MyRacehorse takes confidence into Australian market entry

Cover image courtesy of Bronwen Healy

Never before in the 146-year history of the Kentucky Derby have so many owners, over 5300, experienced the thrill of victory in America's most famous race as when Authentic prevailed in the 2020 edition.

Those owners, brought together by MyRacehorse, held just 12.5 per cent combined ownership of the colt, but the thrill of the victory was as big as it would have been had they each owned him outright.

The following day, Michael Behrens, a marketing executive who had founded MyRacehorse a couple of years earlier, packed up his life in California to head to the thoroughbred heartland of Kentucky.

He knew at that point that his career would never be the same, nor would the concept of micro-syndication which he, with substantial backing from Spendthrift Farm's B. Wayne Hughes, had pioneered in the United States.

For so many years, shares in racehorses were measured by people taking halves and quarters, before the emergence of widespread syndication in the latter part of the last century, in particular the Australian market, saw a whole new clientele introduced to ownership.

Micro-ownership, or micro-syndication, takes that model to a completely new level, breaking down ownership into units of anything up to 10,000 to lower the cost of entry, often at a fixed price, and the opportunity to race horses in a pricetag usually out of reach of the 'mum and dad' investor.

The concept has existed in Australia for a few years now, pioneered by the likes of MiRunners, who have augmented the concept into the MiEverest and The Racing League in the past 12 months.

Given the willingness of the Australian market to embrace the concept, the success it had with Authentic, and the close relationship with Spendthrift, which has a growing presence in Australia, it was no major surprise to see MyRacehorse launch in Australia this month, with six horses as part of its initial stable.

For Behrens, the internationalisation of MyRacehorse is the next logical step of a journey which began when he looked to marry his acumen in marketing with his passion for racing.

"The hypothesis when we started the business was that one of the best thrills in sport was owning a racehorse. It was transcendent among sports experiences. The idea of owning a racehorse is something that for thousands of years has been enjoyed and romanticised. Partnerships started to make that accessible for people, but we were looking for real scale. We wanted real democratisation of that," he told TDN AusNZ.

"I think there was a pent-up demand. We didn't do anything special. We came to market and in the US the biggest problem was regulatory hurdles. Our team spent over a year overcoming those hurdles then had to build up the tech to be able to handle so many people."

The importance of a good experience

As often is the case with startups, word of mouth was key to early success, and Behrens knew the concept was gaining traction when, standing in a winner's circle at the races one day, he watched as someone purchased a MyRacehorse share on the spot.

What was crucial to success, according to Behrens, was ensuring the digital experience on MyRacehorse was as enjoyable as the ownership experience.

"I don’t think that can be done without having a very strong tech stack. A third of my entire team is in engineering and the reality is when you have tens of thousands of owners and thousands of updates that are happening, there are a lot of things that are going on just to manage and provide a great experience," he said.

"So much of that experience is digital because of just the sheer number of people you have and the number of updates you have. We wouldn't get that significant adoption, unless someone like ourselves makes that commitment to ensuring that tech is built out, so it is seamless, enjoyable and it's very sharable."

What MyRacehorse and the other micro-syndication platforms do provide for the thoroughbred industry is entry level access for ownership, something upon which the future prosperity of the industry can be built on.

"The simple value proposition is that you can throw in $50 and have a hair in an elite racehorse and see what happens. The amount of people that just fall in love with what is a simple value proposition to begin with is fantastic. They go off and start buying their own horses, they start getting involved in wagering and all that stuff," Behrens said.

"It’s just a very simple way to get to know the majestic animal that is the thoroughbred."

Hughes' major influence

While the concept itself gained immediate resonance, Behrens said it was the involvement of Hughes as a major investor of the business which proved the key to the growth of MyRacehorse in the United States.

"I like to think it was a pretty good idea and was executed really well, and I had a bit to do with that, but the reality is that if it wasn't for Mr Hughes, none of this happens," he said.

