December 26, 2024 • 55 mins
On this staff favorite episode, Barry Ritholtz speaks with Toto Wolff, Team Principal & CEO of the Mercedes-AMG PETRONAS F1 Team. Prior to joining Mercedes, Toto spent time in the investment world, founding his own company Marchfifteen in 1998 and Marchsixteen in 2004. In 2009 Toto combined his passion for racing and business by investing in the Williams F1 Team. He eventually came to be the team's Executive Director, helping to lead them toward their first win at the Spanish Grand Prix in eight years. Shortly after that win, Toto became Managing Partner of the Mercedes F1 team, where he now holds a 33% stake. In his time with Mercedes, the team has won eight Formula One Constructors' Championships and seven Drivers' Championships.
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:09):
This is Master's in Business with Barry rid Hoolts on
Bloomberg Radio.
Speaker 1 (00:16):
What can I say about this week's guest, Total Wolf,
principal CEO of Mercedes Formula one race team. What an
incredible career from a winning racer to an investor and
venture capitalist, to a person who just kind of became
a principal at Williams and then eventually after that team
(00:41):
surprisingly began to win, got recruited over to Mercedes, where
he has put together a fantastic track record. His rookie
year at Mercedes was the same rookie year for Lewis Hamilton.
Obviously they've had an amazing run together. I don't know
what else I could say about this conversation. If you're
a fan of Formula one racing, if you're a fan
(01:04):
of managing a team of people, if you're interested in
how to ring out every last millisecond of performance, you're
going to find this conversation absolutely fascinating. I know I did,
with no further ado my discussion with Mercedes F One's
team principal Total Wolf. I don't want to waste time
(01:25):
singing your accolades let's just jump right into this undergraduate
Vienna University of Economics and Business. How did you end
up in racing? It sounds like you were going into finance.
Speaker 2 (01:37):
Dropout, dropout. Yeah, so yeah, I was born and raised
in Vienna and went to the Vienna u University of Economics,
but actually raced in junior formulas at the time and
wanted to be a race driver. And when that ended,
abruptly ran out of money and we had a very
(01:58):
bad spell of accidents in Formula one, so I lost
a sponsor. I decided I'm going to quit both. I'm
gonna quit UNI and I'm going to quit racing and
launch myself into working.
Speaker 1 (02:07):
And you were fairly successful as a race so you
began an Austrian Formula Ford. You won the twenty four
hours of Bahrain, which is an unusually any twenty four
hour races difficult. How do you what's the key to
winning twenty four hours of driving?
Speaker 2 (02:23):
Yeah? So the twenty four hour race was in Dubai
and was in so far relatively important because it was
the first big raase of twenty four hours in the
Middle East. So you have three drivers of four and
you're having two hour stints, and it's and it's challenging
from mentally and from the human body because sometimes you
have to get up at two o'clock and drive from
two to four in the ninth But it was all
part of my racing and I loved every minute.
Speaker 1 (02:45):
So you go from racing to saying, all right, I
don't have a career in racing, I'm gonna go into finance.
And you found March fifteenth in nineteen ninety eight. Tell
us a little bit about what sort of investing you
were doing in the late nine Yeah.
Speaker 2 (03:01):
So the first company was called March fifteen and then
March sixteen, and there is not a lot of meaning
behind it. It was just the data incorporated it and
that felt the easiest. So back in the day you
wouldn't think a lot about brand. And I went to
the US for a couple of months and realized that
internet companies were coming up here Yahoo, America Online and
(03:22):
Netscape And went back to Austria and figured out who
is doing that in Austria and stumbled up upon a
few websites and met these people, sometimes not even companies.
One was a seventeen year old board that round the
largest free SMS platform online and set up structure around it.
(03:46):
It was equity for consulting, so I didn't get any
didn't buy anything because I didn't have the money, and
it was just a good timing. In ninety nine and
two thousand we started to IPO companies and it became
a proper menture capital company from from consulting.
Speaker 1 (04:00):
Actually, and let's first forward a little bit to two
thousand and nine. You invest in the Williams F one
team and eventually in twenty twelve you become their executive director.
How is that transition? How do you go from being
a venture investor running a team.
Speaker 2 (04:18):
Yeah, the ten years in between was going from pretty
much tech investor into motor racing. I bought a touring
car team. We were doing FORMA three Engines for Mercedes.
Was quite an extensive program about our raality team as well,
and so in these ten years I kind of merged
(04:39):
my passion for the spot with the investment world. And
as you say, Williams was the first former one team
I got myself into, had a minority stake, and then
I run it in twenty twelve with Frank Williams because
the CEO decided to depart and This is where basically
my Formula one active Formula one story started.
Speaker 1 (05:00):
So Williams at the time wasn't exactly front of the grid.
You help them win a big race and suddenly you're
now competing with much better known, better funded teams. How
are you competitive with You know, you're fighting an uphill
battle when you're at Williams.
Speaker 2 (05:18):
Energy only just energy. Yeah, we didn't have the infrastructure,
not the capability. The drivers work were not on the
level of Louise Hamilton and others. It was the energy
in the team. People gave it all. They had heart
and soul and I think we moved, We moved barriers,
we moved, We fought against adversity and we want to
(05:42):
race just because the people gave it their all.
Speaker 1 (05:44):
H So you're involved in an initial public offering for
hwa AG, the company behind Mercedes Racing. Tell us a
little bit about that IPO and that lead to your
relationship with Mercedes.
Speaker 2 (06:03):
Yeah, that's quite interesting because that when AMG was bought
by Mercedes, the racing side was spun out because the
big Timeler corporation didn't want to have the headaches with
motor racing, you know, with the unions this is weekend
work and you want to stay argile as a corporate
(06:23):
to say well we're in the spot or we're out
without having too much overhead and headache. So that was
spun out and it was a really good high tech company.
They built engines for Formula three y as I said before,
touring cars for the very famous DTM racing series. This
is the equivalent of NASCAR in Germany or in Europe.
Limited editions broadcast for MG and high margin business. And
(06:46):
I bought forty nine percent of that business with the
found of MG, and we iPod it and sold it
to investors and then to a Katari investment fund and
that was a success story.
Speaker 1 (06:59):
So how did that IPO lead to you eventually getting
tapped by Mercedes to both take a piece of the
of the team and become principal.
Speaker 2 (07:11):
So it was multi faceted because we had this company
where we were basically doing all the work for Mercedes
Racing outside of Formula one. I had a driver management
company where fifty percent would be paid by Mercedes, fifty
percent by myself and so we established a trusting relationship.
And then I obviously embarked into being with Williams which
(07:33):
was a competitive of Mercedes. We won a race and
they were interested to understand how can that be. You're underfunded,
back market team and you're beating us on track, and
they asked me, could you evaluate that? And I said,
I don't want to bed mouth anybody, but I can,
so I did that. They came back and said, would
like to offer you to run this as a head
of Mercedes multip.
Speaker 1 (07:53):
Was that a surprise? Was this? Like? Very did you
have any during that conversation? Hey, why is a wealth funded,
big team asking me how we beat them? It sort
of seems like an unusual situation, especially how competitive everybody
seems to be in the paddocks.
Speaker 2 (08:09):
I think the board realized that that stage that I
bought a world championship team winning team with brawn, and
that the results were getting worse and worse and they failed.
They had no grip on what was actually happening, and
that's why they asked me. They knew that I was
not biased because I had another team, but I was
with them in touring cars, and this is how it
(08:30):
all came about.
