lows, the pros, the cons of being an entrepreneur? What does it mean to be an entrepreneur? How do you succeed at it? And how do you know if it's right for you? So this is a subject that both you and I exude from our pores and I’m excited to jump in.
Dan Sullivan: Well, it's a very recent concept because if you go back and check the dictionary, the best definition was 1804, and that was a Frenchman by the name of Jean-Baptiste. And he said, "Entrepreneurs are someone who takes resources from a lower level of productivity to a higher level of productivity." So entrepreneurs improve things. They take existing things, they create new things, but they take resources. And he was asked, what kind of resource? And he said, "Any kind of resource." Just a little note, and then I'll pass it on to you whether you've heard other definitions. But he was asked, and entrepreneur was a really new term as we use it today. And his whole belief was that it was the Industrial Revolution that really created a whole new class of individuals who could literally come from nowhere and become major economic players, unlike anything that had happened before.
Technically, the Industrial Revolution starts in 1776, in March of 1776, and it's when James Watt introduced an improved steam engine that got a 25% energy return, which was phenomenal. Probably, it'd still be phenomenal in some centers, but it was that sudden where almost any individual who was ambitious, who was enterprising, who was ingenious, could now use a new technology to massively transform productivity in all existing industries, starting with basically the fabric industry was where it was first used as a real productive, it was used to get water out of coal mines in Great Britain. That was the main purpose.
But it created two classes. It created the entrepreneurs who were these people who could come from nowhere and create great enterprises and great fortunes. And it created the intellectual class. There was no class called intellectual class. And these are the people who hated entrepreneurs because they didn't deserve their status, they weren't educated, they didn't have aristocracy, they hadn't come up the normal way. And I think it starts there. And then you see the 19th century was a phenomenal entrepreneurial decade, and of course, it's gotten exponentially larger.
Peter Diamandis: I define an entrepreneur as someone who finds a juicy problem and solves it. That's my definition. And I think today more than ever, especially during this exponential age, the ability for a single individual to make a dent in the universe, to find a problem, solve a problem, is greater than ever before. If you think about what it takes to become an entrepreneur, and I'm curious for those who are entrepreneurs, you know it, you thrive on it. I'm on my 26th or 27th company, some really good ones, some spectacular failures, and everything in between.
But I think if I were to rattle off the list of things, first of all, it requires passion or obsession with a subject because it's not easy. It's much easier to just get a job and do what you're told. So that's the first thing. I think it requires a reasonably high risk tolerance because if you're really doing something on your own that hasn't been done before and you could lose it all and you're not sure where your next paycheck is coming, which is some part of the early entrepreneurial journey, risk is there.
And then I think there's a certain amount of self-confidence. I would say having an understanding of the problem you want to solve and possibly, not required, an expertise you're bringing to the table, because a true entrepreneur will not ask how, but who, as you've famously said, they'll pull together a team. What are the other elements that you think of an entrepreneur needs to have?
Dan Sullivan: Well, I think of the one that I've noticed because I am fascinated in people's history. So whenever I meet an entrepreneur, I say, you know, when you think about the entrepreneurial path, which is definitely a fork in the road from the way that most people think about their future, when did you notice it showing up? If you had to go back to the earliest age that you were doing things different than your peer group was doing, you were doing something different than them. You wanted to have a direct relationship with the marketplace. You didn't want the buffer of someone who guaranteed you income, didn't guarantee you security, you wanted to hit the marketplace. So do you remember, I mean-
Peter Diamandis: I do. I do. I remember I was in high school, I started a snow removal service between my house and my friend's house a few miles away. We went door to door and sold snow removal for 20 bucks a shot.
Dan Sullivan: Wow. That was good because that would've been the late 70s, I think.
Peter Diamandis: Yeah. The problem was we had a record three foot snowfall on one day and destroyed the business because I couldn't take care of it. But that was my first effort. But my real entrepreneurial journey was my first year at MIT when I started an international student space organization called Students with Exploration and Development of Space. And it was this bold, crazy vision that actually came true. And I was like, wow, this is cool. And there's like this element of surprise and delight when you start a business, and it was a non-profit, and I got hooked. I got addicted on the idea of creating something that people would participate. How about you, Dan? What was yours?
Dan Sullivan: Well, I grew up on a farm. So farming is a very risky entrepreneurial business. And our farm failed. My father recreated himself at age 60 as a landscaper. He worked right till he was 82, and he had his best business here. He died at 83, but he worked full-time when he was 82. And then he packed it in, he packed it in, he said, “I can't do it anymore.” And my feeling is that the day my father wasn't doing business, he didn't know who he was, and he just said, "I'm out of here." That joy that you talk about, the excitement and a lot of it is just the applause. I think applause really keeps people in the game. Teamwork, deadlines, having to create new solutions, but you're doing it face-to-face with the marketplace. So you're really getting the best kind of research for the development of what you're doing.
And as check writers, check writers are crucial, and you want to be paid directly. You don't want to go through a third party. You don't want to have five levels of your seed coming down to you. And what I noticed just to finish this topic, that it shows up very early. I mean, the instinct for it shows up where it's chosen. I think there are people who are forced into it because of the failure of a large employer, and that happens. But I noticed the ones who started early tend to create new things more than the people who are forced into it. And you had a very divided, not only postgraduate, but you were already added in undergraduate because you have your famous getting your medical degree. Because medical school received the least amount of your passion. Peter Diamandis: Yes, very true. I mean, when you're hooked as an entrepreneur, you love what you're doing and you're excited to jump out of bed in the morning and go and see what are the results of what I did yesterday and what can I do different today? Yeah. Dan, I think it'd be interesting to ask a question and get your insights, and I have a few to add of, what don't people realize about entrepreneurship? What are some of the surprises that if you haven't been an entrepreneur and you become an entrepreneur, what are the surprises that most people don't know about?
I have one. I'm going to say the surprise is you're going to spend more time with your coworkers and your co-founders than you will your family or your kids. The reality is starting a company is never easy. Most companies are overnight successes after 10 years of hard work. And so pick your co-founder and your employee team that you're working with carefully because they're going to be as close to you and sometimes closer than family. What about you, Dan? What else surprises you?
Dan Sullivan: Yeah, I think the biggest thing I often said, if there's a God in the entrepreneurial heaven, the name of that God is cashflow.
Peter Diamandis: Yeah.
Dan Sullivan: Getting the cashflow routine, because you have to market and you have to create, and it takes a while for you to get these two together that you can't just create and solve problems and then start marketing. You have to do both of them at the same time. I think that's the hardest thing. I see more bankruptcies, I see more failed businesses just because they didn't get cashflow down. I went bankrupt twice in the late 70s and early 80s, and it was strictly receivables that killed me.
So in '84, we made a decision, me talking to myself that I would never have another receivable that what I was doing would get paid for upfront. And people said, "Well, people just won't do that." And I said, “Well, I'm just going to find the check writers who would be willing to do it.” But there you really have to be thinking in terms of their goals, and I think that's the next thing that you have to understand that all of your money is in the aspirational future of your best clients.
