One Hundred Million Dollars For An Empty Chair

Gord Vickman: Welcome to the next episode of Podcast Payoffs. My name is Gord Vickman here with Strategic Coach co-founder Dan Sullivan. And I thought about this because it comes on the heels of a Bloomberg article that's making waves right now. So Spotify is-- People see it as a music streaming service, podcast streaming service, in direct competition with Apple basically. They've spent a billion dollars. Their Chief Content Officer Dawn Ostroff, as of 2018, spent more than a billion dollars buying shows and studios, deals with big celebrities. And none of it is panning out. And I think it had something to do with Unique Ability, Dan, and that's a concept that's been integral to Strategic Coach for how many years?
 
Dan Sullivan: If I look back, when it was first introduced into The Strategic Coach Program, it's the very early '90s. So '90, '92, '93, so 30 years, 30 years. And it's really the foundational stone for my teamwork with Babs Smith, who's my partner. We're married. So we've been married 36 years, and we've been growing the company for 33 years. We value each other so much because each of us has something that we do uniquely that the other person in the partnership wouldn't know how to do. We both see that having access to that other person's Unique Ability was crucial in multiplying who you were as just a lone entrepreneur as I was and she was when we first met 40 years ago.
 
So I would say the big thing is that, how does the skill of the person that you're bringing on board—so there'll be two types of people you're bringing on board—but one of them is to your organization, and the other one is customers and clients. Those are the two fundamental relationships in business formation and growth. But generally speaking, we have a rule that there's important work to be done. And oftentimes, it's something new. And there's important work to be done. And we don't have anyone in the company who has a Unique Ability for being successful with this. Might be a new danger, might be a new opportunity. So we have to attract someone who would be terrific about actually doing the work related to this particular issue. And that's how we've really grown our company. You know, for more than three decades.
 
Gord Vickman: I've heard you mention before, Dan, that when you're looking to bring in new team members, it's not a cost; it's an investment. And you're not necessarily looking for someone who's at the top of their game, but you want to see potential, someone who you believe and you foresee growing into the role and growing into what you expect of them. So if someone maybe doesn't have everything that you're looking for, you're prepared to sort of facilitate that growth. I've heard you say that before.
 
Dan Sullivan: At the stage that we're at right now, we're not a small business. We're what's technically called a medium-sized business. We have 130 team members, and, you know, we got 33 years behind us. And we've got a lot of experience in the company. I think we have 70 out of our 130 team members who have more than 10 years of continuous experience with us. We have 25 more than 20 years. And that's unusual. I mean, I've looked at statistics for longevity of people. And I think we're unique in that. And I would attribute it all to our basic approach. You mentioned it, and I'd like to just add another dimension to what you said. We don't see people as a cost; we see them as an investment. But there is such a thing as a good investment and a bad investment.
 
They're not a cost, but they're a bad investment, so. I think it's healthy not to associate the word cost with human beings. And think of investing, and some people just turn out not to be good investments because it's not a match, you know. Where they're going and where we're going just doesn't hook up. But there are tests that you're looking for certain kinds of people and, you know, I can just mention three of them. And these are not our tests. They're tests created by other people. The one that we've been using the longest is Kolbe, the Kolbe profile. It kind of identifies for an individual, for themselves and for others, how they take action to get results. And just to give an example that some people have to do a lot of research before they'll take action and some people just take action, and then do the research after they're in motion. That would be me. And I think it's partially, partially your profile also.
 
And then there's another one, which is called StrengthsFinder, and StrengthsFinder tells you what you'll take action on. So I'm someone who takes immediate action, but the primary thing that I take action on is ideas, you know, ideas, which are good ideas for our entrepreneurial clients. Very, very addicted to ideas. And I take action on ideas. And then there's a third one, which is called PRINT. And it tells you what you look like when you're at your best, what your behavior and your mindset look like when you're at your best. And when you're causing yourself trouble and other people trouble, what you look like when you're doing that. And each of them gives you a different insight into who you are. And also an insight into who other people are. They're very, very useful. They don't guarantee success. But I would say that not using them really sets you up for failure in bringing people in. Oftentimes, entrepreneurs shouldn't be doing recruiting and actually hiring people.
 
Quite frankly, Gord, you're the only person from the outside that I've ever hired, where I needed someone, I needed a really great podcast manager, and you are. But looking back over the 33 years, you're the only person that I have actually hired. The only other person was an internal hire. And it was Melissa Boyce who-- I think Suvi I was involved in it. But you know, becoming the video manager for Coach. And Eleonora hired herself to me. She said, "This is what I would like to do for you." And so Suvi and Eleonora and Melissa are internal, and you're the only one from the outside. So you're unique, you're unique. And I really put a lot of thought into it. I put a lot of really great thought into the hiring. And I used a tool that we call The Impact Filter, which said, if we have a really successful podcast manager, this will get done, this will get done, this will get done, this will get done. Not describing the person, but just describing what the impact of having a podcast manager would be.
 