Speaker 1 (08:31):
So you become a thirty percent owner of the Mercedes
Patrona's team and the principal. How long is it before
that team starts winning races? What were the first couple
of years.
Speaker 2 (08:45):
Like, So, my first day was in January twenty thirteen,
and it was a difficult situation because I got the
job of head of Mercedes Motorsport and at the same
time sharehold of the team and executive director. But those
two posts were, you know, where we people that were
icons in the industry, a gentleman who was running Mercedes
Motorsport and then Ross Brown, a highly decorated technical director,
(09:07):
was running the team, and so had to manage that situation.
Eventually took over and when I joined, we started to
win races. In that first year, we won three races
with Lewis joined that year as well at the same
time as me.
Speaker 1 (09:21):
That was his rookie year. You started the same time.
Speaker 2 (09:24):
Yeah, we were both rookies and Mercedes basically huh. And
that started to be a successfully and by the end
we were front runner and we finished second in the
championship and from then on we introduced new engine regulations
in fourteen, which was really co expertise of Mercedes obviously,
and then we had this run of eight consecutive World Championships.
Speaker 1 (09:44):
Unprecedented run. We've never seen anything like that, even in
the Schumacher era. I don't think he won eight consecutive championships.
I have to ask an obvious question. You're in venture
capital investing, you're in race saying, what similarities do you
find between the two fields. You're dealing with a lot
(10:05):
of data, you're dealing with a lot of unknowns. Did
your background and venture investing help you put together the
winning streak at Mercedes?
Speaker 2 (10:15):
It always starts with the human being because in tech,
human beings have ideas, they manage processes, and it's the
same in formula one. When you talk about a company
or a team, what is that? And it's basically a
bunch of people that on this professional journey together. So
I around people that run racing cars, and I did
(10:37):
the same when I was a venture capital invest stock.
I tried to hire and develop the best people to
run a specific organization.
Speaker 1 (10:45):
And I mentioned when you joined Mercedes you took a
thirty percent ownership stake. Did I read this correctly? You
recently raised your stake in that, So what's your ownership
now of the team?
Speaker 2 (10:56):
Yeah, exactly. When they offered me to run it, I said,
that is super honorable. But I'm a shareholder at Williams
and the deal we found is that I bought forty
percent from the Abu Dabistar and fund, and then Nick
Lauder came in and he bought ten percent, so it
was sixty Mercedes, thirty myself and ten Niki Lauda. And
when Nikki passed away, we found another investor. In today's
(11:18):
three shareholders each with thirty three point three percent, so
I increased my stake. As you say, so.
Speaker 1 (11:24):
You're you're not a majority shareholder, but you're the principal.
How do you juggle dealing two other substantial shareholders, especially
when things become challenging.
Speaker 2 (11:35):
I mean, I couldn't wish for a better shareholding group
because within Naios we got a tremendous powerhouse behind us,
a very financially profitable organization. Obviously chemicals business and that
is you go through cyclics. But Jim Redcliffe, the founder,
is involved in Manchester United and an America's Cup, in skiing,
(11:57):
in cycling, so that was always that was a good
deal financially made sense. It was during COVID and then
Mercedes obviously providing us with this mighty car brand the
seven most valuable brand in the world, and I'm running
it and between us situary well understood who contributes. And
I deem myself very lucky that I have a shareholder
with Mercedes that's basically giving us the keys the responsibility
(12:21):
for this brand. And it's been great. The current Coola Calaneus,
Marcus Schaeffer CTO and the whole Bot gang is fantastically supportive,
and you know that's part of our success.
Speaker 1 (12:33):
You seem to thrive in very competitive environments, not just
investing and racing, but America's Cup and yachting, free diving,
like you do a lot of what some people would
perceive as calculated, high risk activities. What is the competitive drive?
(12:54):
Where does this come from?
Speaker 2 (12:56):
I don't know it. When I was young, and obviously
in racing, it was always a relative competition, you want
to beat the other guy, and I realized over the
years that it was actually more a competition with myself
setting expectations and trying everything in order to achieve that.
And today racing, whilst it's still a relative and we
(13:20):
want to beat our competitor, it is more for us.
It's not only me in the team. We want to
surpass our expectations and if we lose, it's not particularly
losing against another team, it's losing against ourselves. And the activities,
like you mentioned, is a fight against myself. How far
can I push myself? And I love free diving. It
has a meditative component for me that I like. I
(13:42):
like the water, and achieving certain depth is expectations that
are set myself and I don't need to have anybody
competing with me.
Speaker 1 (13:52):
What's the longest you can hold your breath? I know
you must have timed this to the second.
Speaker 2 (13:57):
Four minutes and fifteen seconds.
Speaker 1 (14:00):
What do you think about some of these world champions
who are holding their breath ten, twelve, fourteen minutes? It
seems superhuman.
Speaker 2 (14:08):
Yeah, there was obviously the grades of the spot that
have achieved it, but there is two different angles to
it somehow. Basically, you pump fresh oxygen in your body
to fill your lungs and that basically doubles your time
underwater holding your breath and when you're doing it without it,
without it it forming. It is quite a good benchmark.
Speaker 1 (14:32):
So we talked earlier your rookie years with Lewis Hamilton.
I know you're a very competitive guy. Did you have
any sense when you were first beginning the sort of
run the two you were going to go on.
Speaker 2 (14:46):
No, not at all. I think when I joined the
team they finished fifth in the World Championship, and then
we quickly became so competitive. And it is not particularly
just because of Lewis and myself. A really good group
came together and started to form in twenty twelve before
my time, and then it kind of started to rule.
Speaker 1 (15:07):
And I want to put some flesh on those numbers.
Eight consecutive Formula One Constructors championships from twenty fourteen to
twenty twenty one. Seven consecutor drivers championships, and I put
an asterisk on it because we all know that eighth
one was stolen. We won't go get into that. I
don't want to put words in your mouth. This is
(15:28):
me saying that you you mentioned the whole team, and
that it's not just you were the driver. Tell us
about all the various people involved in this team. This
really is a team sport.
Speaker 2 (15:43):
Absolutely every single team member contributes to the team's success.
And how I'd liked to make the let's say the
breach to people that would be saying, well, what is
my contribution? To the car speed. It is that someone
in another team, Ferrari or red Bull is doing your job.
Whether it's in accounting, it's finance and cleaning, someone is
(16:05):
doing that job. And as long as you're able to
outperform that person, and you keep that in mind, you're
contributing to the team's dynamic and to the team's success.
And that's why everyone in their position, if done with
discipline and responsibility, is contributing to making the car faster.
Speaker 1 (16:24):
And when you say everyone, I want to go into
some details about some of the things you did, because
initially people thought it was ridiculous, and then the data
backed you up. At one point, you had the people
who cleaned the bathrooms make sure everything was wiped down
twice a day. You did these changes to something as
(16:46):
simple as the brush that you used to clean the
ball and people thought you were a little obsessive compulsive
about it. Hey, why is Toto so nuts about the bathroom?
But it turns out your team gets ill last day
stuff for stomach virus is last just there was a
uptick in the overall health of everybody in the organization
(17:08):
once you implemented that. What detail is too small for you?
To notice.