Peter Diamandis: It is. You said something really important about cashflow being critical. As an entrepreneur, you're going to make a decision early on if you are going to use your own money and your own blood, sweat, and tears to get the company going. Are you planning at the end of this to own 100% of your own company, or are you going to go out there and raise money from friends, families, angel investors, venture capitalists, and slowly dilute yourself from 100% ownership down to many times, it may be down to 20% or 10%, and I've done both. And some of the crazy moonshot ideas require massive amounts of outside capital. But the companies that I've started and owned myself, and I started the company based upon making the first sales and building it on cashflow, have been the most fulfilling. Do you want to speak to that, Dan?
Dan Sullivan: Well, I remember when we started collaborating and A360 got created, and it was at the first really big one, we did a sample version and-
Peter Diamandis: At SUs in Silicon Valley, right?
Dan Sullivan: Yeah. That's when I became fully human in your eyes because-
Peter Diamandis: You brought check writers.
Dan Sullivan: I put butts in seats. And I said, I think I was more of an abstraction or a theory before that. I remember the day before we did that first event, which was incredibly successful and has been ever since. All the money was already in, you hadn't put the presentation on. And he said, "Boy, I haven't actually presented anything yet."
Peter Diamandis: Everybody bought the tickets in advance.
Dan Sullivan: Everybody bought the tickets. And so I've just stuck with that one model for our home life and we're up. The real program, Strategic Coach Program, I had 15 years of one-on-one, and then we went to a workshop form, and the reason was that Babs and I are Americans who live in Canada. When we moved to Canada, they said that the tax system is voluntary, and I thought it meant optional.
So the one-on-one career was over, and I said, we're going to have to do a workshop to pay our taxes. And I say that because there's the story that entrepreneurs tell about how their business, they were very systematic, they were very strategic. And then there's the actual story that actually got you started. We were scared and silly because we didn't think we could coach room full of people. And we had six people in the first group. And we weren't charging same as if I was charging a whole year for a single individual, but it was 80% times six, so it was five times bigger, and I died and went to heaven on that day.
When you get entrepreneurs and they're talking to each other, they love the failure stories. That's the other thing about entrepreneurs, entrepreneurs are the only people who thrive on failure stories. Corporate execs, you can never get people to talk about that. Government bureaucrats, nobody talks about their failures because they're swimming among sharks and it's blood in the water.
Peter Diamandis: For sure. So other truisms about being an entrepreneur, if you step into that lifestyle, the result is the buck stops with you and everybody looks to you. Something that we talked about in conversation before this podcast was the notion that, and it's a distinction people need to realize is, entrepreneurs don't need to be the CEO of the company. Entrepreneurs hire CEOs many times, and there are different phases of a company. In the beginning, it is end of one, it's you and you're responsible for everything, and you'll bring in a team. And then ultimately, the thing I love is taking a role as founder and chairman or founder and executive chairman and hiring a great CEO to run all the day-to-day operations. The stuff that I don't love doing. I love the creative, I love the teaching, I love the strategy. I love all of that. You want to speak about the idea of entrepreneurs hiring CEOs?
Dan Sullivan: Yeah. Well, in my case, I married my CEO or she married me, I'm not quite sure how it went. But Babs, who's my lifetime partner in personal life and business life, she was really great at creating teams and to this day has a real gift for putting teams together. And she just looked at me and she says, "You're just doing so much, one, that you're no good at. And the other thing is, some of the things that you're no good at, you just don't do, like filing with the government and paying attention to that."
And so from the year before we actually started the program, she was just freeing me up. And there's one rule that she has in the company, and this goes back 34 years. It's free up Dan. You free up Dan to what he's doing. We have business meetings to run the company. And if there's more than three per year, I ask for an investigation, why am I in more meetings? But the way we look at it, it's like a live theater. If you think about the business of a live theater, there's the whole business of the theater, which is all the backstage that has to go in to fill up an audience. And I'm responsible for what goes on stage. I'm the front stage guy, and it's all my creativity that constitutes the front stage. But everything backstage I have no part of. Peter Diamandis: So is a concept in Coach, and it's a-
Dan Sullivan: No, and what I say, there's no rule for this. There's no rule for this. It's how you want to have it. I mean, you created your entrepreneurial business for freedom. You want to be freed up to just do what you're passionate about, what you started the podcast with. It's about passion, but I think it's passion for freedom.
Peter Diamandis: Yes. I mean, I think a true entrepreneur loves to do what they love to do. I would say if it's just about making money, you pick the wrong topic, money comes as a result of doing what you love to do and what people need. But I was going to get to the idea that you speak about in Coach, which I love, which is Unique Ability. And as an entrepreneur, it's understanding what your Unique Ability is. It could be that you're a coder. It could be that you're a coach. It could be that you're a writer. It could be anything. You could build businesses around any Unique Abilities. And it's also knowing what you don't love doing and finding people, the Whos, to partner with to do those things you don't love doing.
Dan Sullivan: Yeah, yeah. Yeah, I mean, the Unique Ability is really the concept, the cornerstone concept for what we've done. And my whole point is there that everybody's born, and I think this is factory installed. People are born with a particular passionate interest in some sort of activity. And I think we've talked before about the school system. The school system I think tries to educate you out of a passion and want you to be a generalist that you have to take everything. It's very, very interesting, and we've had about 22,000 entrepreneurs who have on average spent three years in the coaching program.
I can remember on one hand the number of entrepreneurs in 34 years, well, actually 48 years, because I started working with entrepreneurs in 1974, and I can't remember any of them saying that their formal education had really anything to do with their entrepreneurism. It's not that they're opposed to it or anything, they just don't see it as a crucial factor to who they are as an entrepreneur.
Peter Diamandis: Yeah, no. If it does have something to do with you, you became an entrepreneur during school, and then school became a distraction for you along the way. One of the speakers at Abundance360 this year, Alexandr Wang, who's the CEO of Scale AI, which is a multi-billion dollar company, he became the youngest self-made billionaire. He tells the story that he was at MIT and over the summer he went to go work on AI, and he told his parents it was going to be just this summer thing, and he never went back.
Dan Sullivan: That was the end.
Peter Diamandis: That was the end of school.
Dan Sullivan: And I think it's happened so frequently, certainly during the microchip revolution, it happened so frequently that it's almost become a cliché. She's in prison now, but Elizabeth Holmes, her big thing was that she went to Stanford and got everything she needed, and I think not even a year, and then she went out, but that had become sort of a model that Steve Jobs filled.
Peter Diamandis: It was a badge of honor to drop out of school.
Dan Sullivan: Oh, yeah. You obviously didn't have what it took. I mean, she had some other interesting issues with her whole presentation, but the thing was that she was following something that had been very, very dominant, especially in the 70s, I think was. It's an interesting thing, but it's almost like folklore. Well, if you go to university, then you have to drop out at a certain point to start your business and everything else. The vast majority of people do get an education, but they got an education because it was what you had to do, but it didn't figure prominently in the crucial center of why they're a successful entrepreneur.
Peter Diamandis: It wasn't like going to medical school to be a doctor or going to law school to become a lawyer. And I don't actually know whether getting an MBA, there's one reason to go to get your business degree is to meet a lot of other people. It's like the network that you get.
Dan Sullivan: I would say network is a crucial.
Peter Diamandis: Yeah. But I've written some blogs about the idea, instead of going and spending hundreds of thousands of dollars and getting your MBA, find a great network and plug into it or become an apprentice for someone you want to apprentice for.
Dan Sullivan: How would that work for you? I mean, if you go back to your Harvard and your MIT days, I mean-
Peter Diamandis: I didn't.
