As you might have heard, the company known as MyRacehorse, and its Founder/CEO, Michael Behrens, have already had quite a year. This past summer they offered micro-shares for pieces of a 12.5% stake in B. Wayne Hughes and Spendthrift Farm’s Into Mischief colt, Authentic. They sold every one of them, then the just over 5,000 investors won The Kentucky Derby. Now the marketing aficionado from California, who is also a lover of all things Thoroughbred, is ready for more. Have a read of our recent interview.
J.N. Campbell: Michael, thanks for chatting today with me.
Michael Behrens: It’s my pleasure.
J.N. Campbell: I want to begin by asking you about this tumultuous year. What are some of the highlights you guys ay MyRacehorse have experienced from this Authentic-Derby-Preakness bump and give us the coolest thing to happen to you, besides the actual running of Authentic in these two legs of the Triple Crown? A story, please...
Michael Behrens: The amount of awareness the Derby win brought to our relatively new platform is tremendous. Our app downloads, web traffic, and new registered users are at all-time highs. Building awareness is one of the most challenging parts of a startup business, and for us to be bestowed this tremendous surge in awareness and interest so early in our life cycle is incredible, like lightning in a bottle. One of my favorite impacts of the Derby has been how much "joy" has been spread about horse racing via our 5,000+ owners of Authentic. The amount of excitement, passion and joy that has manifested itself on each owner's social media pages has been incredible. If just each person has 200 friends, that's 1,000,000 people that were able to consume horse racing content in a positive, fun and joyous state.
We have had a couple tough years as an industry, when it comes to the media and horse racing. However, more powerful than the media are firsthand stories in your social networks, and this win provided some of the best racing content I have ever seen. We recently cut a commercial we made by curating a few of our favorites. We decided that everyone needed to have a keepsake for this historic moment, so we sent everyone a personalized Winner’s Circle picture with their name on it. The reaction has been overwhelming. Hundreds of emails and calls about how this has been such a special moment for so many. I just love to see this many people enjoying horse racing.
On a personal note the most exciting thing that happened to me is that I have literally been stopped on sidewalks, at the airport, in restaurants, and people ask if I was the founder of MyRacehorse, the group that won the Kentucky Derby, and if I would take a picture with them. My 12-year-old daughter now thinks I am a celebrity (Ha ha)!
J.N. Campbell: I was watching some of your YouTube coverage and saw a snippet of a piece with Laura Hillenbrand, the celebrated author of Seabiscuit and Unbroken, can you tell us what her connection is to MyRacehorse? How has support from high-profile celebrities helped your cause?
Michael Behrens: She just loves horses and decided to join in. We had no clue until she had emailed in how much she was enjoying it. We have had quite a few celebrities from Olympic athletes like Bode Miller, to baseball players like Walker Buhler, and NASCAR drivers, actors, etc… I think even for the most affluent, owning a racehorse is expensive and it's a bit scary. This just makes it easy, removes financial burdens and then gets you hooked. We have had several people now reach out wanting to take their ownership experience/involvement to a new level.
J.N. Campbell: Are there some investments coming in certain horses you can let us in on? Bit of a preview of what is to come...
Michael Behrens: We were very active at the yearling sales. I hope we were active enough to meet the demand that app is seeing. All our Fasig horses are now available to sign up for early access, and when they are fully qualified by the SEC, we will open them for investment. I actually think this is going to be one of the more challenging parts of our business. We are quite selective when it comes to buying horses, so protecting our process in buying good horses that we think are at fair valuations is going to remain a priority. If that means we are a little scarce on inventory, then that's what will happen. However, as I mentioned before a lot of doors have been opened with this win, and one of them has been partners with great horses wanting to be part of this. This has given us a lot more opportunities to acquire good horses.
J.N. Campbell: Over the next year or so, from a business plan point of view, what are some of the aspects that you are looking to adapt about your approach? Exciting innovations, etc...
Michael Behrens: One of the changes I am most excited by is our new approach to training expenses. Available for the first time in our current offerings, is a completely deferred training expense model. One part of horse ownership that most new owners don't fully appreciate is how expensive it is to care and train for a top thoroughbred. The cost can often exceed 50k a year. We never require cap calls (it's a one-time payment), so our traditional model has raised 1-1.5 years of training cost up front, and then uses part of the purse earnings to continue the care in the future. Our new approach has completely eliminated the raise for training. We are taking on all the expenses, and are only being paid back at the end of a horse's racing career. If the horse is sold or claimed for less than what was owed for training, the debt is forgiven. This gives the shareholder of a micro-share a real advantage since many horses would sell for far less than their training costs. This will make share prices lower, and the amount of distributions higher and shift much more of the risk away from the shareholder. We feel it could be a game changing evolution to the model.
J.N. Campbell: Fascinating answers! Before I let you go, we need a good old-fashioned rapid-fire segment in order to get to know a bit more about you, Michael Behrens, and your appreciation for this great sport, so here goes…
Michael Behrens: Ok, I am ready!
J.N. Campbell: Seabiscuit or Secretariat?
Michael Behrens: Seabiscuit, I am a sucker for the underdog as my favorite football team is the New York Jets.
J.N. Campbell: Greatest Score at the Track for Yourself?
Michael Behrens: I had the superfecta several times this year in the Derby. It is a lot easier to hit big when you single on top! BTW, with all the excitement of the day, I forgot to cash the tickets! I still carry it around in my wallet!
J.N. Campbell: Preference for turf or dirt races?
Michael Behrens: I have always been a huge fan of the dirt, classic races, but I have to say these past couple of years I am becoming quite fond of turf racing…it's a coin flip right now.
J.N. Campbell: Favorite trackside food? Which venue?
Michael Behrens: The roast beef sandwiches with extra sauce on rye at Santa Anita. Not healthy, but delicious!
J.N. Campbell: Best Name of a Thoroughbred, in your opinion?
Michael Behrens: Behrens, of course! Always wanted to get one from his family line!
J.N. Campbell: Thanks for the time, Michael. What fun and such a pleasure to speak with you.