Speaker 2 (17:14):
I've rarely seen cutting edge businesses without the founder of
the CEO or some of the top management being obsessed
with the detail. You have to be, because if you
don't have an attention to detail, how should the rest
then fly? And I came into the office my first
day and I said, in the lobby and there was
an old daily Mail week, old daily Mail newspaper and
(17:35):
some old coffee cups. And when I came to the guy,
Chross Brown, I was running and I said, well, that's
not how Formula one team should look like. And the
answer was the engineering is what makes a car quick,
and not the appearance of the reception. And I said, well,
I disagree, because it's the attention to detail that is important.
And if the reception as a point of sale, fire
and I font team is not the standard. And what
(17:56):
is the rest?
Speaker 1 (17:57):
Why do people think they're mutually exclusive? You have great
engineering and a clean bathroom and lobby.
Speaker 2 (18:03):
Yeah, and chose your mindset, I guess. And you mentioned
the bathroom story, which has become a little bit famous,
and it's not being obsessed. But long before COVID, we
had had sanitizers that were drilled into the walls of
the races where we were going, we had a hygiene manager.
To today's many of them that looked after our health.
(18:23):
When you have sponsors and CEOs and husbands and wives
that are visiting our grand prixs and issuing big checks,
they are expecting these standards. You can't have a dirty bathroom.
And for me, there's no job too small, And I
know what I expect from going into a bathroom. So
this is how I taught them what I would think
(18:43):
it should be done. And yeah, it's maybe one example
of many others.
Speaker 1 (18:47):
I mean, it's an extreme example, but it points to
a certain culture and mindset. Talk a little bit about
the importance of culture to any organization.
Speaker 2 (18:59):
Culture is the immune system of any organization, the immune
immune system, because when times are tough, that keeps the
team together, keeps the people aligned beyond maybe the co objectives,
because when you fail, you know, those objectives become difficult
to reach. And here's the crux. You can quickly put
(19:21):
some values on a piece of paper and say that's
our culture now, and we projected on the wall the
PowerPoint and this is the standards we want to live to.
But the truth is, you've got to live it in
and they out. And for us, attitudes like loyalty and humility,
(19:42):
integrity just not just not words that we think about
some time because this, but these are the basic principles
upon we act. The old motto we're not all cost
doesn't work for us. And I don't want to work.
I don't want to win, not along those lines, because
it means you're not maybe you're playing matter rules or
you're stretching the rules to a degree that I feel comfortable.
(20:04):
We are in a business of reputation, and in that respect,
I want to do it the right way, and everybody
in the team wants to do it the right way.
We're playing the long game. It's not a game or
a race, but it's the next twenty years. Huh.
Speaker 1 (20:17):
Really interesting. I have a bunch of rule questions for
you later, but I want to stay on the topic
of culture and people. How do you invest in and
retain talents? And I don't mean just a driver, I
mean engineers, everybody across the board. How do you find
and retain the best talent.
Speaker 2 (20:38):
Like any other team and company out there. That's the
most complex of all actions because hiring the best talent
and developing isn't yet a guarantee to long term success
because environment change or exchange, people change, and I think
this is at the core of what we are trying
to achieve and retaining them in the same way. You know,
(21:01):
we've been successful eight times in a row, won the championship,
and then obviously people get interesting opportunity if somebody doubles
your salary and another team, you have to have the
responsibility towards your family to consider that such moves. And
that's why it's the normal lab and flow with people
coming and people leaving. But you want to stay with
(21:22):
that core team that your team as being essential for
the success.
Speaker 1 (21:25):
How do you plan for that? I know there's a
sort of hyper competitive set of I don't want to
use the term poaching, but someone says, hey, we need
this sort of mechanic or this sort of engineer. I
like that guy as that team. How do you plan
for that? How do you cope with that loss of talent?
Speaker 2 (21:46):
I think you need to have an overview about your
organization and the blueprint of how you want to have it.
And sometimes you operate even sometimes you operate along those
lines and you still fail in terms of the results.
So knowing who performs to which levels, where you're having gaps,
do you need to hire outside or develop from within,
(22:09):
bring up talent, and who is who is at risk
to be poached anyway, I think an overview of the
organization is key.
Speaker 1 (22:17):
So let's stay with that topic. Last year was a
really challenging season. How do you keep the team motivated?
How do you face challenges when just it seems like
maybe two years ago especially, it felt like everything was
going wrong for the first half of the season. How
do you keep everybody's spirits up and people focused on
the job at hand.
Speaker 2 (22:39):
It starts with myself. I have to acknowledge that maybe
my motivation or my energy levels are not that good
if our results just don't happen, but it needs to.
I'm the one who kind of needs to have that energy,
imparts into the organization and keep the organization up. So
(23:01):
do my colleagues on the leadership level. And that's not easy.
It's not easy. You're having fald stones. You said your
expectations based on the previous results, and if they were great,
then obviously everything is a failure. So it's been a
process over the last three years to rationalize, not be
carried away with your emotions either way, and it's a
(23:23):
valuable time. And I'm sure we will be looking back
in ten and twenty years and saying we had those
eight consecutive World championships, and then we had a P three.
We finished third in a championship, then second in a championship.
Now it's more complicated at force, but we want three races.
So this is still a more successful season than the
once before and it's all part of the learning, as
tough as it is when you're right in there.
Speaker 1 (23:45):
So you're working on a new legacy with two young drivers.
What can we expect from Kimmi Antonelli? How do you
compare his driving style to his predecessors?
Speaker 2 (23:56):
Obviously, Louis Hamilton is irreplacible, is the greatest champion that
has existed. He's a fantastic personality. He's a core family
member of our team. But he decided he wants to
pursue the Ferrari dream, and like every Formula One driver
wants to do that, he got a fantastic framework of
(24:16):
an agreement and I'm at peace with it because we
decided to sign a short term deal with him because
we wanted to promote them to nailin to the team
and not lose him like we did with a Stub
ten years ago. So that is all very structured and amicable.
And now we have two drivers in our team that
are really juniors since the early days. George Russell was
(24:37):
a menacedest junior since he was seventeen and Kimmi since
he was twelve. So having a lineup of an eighteen
year old and twenty seven year old is our future
and that means developing and there will be moments where
we tear our hair out, but he's quick and we've
seen that in the same way George. It's a great
opportunity for George to be the more senior driver and
(24:59):
the team at that stage. I'm happy about it.
Speaker 1 (25:00):
So Hamilton one Silverstone in July kind of felt like
a bittersweet victory. What were you thinking when when he
took the podium.
Speaker 2 (25:10):
It was only sweet. That was no bitter part of
it because we're still racing together. He will be part
of Mercedes's history forever, and him winning the British Grumpuin
his final year with Mercedes, against all odds, we couldn't
have scripted it better.
Speaker 1 (25:24):
And there has to be some sort of farewell we're
planning for him at the end of the year. What
are you thinking about? How are you gonna, you know,
put a put a cap on this long term relationship.
Speaker 2 (25:39):
When you look at it from a let's say, purely
professional side, When he's leaving Mercedes, he's going to one
of our competitors. Do we want to leave that like that?
And the question is the answer is no, certainly not.
We had so much success with each other. We want
to celebrate the time that that we had. And in
that respect, I think there's more many activities planned. He
(26:01):
doesn't know about it. He doesn't know what it is.
Speaker 1 (26:05):
Secrets here.
Speaker 2 (26:05):
No, he knows that something's coming, but he doesn't know
what it is. And I'm very much looking forward to
that emotion, which is to this moment that's clearly going
to be very emotional.
Speaker 1 (26:14):
It does seem like you are playing a very different game,
a very long game, than everybody else. I sometimes and
I know Drive to Survive is, you know, emphasizes the
conflict and stuff, but it sometimes seems that people are
just thinking about this race or maybe this season. You
(26:35):
guys really are looking out a decade or so into
the future. How is that built into your DNA?