Dan Sullivan: But it seems to me that you were making your network outside of both of them.
Peter Diamandis: It was all outside. I built my Space Network through that first group. I started and founded students for exploration development space. Jeff Bezos was the President of the Princeton chapter, and I met a lot of amazing people, but outside of school. And same thing for medical school, I was checking the boxes and surviving in medical school to get that diploma and send it to my parents at the end, but my network was outside.
Here's another attribute I think is important for entrepreneurs, and I'm curious your thoughts. I think to be a successful entrepreneur, you need to be a great communicator. You need to be effectively a salesman, saleswoman. You need to be able to compel your idea and get people to get it, believe it. Because in the beginning, you're selling yourself and you're selling your idea.
Dan Sullivan: Yeah. Can I ask you a question about that, what gets communicated? You say a great salesperson, but from your experience, because you've really been heavily into the venture capital community for a lot of your different ventures, what are they betting on? Are they betting on the idea or are they betting on the person?
Peter Diamandis: So I think about funding in phases, right? In the beginning, there's the friends and family round. When you have an idea and you're going out and pitching to get some capital, and the friends and family round of any capitalization, if you're raising capital, they're only betting on you because you don't really have a track record yet. You really don't have a fundamental idea. And what you want is people putting small amounts of money on you and then following how you succeed. And if you are able to succeed and you keep that community of investors informed, then as they see you succeed or fail and learn something and then succeed, they're going to be willing to put additional money in.
And then there's the jockey or the horse is the conversation. But at the end of the day, a great entrepreneur with a mediocre business will reinvent it into a great business. A great business with a mediocre entrepreneur will fail. And so it needs to have that level of a great person, but people in the early days are investing in you and the promise of the idea. They're definitely not-
Dan Sullivan: It's the only thing real.
Peter Diamandis: Yeah. It's the only thing real. Yeah.
Dan Sullivan: Yeah, yeah. Another question about that is really the failure, because failure has a totally different meaning in the entrepreneurial world than it does in all other worlds. I mean, I can't think of another world. Like in the entertainment industry, it's still the same model. I think you may know him or have met him. Jeff Madoff.
Peter Diamandis: Yes, I know him. Yeah.
Dan Sullivan: And Jeff, at age 73, decided to write a Broadway play, a Broadway musical play, and started five years ago, and it opens in Chicago. It's gone through the first route to open outside of New York City. They had workshops in New York and then started in Philadelphia, and they had a three week run. And it was spectacular. I mean, they got rave reviews and sellout audiences, but at each level, who was doing the funding moved up a level that you started off with people you knew when you began, and now it's big, big money coming in. They have a 12 week run in Chicago. It's called Personality, and it's the musical history of Lloyd Price, who was the real first crossover rock and roll, 1951-1952.
Babs and I just invested because my first thought in life is I wanted to go into theater. I've got good skills, I've got good theater skills, but I don't have the passion. I wouldn't stick with it. I said, “Jeff, we'll pay for the coffee.” We're on our third round, we put in, not insignificant, but certainly not the top investor. But now you're talking about millions have to come in. It's coming in from foundations. It's coming in from people who are strangers.
Peter Diamandis: There's also a different world today as an entrepreneur, capital goes through cycles of being restrictive and hard to get, and capital becomes open and available. In the late dot-com revolution, there was like, I remember a friend of mine describing Silicon Valley as rivers of gold flowing. All you do is put your ladle and pick it up, and then all of a sudden it shut off instantly. And so when I think about guidance to an entrepreneur, it's okay to have a big passionate moonshot where you want to impact millions or billions of people. But I think it's really important to have a business plan that delivers dollar one to a customer in the beginning. Like you say, check writers, right? Because you learn a lot when you actually have to generate revenue at the start versus theory. How do you think about that? What's your advice to entrepreneurs who are getting started now?
Dan Sullivan: Well, I think the faster you can one, I mean dollar one for the investor, but dollar one for yourself. So Babs and I put in a policy rate from the beginning that 15% of gross was ours, right off the top every year. And we've done that since we started. We started off with two employees, and now we have 130. We were just in Toronto, and now we're in three countries. I've 16 other coaches, and we've just had that constant model. So one of the things I'm always saying that every entrepreneur works out unique formulas. People say, "Well, why do you live in Canada? It's so expensive up there." And I said, “Oh, there's some hedges. There's some offsets.” It's also easier to put a team together in Canada than the United States, because Canadians are not nearly as mobile as people in the States. There's about 20 big centers that you could find opportunity. And Toronto, it's Toronto. Canada, it's basically Toronto or maybe Calgary.
Peter Diamandis: You mean people stick around for the job for a little bit longer than the United States?
Dan Sullivan: Yeah. So we have 70 who have been more than 10 years. We have 25 that are more than 20 years. And the payoff for that, if they're good people and you're operating according to Unique Ability and Unique Ability Teamwork, there's an enormous institutional wisdom that grows up in the company.
Peter Diamandis: Dan, when you're hearing the pitch from a young entrepreneur, whether they're joining Coach or they're at Abundance360, or you just meet them someplace, are there elements that you say, wow, this guy or gal is going to be a great entrepreneur, or this person's dreaming? Is there elements that make you put them in one or the other bucket?
Dan Sullivan: Yeah.
Peter Diamandis: What are they?
Dan Sullivan: That the pitch is totally how the check writers benefit from this new idea. That there's problems that the customer has that are not being solved, or there's better ways to solve. The dangers they have, the opportunities they have, the strengths they have, and you've got a unique take on how they're immediately going to experience benefit. And if they don't have a handle on who the customer is, they're making up fancy futures.
Peter Diamandis: Yeah, that's a real important point. I would say it a slightly different way. If you've got someone who's got a neat technology that's searching for a problem, that's a failure mode over and over again versus someone who says-
Dan Sullivan: Yeah, and you've seen that. I mean, I think probably the microchip. I think this all starts when Gordon Moore put together a prediction line in 1965, wasn't even called microchips. I think '73 is when the term hit on. It was very, very clear that this was a historic game changer, that there was going to be something. I think there was a lot of people throwing solutions at non-problems because people were throwing money at new solutions. But I suspect if you go back to any other, since the industrial revolution, that was the case. And there are a lot of people have money that they don't need, and they just want to throw it at somebody.
Peter Diamandis: Or at some problem to learn about. If you go back into late 1800s and early 1900s, when electricity first became viable, the entrepreneur du jour or the invention du jour was taking a mechanical thing and adding electricity to it.
Dan Sullivan: Oh, yeah.
Peter Diamandis: The electric dishwasher-
Dan Sullivan: Well, in 1910, there were 3000 car companies in the United States.
Peter Diamandis: Crazy.
Dan Sullivan: And 40% of them were electric cars.
Peter Diamandis: Yeah, that's even crazier. And now, of course, we're in the midst of the generative AI revolution where everybody's throwing generative AI at their favorite problem.
Dan Sullivan: I don't know. It's new but there's a classic pattern on what happens during the early days. People are betting on the bet. In some ways, they're not even betting on the thing. They just want to see... I mean, there was the recent example, not naming names here in the crypto world, and the guy got 220 million and he was in shorts, and somebody said, "I love the founder. I love the founder. I just want to give him $220 million."
