Dan Sullivan: Hi everybody, it's Dan Sullivan and this is Free Zone Frontier, our podcast with Steve Krein who, we've been yakking now for 25 years, we've been talking.
 
Steve Krein: Hi Dan.
 
Dan Sullivan: And we were very late in the game recognizing that some of our talking we should just record and share other people with it. You know, it's kind of interesting, Steve, you brought up the thought, as we were taking a break between podcasts, of what happens to your thinking when you're approaching a new year, and we're near the end of one year and going into the next year. So we have a very, very systematic way in our company of going about that, which I'm told about after it's planned. So your thoughts on the topic of next year? And this could be any year, but this is a particular year, 2024, that we're approaching.
 
Steve Krein: I think I've always been struck by this tension between long-term missions and short-term wins. And this idea of how to live within the context of a long-term vision for what you want to accomplish and mission that you're on with what you need to do this year, this quarter, this month, this week, today. And I think it's a never-ending quest, I think for a lot of entrepreneurs, to get a sense of normalizing that so that you're not being schizophrenic, if you will, about which one you're talking about, but building in that framework. I found that a lot of people get uncomfortable talking about really, really long-term stuff. And then on the flip side, there's people who are only talking about today and tomorrow. And so the balance of using the new year to just reflect on the progress you've made over the last 12 months and what you need to do over the next 12 months, but fitting it into the context of what your long-term mission is.

Dan Sullivan: You know, this happens on a company basis, but I think that where you start is on the individual basis. So my attitude about it is that we've only ever lived in the present. Like I was reflecting, you know, I've not spent a second in the future, and I've not spent a second in the past. I've only spent all my time in the present. And then the question is, is your past any use to you? And the other one is, do you have any sense about what your future is? So what I've learned to do is to transform everything I've done in the past into raw material. I said I can reuse my past any way I want. And I'm not talking about relationships here, I'm talking about just activities. And I said, is there anything that is sacrosanct? Is there anything from the past which it wouldn't matter what next year we're planning, we have to do this. And of course, my answer is, we have to put on workshops, we have to get new customers, and I've got to create new tools. And as long as we do that, the future will be good. And those are the things we've learned how to do in the past. And we're better at it now than we were 10 years ago. But the other thing is, how big a future are you planning that next year is just a part of that? And I think this is really where entrepreneurs separate themselves from the general population.
 
Steve Krein: You know, it's funny, I remember many years ago, we first talked about a 25-year vision and the idea that when you break down 25 years, you know, it's a hundred quarters. And then all of a sudden you think about, well, that's a much easier way of thinking about 25 years. And then you think about a quarter, and it's a great measurement cadence, right? There's enough time to get stuff done, but not so long that you lose your way, but not so short that you don't have enough time to get things done. So it's a great framing. But I think the idea that you just got four quarters coming up. You don't need to worry about what happens in the second, third, and fourth quarter. We're going to talk about where we want to be a year from now, at the end of 2024. But what do we need to do in the next quarter to make our way towards that goal? Beyond that, it's a big guess, but I think the idea of just having the framing of long term to short term to this quarter is incredibly helpful and also narrowing down so you don't get distracted with the task at hand.
 
Dan Sullivan: The word you just said there is very, very important, that there's this belief, and I think it's kind of an ideology, that technology will become so powerful that we can predict the future. And I said, we can never predict the future. It's all guesses and bets. But I'd just like to relate it to some other podcast conversation that we've had. What you've proven consistently good over a long period of time gives you a basis for predicting something about the future, that what you've proven works over the last 25 years will probably work, at least major parts of it will work over the next 25 years. And that's why consistency over time in your past is so crucial for building your future. For example, if you look at the model of StartUp Health, you know that giving a growth structure to entrepreneurs works. And for the most part, entrepreneurs, when they start a new business, don't have any structure or process that works. But you've got 500 entrepreneurs who are in a community, and you've also learned that putting entrepreneurs, startup entrepreneurs, into a community really works. You also know that major foundations, major corporations, and institutions are really crappy at innovation.
 
Steve Krein: Yeah, they have a lot of resources, but entrepreneurial innovation is not one of them.
 
Dan Sullivan: Yeah. So if you can create a network where the foundations aren't even taking a risk, they're just putting money in, and out of 500 corporations, something's going to pop up that's innovative, and they get the benefit of the innovation. So that makes your future, to a certain extent, predictable.
 
