How To Turn Your Solutions Into Profitable Intellectual Property

Shannon Waller: Hi, Shannon Waller here and welcome to Inside Strategic Coach with Dan Sullivan. Dan, in our last podcast, we had a great time talking about a new exercise that you created called Your Second Company Secret. The key distinction there is that everyone has two companies, one in real life, which you call the R&D company, which is creating incredible solutions for people. And the second one is the multiplier company, which is actually packaging those solutions into IP solutions, intellectual property solutions, which is amazing. And it kind of reconciles that frustration that a lot of clients are feeling. So that was part one. So make sure you have a listen to that if you haven't already.
 
And you also did for our clients something called The Triple Play, which is an incredible way of combining some of the key insights from an exercise and taking it bigger and bigger again, so you get the full impact of your thinking. So we're actually going to talk this through with your examples, which I think will be super fun. Any other context you want to set around this before we jump in?
 
Dan Sullivan: You know, I just mentioned in the introducing the first podcast that as a coach, I've been coaching since 1974, I've been coaching entrepreneurs. And I think it's almost every entrepreneur, there's this tension, and it's a negative tension between the company they've built, which is really responsible for their success, you know, their income, their reputation and everything, and another company, which is a visionary, imaginative company, you know, I wish I could get rid of this company so I could spend all my time on this company. And every time they try to do that, they're pulled back by reality that they're not paying attention to their cash flow company. But the tension is always there, and what we've done with the two-company secret concept, we've reconciled the two companies so that they actually work with each other, and the one actually feeds the other.
 
So I think we've created a great psychological breakthrough in how entrepreneurs see the career they've had already and the career they have going forward. And the real key in here is that solutions that you already got paid for, for a one-off solution, but it solved a problem, that had a tremendous intellectual value. And if you had recorded it and packaged and named it, it would have massive ongoing value. And you would have a second company that took what your first company created, manufactured, invented and designed and manufactured, and it would put it into networks in the world where your ideas, but you would have to have them protected by law—copyrights, trademarks, and patents in order to do that. So that's where we were when episode one finished.
 
Shannon Waller: There you go. And Dan, there's a cost to only sticking with your first company and that people get frustrated by it. And then what happens if they don't actually reconcile this tension within themselves? What happens to them?
 
Dan Sullivan: Well, two thing is that your greatest creativity where you've created a solution, one, there's a danger that you're going to get bored with it. And even though when people experience it the first time, they think it's amazing, but the 10th time that you've done it, you're not interested anymore. Okay. So something that could have been a massive multiplier value, you neglect because you go on to another solution, which actually excites you. But that abandoned or neglected solution you have is sitting there on the shelf, but it has no value because it hasn't really been packaged. It hasn't been named, and it hasn't been protected through intellectual property law. And if you just go the extra step and get it protected, and, you know, we have tools, one really good tool called The Impact Filter for documenting your solutions and, you know, getting them in order where they can be easily turned into intellectual property.
 
Shannon Waller: Right? I feel like I have to mention, especially this will be relevant for anyone who's in Strategic Coach, is you have created such incredible tools called Unique Process. You're way ahead of your time when you first created that. Unique Naming Formula, like we just have some killer tools for helping people appreciate and recognize and name, like identify and name their own intellectual property, but then also now to protect it, right? And you mentioned Kary Oberbrunner and Instant IP as another way to do that. So I want everyone to appreciate that you've been talking about this for a very long time, and you've got some amazing tools to help with that, which I'm always telling people, especially if they joined 10x and they haven't done that, I'm like, go do that workshop. You do not want to miss that. So I'm a big fan of that.
 
So Dan, you actually shared your thinking about this in our last Free Zone Summit, and you came up with some really great insights. And we're going to talk about that in the context of The Triple Play, which is, again, a way to expand that. So let me share your insights, and then we can start making some connections. I'll tell you my thoughts on this after I read your insights. So insight number one, over the next 20 years, the asset value of our registered patents will exceed the value of all of our coaching revenues over 55 years. That's kind of a big deal.
 