Peter Diamandis: Right. I could not imagine who that could possibly be. All right, so I want to maybe wrap with a rapid fire session on this podcast of advice to someone who wants to be an entrepreneur or thinks they might want to be an entrepreneur. It's like, what do you need to think about? I'm going to throw out the first one. Choose your co-founders wisely. You're going to live with them, spend time with them, make sure they bring a different Unique Ability than you do, and that you're talking all the time and sharing your ideas and your challenges, and you have respect to their person. What's another piece of advice?
Dan Sullivan: Yeah. I would say the other thing is make your first hire an artist.
Peter Diamandis: Really? That's unusual. Tell me about that.
Dan Sullivan: Yeah, because they can take your ideas and put them into graphic form.
Peter Diamandis: Can it be DALL·E 2 or Stable Diffusion?
Dan Sullivan: Well, my rule is I always keep a smart human between me and the technology. But my first hire was an artist. He was 16 years old, and he was into computers. So this was 1987-1988. I promised him a Mac too, if he came aboard. No, it was the little Mac to start with. The little box-like Mac.
Peter Diamandis: Yeah, the Mac plus.
Dan Sullivan: But we told him that when the Mac II came in, he'd get the... I mean, he was a dream. And when I have artistic skills, I was a layout artist in the advertising world, so I knew the basics. And he says, "How come we always use Helvetica?" And I said, because everybody uses Helvetica. I know, but we should be different. I said, there's a reason why everybody uses Helvetica. And so I hired an artist and because we had fantastic slides in those days, and you could tell your whole story.
Peter Diamandis: Dan, you're dating yourself way back where?
Dan Sullivan: I mean, I was old in 1980s. I mean, I'm timeless now.
Peter Diamandis: Yes, you are. You're only halfway done with life. At least halfway.
Dan Sullivan: At 78. Oh, that was my first. And people said, "Well, why not a secretary?" And I said, first of all, you can hire them by the hour, but you want to get your image of what you're doing in picture form as fast as you can.
Peter Diamandis: All right. Well, we now have generative AI to help us on that. I'm going to throw out another one. Pick a subject you're obsessed by, not interested in. That you pick a topic for your business or company that you're passionate about, you're obsessed by. And it's not a passing fancy.
Dan Sullivan: It's a passion for or a passion against?
Peter Diamandis: Well, it could be a passion for or passion against, right?
Dan Sullivan: Yeah.
Peter Diamandis: It could be a problem that you refuse to let go on any further. I'm going to solve this no matter what it takes, or I'm going to create this. What's another piece of advice?
Dan Sullivan: Mine is talented, successful, ambitious entrepreneurs who don't have any lifestyle goals that they're heading towards and don't have any status goals. They just have growth goals.
Peter Diamandis: Okay. I buy that. Understand your Unique Ability and do that which you're great at and you love doing. And then bring in partners or employees who do the other stuff for you and support you.
Dan Sullivan: Yeah, totally.
Peter Diamandis: Yeah. Oh, another one you mentioned earlier, generate dollars on day one if you can. Get to check writers. Dan Sullivan: Yeah. Get a fast turnaround on your first. So I have a 90 day turnaround on anything new that I create. It's in the profit after 90 days. And mind you, I'm dealing with ideas. It's not with stuff, so I can do that. But remember when A360 got created and I said, “You're going to have an enormous amount of money before the first day of this”. And we did. We did. And you were able to grow your team from that.
Peter Diamandis: For sure. I mean, the equivalent here is build a minimally viable product, an MVP. You can prototype it, you can start selling it. You can start taking out Google AdWords and testing it. You can throw up a Shopify page and see if anybody wants it. You can go to a variety of platforms and get customer feedback. Get customer feedback.
Dan Sullivan: Yeah. The only person who can tell you it's a good idea is somebody who would write a check for it. Nobody else. Your friends, your family, especially not your staff, you're paying them. They don't think any new idea is that good.
Peter Diamandis: Well, it's interesting, right? On the flip side, sometimes your staff will tell you it is a good idea when it isn't. I remember I was interviewing Elon Musk on a Goldman Sachs stage, and he said something I'll never forget. He said, “Your friends tell you how great everything is. Your best friends tell you what suck.” So make sure you've got people-
Dan Sullivan: But check writers will just tell you that they wouldn't pay for it the way it is. But if you've made some adjustments, then that's great market research. And I think you mentioned Elon, and I think Elon is, from my perspective, which is not close like yours is, of all the big tech people, I think he's the truest entrepreneur of them all.
Peter Diamandis: For sure. Sees a problem, jumps on it.
Dan Sullivan: Well, not only that, but he continually takes big risks. And the other thing he’s got a very interesting, which I totally agree with, is fail as fast as you can and as often as you can. And pretty soon you're going to get to something that nobody else could possibly have created.
Peter Diamandis: Yeah, it's amazing.
Dan Sullivan: He's got a different kind of nervous system, I think.
Peter Diamandis: He does. He's also one of the most extraordinarily intelligent individuals I've ever met in my life who has a first principle thinking mindset.
Dan Sullivan: He read and almost memorized whole encyclopedias when he was a kid, his understanding of geopolitics and everything. I mean, when Elon makes a big decision, like a $10 million factory in Mexico.
Peter Diamandis: 10 billion. Right. Yeah. 10 million.
Dan Sullivan: Yeah. You can't round off with 10 million. But $10 billion factory. He's sensing something in the wind. And the thing is that there's a shift on and where North America, the United States, Canada, and Mexico have just tested out supply chains from all over the world that aren't dependable. And he said, "One of the things, everybody's decided it can be in Mexico, but it has to be on the continent. You can do it by truck, you can do it by train and everything." But the other thing, the pay scales in Mexico are about one-sixth the pay scales in the United States. At almost every level, the US is six times the pay scale, and you have to have that with high technology. You got to have this spectrum of pay scales. I mean, he bought Twitter and everybody says "He's just fooling around. It's like somebody buying a baseball team." And I said, no, no, no, no. I said, it's really dangerous to second guess Elon Musk.
Peter Diamandis: My guess is that when he takes it public again, it'll be at least 5x what he bought it for.
Dan Sullivan: Oh, yeah.
Peter Diamandis: With a number of new revenue streams. All right. My last thought on entrepreneurship here to close out our podcast here, buddy, is it is one of the highest forms of artistic creativity. You're creating something that can change the world. If you've got a bent for it, if you're interested in it, I could not commend it more than a way of life. It is extraordinary. I love being an entrepreneur, and I love hanging out with entrepreneurs, and I think they're the most important forces of making the world a better place.
Dan Sullivan: I talk to people as if it's a career choice. It's not a career choice, it's a lifetime choice. Okay?
Peter Diamandis: Yes.
Dan Sullivan: You have to understand that if you've been at it for 5 or 10 years, this is a life sentence.
Peter Diamandis: There's no going back.
Dan Sullivan: They won't have you back. And what are you going to show them for the 10 years? Well, who did you work for? I mean, who withheld your tax at source and everything like that.
Peter Diamandis: You become unemployable after a year or two being an entrepreneur.
Dan Sullivan: Yeah, and I would say that that's the actual decision that takes the greatest commitment. This is for life, certainly mine. I mean, the day I quit will be the day after I die.
Peter Diamandis: Yes, for sure. All right, buddy, as always, a pleasure to spend time with you. That
Dan Sullivan: That was a good ref.