Speaker 2 (26:42):
I think, without wanting to be disrespectful, it's different if
you're running an organization as an employee that has a
certain shild life and needs to perform in order to
stay in the job, or my situation as a shareholder
being able to look at the long term if you're
if you know that, you know, I know if I'm
not in principle, I'm going to be on the board
(27:03):
or cham and still responsible for the overall company. So
I kind of get that that other people need to
have more short term perspectives. It's their livelihoods and their
professional career. And on the one side, I can look
further down into the future, but that shouldn't be an
excuse of not being successful at the specific moment.
Speaker 1 (27:24):
You mentioned. Some of your drivers have come from Mercedes
junior teams. Where do you see talent coming from these days?
Not just driving talent, but crew and team members, mechanics, engineers.
Where are you looking for the next great hire for
Team Mercedes.
Speaker 2 (27:41):
You just need to have a knowledge about the various
channels that talent can come up in. On drivers, we
are looking at car drivers from the age of eight
years old, and we're seeing who can you know who
is outstanding?
Speaker 1 (27:53):
You're literally tracking people a decade before they can even think.
Speaker 2 (27:57):
Absolutely, we have our scouts that are on the more
junior of international count races that are looking at those kids,
and we're not the only ones for Oris doing that
and some of the other teams. So and when it
comes to engineering, we have a very strong undergraduate program,
internships and work experiences. We're giving opportunities to underprivileged and
underrepresented groups into the team because we believe not only
(28:19):
for the sake of doing it to do good, but
we believe more variability and diversity in our people will
give new perspectives and new perceptions and a lot of
ambition and drives so very early into academic careers, we're
looking at people.
Speaker 1 (28:38):
Let's talk a little bit about that diversity. I read
following the Black Lives Matter protests and the death of
some American citizens at the hands of police. Here, you
had a long conversation with Lewis Hamilton. You painted the
car black, which was sort of unprecedented that hadn't been
done before, kept it that way for at least a season,
(29:00):
if I remember correctly, and then made a commitment to, hey,
the minorities are very underrepresented in F one. How can
we expand this? How has that process gone and how successful.
Speaker 2 (29:12):
Have you been? I think long before Black Lives Matter,
as a team, we have always strived to be diverse.
It was part of my upbringing that I saw what
it means to be discriminated. Anti Semitism was a strong
topic in my upbringing in Vienna, and so that is
(29:35):
always how we have been calibrated. And then when obviously
Lewis was pushing very hard for more diversity in our
population in the team, and we embraced that from the beginning.
And then Black Lives Matter started with you know, obviously
the things that happened in the in the US, and
he said, shouldn't we do you think we should paint
(29:55):
the car black, which is a highly unusual question because
the silver arrows very much how the Mercedeses are being
called in the racing world.
Speaker 1 (30:03):
That's the history going back to what the nineteen thirties.
Speaker 2 (30:06):
Yeah, the very the first Mercedes racing car or the
earlier Mercedes racing cars were too heavy, so we scratched
off the white collar and it was the Bay aluminium,
the Bell silver and that state but it was a
very quick decision. I called the board of Mercedes at
least listen, I have an unconventional question, and I think
it's good. Are we doing this? And it wasn't. It
(30:28):
was an absolute capital letter, Yes, let's do that. And
so you can see the support of the White the
Mercedes organization for these topics, and here we go. The
car is still black until today.
Speaker 1 (30:41):
Let's talk a little bit about Netflix and Drive to Survive.
I'm a fan of the show. I couldn't help but
notice that in the first season, you guys really didn't
participate in it. It now looks like you're not only participating,
but enjoying it. Tell us a little bit about your
experience with Netflix.
Speaker 2 (31:03):
Clearly, Ferrari and do has got that wrong at the beginning,
because we decided for ourselves work participants in the Formula
one World Championships, and my colleague at Ferrari outspoken Italian
said we're not seeing the Solai, so we're not going
to act. And my approach was try to be pragmatic
and said, the moment you have microphones on you and cameras,
you're going to start to act. And I don't want
my engineers to act for some cameras, so we said
(31:27):
we're not doing it. But that was a blessing in
disguise because as we were not playing as the main protagonists,
Netflix was showing smaller teams, was showing drivers that weren't
competing for racemans or podiums, and that in itself created
the interest from our fans for the spot. So you two,
(31:48):
we joined, and from then on it's been it's been
a blast. They're doing a fantastic job the impossible task
of showing is sport, a real sport and honest sport,
and on the other side trying to make it spectacular
and exciting and drama and glory. But it's been a
great success for Netflix and Formula one overall.
Speaker 1 (32:08):
So it's obviously brought a ton of new fans, and
not just overseas, but especially here in the United States,
and now there are multiple races that take place here
each year. How has the Netflix documentary expanded the audience
and expanded where you guys actually run races.
Speaker 2 (32:27):
I think there were a few pillars that came together
for it to be so Formula one to be so successful.
We were the first spot to actually race in twenty twenty.
We had a very discipline and strangent COVID protocol. People
were at home. Netflix was showing our series and the
racing was excited, exciting the first up Hamilton, Saga, the
(32:51):
Grand Prix that you mentioned, twenty one, Abu Dhabi, many
young drivers being avid social media protagonists, and all of
that contributed to a boom of Former One in the
United States. We've always been in Austin. It's a fantastic place,
and last year was the single biggest event in the
United States to my knowledge, with four hundred and forty
(33:14):
thousand people. And since then Miami has joined, in Las
Vegas has joined, and Formula one has been booming in
the United States in that affluent demographic. Our strongest growing
group is the young females fifteen to thirty five, believe
it or not, and that shows how you know, all
the things have come together and we are on a
(33:35):
successful path. But you've got to be wary. We know
that we are in the entertainment industry. We need to
provide a product that is exciting and if we fail
to do so, we could as well hit some stumbling blocks.
Speaker 1 (33:46):
So you do a pretty good job at not only
maintaining your emotions but not revealing a lot. I kind
of got the sense in the beginning of the first
season that you participated in I was like, all right,
this is an annoyance, but I'll play it. Seems like
over the past few seasons you've kind of learned to
(34:07):
enjoy yourself more on camera, and sometimes it feels like
you're just throwing out these little bombs and leaving them there.
For some of your competitors, especially at Red Bill, you
seem to like to get under other people's skin in
a very subtle way. How much fun has the entire
(34:27):
Netflix Drive to Survive experience been for you?
Speaker 2 (34:30):
At the beginning, most of the teams gave Netflix a
full access to the premises and to the team members.
Speaker 1 (34:38):
And by the way, you could do that if you're
the back of the pack, right, you have too much
stuff that you don't want anybody else to see.
Speaker 2 (34:45):
Yeah, but even front running teams failed. They needed to
be left and sent into the camera, and that's not
something we wanted to be, so we gave we immersed
them fully for our race to season, and funnily enough,
these were always our worst performances, but not Netflix's fault.
And over time you just you just realize that you
embed those people into the team. We put them in
(35:07):
team cloth so they weren't looking like aliens in the garage.
And since then they have just been part of our
of our of our sport. And they've always been very
fair when it comes about, you know, cutting out stuff
that it was not appropriate or that wasn't right to say.
