By Carter Carnegie
Michael Behrens is synonymous with innovation in the racing industry, having brought the concept of microshares into everyday conversation. His MyRacehorse struck gold early–and almost immediately–when Authentic (Into Mischief) won the 2020 GI Kentucky Derby and GI Breeders' Cup Classic en route to Horse of the Year honors just months after buying in. Carter Carnegie, who provides some marketing services for MyRacehorse, recently had a conversation with Behrens, who remains in the news with other high-profile investments, including a recently announced partnership in two-time champion Monomoy Girl (Tapizar).
CC: Please share your favorite racing memories.
MB: That one is easy. It was the first Saturday in September 2020, and it was when Authentic turned back Tiz the Law [Constitution] and won the Kentucky Derby. For me personally, as an entrepreneur, it was a combination of years of getting this idea off the ground and getting the business going and the hard work of a lot of people to help me get it to that point. Two, it was the first time ever you had over 5,000 people that had the same vested interest. And third, it was in partnership with Mr. [B. Wayne] Hughes, who has been such a tremendous partner on this journey. So, there's definitely nothing close to it. That's been the pinnacle for me in racing.
CC: Can you share a brief history of your professional career?
MB: It's not in racing. Racing has been my joy and my place of decompression and to let loose after a tough week at the office, but the reality is I spend most of my time in e-commerce, ad tech, and marketing.
CC: What was your motivation to explore microshares?
MB: As a marketer, my obsession was how brands are built and how categories are created. As a fan of racing, I had been searching for the reasons that were holding racing back from a prominent place in the sports entertainment landscape in America, and came to the conclusion that the sport was very difficult for people to try to experience. [I thought] the best possible way to do that was to experience it through the lens of ownership. This is a sport that has really struggled with attracting new fans and educating fans how to experience the sport. Microshares became what I believe to be the perfect product to meet that need.
CC: What similarities do you see between what Casper Mattress did to the mattress industry during your time as chief marketing officer and what you are doing with MyRacehorse in the Thoroughbred industry?
MB: You wouldn't think there's a lot of similarities, but there's a common trait as both industries were stale and lacked the desire to promote innovation. Prior to Casper, the mattress industry provided a terrible buying experience. [Casper] proved to be ridiculously disruptive to the mattress industry because it offered the consumer a better product and a better experience.
The same thing is true in racing. It's been done the same way for decades, and people have either not thought of or had the wherewithal to bring a lot of disruptions to its business model. My obsession is to understand the consumer, what their wants are, what the desires are, where they find frustrations in each industry. In the case of racing, it was unlocking a way to make a fan participatory without just focusing on betting.
CC: What are some of the key results that you believe have benefited the Thoroughbred industry through microshare participation?
MB: A lot of people will think the obvious: that MyRacehorse in a very short period of time has come in and bought a lot of bloodstock. As a new player, the amount of bloodstock we have been able to purchase benefits a lot of people whose livelihood relies on raising, training, or caring for Thoroughbreds, but I think that's just a small fraction of the influence that MyRacehorse and the community that we have develop has had. These fans are bringing in new fans. These new fans are spending time in racing content, on racing media websites, and hopefully–after COVID–returning to the track. They are also very active wagering as our horses' odds definitely indicate compared to the morning line. Therefore, more than our bloodstock acquisitions, I think what's
exponentially bigger is the amount of people that we've re-energized or newly captured and brought them into the entire ecosystem.
CC: With such a large community, how do you manage/balance the natural restrictions of providing real-world experiences while keeping the microowners engaged and participatory in their investment?
MB: Like most brands, it is being able to give a rewarding digital experience by providing unique content and experiences within the digital platform. And then balancing that with being opportunistic and how you can have the physical experiences we've been able to deliver. Prior to the pandemic, outside of a few big days, the racetracks have a lot of capacity. We don't have to shy away from the fact that racing is widely enjoyed and really appreciated when you're in the physical environments of the game. Some racetracks have really embraced this concept, Santa Anita specifically, who has been a big supporter of ours early on and did a lot to get our fans to come out and enjoy racing. I expect that's going to be a huge part of 2021 and beyond as we're seeing a lot of demand to attend the racetrack. But the digital side supports the largest percent of our owners and we have great online communities which are very vibrant as well.
CC: Do you think MyRacehorse is a powerful marketing platform for the sport?
MB: It's becoming a very significant channel. Our customers are becoming brand ambassadors that are sharing their visits to their horses, the race results they've had, and their connection with the other stakeholders. Our community is very active in sharing that kind of content in their own personal networks. I think that's how categories like racing can achieve scales. When you think about the size of our community and how socially-centric they are and how socially active they are, the fact that with their good experiences, they're going back out and they're sharing that. The numbers are pretty tremendous in terms of how much scale you get by just the network effect of the racehorse owners that we've created.
CC: What can stakeholders do to help in your efforts?
MB: I think that there have been those that have been more helpful than others. And I get it. It's new. It's not defined. There's not a lot of precedent for it. But the reality is that if you take a step back as any stakeholder in industry and realize that there's just a lot of passionate, excited people that are now involved in racing, what we need to do is enrich and cultivate that collectively. We need to harness it. I think the fact that whatever we can do to allow these people to experience everything that racing has to offer. Right now, I think we're approaching a situation where with the pandemic restrictions hopefully lifting in the next three to four months, we're going to really turn to the tracks and we're going to look for their support as we want to be able to bring out this community and be able to enjoy the races live and with friends and with family, and have them bring new people out to the races.
CC: Do you see your category having an impact on wagering?