Steve Krein: The consistency of the past to be a predictor of the future is very helpful. It also, when you just think about simplifying that, it's even more useful. For us, we brought in 50-plus new companies a year for the last 12 or 13 years. And over the last 12 months, we applied that skill and Unique Ability and teamwork to doing it within one area in healthcare, one disease, type 1 diabetes. And we applied the logic to identifying from around the world the top 25 startups and companies that are innovating in type 1 diabetes, regardless of whether it's a digital health company, a life science company, or biotech company. But the entrepreneurs have to be focused on type 1 diabetes information. And we had almost 250 companies apply for that. But our skill and pattern recognition had nothing to do with type 1 diabetes. It had everything to do with the pattern recognition of growth-minded entrepreneurs who have the right mindset and have the willingness and interest in collaborating with other entrepreneurs and innovators. And so, yeah, you know, it's interesting the predictability. Now, when I look at next year and I think about we're doing the exact same thing in Alzheimer's disease. It's a concentration in previously areas where there was very little collaboration. It was more competitive mindset around innovation.
 
Dan Sullivan: And the interesting thing about those two focuses is that the first one is what largely leads to the second one.
 
Steve Krein: It's actually like type 1, type 2, and type 3 kind of as a frame. But what's interesting is, the idea of this being one ecosystem, we're calling it an ecosystem of these health moonshot communities, very powerful. But all of our planning for 2024, just bringing it back to planning, is based upon what we've learned, what works, what doesn't work from not only the last 13 years, but the last year. And I think that I would look at our 2024 plan as simpler to execute than what we outlined in 2023 because of what we just learned.
 
Dan Sullivan: Yeah. Again, I'm going to be talking about the theme of consistency over time. So we had our first year, we started the company in late 1989. So our first year was 1990. And we had a basic model that we would have workshops. They would consist only of entrepreneurs above a certain income level that they could prove. And that we would meet every quarter for eight hours. And we would have a structured thinking process for them to go on. And we started in Toronto because that's where Babs and I lived. So, fast forward 35 years, we're in our 35th year. And what our model is that we have quarterly workshops for stages—it's now three stages—of people who are above certain income levels at stage one. And that's the only thing is we just have one stage that you have to be above a certain level. And then they go through periods of growth, and it's every 90 days. And then we have added, because we have the recently over the last three years, we have the ability of Zooming, having increasing number of meetings between the 90-day workshops. But our model is 90% the same 35 years later. Well, if I look ahead 35 years, the model isn't going to be any different. But we've been enhanced by technology over that age. And whereas we had one coach in 1989, we have 17 coaches now. And whereas we were in one city in 1989, we're in four cities, we're in three countries, and the diversity of entrepreneurial industries—we were 60% financial services when we started in 1989, and now we're 85% something else besides financial services.
 
Steve Krein: I remember those days because I felt very alone.
 
Dan Sullivan: Yeah. Yeah. And financial services has diversified beyond belief. So saying financial services doesn't tell you anything about what the actual function is. But the model is 85, 90 percent exactly what it was 35 years ago. So if I look ahead 35 years, the model isn't going to be any differently. The world will change. The economy will change. Technology will certainly change. But our model is totally consistent.
 
Steve Krein: Yeah, you know, first of all, I think there's a great thread about this. Jeff Bezos talks about not what is going to be different, but what's going to be the same. And there's a great deal of value. As you think about annual planning of doing just that, it's harder to do than it sounds. It sounds very easy. Very hard to do. And I think there is an element when you go back to that idea of 25 years, what you're going to commit to doing. It helps you really frame making sure that you're doing something that can last a long time and withstand the changing nature of everything from the way the world works to what I think ultimately become distractions. So I think for us in our annual planning, I have used that idea of what we're going to build on that's the same around community.
 
Interestingly enough, we shifted our business model very significantly over the last 15 to 18 months. And as of the end of this year, we're out of the new fund business. We're not launching another fund because the unlock here is to let these communities be supported by those that are mission aligned. And I think there's a quick deviation from those values sometimes when you're trying to just get financial return. And I think impact-driven funders in track-driven organizations, entrepreneurs and startups need more consistency for the long term than a 10-year unlimited partner fund that typically has no ability to look beyond typically a 10-year period. And so there's a very big gap in the consistency alignment of decades of thinking that needs to happen when you're talking about preventing, managing, and curing diseases like type 1 diabetes, Alzheimer's disease, metabolic diseases, etcetera.
 