Peter Diamandis: That was fun. All right, see you next time.
Dan Sullivan: Okay. Thank you, Peter.
Dan Sullivan: Well, it's a very recent concept because if you go back and check the dictionary, the best definition was 1804, and that was a Frenchman by the name of Jean-Baptiste. And he said, "Entrepreneurs are someone who takes resources from a lower level of productivity to a higher level of productivity." So entrepreneurs improve things. They take existing things, they create new things, but they take resources. And he was asked, what kind of resource? And he said, "Any kind of resource." Just a little note, and then I'll pass it on to you whether you've heard other definitions. But he was asked, and entrepreneur was a really new term as we use it today. And his whole belief was that it was the Industrial Revolution that really created a whole new class of individuals who could literally come from nowhere and become major economic players, unlike anything that had happened before.
Technically, the Industrial Revolution starts in 1776, in March of 1776, and it's when James Watt introduced an improved steam engine that got a 25% energy return, which was phenomenal. Probably, it'd still be phenomenal in some centers, but it was that sudden where almost any individual who was ambitious, who was enterprising, who was ingenious, could now use a new technology to massively transform productivity in all existing industries, starting with basically the fabric industry was where it was first used as a real productive, it was used to get water out of coal mines in Great Britain. That was the main purpose.
But it created two classes. It created the entrepreneurs who were these people who could come from nowhere and create great enterprises and great fortunes. And it created the intellectual class. There was no class called intellectual class. And these are the people who hated entrepreneurs because they didn't deserve their status, they weren't educated, they didn't have aristocracy, they hadn't come up the normal way. And I think it starts there. And then you see the 19th century was a phenomenal entrepreneurial decade, and of course, it's gotten exponentially larger.
Peter Diamandis: I define an entrepreneur as someone who finds a juicy problem and solves it. That's my definition. And I think today more than ever, especially during this exponential age, the ability for a single individual to make a dent in the universe, to find a problem, solve a problem, is greater than ever before. If you think about what it takes to become an entrepreneur, and I'm curious for those who are entrepreneurs, you know it, you thrive on it. I'm on my 26th or 27th company, some really good ones, some spectacular failures, and everything in between.
But I think if I were to rattle off the list of things, first of all, it requires passion or obsession with a subject because it's not easy. It's much easier to just get a job and do what you're told. So that's the first thing. I think it requires a reasonably high risk tolerance because if you're really doing something on your own that hasn't been done before and you could lose it all and you're not sure where your next paycheck is coming, which is some part of the early entrepreneurial journey, risk is there.
And then I think there's a certain amount of self-confidence. I would say having an understanding of the problem you want to solve and possibly, not required, an expertise you're bringing to the table, because a true entrepreneur will not ask how, but who, as you've famously said, they'll pull together a team. What are the other elements that you think of an entrepreneur needs to have?
Dan Sullivan: Well, I think of the one that I've noticed because I am fascinated in people's history. So whenever I meet an entrepreneur, I say, you know, when you think about the entrepreneurial path, which is definitely a fork in the road from the way that most people think about their future, when did you notice it showing up? If you had to go back to the earliest age that you were doing things different than your peer group was doing, you were doing something different than them. You wanted to have a direct relationship with the marketplace. You didn't want the buffer of someone who guaranteed you income, didn't guarantee you security, you wanted to hit the marketplace. So do you remember, I mean-
Peter Diamandis: I do. I do. I remember I was in high school, I started a snow removal service between my house and my friend's house a few miles away. We went door to door and sold snow removal for 20 bucks a shot.
Dan Sullivan: Wow. That was good because that would've been the late 70s, I think.
Peter Diamandis: Yeah. The problem was we had a record three foot snowfall on one day and destroyed the business because I couldn't take care of it. But that was my first effort. But my real entrepreneurial journey was my first year at MIT when I started an international student space organization called Students with Exploration and Development of Space. And it was this bold, crazy vision that actually came true. And I was like, wow, this is cool. And there's like this element of surprise and delight when you start a business, and it was a non-profit, and I got hooked. I got addicted on the idea of creating something that people would participate. How about you, Dan? What was yours?
Dan Sullivan: Well, I grew up on a farm. So farming is a very risky entrepreneurial business. And our farm failed. My father recreated himself at age 60 as a landscaper. He worked right till he was 82, and he had his best business here. He died at 83, but he worked full-time when he was 82. And then he packed it in, he packed it in, he said, “I can't do it anymore.” And my feeling is that the day my father wasn't doing business, he didn't know who he was, and he just said, "I'm out of here." That joy that you talk about, the excitement and a lot of it is just the applause. I think applause really keeps people in the game. Teamwork, deadlines, having to create new solutions, but you're doing it face-to-face with the marketplace. So you're really getting the best kind of research for the development of what you're doing.
And as check writers, check writers are crucial, and you want to be paid directly. You don't want to go through a third party. You don't want to have five levels of your seed coming down to you. And what I noticed just to finish this topic, that it shows up very early. I mean, the instinct for it shows up where it's chosen. I think there are people who are forced into it because of the failure of a large employer, and that happens. But I noticed the ones who started early tend to create new things more than the people who are forced into it. And you had a very divided, not only postgraduate, but you were already added in undergraduate because you have your famous getting your medical degree. Because medical school received the least amount of your passion. Peter Diamandis: Yes, very true. I mean, when you're hooked as an entrepreneur, you love what you're doing and you're excited to jump out of bed in the morning and go and see what are the results of what I did yesterday and what can I do different today? Yeah. Dan, I think it'd be interesting to ask a question and get your insights, and I have a few to add of, what don't people realize about entrepreneurship? What are some of the surprises that if you haven't been an entrepreneur and you become an entrepreneur, what are the surprises that most people don't know about?
I have one. I'm going to say the surprise is you're going to spend more time with your coworkers and your co-founders than you will your family or your kids. The reality is starting a company is never easy. Most companies are overnight successes after 10 years of hard work. And so pick your co-founder and your employee team that you're working with carefully because they're going to be as close to you and sometimes closer than family. What about you, Dan? What else surprises you?
Dan Sullivan: Yeah, I think the biggest thing I often said, if there's a God in the entrepreneurial heaven, the name of that God is cashflow.
Peter Diamandis: Yeah.
Dan Sullivan: Getting the cashflow routine, because you have to market and you have to create, and it takes a while for you to get these two together that you can't just create and solve problems and then start marketing. You have to do both of them at the same time. I think that's the hardest thing. I see more bankruptcies, I see more failed businesses just because they didn't get cashflow down. I went bankrupt twice in the late 70s and early 80s, and it was strictly receivables that killed me.
So in '84, we made a decision, me talking to myself that I would never have another receivable that what I was doing would get paid for upfront. And people said, "Well, people just won't do that." And I said, “Well, I'm just going to find the check writers who would be willing to do it.” But there you really have to be thinking in terms of their goals, and I think that's the next thing that you have to understand that all of your money is in the aspirational future of your best clients.
Peter Diamandis: It is. You said something really important about cashflow being critical. As an entrepreneur, you're going to make a decision early on if you are going to use your own money and your own blood, sweat, and tears to get the company going. Are you planning at the end of this to own 100% of your own company, or are you going to go out there and raise money from friends, families, angel investors, venture capitalists, and slowly dilute yourself from 100% ownership down to many times, it may be down to 20% or 10%, and I've done both. And some of the crazy moonshot ideas require massive amounts of outside capital. But the companies that I've started and owned myself, and I started the company based upon making the first sales and building it on cashflow, have been the most fulfilling. Do you want to speak to that, Dan?