MB: Absolutely. You can see it in each race that we have, how much money are into the pools, how disproportionately our horses are relative to the morning-line odds. I think over time, we'll do a lot more work on being able to measure this. But the reality is that when you get connected to the sport, there is a direct correlation to your participation in pari-mutuel. We'll see it more and more and it won't even be so directly correlated to the horses that we have racing, but just the size of the community that is now better educated, and that education is going to manifest itself in much more significant handle because they have become more confident with the product.
CC: Can you address how significantly the support of B. Wayne Hughes has impacted your success?
MB: I'm not sure I can totally put it into words. It's been something that I couldn't even have imagined that I'd have a partner with this type of support, this type of commitment, this type of passion for seeing something be done differently and be able to catalyze real change. There's just innovation. There's creativity. As a business partner, there's a lot of accountability, but the reality is that his commitment and passion and love of the sport has been a benefit to us. We wouldn't have the success that we've had in such a short period of time without his support.
CC: You just announced Monomoy Girl on your platform. Why are purchase of shares limited and what is your goal with this offering?
MB: We want people to be able to experience every part of this game. One part of this game is competing at the highest level. I think there's not much of a higher level than Monomoy Girl. She is the definition of a champion. We want as many people to participate and go on this journey as possible. The financials, as people will see, are very, very attractive. They're very shareholder-friendly. This is not about having a few people come in and take up a lion's share of it. We want as many people as possible to experience this. So, there'll be very aggressive limits on how much one person can participate.
CC: What is more important, financial success or a positive experience for your investor?
MB: It's both. I don't think you're in a positive experience if you're basically not having financial success, but no one does this because they're selling their 401(k) and deciding this is going to be the wave of their future investment. So, at the end of the day, we live in a world in which we have to be fiscally responsible. We have to make sure we get people into horses that provide them a great experience. We have to then take that experience and we have to deliver great content and digital and physical experiences that matched the joys and the thrills of what it is to own a racehorse, but we also want to be good stewards of other investments.
CC: Can you share some of the other plans you have for MyRacehorse in 2021?
MB: Our focus now is really going to be to continue to scale. One of the challenges the business has faced in the last couple of months is to keep up with the amount of demand that we've had by new people coming in. People who've had a good experience are telling friends. We're super happy they're signed up. They're downloading the app. They're registering for investments. We've actually only had horses on the website for a handful of days in the last couple of months, just because the overwhelming demand. So, what we focus on aggressively is building out infrastructure and we are committed to making sure that we have more inventory to meet the demand. We are also going to go explore expansion in international markets. The two international markets that we are focused on right now are Australia, which will be launching in the next month or so, and then we'll be going into the UK and Ireland shortly thereafter.
CC: What does success look like?
MB: According to a survey that I saw a few years back, there's over nine million people that have a curiosity of horse racing. There's no doubt that we've been losing market share overall to other sport. Success will be when we basically start seeing tremendous growth overall in the industry. Obviously, we want to build a good business and we want to be able to build a big base of customers. But overall, I think the ultimate success is going to be that we bring a real growth trajectory back to racing.
CC: What are the unique traits in horse racing that need to be exploited by stakeholders to deliver a greater interest from owners and race fans?
MB: I think racing has a very unique combination of the ability to have competition at the highest level centered around this majestic animal and the equine athlete and the Thoroughbred and the gaming components. The intersection of those makes it very, very compelling when you think about what you're competing against in terms of mind share for consumer attention. We have to continue to be able to embrace the fact that it's the intersection that's so important. It's not one or the other. It's not just about the experiential component, which is great. It's not just about the gaming component and it's not just about the athlete and the sport. It really is about bringing it all together. Overall, we need to do a better job of making it available. We've got to make it easy to participate in all those things. We have to make it more digestible. It seems to focus on the audiences that are already known. When you expand and you bring them into a world that maybe isn't the easiest to understand, you've got to change. I think that's really what we have to do is get to understand what makes us unique and different. We have to accept the fact that maybe it's not simple and that's okay, but we just got to be able to change the way that we engage and change the way we message and share it, change the way we market to be able to get that message out there. Because once the message is appreciated, once the sport is really understood, it's beautiful and it's going to capture a lot of people.
CC: What's the best professional advice you've received as a marketer?
MB: I think the best thing is to ask why, an intellectual curiosity, the ability to question everything. It's really what I wake up every single day and I challenge: why did we do what we did yesterday? Was that the best possible result we could achieve? How could we have done it better? Why did this cause frustration? Why can't we do it differently? Why can't we emulate another role model from a brand or a category that we like? I'm sure my staff will attest to the fact that it can get tiring if you're questioning everything, but that's the best way to be a marketer, to have this pursuit of always doing better. You question why can't we do it better.
CC: Is there a business mistake that you try to avoid at all costs?
MB: I think one of the biggest mistakes is being afraid to fail. Early in my career, I was and I think a lot of people are. But the reality is that experimentation, testing, and learning is part of the natural evolution of any business of any category and you've got to embrace it. You've always got to celebrate failure. I think when you really do create a culture, be it in your professional career, be it in your business, be it in the industry, that you embrace trial, you embrace experimentation, you embrace failure, you learn from it, you enjoy it. It's something that Mr. Hughes is as adamant [about] as I am. It's very liberating to have a culture, to have a business philosophy that embraces failure, celebrates failure. If you're not failing, then you're really not trying.
Carter Carnegie is president of Metrical Consulting and has over 30 years of experience as a sports business professional both in racing and working with sports leagues/events such as the NBA, NFL, and Olympics. Metrical offers marketing solutions and business strategics to brands as well as sports properties.