The Entrepreneur’s Guide To Becoming An Invention Machine

Shannon Waller: Hi, Shannon Waller here, and welcome to Inside Strategic Coach with Dan Sullivan. Dan, I like to pick up on when you say interesting things. And one of the interesting things that you've said lately is that you describe Strategic Coach as being an invention-producing enterprise. And I was like, hmm, I want to know more about that. So I'd love to know how do you define what an invention-producing enterprise is and what difference does that make? Why is that important to our entrepreneurial longevity?
 
Dan Sullivan: I have a confession to make on this.
 
Shannon Waller: Oh, that's interesting.
 
Dan Sullivan: I didn't call what we do an invention-producing enterprise. Claude told me— Claude 4.6 AI program. But I described what we had done with intellectual property, like we have thousands of copyrights, we have hundreds of trademarks. And as of last week, we have 85 patents. And I said, so how does Strategic Coach as a coaching company differ from other coaching companies from the standpoint that we have all this intellectual property? It came back and said, well, you are secondarily a coaching company, but what you actually are is an invention-producing enterprise. Coaching companies, they use marketing and they use networking to establish their prominence in the marketplace. And they said, you may do that too, but the central thing you do is you create new thinking tools using our language.
 
AI blows hot air back up your thing, says you are unique in the marketplace because you have 85 patents and hardly any other entrepreneurial coaches, they have to use a lot of relationship, a lot of networking, and a lot of marketing to actually establish their reputation. But in your case, the U.S. Patent Bureau is actually establishing your reputation in the marketplace. And that's very important because the Patent Bureau in Washington is actually an adversarial system, that what they're attempting to do is not to give you a patent, and they will scrutinize the whole world to see if there's anything like what you're doing. They have a whole series of tests, it's about five or six steps, and they have to prove that this is unique, that it's valuable, and that it's non-obvious, but that anybody who would use your thinking tool would get a guaranteed result. So that's where the term came. And it's really changed my whole thinking about how we position ourselves in the marketplace.
 
Shannon Waller: First of all, I love that it was your friend, Claude.
 
Dan Sullivan: Claude is very friendly.
 
Shannon Waller: Very friendly. And actually, I do remember you saying that.
 
Dan Sullivan: And it's very complimentary.
 
Shannon Waller: It is. With great language skills, I might add, which I appreciate about Claude. It's fantastic. It really struck you, Dan, in terms of that is who we are, which is true. And I've actually heard you say a version of that. You've always talked all the way back to our earlier program called Coach 2, how, you know, produce a product and a service, and then you create experience, and then out of that, you generate intellectual property. And from that, you can produce intellectual capital, which is when you make intellectual property valuable to someone else, where they can use it, purchase it, take advantage, what have you. And so to my mind, this was another spin on that, which is kind of fun. But I'm curious to hear more about how it changed your thinking. And you are the number one person. There's a couple of other of us in the company who do create things, at nowhere near the pace that you do, I might add. But it's not a common capability for people to be an invention-producing organization or to produce new intellectual property and capital. So how does that shift your thinking and what difference is that making?
 
Dan Sullivan: Well, to go further with the return I got back on my AI thread, it said that more and more you will attract entrepreneurs who want to be invention-producing enterprise. And that made a huge difference to me. For example, I mean we've known from the beginning when we started the workshop program that entrepreneurs, when they come to their workshops, they of course do the thinking tools that we present in each workshop and we have new ones every quarter. They experience that we're an invention-producing enterprise without knowing that that's the word. But the one of the things in another dimension, they watch how we run our companies. They're very, very alert to how our team members interact with them and what the teamwork looks like in the workshops, how we put on the workshops, the quality of the food, how people are communicated with. And they're picking up all sorts of tips really aren't the content of the Program, but they are the context of the experience.
 
The other thing is that, you know, I have clients who, my longest continuous client in July of 2027, he will have interacted with me in a coaching structure every quarter for 40 years. And every time that that's happened, there's new things that they experience. And I began to realize because we haven't monetized our patents yet. I mean, you can license your patents, you can sell your patents. They're intellectual property and they have property value and we've had them appraised. And we know what the low number would be for one of our patents and what the high number would be for our patents. But you get that through licensing, basically the best way. And we haven't done any licensing yet. But I said, maybe we monetize it by simply stating the fact that what you're going to learn when you come to the Program is how to be an invention-producing enterprise. And nobody else can say that because none of their ideas are backed up by the U.S. government.
 