Dan Sullivan: Yeah. So, I mean, we started the workshop program in ‘89, November of ‘89. I had calculated at the end of 2023 that it was basically $600 million. Okay. I made a guess at it and our financial officer went through it and I was about 1% off because I remembered it. So that was doing the workshops, billing people for the workshops, you know, and that was all of our revenues. And we have good profits all along and everything else. And we've billed a company from about three or four people, you know, to 120 people from just one city to three countries and lots of other coaches to do it but you just add up all the revenues we've had come in, so let's just say that it's at the end of ’24, it's pushing 700 million dollars.
 
Shannon Waller: Amazing.
 
Dan Sullivan: Yeah, and what I'm saying is that that's the revenue income. But at the same time, we're getting a lot of our best tools patented. They've been all copyrighted and trademarked, but we're getting them patented now, and they have an appraisal value. And I would say within, probably could be 10 years, but certainly in 20 years, that the asset value of our intellectual property will be greater than all the revenues for 55 years of the company. That'll be assets that we have because we don't have all the assets from our revenues. You know, we had expenses, we had taxes. So it's very, very interesting that we're getting double paid, more than double paid for all of our creativity. And it's because we've captured our creativity, named our creativity, packaged our creativity, and protected our creativity that we have that. I'm underestimating. I think it's going to be way more than the total value of the revenue.
 
Shannon Waller: Yeah, you're being conservative with that. Well, it's interesting, Dan, because not only so, you know, with packaging and naming and protecting your creativity, not only is it a multiplier, it's an accelerator of value.
 
Dan Sullivan: Yeah, and it's incredibly productive. It's incredibly productive. It's incredibly profitable, you know, because, you know, at the most modest, you know, that we've had the patents, the first 50 or so, we've had them appraised without saying anything about them. They're worth 40 times what we paid to get the patent.
 
Shannon Waller: That's a good return.
 
Dan Sullivan: Yeah, that's a very good return.
 
Shannon Waller: Dan, your second insight is intriguing to me. You say all Strategic Coach team members growing to a maximum of 150 will increase Strategic Coach revenues 10 times by combining The 4 x 4 Casting Tool, which is actually the subject of one of our small books and the next big book, which is exciting, with AI. So talk a little bit about that, because it's one thing for you as a toolmaker to be packaging your creativity, but to actually 10x everyone on the team's productivity, that's a thing. So say more about that.
 
Dan Sullivan: A little background to that. So I think it was 2017. I'm really not part of the hiring process in Strategic Coach, but I did have two key team members that I wanted to add to what I was doing. And I said, you know, job descriptions really don't say anything. And I created this tool called The 4x4 and have named it this year called The 4 x 4 Casting Tool. And what it does, it tells the person exactly how they have to be when they show up and teamwork with me, what they have to be like, and then their productivity, how they have to do things faster, easier, cheaper, bigger, and then how they can be a hero to me, and then also ways they can drive me crazy. They can just drive me crazy, and I did it, and it worked like a charm. It worked like a charm, but it was a tool that was used for just specific purpose, and it didn't go any further.
 
And more and more, I've been going back to the whole idea that instead of job descriptions, I mean, you give job descriptions because they're like technical manuals, but it doesn't tell anything, the importance of the person's role and how they have to be and how they can grow. And this year, I came across somebody who said, you know, it should be like theater, business should be like theater. And we came up with a book title called Casting Not Hiring, his idea. And then we created a small version of that, and it's been well received. So we have a big one.
 
But at the same time, going back to our Second Company Secret thing, the first company, I mean, it's grown the way it's grown in the first 35 years. If we average it out, it's been good money. It's been profitable and everything like that. But I think it can grow much bigger and I think it can grow much more easily if we use the 4x4 tool to also drive the utilization that our team members do of AI. And even if they just freed up five hours per week, you know, like my writing speed has increased extraordinarily fast since I've been using AI. I mean, I can structure whole books in a matter of an hour with all the chapters and everything I can do it with AI. And so my sense is we're into the AI period of history right now. So our progress with the 4x4 tool, in addition to AI technology, is that our first company, our R&D company, is going to go easily by 10 times over the next 20 years. And that'd be a half a billion-dollar company.
 