And it's been a great, great relationship. And some of
(35:29):
our you know, some of my colleagues, they they're just
keen and being a little bit more on Telly. I'm
trying to stay authentic to who I am. Sometimes that
you know, makes me shine in a not so good light.
I'm not proud for some of the moments that were
captured on the other side. I want to just continue
to to be like I am and not act. I'm
not good at acting.
Speaker 1 (35:48):
That's very fair. Let's talk a little bit about what's
going on in F one today. It's pretty clear that
over the long haul, no single team has produced the
best car. Year after year, you could have a run,
but eventually the platform changes, the rules change. It's sort
of cyclical. Just how challenging is the F one engineering.
(36:12):
It seems like it's at an incredibly high level.
Speaker 2 (36:16):
Formula one has always been at the pinnacle of racing
and high tech. We're an organization of two and a
half thousand people, half of them on the engine, the
other half on the chassis, and it's science. We're trying
to utilize the best infrastructure that there exists today, things
that are starting to really kick off on AI and
(36:37):
as an example, we operate wind tunnels and computational fluid
dynamic technologies, etc. Etc. And in that respect, it is
a huge, huge engineering challenge. But you know, having the
best people and the best infrastructure is still no guarantee
for success, as it's been shown in our performance. At
(36:57):
the moment, rules change and Formula one and rules change
to have balance performances out and twice these changes were
thrown at us and we came out on top. And
this last time with ground effect cars, we were caught
out and we were not among the winning teams.
Speaker 1 (37:13):
So let's talk a little bit about some of those
rule changes, including rules that don't really seem to be enforced. First,
what's your most and least favored rule change of the
past few years.
Speaker 2 (37:26):
Well, obviously have a certain bias, so if I look
from the team's perspective. Ground effect cars caused a lot
of problems because the lower you're round to the ground,
the faster you are. That smashed the flaws up. And
we were really not great at finding the best compromise here.
But you know, the rules are the rules. You need
to be trying to be the best and it's the
(37:47):
same conditions for everyone as long as everyone plays by
the rule book. And that's the tricky bit.
Speaker 1 (37:53):
So let's talk about that. What rule do you think
should be more strictly enforced? And they kind of softly enforced,
Like what are we not being strict about that we
should be.
Speaker 2 (38:06):
I think the FAA, which the governing body, is trying
to be compliant and to enforce regulations, but sometimes you know,
they are facing a group of many thousands of engineers
on the team sides and they are maybe twenty so
they are always on the back foot trying to keep
the spot under control and that's not an easy task.
Speaker 1 (38:25):
What's your take on the budget cap that's now imposed
on F one teams. When they did this in the
National Football League here, it was to create a level
playing field so all teams could be competitive. What are
you seeing with this cap, how is it affecting the
way you guys hire and engineer the cars.
Speaker 2 (38:45):
Well, the cost cap was implemented by Chase Carey, who
knew everything about media and football in the United States,
and he said, I'm gonna I need to protect you
from yourselves because Red Bull, Ferrari and Mercedes were outspending
each other to have the best talent and best technologies,
and therefore we were always going. We were going faster
than many of the small teams. And he came in
(39:08):
with that. I was against obviously because we had the resource,
but he came in and our business models have changed
since then. We have profitable entities and not just the
marketing activity. And you can see this today there's four
teamstead of I think for for race victory. So he
was right.
Speaker 1 (39:24):
Where does the budget cap show its biggest effect? Is
it in the top speed of the cars? Is it
the handler in the cars? Is it the driver selection?
Where do you see the biggest impact of that that cap?
Speaker 2 (39:37):
Well, drivers for example, are still excluded, which is something
we are looking at for the future, and certain marketing costs.
But as a matter of fact, everybody spends the same
amount of money to date, it's about one hundred and
six and sixty five million dollars a year on engineering.
Speaker 1 (39:53):
And that's a big number.
Speaker 2 (39:54):
That's still a very big number, But we spent double
before that. So how should a small team like has
compete with a Mecedes juggernaut that's spending double the money
on engineering today it's the same. Obviously, that catch up
phase is going to take longer because we have infrastructure
that's been created since a long time. We spend a
billion in our sides I guess in the last ten years,
(40:14):
but over time that's going to level out. And that's
why it was the right decision.
Speaker 1 (40:18):
So let's talk about some other teams. First of all,
what do you think about Andretti? Should he be allowed
to join? Should there be another team in Formula one?
Speaker 2 (40:28):
First of all, the teams have no say in this.
It's the governing body and the commercial rights holder. My
personal opinion is that if a team wants to enter
Formula one, it should be carefully evaluated like it's being
done in the US, like the NFL decides who is joining,
and for us, it's a very easy exercise. If a
team can contribute to the formula success, Formula one success
(40:51):
by increasing its audiences, marketing power, etc. Then it's a
logic consequence that as a team we would be for it.
But then of course we have no vote, which just
can we just give our opinion? And I think this
is the exercise that formula one and the governing body
you need to evaluate who is providing a real usb
(41:14):
and providing a contribution to the spot that makes it
grow beyond the current CP.
Speaker 1 (41:21):
Right. So in the US, when we expanded baseball and
we expanded football, there was a little dilution of talent.
You had a little you had fewer Juggernauts, although arguably
Tom Brady and the New England Patriots ran the table
for quite a while. Is that a risk if we
(41:41):
add more teams or there's plenty of talent to go around.
Speaker 2 (41:45):
I think you need to embrace all competition. We are
there to fight against the other teams, and whoever's not
doing a better job this deserves to win. So that
is not at all a limiting factor. I think the
US leagues have done it. It needs to be carefully
evaluated what the benefit is of increasing of increasing the
(42:07):
amount of teams joining for the incumbents and also for
a new team and the sport overall.
Speaker 1 (42:14):
So let's talk about drivers Lewis Hamilton, Max Rostab and
the previous generation Michael Schumacher. How do you rate these
top Formula one racers.
Speaker 2 (42:27):
Each of them was the predominant driver in the areas eras.
Each of these drivers have been the predominant drivers of
the of their era. And it's very difficult to compare
Fangio to Moss, to Senna to Schumacher and Lewis Hamilton
(42:50):
for stubm now because they're all different and we wouldn't
do them justice by doing such a simple comparison. But
if you look at the pure numbers today, Lewis has
scored the most victories, the most boy positions in his
unequal power with Michael Schumacher in terms of titles, maybe
he should have could have one more in twenty twenty one.
(43:13):
So that's the fact of the methom huh.
Speaker 1 (43:17):
Really interesting. So here's what I'm going to do. I'm
going to ask my curveball question, and then I have
a whole bunch of technical questions. You had this fascinating
quote in a voting international which I thought was really
really interesting quote. I think in life you must have
three motivations, somebody to love, something to do, and something
(43:41):
to dream of. Explain that that's not exactly what I
think of when I think of a Formula one principle.
Speaker 2 (43:49):
I think I had some tough moments in my life.
My upbringing wasn't easy. My father died very young, we
literally had no money, and over the course of time,
mental healths has been something that I have struggled with
at times. And so I came to the realization, after
you know, becoming older, what is it really that makes
(44:10):
us happy, that makes us strive? And these three things
kind of summarize it for me. When you are running
out of dreams or when you're running out of activity,
and if you can't have someone to share it with,
then for me, there is such a big gap that
(44:32):
exists in your life that I would you know, but
that's maybe just my personal view.
Speaker 1 (44:38):
Well, that's very philosophical. It's not what we typically think
of when we think of competitive sports. It's thoughtful and introspective,
and it just stood out to me, is not what
I would have expected from you.