Dan Sullivan: Well, I remember when we started collaborating and A360 got created, and it was at the first really big one, we did a sample version and-
Peter Diamandis: At SUs in Silicon Valley, right?
Dan Sullivan: Yeah. That's when I became fully human in your eyes because-
Peter Diamandis: You brought check writers.
Dan Sullivan: I put butts in seats. And I said, I think I was more of an abstraction or a theory before that. I remember the day before we did that first event, which was incredibly successful and has been ever since. All the money was already in, you hadn't put the presentation on. And he said, "Boy, I haven't actually presented anything yet."
Peter Diamandis: Everybody bought the tickets in advance.
Dan Sullivan: Everybody bought the tickets. And so I've just stuck with that one model for our home life and we're up. The real program, Strategic Coach Program, I had 15 years of one-on-one, and then we went to a workshop form, and the reason was that Babs and I are Americans who live in Canada. When we moved to Canada, they said that the tax system is voluntary, and I thought it meant optional.
So the one-on-one career was over, and I said, we're going to have to do a workshop to pay our taxes. And I say that because there's the story that entrepreneurs tell about how their business, they were very systematic, they were very strategic. And then there's the actual story that actually got you started. We were scared and silly because we didn't think we could coach room full of people. And we had six people in the first group. And we weren't charging same as if I was charging a whole year for a single individual, but it was 80% times six, so it was five times bigger, and I died and went to heaven on that day.
When you get entrepreneurs and they're talking to each other, they love the failure stories. That's the other thing about entrepreneurs, entrepreneurs are the only people who thrive on failure stories. Corporate execs, you can never get people to talk about that. Government bureaucrats, nobody talks about their failures because they're swimming among sharks and it's blood in the water.
Peter Diamandis: For sure. So other truisms about being an entrepreneur, if you step into that lifestyle, the result is the buck stops with you and everybody looks to you. Something that we talked about in conversation before this podcast was the notion that, and it's a distinction people need to realize is, entrepreneurs don't need to be the CEO of the company. Entrepreneurs hire CEOs many times, and there are different phases of a company. In the beginning, it is end of one, it's you and you're responsible for everything, and you'll bring in a team. And then ultimately, the thing I love is taking a role as founder and chairman or founder and executive chairman and hiring a great CEO to run all the day-to-day operations. The stuff that I don't love doing. I love the creative, I love the teaching, I love the strategy. I love all of that. You want to speak about the idea of entrepreneurs hiring CEOs?
Dan Sullivan: Yeah. Well, in my case, I married my CEO or she married me, I'm not quite sure how it went. But Babs, who's my lifetime partner in personal life and business life, she was really great at creating teams and to this day has a real gift for putting teams together. And she just looked at me and she says, "You're just doing so much, one, that you're no good at. And the other thing is, some of the things that you're no good at, you just don't do, like filing with the government and paying attention to that."
And so from the year before we actually started the program, she was just freeing me up. And there's one rule that she has in the company, and this goes back 34 years. It's free up Dan. You free up Dan to what he's doing. We have business meetings to run the company. And if there's more than three per year, I ask for an investigation, why am I in more meetings? But the way we look at it, it's like a live theater. If you think about the business of a live theater, there's the whole business of the theater, which is all the backstage that has to go in to fill up an audience. And I'm responsible for what goes on stage. I'm the front stage guy, and it's all my creativity that constitutes the front stage. But everything backstage I have no part of. Peter Diamandis: So is a concept in Coach, and it's a-
Dan Sullivan: No, and what I say, there's no rule for this. There's no rule for this. It's how you want to have it. I mean, you created your entrepreneurial business for freedom. You want to be freed up to just do what you're passionate about, what you started the podcast with. It's about passion, but I think it's passion for freedom.
Peter Diamandis: Yes. I mean, I think a true entrepreneur loves to do what they love to do. I would say if it's just about making money, you pick the wrong topic, money comes as a result of doing what you love to do and what people need. But I was going to get to the idea that you speak about in Coach, which I love, which is Unique Ability. And as an entrepreneur, it's understanding what your Unique Ability is. It could be that you're a coder. It could be that you're a coach. It could be that you're a writer. It could be anything. You could build businesses around any Unique Abilities. And it's also knowing what you don't love doing and finding people, the Whos, to partner with to do those things you don't love doing.
Dan Sullivan: Yeah, yeah. Yeah, I mean, the Unique Ability is really the concept, the cornerstone concept for what we've done. And my whole point is there that everybody's born, and I think this is factory installed. People are born with a particular passionate interest in some sort of activity. And I think we've talked before about the school system. The school system I think tries to educate you out of a passion and want you to be a generalist that you have to take everything. It's very, very interesting, and we've had about 22,000 entrepreneurs who have on average spent three years in the coaching program.
I can remember on one hand the number of entrepreneurs in 34 years, well, actually 48 years, because I started working with entrepreneurs in 1974, and I can't remember any of them saying that their formal education had really anything to do with their entrepreneurism. It's not that they're opposed to it or anything, they just don't see it as a crucial factor to who they are as an entrepreneur.
Peter Diamandis: Yeah, no. If it does have something to do with you, you became an entrepreneur during school, and then school became a distraction for you along the way. One of the speakers at Abundance360 this year, Alexandr Wang, who's the CEO of Scale AI, which is a multi-billion dollar company, he became the youngest self-made billionaire. He tells the story that he was at MIT and over the summer he went to go work on AI, and he told his parents it was going to be just this summer thing, and he never went back.
Dan Sullivan: That was the end.
Peter Diamandis: That was the end of school.
Dan Sullivan: And I think it's happened so frequently, certainly during the microchip revolution, it happened so frequently that it's almost become a cliché. She's in prison now, but Elizabeth Holmes, her big thing was that she went to Stanford and got everything she needed, and I think not even a year, and then she went out, but that had become sort of a model that Steve Jobs filled.
Peter Diamandis: It was a badge of honor to drop out of school.
Dan Sullivan: Oh, yeah. You obviously didn't have what it took. I mean, she had some other interesting issues with her whole presentation, but the thing was that she was following something that had been very, very dominant, especially in the 70s, I think was. It's an interesting thing, but it's almost like folklore. Well, if you go to university, then you have to drop out at a certain point to start your business and everything else. The vast majority of people do get an education, but they got an education because it was what you had to do, but it didn't figure prominently in the crucial center of why they're a successful entrepreneur.
Peter Diamandis: It wasn't like going to medical school to be a doctor or going to law school to become a lawyer. And I don't actually know whether getting an MBA, there's one reason to go to get your business degree is to meet a lot of other people. It's like the network that you get.
Dan Sullivan: I would say network is a crucial.
Peter Diamandis: Yeah. But I've written some blogs about the idea, instead of going and spending hundreds of thousands of dollars and getting your MBA, find a great network and plug into it or become an apprentice for someone you want to apprentice for.
Dan Sullivan: How would that work for you? I mean, if you go back to your Harvard and your MIT days, I mean-
Peter Diamandis: I didn't.
Dan Sullivan: But it seems to me that you were making your network outside of both of them.