And you read that before you, you know, responded to our offer. And then when you were kind of the person that four or five other people had already met you. And they've said, you know, we think not quite what we were looking for in Kolbe, not quite, but we feel that it would be a solution, a really good solution. Then I created a tool called 4 x 4, and 4 x 4 kind of tells you, for the two of us to work together, this has to be true. And this is how you have to show up mindset wise, you know: alert, curious, responsive, resourceful. Results wise, faster, easier, cheaper, bigger. And then there's a area, if you pull this off, you're going to be a real hero to me. And there are certain things, which if you do, you're going to drive me crazy. And you don't want to go to any of these things that drive me crazy because for almost no reason whatsoever, I'll just fire you if you go here. [laughs] Anyway. And you knew all that before we met. So I think you had a pretty good hand--. I think I had a good handle on you before we met and I think you probably had an exceptional handle on me before you came in.
 
Gord Vickman: Yeah. I did my research. If you're listening to the show right now, you might be wondering what is the Strategic Coach hiring process and Kolbe and PRINT and everything have to do with this article? The Bloomberg article? Well, we're gonna bring it all home because it is under the same umbrella. I think Strategic Coach does a great job in hiring. I've never been through such an extensive process before. I've learned a lot about myself. I learned a lot about what I'm capable of. And I think Strategic Coach does it right. Quick little sidebar, Dan. When COVID hit and we all were remote within 48 hours, you mentioned before that you think the heritage and the longevity of many of the team members here were partially the reason why there was so little scrambling because you have so many people within the walls of Coach here, both literally and figuratively, who know the business so well. Everybody almost knew what they had to do. And if you have a building full of people who've been around for six months, there's going to be a lot of scrambling going on that. That was a big thing, right? This the heritage of the people and the longevity.
 
Dan Sullivan: Yeah, well, I call it institutional wisdom. And I've noticed that where things are breaking down, and the airline industry would be a prime example right now, the flying is actually the most successful part of the airline industry right now. I mean, once it leaves the ground, it's, it's pretty good. you know. They generally land and you know, you're where you're supposed to be when you land. But what happens to you before you get on the plane and what happens to you after you get on the plane is the worst I've seen it in 60 years of flying. And I think the reason is that when COVID happened, two things happened which were really showing up in problems right now, is that a lot of people were close to retirement and just decided to use this as an opportunity just to do an easy, an early out. And that included pilots and air crews and especially the ground crews that handle check-ins and the ground crew that handles baggage.
 
I think a lot of people had 20, 30, 40 years of experience in the terminals, airport terminals, and they just said, you know, it's not worth it after, you know, being out for six months or a year. It's just not worth going back. I just don't want to go back. The other thing is, I think the airlines needed to cut costs, obviously, because they weren't flying. And they gave early offers to a lot of their senior people who were biggest on the payroll, you know, and they had to cut costs. But unfortunately, yeah, they cost the most, but they also had tremendous wisdom that can't be written down in a manual. There's a wisdom of people who have worked together for a long time, successfully, that they just kind of know. I mean, you see this in all walks of life—you see this in sports, you see it in entertainment—but you just know what the other person's gonna do, you just know where the other person is going to be, and you just know how the other person's gonna handle things. And it's a wisdom and I think, probably 60% of the institutional wisdom that makes flying an OK experience or even an enjoyable experience didn't come back after COVID. I mean, the airline industry is just one node of 1,000 nodes that make the world economy grow. And I think every one of them, the same story that I just told about the airline industry is true in these other industries.
 
Gord Vickman: Yeah, it's a lot of Unique Ability walking out the door. So we promised right off the top, we're gonna bring this all home. And we're going to show you how this relates to bringing new people into your organization. Because the theme of the Bloomberg article, how Spotify basically dropped the ball, fumbled in terms of bringing people into that organization who they thought were going to make them lots of money. So we have Strategic Coach who was hiring properly and doing it well, using the tools and all the capabilities that we have. And not just Coach but the thousands of entrepreneurs that you coach, Dan, who bring these systems into their own organizations as well. So they can relate. It's not the Strategic Coach and saying, "Oh, we're the best, we're hiring better than anybody." But you've taught thousands of people how to do this as well. And many of them have implemented that in their own organizations.
 