And I began thinking, well, why don't we just use the fact that we have 85 and a year from now we'll have over 100 patents? Why don't we use that to position ourselves? It's radically different, because the Patent Bureau is the stamp of approval from one of the toughest testing and judging organizations in the world. The U.S. Patent Bureau is the toughest of all the patent bureaus, you know, and around the world, U.S. patents are the gold standard. So I said, well, why don't we just use the uniqueness of how we've gone about creating new materials that, first of all, they're tested on thousands of entrepreneurs. And then they leave the person who designed the tools in the hands of other coaches, and the other coaches get the same results, which is one of the proofs that it's actually intellectual property. So that's what I'm getting out of it is, we may or may not license our tools, but my sense is that what I would really love to see is more and more of our entrepreneurs in the Program are themselves taking their unique knowledge and their unique solutions and they're going through the IP process and they're also getting patents.
 
Shannon Waller: I love this, Dan, because to me, that means you attract creators, people who take their experience and their value creation seriously. The people you're attracting are less likely to be borrowers of other people's ideas, right? And people who actually do want to create ongoing, repeatable value in the marketplace by someone who's not just them. It's not just less ego-y, but it means that you're creating something that's bigger than you, which is exciting.
 
Dan Sullivan: And more lasting. And it's not dependent on the personality. It's not dependent upon the founder. And it's freed me up. You know, I mean, I've got a couple measurements that in 1994 I was the only coach for our workshop programs. I coached 144 workshops in 1994 and then the next year we had our materials packaged enough that we could have another coach come in, and now we're approaching 20 coaches that we have, and they coach the materials, they get the same experience in the room, they get the same outcome. So last year we had 600 workshop days and I did 12 of them. And that kind of shows the power. If it wasn't intellectual property, I would be doing everything.
 
Shannon Waller: So this is cool, Dan. This is actually part of the formula for how you have a Self-Managing and Self-Multiplying Company. This is how you grow 10x. This is how you can do it, not having to work longer and harder, just working a heck of a lot smarter. Ooh, this is good.
 
Dan Sullivan: Well, the other thing is, it depends upon the personality. So a lot of the coaches, they coach big rooms, you know, with maybe 1,000, 2,000, 3,000 people in them. But they basically have the same process. They just need a new 2,000 or 3,000 they get a check for an event, their events get bigger, they apply theater principles to it, has a big experience, but if they're not there, none of this happens. If they're not on stage, none of this happens. They don't have a system. I mean, it's a personality-based coaching company, but it's not a system-based intellectual property coaching company. And I think that's a great differentiator in the marketplace.
 
And there's hundreds of great coaches. There's thousands of great coaches. But I think that their return, the kind of income they get or their growth of their company, depends upon their personality being on stage, which means it's like Siegfried and Roy. I mean, they had a company of 200 people and 20 tigers or whatever the other cast members were. And one night, one of the tigers got nervous and he grabbed Roy and dragged him off stage. Roy was disabled. And the next day they went bankrupt. They had to fire everybody. The show shut down and everything. And it's a good example of that dependence upon an individual live being on stage. And without that, you don't have a business.
 
Shannon Waller: So in terms of entrepreneurial longevity, which I love that we've been using that term, it's kind of dangerous. You've talked about it's better to be the Blue Man Group.
 
Dan Sullivan: Yeah, there was a great article, I think it was in Forbes or Fortune Magazine or anything, and they said, you know, be a Blue Man Group, don't be Siegfried and Roy. You know, Tiger grabs Roy and it's over. Tiger grabs the blue man, you just put another blue man in there. So they had a better model and Blue Man Group is still out there operating.
 
Shannon Waller: Yeah, they sure are.
 
Dan Sullivan: It's not the same blue men, but who knows.
 
Shannon Waller: That's so fun. Well, it's cool because, again, it is actually less ego-y, to use that term, because when you are creating something that's bigger than you or beyond you, it's no longer about your personality. It's about the capability that you are creating that other people can also demonstrate, deliver, get paid for, create value with, which is, I think, really powerful. The other aspect of this, and we've talked about this at various times, is the increase in valuation for companies and how actually compared to what, a hundred years ago, Dan, versus now, just how much used to be physical assets versus what is now intellectual assets. Can you talk about that? Because I think that really supports this argument.
 