Shannon Waller: That is so exciting, Dan. And as you're talking, you know, Julia Waller, perhaps also to be my sister, was talking about just how phenomenal ChatGPT is to help her, because she's our Unique Ability, I call her queen, I'm not sure she likes the title, but she is the expert in the Unique Ability process that she does one-on-one. It is the best editing friend ever, right? Like, it's just amazing. And she still fine-tunes it and her Unique Ability.
 
Dan Sullivan: Oh yeah, I do it too.
 
Shannon Waller: Yep. It just accelerates the whole process and makes it easier and saves so much time. And we love perplexity.ai is another one that Evan Ryan turned us on to, but people have to be open to it. And the thing I love about the casting 4x4 is there's your performance, you know, alert, curious, responsive, resourceful. Then there's your results, faster, easier, cheaper with a bigger impact. And AI is nothing if not an incredible multiplier of time and productivity. So that's amazing. And it's very clearly specified because in the section being a hero, right, there's four very clear projects and deliverables for you to apply that talent and capability in AI too. And then again, four ways not to screw up basically, which is my favorite section. So I think this is key, especially if we look at growing, You know, you've made this point for several years now, not wanting to be more than 150 people.
 
Dan Sullivan: Yeah.
 
Shannon Waller: So we could have a 10 times bigger revenue company with a maximum of 30 more plus tools, plus tools, plus AI. So that's kind of amazing. I mean, that's an amazing productivity multiplier right there.
 
Dan Sullivan: Yeah. Yeah.
 
Shannon Waller: Great insight, Dan.
 
Dan Sullivan: We're just talking about our R&D company here. We're not talking about the second company, which is the multiplier company.
 
Shannon Waller: Yeah, I know. Amazing. So, Dan, your third insight, regardless of unpredictable marketplace and economic changes, our existing two company structure can remain exactly the same.
 
Dan Sullivan: Yeah, no change. And that would be not only for me, but it would be for every other Strategic Coach client. As long as they have this two-company structure, they have an R&D company that creates solutions that can be packaged, they can be named, they can be protected, then they can multiply out in the world and they can have collaborations with a multiplier who actually multiplies their solution. So they're getting paid again for their creativity from company number one, except it's not using up any of their time. So there's a tremendous time saver there, you know, it can just go on and on.
 
You know, to use the franchise model, somebody brought it up, our Zoom call this morning, and they said, this is kind of like franchising, isn't it? And I said, well, franchising is kind of an example of this. And so you have the McDonald brothers who created very popular, you know, hamburger restaurants in Southern California. And then someone joined their company, Ray Kroc, and they had all the work. But at the end of every year, you know, they made money. They made money and everything else, but they didn't make any money more than the meal served. That's what they did every year. And he said, you know, they have such a great model here if it were packaged and put into a franchise basis.
 
And I think it started off as ownership. I think the first ones they owned, but he was able to produce more than two. So he had a number and then what he began to see is you can franchise this and now it's a worldwide corporation that came out because the creativity that made the two restaurants popular, recipes and their work procedures and everything, that got documented, it got named, it got put into processes, which were packaged and then protected by law, and then it went worldwide. And that's how franchises work.
 
Shannon Waller: So this is cool. This is like franchising your ideas. I love it.
 
Dan Sullivan: Yeah.
 
Shannon Waller: But I think the original brothers, this is a mindset shift, right? So not just keep it within your own little company. And this is why the protection as we talked about in the last podcast is so critical. Because without that step, you're not gonna wanna give anything away or share it. My ideas are useful for more than just outside this company one, basically. And the mindset shift to get it out to other people who will take advantage, connect with the communities, and multipliers that will get your reach out there—this is exciting. All right, Dan, when you put these three insights into a Triple Play, so then you connected the insights. So I'll read out some of these. One of them is that by 2044, we will have over 1,000 thinking tool patents and our 150 team members upgrading their 4 x 4 Casting Tool every 90 days will be 10 times more productive than now. I feel like everything's just got more zeros on it. So that's a pretty big exciting feature.
 