Speaker 2 (44:53):
I deal with people, you know, this is all about
humans being on a journey in the team, trying to
be successful, and if you are, you know, more vulnerable
in terms of your feelings, you introspect more. That's happened,
That's happening to me all the time. So I think,
you know, we are more visible leaders in organizations. We
(45:17):
should be. We should be speaking more about mental healths
rather than appearing like the unbreakable, unbreakable individuals that have
never weak moments.
Speaker 1 (45:30):
So let's spend some time talking about getting a little technical,
talking about some F one issues that I think are
really fascinating. So it seems like a lot of the
head to head racing takes place in the middle of
the field, not the front of the field. What do
you think about some of the proposals and some of
(45:51):
the ideas to make that head to head passing in
the front of the field. How are the rules being
considered so that you just don't I'm Monaco is a
special case, but it seems like in some races it's
much harder if you have two people neck and neck
for the number two car at the front of the
(46:13):
front of the grid to pass the number one car.
Speaker 2 (46:15):
I think there's two reasons. It's very track specific. Many tracks,
even with close performances, you can overtake. Long straights are
important factor because the aerodynamic efficiencies of those cars are
so good that it's difficult to get out of the
slipstream because there isn't anyone any slipstream anymore. The other
thing is that the competition is to close. Sometimes you
(46:37):
have a second between P one and P fifteen and they.
Speaker 1 (46:40):
Are for four second. Wow, that's amazing, that's amazing.
Speaker 2 (46:42):
We have top eight cars sometimes separated within three or
four tenths, and that's why there is no car ever
to be so much faster. So it only works with
strategy and entire degradation. But this season has been pretty
successful in terms of overtakes and excitement.
Speaker 1 (46:57):
So there was a comment from Benito that making AUDI
successful will be like climbing Everest. What are your thoughts
on that.
Speaker 2 (47:08):
I think that's a pretty good analogy. Formula one is
a very high entry barrier spot. But if somebody can
do it, then an organization like AUDI. I mean, they
have been very successful in motor racing in general. The
Alemant program was the best ever, and they have the
(47:29):
capability and they will attract the people to make it
a success. But one thing that I've learned in Formula one.
You need time and I hope that as an OEM,
they are capable of giving the project enough time, like
Mercedes has given us enough time to become successful.
Speaker 1 (47:46):
Let's talk about gearbox and transmission development. Are we at
peak gear changing? Is there more performance to be run
out of that?
Speaker 2 (47:54):
Now we're getting very specific. Yeah, the gearboxes today a
fully thematic, seamless shift gearboxes and it doesn't go you know,
there's no talk break anymore.
Speaker 1 (48:07):
It's literally instant like there's just a millisecond between gears.
Speaker 2 (48:12):
You wouldn't even feel it, which is which is amazing technology.
So that is pretty managed, you know, to the max
of what it can be. And in power units in
twenty twenty six, we're becoming sustainable engines, still highly efficient,
highly powerful, fifty percent combustion, fifty percent electric, but with
(48:32):
one hundred percent waste based biofueld. And this is where
the world is going zero carbon carbon emission reduced to
zero because it stays in the cycle. So I think
we are rolled. We need to be role models in
the auto industry. We need to be innovative. Ev hasn't
been as the implementation of electric vehicles hasn't been as
(48:55):
quick as we all thought, and therefore fueling the best
engines in the world in the quickest cars in the
world with a biofuel, I think is a good way
of participating in the energy transition.
Speaker 1 (49:08):
So you guys have done a lot of work both
modeling and using AI for wind resistance and the dynamics
of the car in wind tunnels and how it's going
to react. It seems like that is the most challenging
aspect to take from the computer to the track. Is
(49:32):
there some sort of a formula where you're testing something,
How do you decide this is go or no go?
When it comes to actually implementing all of the aerodynamics
to the actual.
Speaker 2 (49:43):
Car, there's lots of science behind it. And it's not
only wind tunnels because that is pretty old technology, but
there's simulations, simulations, tool driver and the loop simulators CFD
and lots of other highly sophisticated development capability. But correlation
to the track is then another is then another topic.
(50:05):
First of all, you have a driver in the car,
the human being you could say, the engine is called
it the weakness between the steering wheel and the engine
good and bad days. How do you put that into data?
So correlating that is today the crux of the matter.
And that's something that all the teams struggle, that their
(50:28):
simulations are telling them one thing, but the drivers are
telling them something else.
Speaker 1 (50:32):
It seems more art than science.
Speaker 2 (50:35):
I know, I fundamentally believe, and we in the team
do that it is science and it must stay science.
But we haven't with this current ground effect cars all
of us figured out why sometimes it doesn't correlate with
the virtual world.
Speaker 1 (50:52):
It's a model. What's the old line from Professor George
Box All models are wrong, but some are useful. Is
that how the ground effects end up working out in
the real world.
Speaker 2 (51:03):
I I didn't hear that sentence, but it pretty much
sums up where we are today.
Speaker 1 (51:07):
Yeah, a famous quote about economic modeling. All models are wrong,
but some are useful. It very much works out. Let
me jump to my favorite questions that I asked all
of my guests, starting with besides Drive to Survive, what
else do you watch on Netflix? What keeps you entertained?
Speaker 2 (51:26):
Well? I was never kind of a TV person so much.
I preferred to read, do some sports, but most recently
there's more and more interesting streaming series coming out. I
like sports documentaries. The last one that I enjoyed was printers.
(51:49):
That was different sports that I didn't that I didn't
know a lot about. Still about speed, Still about speed.
I like to Tour de France, the documentary, So that's
more the kind of spectrum that I like to watch.
Speaker 1 (52:03):
Let's talk about mentors who helped shape your career, who
helped put you on the path that you've been on.
Speaker 2 (52:13):
When I was eight years old, my dad got very
ill and died a few years later, and my mother
could barely make our living. I was responsible for myself
and my sister, and that very much carved my personality.
There was no mentor I was. I had the responsibility
(52:34):
and accountability since my early years, and that's who I am.
Speaker 1 (52:39):
Our final two questions. Someone's interested in a career in racing,
in Formula one in high performance engineering, what sort of
advice would you give them?
Speaker 2 (52:50):
My advice to someone would be like, if you're able
at an early age to find out what you enjoy doing,
and that may change. I think by the way, young
people much too under pressure to find the so called
passion at the age of twenty two, which is nonsense.
Give them, give them time to be all around us
and then in the late twenties to find out what
they want to specialize in. But you can become all
(53:15):
you want if motor racing or engineering or driving is
what you think you're good at, and then give it
all you have and you will be eventually successful.
Speaker 1 (53:25):
And our final question, what do you know about the
world of Formula one racing today that you wish you
knew when you first started out with the Williams team?
Speaker 2 (53:35):
All of it? I mean literally, when I started, I
didn't understand many fundamental topics in Formula one. But it's
part of the trajectory. You've got to learn it the
hard way, sometimes by doing it by failing. So that's
all you know was all important.
Speaker 1 (53:52):
Thank you Toto for being so generous with your time.
We have been speaking with Toto Wolf. He is the
principal and CEO of Mercedes F one team. If you
enjoy this conversation, well, be sure and check out all
of the previous five hundred or so we've done over
the past ten years. You can find those at Bloomberg, YouTube, iTunes, Spotify,
(54:15):
wherever you find your favorite podcasts. And be sure and
check out my new short form podcast at the Money
conversations with experts about your money, earning it, spending it,
and most importantly, investing it at the Money wherever you
find your favorite podcasts or in the Masters in Business feed,
I would be remiss if I do not thank our
(54:36):
crack team that helps put these conversations together each week.