Dan Sullivan: Yeah, well, I think you make distinctions as you go along of who your lead dogs always are. For example, a number of differentiations we've made is that technically an entrepreneur is someone who is self-employed. According to tax law, the word entrepreneur is used, but essentially you're self-employed. So what we noticed at the beginning, a lot of the entrepreneurs who joined the Program had just created a job for themselves. They didn't actually have a company. You know, and they didn't think of their future in terms of the company. Their big plan is to never have to hire anyone more than the secretary. So after a while, the wording that we used and the social proof that we used, like interviews with clients, we never featured anyone who had just created themselves a job. We created people who had companies, planted the company to be much bigger. The other thing was income level, and we use personal because it's very difficult to use corporate because accounting practices are different, jurisdictions are different, and it's very, very hard to get a common handle. But, you know, your personal income that the IRS or the other revenue institutions in Canada, you just use that.
 
Steve Krein: You looked for consistent and made sure that whatever you're going to measure over a long period of time was consistent.
 
Dan Sullivan: Yeah, will always be there. Our minimum is $200,000 right now. We started at $75,000, and now it's $200,000. But actually, 80% of our new clients last year were over $500,000 when they signed up. I mean, they could get in for $200,000, but it was over $500,000. And the other thing is, they all have companies now. There's no single individual with a secretary to do that. They have small teams and everything like that. The other thing that's really changed is that it was virtually all services when we started. I would say it was 100% services when we started. And I think it's a function of the changing economy. More and more, we're getting industry... It's service, but we're getting trades. We're getting people who are in construction industries and everything. I think it's just a function of the changing economy. The other thing I noticed, there are more conceptually gifted people coming into the Program.
 
Steve Krein: Yeah. It's interesting. So you called them lead dogs. The idea of who fits into your customer profile changes. Your customer profile doesn't change. Who fits into it changes. Right? So we were always looking for mission-driven funders. But after a decade plus, you start to see people and organizations, consistency or inconsistency. And ultimately, what you're describing is who qualifies in 2024 to be your client or customer or member versus who might have fit that five years ago or 15 years ago.
 
Dan Sullivan: Yeah. So what we're pushing for is, you know, as we go, let's say the next 10 years, we're putting messaging out in the marketplace that people who are very collaborative between their organization and other organizations, that's what we're looking for, is they've gone beyond being the, you know, most successful competitor in their industry to actually being not only that, they are, but they don't think in terms of competition, they think in terms of collaboration. So, I mean, to a certain extent, you're creating the future out of the best of your past experience. I was in a workshop, it's workshop week where I have one workshop, but there's workshops going on in the other days here in Chicago. And I was in at lunchtime and then I talk a little bit after lunch, the coach, if the coach invites me to do that. And they were talking about 80/20 rule. They says, you know about the 80/20 rule. And I said, well, at any time, you can divide your business into an 80 and 20, and 20- If the 20% of what you're doing, if it became the 100%, you would go 10 times. The 80% is what got you to where you are today, but it's not going to get you any further.
 
Steve Krein: It's the old "10x is easier than 2x."
 
Dan Sullivan: And I said the ingredients for going 10 times is always there. But it's just the 20 percent of what you're doing is the 20 percent of who you're doing it with, which represents your next 10 times jump. And they say, well, that means I'm going to have to leave a lot of people behind. And I said, it'll be easy to do because they've already left you behind.
 
Steve Krein: Well, I want to be mindful of time on this podcast episode, because I could talk about this for a long time. But if you were to kind of put a bow on the idea of annual planning and the context of both long term and short term, what do you take away from this conversation, Dan?
 
Dan Sullivan: Well, I think the big thing, you know, is that the way to plan from now to the next year is actually to start with the conversation, what does the next year represent in terms of the next 25 years? Because it's 4% of the next 25 years. And then get that clear, and then start a year from now and plan backwards if we're going to be there next year. The ability to be in the future and plan backwards is an acquired skill. It's not natural for human beings. But the more you do it, the better you get at it.
 
Steve Krein: Yeah. I took away, and it was a great reminder about consistency and how important it is to not only stay consistent, but embed consistency in your annual plan and thinking about it from the perspective of what you can at least rely on for the next year like you have for the last several years. And I think it's easy to do after you start to get, you know, a decade plus in your company built. I don't know if you see it in years one, two, and three, but a great deal of appreciation for being consistent and also identifying what's not going to change. And I think your structure of how you deliver the program or what you do or who you serve, I think are great examples of that. So, good reminder for everybody in Free Zone. We're probably going to have this out in the new year and people already have their plans in place, but I think it's always a good reminder to think about the underpinning and building blocks of these.
 
Dan Sullivan: Yeah. And leave room in your firm plans for next year to change your mind.
 
Steve Krein: Well said. Excellent, Dan. Always enjoy spending time with you.
 
Dan Sullivan: Thanks, Steve.
 
Steve Krein: Take care. Thanks.