Dan Sullivan: Yeah, that would be exciting.
 
Shannon Waller: That would be very exciting.
 
Dan Sullivan: That'd be very exciting. Yeah.
 
Shannon Waller: Well, and if you think about all the value creation that comes from this, Dan, and then all the revenue that that generates, and then all the profit, there's just a lot of abundance for everybody, which is phenomenal. Second connection, all of our changes over the next 20 years will be in the form of creative, productive, and profitable breakthroughs from technology times teamwork. I always say that again, creative, productive, and profitable breakthroughs from technology times teamwork. What is not to love about that? Great. And your last connection between these ones is our company-wide use of AI, increasing every 90 days for the next 80 quarters, will continually deepen and expand our client base to 10,000 plus Free Zone entrepreneurs.
 
Dan Sullivan: Yeah, and that's not out of alignment with the growth curve that we've had over the last 35 years. But, you know, when we originally started, we thought, you know, at the most, we might get to 500 in the Program. But you make improvement here and improvement here, the teamwork gets better, the marketing gets better, the sales get better, the coaching gets better, and everything else. And, you know, we're shy of 3,000, you know, 3,015 clients and everything else. But if you project our present growth rate out another 20 years, you know, it's, 10,000 is not unreasonable.
 
Shannon Waller: Uh-huh. It's doable.
 
Dan Sullivan: It's doable. Yeah. And doable without twisting yourself out of shape.
 
Shannon Waller: Well, and I think that's one of the powerful conclusions from this exercise is that actually you don't have to change anything substantially to make this happen. You do not have to bend yourself out of shape. You don't have to become someone you're not. It's actually just, as I talked about in the last podcast, doubling down on the things that you love to do. I'm just going to do the final level here, Dan. By the end of 2025, we'll have two Strategic Coach growth structures, one for management, the other for leadership, all within the same business model established in 1989. You've talked about the importance of having the same business model a lot. Can you just share a little bit more about that?
 
Dan Sullivan: Yeah. I mean, in November of 1989, we had our first workshop. We had six paying clients and we had an eight-hour workshop. It was based on a tool called The Strategy Circle, which is one of our patented tools. Everybody paid up front for it. There was no receivables. And it was every quarter they came back for their second workshop. And today we're approaching 3,000 clients. They do 800 workshops. All the money's up front. They come back 90 days. I mean, we have a lot more support in between. We've added some things. The basic structure is exactly the same as it was in 1989. You know, we have a lot more to offer than we did then. We have a lot more teamwork around it. You know, we have way more tools, thinking tools, but it's very consistent with the first workshop that we did. I was super happy with that, and I'm super happy with the way it looks today. Level and quality of happiness has remained more or less the same over 35 years.
 
Shannon Waller: Which is probably my favorite part. Yeah, we have our Signature level Program for workshops each year, plus all of the in-between things, which are a lot. And then people can do 10x, which means they continue with Signature and then add on 10x to that. And then of course, Free Zone, where you can do as many workshops as you want. So all of the different levels.
 
Dan Sullivan: And thanks to COVID, we have a virtual version.
 
Shannon Waller: Yeah. And virtual connection calls and so many different ways of staying connected because I think 90 days, like the 90-day quarters, feel longer than they used to. And so having more connection points is really, really valuable. All right, next conclusion as you connect all of the insights on another level. Our first company is Strategic Coach and the second is Strategic Patents. One creates the patents and the other expands the coaching. What a great way to summarize this whole process. Very cool.
 
And then lastly, our Second Company Secret means that we'll be increasingly immune to the external marketplace of disruption that undermines all would-be competitors. Yeah, this really becomes like an ecosystem and there's just no way in, right? It becomes its own very strong system of support where you can't, well, you talk about Mongolian plumbing. Someone could look at something and want to take it off the wall, but there's no infrastructure behind it to support the result. Yeah, this is powerful, Dan. And I think, especially when there's uncertainty in the marketplace or what's happening in the world, for people to have their own clear structure about what they can control and what they can impact and how they're creating value for their clientele, that's gold. You're immune to so much if you're clear on this.
 