Peter Diamandis: It was all outside. I built my Space Network through that first group. I started and founded students for exploration development space. Jeff Bezos was the President of the Princeton chapter, and I met a lot of amazing people, but outside of school. And same thing for medical school, I was checking the boxes and surviving in medical school to get that diploma and send it to my parents at the end, but my network was outside.
Here's another attribute I think is important for entrepreneurs, and I'm curious your thoughts. I think to be a successful entrepreneur, you need to be a great communicator. You need to be effectively a salesman, saleswoman. You need to be able to compel your idea and get people to get it, believe it. Because in the beginning, you're selling yourself and you're selling your idea.
Dan Sullivan: Yeah. Can I ask you a question about that, what gets communicated? You say a great salesperson, but from your experience, because you've really been heavily into the venture capital community for a lot of your different ventures, what are they betting on? Are they betting on the idea or are they betting on the person?
Peter Diamandis: So I think about funding in phases, right? In the beginning, there's the friends and family round. When you have an idea and you're going out and pitching to get some capital, and the friends and family round of any capitalization, if you're raising capital, they're only betting on you because you don't really have a track record yet. You really don't have a fundamental idea. And what you want is people putting small amounts of money on you and then following how you succeed. And if you are able to succeed and you keep that community of investors informed, then as they see you succeed or fail and learn something and then succeed, they're going to be willing to put additional money in.
And then there's the jockey or the horse is the conversation. But at the end of the day, a great entrepreneur with a mediocre business will reinvent it into a great business. A great business with a mediocre entrepreneur will fail. And so it needs to have that level of a great person, but people in the early days are investing in you and the promise of the idea. They're definitely not-
Dan Sullivan: It's the only thing real.
Peter Diamandis: Yeah. It's the only thing real. Yeah.
Dan Sullivan: Yeah, yeah. Another question about that is really the failure, because failure has a totally different meaning in the entrepreneurial world than it does in all other worlds. I mean, I can't think of another world. Like in the entertainment industry, it's still the same model. I think you may know him or have met him. Jeff Madoff.
Peter Diamandis: Yes, I know him. Yeah.
Dan Sullivan: And Jeff, at age 73, decided to write a Broadway play, a Broadway musical play, and started five years ago, and it opens in Chicago. It's gone through the first route to open outside of New York City. They had workshops in New York and then started in Philadelphia, and they had a three week run. And it was spectacular. I mean, they got rave reviews and sellout audiences, but at each level, who was doing the funding moved up a level that you started off with people you knew when you began, and now it's big, big money coming in. They have a 12 week run in Chicago. It's called Personality, and it's the musical history of Lloyd Price, who was the real first crossover rock and roll, 1951-1952.
Babs and I just invested because my first thought in life is I wanted to go into theater. I've got good skills, I've got good theater skills, but I don't have the passion. I wouldn't stick with it. I said, “Jeff, we'll pay for the coffee.” We're on our third round, we put in, not insignificant, but certainly not the top investor. But now you're talking about millions have to come in. It's coming in from foundations. It's coming in from people who are strangers.
Peter Diamandis: There's also a different world today as an entrepreneur, capital goes through cycles of being restrictive and hard to get, and capital becomes open and available. In the late dot-com revolution, there was like, I remember a friend of mine describing Silicon Valley as rivers of gold flowing. All you do is put your ladle and pick it up, and then all of a sudden it shut off instantly. And so when I think about guidance to an entrepreneur, it's okay to have a big passionate moonshot where you want to impact millions or billions of people. But I think it's really important to have a business plan that delivers dollar one to a customer in the beginning. Like you say, check writers, right? Because you learn a lot when you actually have to generate revenue at the start versus theory. How do you think about that? What's your advice to entrepreneurs who are getting started now?
Dan Sullivan: Well, I think the faster you can one, I mean dollar one for the investor, but dollar one for yourself. So Babs and I put in a policy rate from the beginning that 15% of gross was ours, right off the top every year. And we've done that since we started. We started off with two employees, and now we have 130. We were just in Toronto, and now we're in three countries. I've 16 other coaches, and we've just had that constant model. So one of the things I'm always saying that every entrepreneur works out unique formulas. People say, "Well, why do you live in Canada? It's so expensive up there." And I said, “Oh, there's some hedges. There's some offsets.” It's also easier to put a team together in Canada than the United States, because Canadians are not nearly as mobile as people in the States. There's about 20 big centers that you could find opportunity. And Toronto, it's Toronto. Canada, it's basically Toronto or maybe Calgary.
Peter Diamandis: You mean people stick around for the job for a little bit longer than the United States?
Dan Sullivan: Yeah. So we have 70 who have been more than 10 years. We have 25 that are more than 20 years. And the payoff for that, if they're good people and you're operating according to Unique Ability and Unique Ability Teamwork, there's an enormous institutional wisdom that grows up in the company.
Peter Diamandis: Dan, when you're hearing the pitch from a young entrepreneur, whether they're joining Coach or they're at Abundance360, or you just meet them someplace, are there elements that you say, wow, this guy or gal is going to be a great entrepreneur, or this person's dreaming? Is there elements that make you put them in one or the other bucket?
Dan Sullivan: Yeah.
Peter Diamandis: What are they?
Dan Sullivan: That the pitch is totally how the check writers benefit from this new idea. That there's problems that the customer has that are not being solved, or there's better ways to solve. The dangers they have, the opportunities they have, the strengths they have, and you've got a unique take on how they're immediately going to experience benefit. And if they don't have a handle on who the customer is, they're making up fancy futures.
Peter Diamandis: Yeah, that's a real important point. I would say it a slightly different way. If you've got someone who's got a neat technology that's searching for a problem, that's a failure mode over and over again versus someone who says-
Dan Sullivan: Yeah, and you've seen that. I mean, I think probably the microchip. I think this all starts when Gordon Moore put together a prediction line in 1965, wasn't even called microchips. I think '73 is when the term hit on. It was very, very clear that this was a historic game changer, that there was going to be something. I think there was a lot of people throwing solutions at non-problems because people were throwing money at new solutions. But I suspect if you go back to any other, since the industrial revolution, that was the case. And there are a lot of people have money that they don't need, and they just want to throw it at somebody.
Peter Diamandis: Or at some problem to learn about. If you go back into late 1800s and early 1900s, when electricity first became viable, the entrepreneur du jour or the invention du jour was taking a mechanical thing and adding electricity to it.
Dan Sullivan: Oh, yeah.
Peter Diamandis: The electric dishwasher-
Dan Sullivan: Well, in 1910, there were 3000 car companies in the United States.
Peter Diamandis: Crazy.
Dan Sullivan: And 40% of them were electric cars.
Peter Diamandis: Yeah, that's even crazier. And now, of course, we're in the midst of the generative AI revolution where everybody's throwing generative AI at their favorite problem.
Dan Sullivan: I don't know. It's new but there's a classic pattern on what happens during the early days. People are betting on the bet. In some ways, they're not even betting on the thing. They just want to see... I mean, there was the recent example, not naming names here in the crypto world, and the guy got 220 million and he was in shorts, and somebody said, "I love the founder. I love the founder. I just want to give him $220 million."