So we mentioned Spotify's Chief Content Officer spends a billion dollars bringing in the Obamas. They recorded less than 15 hours of content. Kim Kardashian made a big splash signing her decamillion-dollar deal. Hasn't done a thing. Prince Harry and Meghan did two shows. Haven't done a thing. Oh, I forgot, Obama did a show with Bruce Springsteen. And that was supposed to make it all better. So that was a fart in the wind, basically, and now they're gone. They've signed with somebody else. So the internal research shows, they haven't really produced any hits with this billion dollars of an investment. And just as a sidebar to this, music streaming, which is Spotify's bread and butter, is not profitable. Because the labels and the publishers take 70% of every dollar. So they're not making money off streaming music. So they had podcasting as their saving grace, right?
 
And this is why they thought, I'm gonna go in and find people with Unique Abilities. I'm going to find people with built-in audiences like the Obamas, the Kardashians, because they thought, bringing someone in and building an audience—that takes too long. I don't want to go through that. I don't want to grow with anybody. I don't want to find people who are actually good at doing radio shows, podcasts, people who have a knack for audio, people who know how to tell stories. I'm just going to find the biggest personalities in the world and bring them in, and they're going to bring their audience with us. So Spotify went and they bought studios, they bought distributors, they bought audio hosts, they bought ad sales vehicles, because they see podcasting as a $100 billion a year industry. But as of right now, according to Bloomberg, only 14% of their shows make any money. And then when I read that article, I read it two or three times because I thought they're bringing in people who have no proclivity towards this medium whatsoever. Their Unique Ability doesn't match any of the things that they're trying to accomplish with it. So it seemed to me like if they had spoken to you before they started this, maybe they'd bring people in who were actually good at this kind of thing. And grow them.
 
Dan Sullivan: Well, you know the the very interesting thing is if you contrast the personalities, let's say they're bringing Joe Rogan on board, but he had built his own audience. I mean, he, he brought his audience with him. I don't know if you've got a Facebook audience or a Twitter audience that that translates into a podcast audience. I'm not familiar because I'd never actually involve myself on either Twitter, podcasts. I mean, my team does it for me, but I myself have never done it. So I have no feel for those. But the other thing is, it really strikes me that in all the cases that you mentioned, their past is bigger than their future.
 
Gord Vickman: Ah, now we're getting somewhere. So you believe that they're--?
 
Dan Sullivan: Well, ex-presidents are ex-presidents, I have to tell you. Actually, ex-presidents who spend a lot of time preaching and everything else, they're expected go off and work on their golf game after they're president of the U.S. I mean, they have their followers. They have the-- People are devoted to them. But it's for things in the past. It's not for things in the future. They can't be president again, you know. And the Kardashians are, the whole Kardashian and Jenner thing really goes back to the '90s. It goes back to the '90s. You know, they're getting older now. They're not young personalities anymore. And there was another one that you mentioned I--
 
Gord Vickman: Harry and Meghan.
 
Dan Sullivan: Oh, well, I tell you, if you're in the monarchy business, number one's the only one that counts. You know, they, they had a chance to do something, and I think they blew it. And I don't think it was good for Oprah either. I think Oprah lost ground in that interview she did. So we're talking about people, again, I think that these people were of much greater interest in the past than they ever will be in the future. And that would kind of tell you that it's like in sports, you know, the rule in sports is, you can't win an NBA championship unless you have three superstars on the team. But if every team has three superstars, the rankings every year are gonna end up the same as they were before.
 
Gord Vickman: They just share the trophy.
 
Dan Sullivan: The team with the very three best superstars is gonna defeat the team with not the greatest superstars. And besides, I don't think Spotify or any of the other podcast networks really have enough ground under their feet yet to say what the podcasting industry is going to be. So you take radio. When radio was 10 years old, it was the 1930s. You know, when television had 10 years, it was the early 1950s. So I don't think they have that much of a feel yet for what podcasting is going to be. And besides, I don't think you can measure podcasting in the way that you can measure broadcasting.
 
Gord Vickman: One thing I thought was very simply put in this article, and we'll link it in our show notes, go to Strategic Podcasts with an S strategicpodcasts.com. Click Podcast Payoffs and this episode. So when we talk about things like books, Dan, when we talk about anything, any resources, your tools, we always link them in there. So we make it very easy for you to find the things that we're talking about. We're not going to send you off on a wild safari hunt. If you want to acquire a book or watch something that we're talking about, you can find it on our show notes as always. So again, it sounds like I'm picking on the Obamas, the Kardashians, Prince Harry, Meghan Markle. Maybe I am. I don't want to pick on them. But I will. And the article suggested that they realized, "Oh no, we have to do something now." And the Obamas, like you'd mentioned the golf game. They realize they don't want to sit in a studio for 15 hours a week. Can you imagine that? Kardashians--
 
Dan Sullivan: Well, they don't want to work.
 