Steve Gonzalez is my audio engineer. Anna Luke is my producer.
Sean Russo is my head of research. Sage Bauman is
the head of all podcasts here at Bloomberg. I'm Barry Rihelts.
You've been listening to Masters in Business on Bloomberg Radio
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:09):
This is Master's in Business with Barry rid Hoolts on
Bloomberg Radio.
Speaker 1 (00:16):
What can I say about this week's guest, Total Wolf,
principal CEO of Mercedes Formula one race team. What an
incredible career from a winning racer to an investor and
venture capitalist, to a person who just kind of became
a principal at Williams and then eventually after that team
(00:41):
surprisingly began to win, got recruited over to Mercedes, where
he has put together a fantastic track record. His rookie
year at Mercedes was the same rookie year for Lewis Hamilton.
Obviously they've had an amazing run together. I don't know
what else I could say about this conversation. If you're
a fan of Formula one racing, if you're a fan
(01:04):
of managing a team of people, if you're interested in
how to ring out every last millisecond of performance, you're
going to find this conversation absolutely fascinating. I know I did,
with no further ado my discussion with Mercedes F One's
team principal Total Wolf. I don't want to waste time
(01:25):
singing your accolades let's just jump right into this undergraduate
Vienna University of Economics and Business. How did you end
up in racing? It sounds like you were going into finance.
Speaker 2 (01:37):
Dropout, dropout. Yeah, so yeah, I was born and raised
in Vienna and went to the Vienna u University of Economics,
but actually raced in junior formulas at the time and
wanted to be a race driver. And when that ended,
abruptly ran out of money and we had a very
(01:58):
bad spell of accidents in Formula one, so I lost
a sponsor. I decided I'm going to quit both. I'm
gonna quit UNI and I'm going to quit racing and
launch myself into working.
Speaker 1 (02:07):
And you were fairly successful as a race so you
began an Austrian Formula Ford. You won the twenty four
hours of Bahrain, which is an unusually any twenty four
hour races difficult. How do you what's the key to
winning twenty four hours of driving?
Speaker 2 (02:23):
Yeah? So the twenty four hour race was in Dubai
and was in so far relatively important because it was
the first big raase of twenty four hours in the
Middle East. So you have three drivers of four and
you're having two hour stints, and it's and it's challenging
from mentally and from the human body because sometimes you
have to get up at two o'clock and drive from
two to four in the ninth But it was all
part of my racing and I loved every minute.
Speaker 1 (02:45):
So you go from racing to saying, all right, I
don't have a career in racing, I'm gonna go into finance.
And you found March fifteenth in nineteen ninety eight. Tell
us a little bit about what sort of investing you
were doing in the late nine Yeah.
Speaker 2 (03:01):
So the first company was called March fifteen and then
March sixteen, and there is not a lot of meaning
behind it. It was just the data incorporated it and
that felt the easiest. So back in the day you
wouldn't think a lot about brand. And I went to
the US for a couple of months and realized that
internet companies were coming up here Yahoo, America Online and
(03:22):
Netscape And went back to Austria and figured out who
is doing that in Austria and stumbled up upon a
few websites and met these people, sometimes not even companies.
One was a seventeen year old board that round the
largest free SMS platform online and set up structure around it.
(03:46):
It was equity for consulting, so I didn't get any
didn't buy anything because I didn't have the money, and
it was just a good timing. In ninety nine and
two thousand we started to IPO companies and it became
a proper menture capital company from from consulting.
Speaker 1 (04:00):
Actually, and let's first forward a little bit to two
thousand and nine. You invest in the Williams F one
team and eventually in twenty twelve you become their executive director.
How is that transition? How do you go from being
a venture investor running a team.
Speaker 2 (04:18):
Yeah, the ten years in between was going from pretty
much tech investor into motor racing. I bought a touring
car team. We were doing FORMA three Engines for Mercedes.
Was quite an extensive program about our raality team as well,
and so in these ten years I kind of merged
(04:39):
my passion for the spot with the investment world. And
as you say, Williams was the first former one team
I got myself into, had a minority stake, and then
I run it in twenty twelve with Frank Williams because
the CEO decided to depart and This is where basically
my Formula one active Formula one story started.
Speaker 1 (05:00):
So Williams at the time wasn't exactly front of the grid.
You help them win a big race and suddenly you're
now competing with much better known, better funded teams. How
are you competitive with You know, you're fighting an uphill
battle when you're at Williams.
Speaker 2 (05:18):
Energy only just energy. Yeah, we didn't have the infrastructure,
not the capability. The drivers work were not on the
level of Louise Hamilton and others. It was the energy
in the team. People gave it all. They had heart
and soul and I think we moved, We moved barriers,
we moved, We fought against adversity and we want to
(05:42):
race just because the people gave it their all.
Speaker 1 (05:44):
H So you're involved in an initial public offering for
hwa AG, the company behind Mercedes Racing. Tell us a
little bit about that IPO and that lead to your
relationship with Mercedes.
Speaker 2 (06:03):
Yeah, that's quite interesting because that when AMG was bought
by Mercedes, the racing side was spun out because the
big Timeler corporation didn't want to have the headaches with
motor racing, you know, with the unions this is weekend
work and you want to stay argile as a corporate
(06:23):
to say well we're in the spot or we're out
without having too much overhead and headache. So that was
spun out and it was a really good high tech company.
They built engines for Formula three y as I said before,
touring cars for the very famous DTM racing series. This
is the equivalent of NASCAR in Germany or in Europe.
Limited editions broadcast for MG and high margin business. And
(06:46):
I bought forty nine percent of that business with the
found of MG, and we iPod it and sold it
to investors and then to a Katari investment fund and
that was a success story.
Speaker 1 (06:59):
So how did that IPO lead to you eventually getting
tapped by Mercedes to both take a piece of the
of the team and become principal.
Speaker 2 (07:11):
So it was multi faceted because we had this company
where we were basically doing all the work for Mercedes
Racing outside of Formula one. I had a driver management
company where fifty percent would be paid by Mercedes, fifty
percent by myself and so we established a trusting relationship.
And then I obviously embarked into being with Williams which
(07:33):
was a competitive of Mercedes. We won a race and
they were interested to understand how can that be. You're underfunded,
back market team and you're beating us on track, and
they asked me, could you evaluate that? And I said,
I don't want to bed mouth anybody, but I can,
so I did that. They came back and said, would
like to offer you to run this as a head
of Mercedes multip.
Speaker 1 (07:53):
Was that a surprise? Was this? Like? Very did you
have any during that conversation? Hey, why is a wealth funded,
big team asking me how we beat them? It sort
of seems like an unusual situation, especially how competitive everybody
seems to be in the paddocks.
Speaker 2 (08:09):
I think the board realized that that stage that I
bought a world championship team winning team with brawn, and
that the results were getting worse and worse and they failed.
They had no grip on what was actually happening, and
that's why they asked me. They knew that I was
not biased because I had another team, but I was
with them in touring cars, and this is how it
(08:30):
all came about.
Speaker 1 (08:31):
So you become a thirty percent owner of the Mercedes
Patrona's team and the principal. How long is it before
that team starts winning races? What were the first couple
of years.