Peter Diamandis: Right. I could not imagine who that could possibly be. All right, so I want to maybe wrap with a rapid fire session on this podcast of advice to someone who wants to be an entrepreneur or thinks they might want to be an entrepreneur. It's like, what do you need to think about? I'm going to throw out the first one. Choose your co-founders wisely. You're going to live with them, spend time with them, make sure they bring a different Unique Ability than you do, and that you're talking all the time and sharing your ideas and your challenges, and you have respect to their person. What's another piece of advice?
Dan Sullivan: Yeah. I would say the other thing is make your first hire an artist.
Peter Diamandis: Really? That's unusual. Tell me about that.
Dan Sullivan: Yeah, because they can take your ideas and put them into graphic form.
Peter Diamandis: Can it be DALL·E 2 or Stable Diffusion?
Dan Sullivan: Well, my rule is I always keep a smart human between me and the technology. But my first hire was an artist. He was 16 years old, and he was into computers. So this was 1987-1988. I promised him a Mac too, if he came aboard. No, it was the little Mac to start with. The little box-like Mac.
Peter Diamandis: Yeah, the Mac plus.
Dan Sullivan: But we told him that when the Mac II came in, he'd get the... I mean, he was a dream. And when I have artistic skills, I was a layout artist in the advertising world, so I knew the basics. And he says, "How come we always use Helvetica?" And I said, because everybody uses Helvetica. I know, but we should be different. I said, there's a reason why everybody uses Helvetica. And so I hired an artist and because we had fantastic slides in those days, and you could tell your whole story.
Peter Diamandis: Dan, you're dating yourself way back where?
Dan Sullivan: I mean, I was old in 1980s. I mean, I'm timeless now.
Peter Diamandis: Yes, you are. You're only halfway done with life. At least halfway.
Dan Sullivan: At 78. Oh, that was my first. And people said, "Well, why not a secretary?" And I said, first of all, you can hire them by the hour, but you want to get your image of what you're doing in picture form as fast as you can.
Peter Diamandis: All right. Well, we now have generative AI to help us on that. I'm going to throw out another one. Pick a subject you're obsessed by, not interested in. That you pick a topic for your business or company that you're passionate about, you're obsessed by. And it's not a passing fancy.
Dan Sullivan: It's a passion for or a passion against?
Peter Diamandis: Well, it could be a passion for or passion against, right?
Dan Sullivan: Yeah.
Peter Diamandis: It could be a problem that you refuse to let go on any further. I'm going to solve this no matter what it takes, or I'm going to create this. What's another piece of advice?
Dan Sullivan: Mine is talented, successful, ambitious entrepreneurs who don't have any lifestyle goals that they're heading towards and don't have any status goals. They just have growth goals.
Peter Diamandis: Okay. I buy that. Understand your Unique Ability and do that which you're great at and you love doing. And then bring in partners or employees who do the other stuff for you and support you.
Dan Sullivan: Yeah, totally.
Peter Diamandis: Yeah. Oh, another one you mentioned earlier, generate dollars on day one if you can. Get to check writers. Dan Sullivan: Yeah. Get a fast turnaround on your first. So I have a 90 day turnaround on anything new that I create. It's in the profit after 90 days. And mind you, I'm dealing with ideas. It's not with stuff, so I can do that. But remember when A360 got created and I said, “You're going to have an enormous amount of money before the first day of this”. And we did. We did. And you were able to grow your team from that.
Peter Diamandis: For sure. I mean, the equivalent here is build a minimally viable product, an MVP. You can prototype it, you can start selling it. You can start taking out Google AdWords and testing it. You can throw up a Shopify page and see if anybody wants it. You can go to a variety of platforms and get customer feedback. Get customer feedback.
Dan Sullivan: Yeah. The only person who can tell you it's a good idea is somebody who would write a check for it. Nobody else. Your friends, your family, especially not your staff, you're paying them. They don't think any new idea is that good.
Peter Diamandis: Well, it's interesting, right? On the flip side, sometimes your staff will tell you it is a good idea when it isn't. I remember I was interviewing Elon Musk on a Goldman Sachs stage, and he said something I'll never forget. He said, “Your friends tell you how great everything is. Your best friends tell you what suck.” So make sure you've got people-
Dan Sullivan: But check writers will just tell you that they wouldn't pay for it the way it is. But if you've made some adjustments, then that's great market research. And I think you mentioned Elon, and I think Elon is, from my perspective, which is not close like yours is, of all the big tech people, I think he's the truest entrepreneur of them all.
Peter Diamandis: For sure. Sees a problem, jumps on it.
Dan Sullivan: Well, not only that, but he continually takes big risks. And the other thing he’s got a very interesting, which I totally agree with, is fail as fast as you can and as often as you can. And pretty soon you're going to get to something that nobody else could possibly have created.
Peter Diamandis: Yeah, it's amazing.
Dan Sullivan: He's got a different kind of nervous system, I think.
Peter Diamandis: He does. He's also one of the most extraordinarily intelligent individuals I've ever met in my life who has a first principle thinking mindset.
Dan Sullivan: He read and almost memorized whole encyclopedias when he was a kid, his understanding of geopolitics and everything. I mean, when Elon makes a big decision, like a $10 million factory in Mexico.
Peter Diamandis: 10 billion. Right. Yeah. 10 million.
Dan Sullivan: Yeah. You can't round off with 10 million. But $10 billion factory. He's sensing something in the wind. And the thing is that there's a shift on and where North America, the United States, Canada, and Mexico have just tested out supply chains from all over the world that aren't dependable. And he said, "One of the things, everybody's decided it can be in Mexico, but it has to be on the continent. You can do it by truck, you can do it by train and everything." But the other thing, the pay scales in Mexico are about one-sixth the pay scales in the United States. At almost every level, the US is six times the pay scale, and you have to have that with high technology. You got to have this spectrum of pay scales. I mean, he bought Twitter and everybody says "He's just fooling around. It's like somebody buying a baseball team." And I said, no, no, no, no. I said, it's really dangerous to second guess Elon Musk.
Peter Diamandis: My guess is that when he takes it public again, it'll be at least 5x what he bought it for.
Dan Sullivan: Oh, yeah.
Peter Diamandis: With a number of new revenue streams. All right. My last thought on entrepreneurship here to close out our podcast here, buddy, is it is one of the highest forms of artistic creativity. You're creating something that can change the world. If you've got a bent for it, if you're interested in it, I could not commend it more than a way of life. It is extraordinary. I love being an entrepreneur, and I love hanging out with entrepreneurs, and I think they're the most important forces of making the world a better place.
Dan Sullivan: I talk to people as if it's a career choice. It's not a career choice, it's a lifetime choice. Okay?
Peter Diamandis: Yes.
Dan Sullivan: You have to understand that if you've been at it for 5 or 10 years, this is a life sentence.
Peter Diamandis: There's no going back.
Dan Sullivan: They won't have you back. And what are you going to show them for the 10 years? Well, who did you work for? I mean, who withheld your tax at source and everything like that.
Peter Diamandis: You become unemployable after a year or two being an entrepreneur.
Dan Sullivan: Yeah, and I would say that that's the actual decision that takes the greatest commitment. This is for life, certainly mine. I mean, the day I quit will be the day after I die.
Peter Diamandis: Yes, for sure. All right, buddy, as always, a pleasure to spend time with you. That
Dan Sullivan: That was a good ref.
Peter Diamandis: That was fun. All right, see you next time.
Dan Sullivan: Okay. Thank you, Peter.