Dan Sullivan: Well, just talking about Strategic Coach here, about five years ago, we have a really terrific M&A person in the program. He helps entrepreneurial companies sell themselves. They have to package them a certain way. They have to clean up their financial records. They don't have a lot of relatives on the payroll. I mean, there's all sorts of rules of how you get yourself ready for the marketplace. And then he essentially creates a contest of half dozen to ten buyers and there's a big spread between low bid and high bid and then he takes the top three high bidders and he has them compete on their aspirations or their ambitions for what they're going to do with this company and the most aspirational high bidder basically gets the sale—everything being equal, you know, that they're good people and you like dealing with them and you get a good contract.
 
So I just gave him our numbers. This was 2019. I gave him our numbers and I said, you know, we're debt free. This is our revenues. You know, all the money's up front. We have this kind of renewal rate. Our whole company is based on Unique Methods. Everybody in the company operates according to the … so I gave him the whole spiel, you know, the Self-Managing Company. And I said, so right off the top, you've done hundreds of these, so you can probably approximate a number. And he gave me a number, and it was a good number. And then last year, because we started the whole patent process in earnest, because we have a phenomenal IP lawyer, Keegan Caldwell, and Keegan has just produced miracles for us. So we had four patents and we've gotten 81 patents in the last three years.
 
I said, so how does it change the number? Not that we're going to sell, but if we did sell, you know, what would the number be? And immediately doubled from what the original number I got. He says, no, it's double. He said, and that's the low. I'm just giving you the low number. It might be much higher. This is property. It's like jewelry in a safe. It's like paintings on the wall. It's like real estate. It's like ideas properly packaged and certified. And I would say the U.S. government is the best at doing this. So you have a number, and that number you can borrow against it. You can license based on that number. So my feeling is if you're going to be an entrepreneur, and you really want to be a great entrepreneur, be an invention-producing enterprise.
 
Shannon Waller: I like that, Dan. The other thing that strikes me is the valuation of companies has really moved away from physical assets. We live in a digital world. Most people can do their business from almost anywhere if you do Zoom or virtual anything. And a lot of people have virtual teams or remote teams or, you know, lots of different names for that. And so where's the inherent value? It's in the ideas. It's in the process. It's in the technology that you're creating. And so I think that this kind of makes sense for this phase of the world that we're in, that you actually take this part of your business seriously and package it and name it and then have it validated by the U.S. government. And we've got several entrepreneurs, Keegan being one, but then also Kari Oberbrenner with Easy IP, you know, other companies who help you actually understand the value of everything that you have if you're not used to thinking this way. And I think it really is simply a change in mindset because you're like, oh, I just do something versus, oh, actually, I have inventions that are not only useful to me, but could be useful to other people. Then that changes your mindset and you're much more likely to protect them than you would have otherwise.
 
Dan Sullivan: I would say this, that the United States itself as a country is an invention-producing enterprise. And it's kind of interesting how central this is to what America is and how different America is from the rest of the world. And I would say that the most valuable, probably, I mean, you could take the Bible as an example, you know, as lasting intellectual property, but once you move out of the religious world, but you go to the political world, the United States itself, and especially the U.S. Constitution, is the greatest piece of intellectual property that's ever been created. And in the Constitution, in Article I, how this country works, you know, it tells you what the operating system of the U.S. is in the very first article. It says one of the things that we have to establish right away is the possibility that inventors and innovators can be guaranteed protection and encouragement for their inventions so that it spreads maximum new knowledge and new skill throughout this society. And to do that, we've got to give them a monopoly of a certain number of years when their ideas cannot be competed with by other people.
 
So it's right there from the beginning. And I think that's why U.S. patents are the gold standard. And we did a book called The Entrepreneurial Republic, where we simply analyzed the first 10 amendments to the U.S. Constitution, and we showed how they uniquely guarantee protection for entrepreneurs. And, you know, the founders themselves, if you look how they made their living, they were predominantly entrepreneurs, including George Washington, who had the biggest whiskey distillery in the new country. Plus he had about 50,000 acres. He was a real estate speculator.
 
Shannon Waller: Fascinating.
 
Dan Sullivan: But the thing that struck me, and it was triggered by this search that I did on Claude, I came back and said, your coaching program is the R&D lab that creates the new intellectual property. And it's really the more that you can actually have your entrepreneurial clients experience being an invention-producing enterprise, that would be a breakthrough for you.
 
Shannon Waller: That's true. So Dan, if someone wants to take a page out of this book or the U.S. Constitution, what's the low-hanging fruit? What's the way that people can go, oh, how can they inventory their inventions or how can they appreciate and secure that property? Where do they start? Where do they look? What do you advise people?
 