Dan Sullivan: Yeah, and we're going through profound changes right now. You know, I was born during the Second World War, so I was born about two weeks before the invasion of Normandy, which is one of the big events of the Second World War. Six weeks after I was born, there was a conference in New Hampshire—Bretton Woods, New Hampshire—and there was an agreement that basically put the world back together after the Second World War. And it was an agreement between essentially one party, the United States, and everybody else, and how the economies were going to be grown around the world, how trade was going to take place, how it was going to be paid for.
 
And it's only now, in 2025, so 80 years later, that that's all coming apart from an event that happened in the 1940s. The amount of change that we're going through is just extraordinary. It's like the end of a huge monopoly, a huge historic monopoly game where all the pieces go back into the box, but what comes out for the next game is a completely different board with different pieces and different rules. And we're all going through this now, you know, in a very short period of time.
 
But that model that we've created for ourselves and the model that we want for all the other Strategic Coach entrepreneurs, none of that matters. None of that matters. They've got clients that they love creating solutions for. They create their solutions. They name their solutions. They package their solutions. They protect their solutions. And their solutions become widespread in the marketplace. And they have a great R&D company. They have a great multiplier company. All the changes in the world really don't matter. As a matter of fact, the changes in the world are creating problems that they're solving.
 
Shannon Waller: Dan, as you're talking, it's like any sense of anxiety that one has about the future just goes, whew, calms right down. Because this is what you have control and impact over.
 
Dan Sullivan: Well, I think it's possible. I mean, the reality is in the doing it. But I think there is a game plan here that can easily stand up for 20 years.
 
Shannon Waller: I agree. So Dan, if someone wants to take action, last podcast you mentioned The Impact Filter. Is there anything else that people can do to take action on this thinking on connecting the dots as you've been doing? What else can people do to kind of just, oh, okay, if I want to embark on this way of thinking, what's something that they can do?
 
Dan Sullivan: Well, I think that they should order the small book that we created, which is called Casting Not Hiring, which is a great way of transforming the ownership that every one of your team members really takes over their role inside your company. And I think another small book, which would be interesting is Everything Is Created Backward, which talks about The Triple Play. And we have another small book. What's that?
 
Shannon Waller: Extraordinary Impact.
 
Dan Sullivan: Extraordinary Impact Builder, which tells you how to document your solutions so that they can be packaged and protected. Yeah.
 
Shannon Waller: Well, and Dan, each of these three books, Casting Not Hiring, Everything Is Created Backward, and Extraordinary Impact Filter, all have tools in them. You actually demonstrate in each of these three, and all of our future books, exactly what you're talking about. Taking your ideas seriously, naming, packaging, and protecting them, and then getting them out, right?
 
Dan Sullivan: And we can add the most recent one we did, Growing Great Leadership. That also has a tool. So those four books I think would be, they're very easy reads. You can read the books, slow reader can do it in an hour and a half. They have audio, they have video, and they have tools.
 
Shannon Waller: And I'm gonna recommend the audio. Well, first of all, take a look at the tool, that's huge. And the audio is our final version of the book, where the most evolved version of the thinking has happened. So it's all fabulous, however you like to ingest content, but I have to say, audios are one of my favorites of that. So again, I'm just gonna get that list, cause there's a lot. So Casting Not Hiring, which is the 4x4 tool. Everything Is Created Backward, which is The Triple Play, which is really what we talked through today. Extraordinary Impact Filter, Impact Filter, and Growing Great Leadership, which is a special version of our 4 C's, which is commitment, courage, capability, and confidence.
 
So I don't want to say much more about it because I don't want to give away the good stuff, but it is such a powerful tool. And I am working it into every single coaching opportunity that I have with leadership. That's how great I think that is. So much stuff, Dan, and I appreciate you mentioning these four books because, as I just mentioned, it is a perfect demonstration of everything we've been talking about in the last podcast in this one. So it's the tool, it's naming, packaging, and protecting it, and getting it out there, and people get to see exactly what you're referring to. Love it. Dan, thank you, as always, very illuminating.
 
Dan Sullivan: Thank you, Shannon.
 
Shannon Waller: Awesome.