"When he saw the business, he said right away that we need to compete at the highest level. He said we can't have fans get in at the lower level or the second-tier races, we have to be at that top level. That was the obsession as soon as he got involved.

"We started buying bigger horses, bigger pedigrees and we started buying Derby prospects. It was a totally different switch, because he firmly believes that if you really want to love the racing experience in its best form, you have shoot to for those big races."

It was that approach which led to MyRacehorse's involvement with Authentic, who was purchased after winning the G1 Santa Anita Derby, with a view of making what seemed an impossible dream of owning a Kentucky Derby winner a reality for over 5000 people.

What followed at Churchill Downs was a marketer's dream as the Into Mischief colt prevailed in the MyRacehorse silks.

"The generosity that the horse was able to wear the silks, even though we were a minority partner in the horse, it was a testament to Mr Hughes' commitment for increasing the passion of global racing," Behrens said.

The Australian expansion

Behrens said Hughes has also been the driving force behind MyRacehorse's expansion into Australia.

"Mr Hughes is so passionate about Australian racing. We talk about it all the time. The first day I ever met him he said, 'let’s go to Australia'. He had already set up Spendthrift Australia down there and had really committed to spending good money. His view on Australia was that the racing is high-quality and everybody loves racing," he said.

Spendthrift Australia, together with MyRacehorse's bloodstock team, has sourced the six horses MyRacehorse has launched with in Australia, including a Written Tycoon yearling which cost $1.2 million at the Magic Millions Gold Coast Yearling Sale. All six horses will be raced in partnership with Spendthrift Australia and be trained by the likes of Hawkes Racing, Mark Newnham, Tony and Calvin McEvoy and Bjorn Baker.

"Garry Cuddy over at Spendthrift Australia has been fantastic. We have a global manager of bloodstock and they have partnered up a little bit. You have to have good people and having Spendthrift Australia there knowing the local market and having that team in place, it has allowed us to partner on these quality horses," Behrens said.

MyRacehorse has also set up a marketing and operations team in Australia, with promotional and procedural requirements put in place ahead of the launch.

"This is an ASIC-regulated security. At the end of the day, there is a chance of a high appreciation of an asset, and we do not get into it for the money but since there can be such a high appreciation, it needs to be a regulated security. We have to have that ASIC compliance and we have a team that is all predicated on making sure we do that," he said.

"We then have a team that focusses on the marketing experience. We are led by a couple of sharp guys down there, and we have a global bloodstock team which partners up with Spendthrift, so we have got good infrastructure and we are off to the races."

Competition and growth

As mentioned, MyRacehorse are not sewing in completely fresh ground in Australia, with the likes of MiRunners already firmly established and evolving their business in new and interesting ways. Behrens sees there being plenty of scope for multiple operators in the Australian market.

"The reality is that with the number of people who enjoy racing, there's a pretty big spread. We are confident that multiple players can co-exist. We feel it is going to become a very, very big category in Australia and other markets," he said.

"When a broader range of people get to appreciate that this is a fully transparent, enjoyable, low cost, low risk way of expressing and enjoying their sport at another level, I'm pretty confident that there's enough of a market for everyone."

With confidence in the Australian market, Behrens said it will be very much full steam ahead in terms of MyRacehorse's investment in this part of the world.

"We are all in! We have a few horses on the platform already, but our stable is much more significant and we will continue to launch horses. We have got significant investments in sponsorships and marketing to come to spread the word anew," he said.

"We have to come into this market and let people know we are here. We have to give people context to what we are all about. We have to throw great events, we have to race good horses and provide good content.

"We have done our due diligence, we have done a lot of focus groups and we feel there is a pent-up demand, a big market and Mr Hughes is extremely confident. He has decided to support it financially in a way which will allow us to come out of the gate in a really big way.

"In the US, we really had to go slow. But there's a lot of confidence that the product will be well received in Australia."