Dan Sullivan: I'm thinking about this on the spot. I'm being an invention-producing enterprise on the spot here. And what I would say is, answer this question: If your company was having an even 10x greater impact in the marketplace, 10x more revenues, 10x more profits than that, but they never came into contact with you, how would you go about that?
 
Shannon Waller: Ooh, I like that.
 
Dan Sullivan: What would have to happen? They get the full impact of what the value that you personally create in the marketplace, but you're not there. What would have to happen to your unique knowledge and skills? Well, it'd have to be written down. It'd probably have to be packaged in a certain way. And someone else would be able to do it. But how would you guarantee that it wouldn't be stolen by other people? And that they would know that there were severe consequences if they tried to steal what you do? So it's a series of questions. That's how I would approach it. And, you know, it's something to think about. And they say, well, that's my big problem. You know, I have to be there all the time. And I said, well, what if you weren't? But your company was still together, your company was prospering, and there was enormous money. How would you approach that? Well, it has to go through copyrights, trademarks, and trade design, intellectual property, and everything else. That's how you would do it.
 
Shannon Waller: That's such a great question, Dan, because it's like, how can you be super successful without you being the only one in that process? And it strikes me that it's what people tend to give away for free. We've talked about this for years. And we have a whole thing about unique process, which is how you package and name your unique way that you do business. But anytime you've tried to train someone, it's like you've actually related this. So truthfully, most people, to some degree, have done that.
 
Dan Sullivan: Right?
 
Shannon Waller: And Karicompany, by the way, is Instant IP. I misspoke.
 
Dan Sullivan: Instant IP.
 
Shannon Waller: Instant IP. And he's a great one to contact, by the way, to do that. But it's like any time you've actually trained one other person on how to do it your way, especially if you want to free yourself up to work with another level of clientele, you've probably done it; you just haven't realized that you've done it. So when you're able to write down, name, and then protect what you've been talking about, you can actually start the process of doing this. I love it. So much wisdom, Dan, and how entrepreneurial and such a longstanding history with the United States as well. So this is a very essential entrepreneurial activity that's been supported for a couple hundred years.
 
Dan Sullivan: It's fine. I just want a little interesting comment about this. We just put in a new book and it's called Casting Not Hiring. And it's about how to put your business together using a theater-based model. So we were going through the process, we're working with the publisher, and we're going through the final edit, and we're getting everything right. And the day before everything had to be right, we get a notice from our IP firm that our tool that we use in the book, The 4 x 4 Casting Tool, just got a patent, and it came in that morning. And I said, so in my acknowledgments, I acknowledged our IP lawyer, and I acknowledged the U.S. Patent Bureau for granting us this patent.
 
Shannon Waller: Who knew they were your business partner?
 
Dan Sullivan: I think it's like patent 12,000,075,125, something like that. And I said, that's terrific. How many authors have acknowledged the U.S. Patent Bureau in their book?
 
Shannon Waller: Yeah, I don't think any. Well, pretty cool when you can actually look at the Patent Bureau as being a partner.
 
Dan Sullivan: Yeah.
 
Shannon Waller: Right. Like that's essentially what you've done.
 
Dan Sullivan: And they're a tough partner. I tell you, they're really tough, you know, because they scrutinize it in 20 different ways. They search the world. Now with AI, they can probably do a much faster job. I did a comparison of getting a doctoral degree from Harvard or getting a patent from the U.S. Patent Bureau, which is the most authoritative? And they said, well, depending on the field the doctorate is in, it's a big deal. But a patent is immediately saying that this is useful from a practical standpoint in the world, and it's got a value. It's got an actual market value. And I said, well, what about a Harvard degree and 85 patents? And they said, oh, 85 patents is way bigger than a doctoral degree from Harvard. But they said the doctoral degree, and it may be a great discovery, but it may not be a patent. The patents are the patents. So anyway, it's really interesting when you start going deep into this.
 
Shannon Waller: Well, Dan, I appreciate that not only this is a path that you and Babs have been on forever. You started the intellectual property protection.
 
Dan Sullivan: Babs did.
 
Shannon Waller: Babs did decades ago. Good point. But that's really how we've developed. And also there's an encouragement in the company to create new things. I've done that. Cathy's done that. Others have done that. And then also with our clients, we can all be invention-producing enterprises, and the incredible value that can come from that. To my mind, it's that essential idea of taking your ideas seriously. So thank you for laying out the pathway and the value to doing that today. I appreciate it. Thanks, Dan.
 
Dan Sullivan: I appreciate it.