Gord Vickman: They don't want to do anything. Kim Kardashian doesn't want to sit in a studio.
 
Dan Sullivan: She doesn't want to work. Meghan and Harry don't want to work.
 
Gord Vickman: Yeah, they wanted the check. And then they realized, "Oh, snap, we have to do something now." And that's why all these deals disappeared. Because they have to do something and be somewhere and they don't want to do it. So Spotify would be well versed to stop giving tens of millions of dollars to people who don't want to work very much. Even if they are superduper famous.
 
Dan Sullivan: You want hard-working, talented people on the way up. You know, I mean, it's like getting a whole team of free agents of people who've been great for 10 years. The vast majority of them are past their prime.
 
Gord Vickman: Yeah, one last little story I'd love to share, Dan. Again, I come from radio. I had a decade in morning radio in big markets here in Canada. And one of the saddest stories that I hear all the time is when pure performers-- There's a progression in radio: you start out, you leave college, and you go to a little kind of a, you know, one-horse town, and you build your skills, and you learn and you make your mistakes there. And then you move to a bigger market. Then you move to a bigger market. And then eventually you get to a major market. I had a unique experience, I guess I went from school to a major market. It was just luck of the draw. They didn't have a morning show. So I saw an opportunity, went, worked really hard. And it was very, very fortuitous. Because if the show had not been open, then I wouldn't have been there and everything just worked out really well.
 
But what happens to broadcasters is, a lot of them go through this route and then they are tired of waking up at three in the morning for the morning show. Maybe it's a bit of a drag, it's a bit of grind, they go into management. They become program directors. And it's always horrific because performers are not managers. And people who love to perform are terrible at orchestrating and trying to tell 75 people what to do. So it's always a disaster. And again, we were talking about Unique Ability in the last episode. I just feel like the people that they're bringing into Spotify right now are people who are in the wrong area because they don't necessarily want to work. And to go back to that radio example, when you're so far out of the galaxy of what you truly want to be doing—you're going from performing on the radio every morning to, you know, screwing around with spreadsheets all day—I think it just crashes and burns. And it's like if you have that thing, that X factor. If you have that need to perform and that need to entertain. Just saw it so much in the radio world of pure performers who were wonderful at that aspect, moving into management because it's $10,000 more. And then everything goes south and then the next thing you know they're selling cars. They're just out of it. Doesn't work.
 
Dan Sullivan: I think you're talking about a pattern in all walks of life, you know, all occupations. I've been an avid student of sports, I would say. I'm more than a fan because I actually haven't been to many games in my life, but the whole way that sports happens, I would say that the superstars-- There are some superstars athletes, but the superstars are really coaches and general managers who have a nose for talent at the right time. They know how to put together this year's team with the best talent that's available for this year. Next year, we don't know. We may do this.
 
And you know, the greatest professional football coach, just from a success standpoint, is Belichick from New England and he never played football. He didn't play football. His father was a coach at the naval academy. And when he was 13 or 14, his father taught him how to study and analyze game films. And he just learned it all by studying game films about what worked and what didn't work, and what kind of talent could handle certain types of situations and other talent. And never really had any actual-- He may have played in high school or grade school, but he didn't play in college. And he certainly wasn't a pro player. And Saban, who's the greatest college coach, no particular glory as a player or anything. His father was a coach. In both cases, their fathers were coaches. They started coaching at very young ages, like in their 20s. And they're different from each other. Belichick would be a horrible college football coach, and Saban was a very, very unsuccessful professional football coach. He knows 18- to 22-year-olds, and Belichick knows people when they're in their 20s and 30s, you know. So I think that there's a uniqueness of what makes something work. But if Spotify is 10 times bigger, let's say five years from now, it will be because they've totally changed their model of going for younger, really, really talented individuals who are on their way up. That'd be the change in their model.
 
Gord Vickman: Who are hungry to work and do things.
 
Dan Sullivan: And they will work themselves to the bone. You know, every head of every organization in the world, regardless of the field or the profession or the industry, spends 50% of their time thinking about this issue. How do we get the best talent at the right time to work together in a winning, winning way? I think there's some people who just have greater wisdom about this, but I don't think listening to them you could imitate what they do. I don't think you could copy what they do. They have a something about how they do what they do that is not learnable.
 
Gord Vickman: And in the words of Dan Sullivan, find people who believe their futures are bigger than their past.
 
Dan Sullivan: And it's with you.
 
Gord Vickman: Podcast Payoffs. So glad you're with us. So glad you joined us today. If you liked this episode, if you got value out of it, share it with a friend, share it with two friends. Share it with 10 friends. We would truly appreciate that. Yeah, Dan, always a pleasure. Thanks so much.
 
Dan Sullivan: Thank you very much.