Speaker 2 (08:45):
Like, So, my first day was in January twenty thirteen,
and it was a difficult situation because I got the
job of head of Mercedes Motorsport and at the same
time sharehold of the team and executive director. But those
two posts were, you know, where we people that were
icons in the industry, a gentleman who was running Mercedes
Motorsport and then Ross Brown, a highly decorated technical director,
(09:07):
was running the team, and so had to manage that situation.
Eventually took over and when I joined, we started to
win races. In that first year, we won three races
with Lewis joined that year as well at the same
time as me.
Speaker 1 (09:21):
That was his rookie year. You started the same time.
Speaker 2 (09:24):
Yeah, we were both rookies and Mercedes basically huh. And
that started to be a successfully and by the end
we were front runner and we finished second in the
championship and from then on we introduced new engine regulations
in fourteen, which was really co expertise of Mercedes obviously,
and then we had this run of eight consecutive World Championships.
Speaker 1 (09:44):
Unprecedented run. We've never seen anything like that, even in
the Schumacher era. I don't think he won eight consecutive championships.
I have to ask an obvious question. You're in venture
capital investing, you're in race saying, what similarities do you
find between the two fields. You're dealing with a lot
(10:05):
of data, you're dealing with a lot of unknowns. Did
your background and venture investing help you put together the
winning streak at Mercedes?
Speaker 2 (10:15):
It always starts with the human being because in tech,
human beings have ideas, they manage processes, and it's the
same in formula one. When you talk about a company
or a team, what is that? And it's basically a
bunch of people that on this professional journey together. So
I around people that run racing cars, and I did
(10:37):
the same when I was a venture capital invest stock.
I tried to hire and develop the best people to
run a specific organization.
Speaker 1 (10:45):
And I mentioned when you joined Mercedes you took a
thirty percent ownership stake. Did I read this correctly? You
recently raised your stake in that, So what's your ownership
now of the team?
Speaker 2 (10:56):
Yeah, exactly. When they offered me to run it, I said,
that is super honorable. But I'm a shareholder at Williams
and the deal we found is that I bought forty
percent from the Abu Dabistar and fund, and then Nick
Lauder came in and he bought ten percent, so it
was sixty Mercedes, thirty myself and ten Niki Lauda. And
when Nikki passed away, we found another investor. In today's
(11:18):
three shareholders each with thirty three point three percent, so
I increased my stake. As you say, so.
Speaker 1 (11:24):
You're you're not a majority shareholder, but you're the principal.
How do you juggle dealing two other substantial shareholders, especially
when things become challenging.
Speaker 2 (11:35):
I mean, I couldn't wish for a better shareholding group
because within Naios we got a tremendous powerhouse behind us,
a very financially profitable organization. Obviously chemicals business and that
is you go through cyclics. But Jim Redcliffe, the founder,
is involved in Manchester United and an America's Cup, in skiing,
(11:57):
in cycling, so that was always that was a good
deal financially made sense. It was during COVID and then
Mercedes obviously providing us with this mighty car brand the
seven most valuable brand in the world, and I'm running
it and between us situary well understood who contributes. And
I deem myself very lucky that I have a shareholder
with Mercedes that's basically giving us the keys the responsibility
(12:21):
for this brand. And it's been great. The current Coola Calaneus,
Marcus Schaeffer CTO and the whole Bot gang is fantastically supportive,
and you know that's part of our success.
Speaker 1 (12:33):
You seem to thrive in very competitive environments, not just
investing and racing, but America's Cup and yachting, free diving,
like you do a lot of what some people would
perceive as calculated, high risk activities. What is the competitive drive?
(12:54):
Where does this come from?
Speaker 2 (12:56):
I don't know it. When I was young, and obviously
in racing, it was always a relative competition, you want
to beat the other guy, and I realized over the
years that it was actually more a competition with myself
setting expectations and trying everything in order to achieve that.
And today racing, whilst it's still a relative and we
(13:20):
want to beat our competitor, it is more for us.
It's not only me in the team. We want to
surpass our expectations and if we lose, it's not particularly
losing against another team, it's losing against ourselves. And the activities,
like you mentioned, is a fight against myself. How far
can I push myself? And I love free diving. It
has a meditative component for me that I like. I
(13:42):
like the water, and achieving certain depth is expectations that
are set myself and I don't need to have anybody
competing with me.
Speaker 1 (13:52):
What's the longest you can hold your breath? I know
you must have timed this to the second.
Speaker 2 (13:57):
Four minutes and fifteen seconds.
Speaker 1 (14:00):
What do you think about some of these world champions
who are holding their breath ten, twelve, fourteen minutes? It
seems superhuman.
Speaker 2 (14:08):
Yeah, there was obviously the grades of the spot that
have achieved it, but there is two different angles to
it somehow. Basically, you pump fresh oxygen in your body
to fill your lungs and that basically doubles your time
underwater holding your breath and when you're doing it without it,
without it it forming. It is quite a good benchmark.
Speaker 1 (14:32):
So we talked earlier your rookie years with Lewis Hamilton.
I know you're a very competitive guy. Did you have
any sense when you were first beginning the sort of
run the two you were going to go on.
Speaker 2 (14:46):
No, not at all. I think when I joined the
team they finished fifth in the World Championship, and then
we quickly became so competitive. And it is not particularly
just because of Lewis and myself. A really good group
came together and started to form in twenty twelve before
my time, and then it kind of started to rule.
Speaker 1 (15:07):
And I want to put some flesh on those numbers.
Eight consecutive Formula One Constructors championships from twenty fourteen to
twenty twenty one. Seven consecutor drivers championships, and I put
an asterisk on it because we all know that eighth
one was stolen. We won't go get into that. I
don't want to put words in your mouth. This is
(15:28):
me saying that you you mentioned the whole team, and
that it's not just you were the driver. Tell us
about all the various people involved in this team. This
really is a team sport.
Speaker 2 (15:43):
Absolutely every single team member contributes to the team's success.
And how I'd liked to make the let's say the
breach to people that would be saying, well, what is
my contribution? To the car speed. It is that someone
in another team, Ferrari or red Bull is doing your job.
Whether it's in accounting, it's finance and cleaning, someone is
(16:05):
doing that job. And as long as you're able to
outperform that person, and you keep that in mind, you're
contributing to the team's dynamic and to the team's success.
And that's why everyone in their position, if done with
discipline and responsibility, is contributing to making the car faster.
Speaker 1 (16:24):
And when you say everyone, I want to go into
some details about some of the things you did, because
initially people thought it was ridiculous, and then the data
backed you up. At one point, you had the people
who cleaned the bathrooms make sure everything was wiped down
twice a day. You did these changes to something as
(16:46):
simple as the brush that you used to clean the
ball and people thought you were a little obsessive compulsive
about it. Hey, why is Toto so nuts about the bathroom?
But it turns out your team gets ill last day
stuff for stomach virus is last just there was a
uptick in the overall health of everybody in the organization
(17:08):
once you implemented that. What detail is too small for you?
To notice.
Speaker 2 (17:14):
I've rarely seen cutting edge businesses without the founder of
the CEO or some of the top management being obsessed
with the detail. You have to be, because if you
don't have an attention to detail, how should the rest
then fly? And I came into the office my first
day and I said, in the lobby and there was
an old daily Mail week, old daily Mail newspaper and
(17:35):
some old coffee cups. And when I came to the guy,
Chross Brown, I was running and I said, well, that's
not how Formula one team should look like. And the
answer was the engineering is what makes a car quick,
and not the appearance of the reception. And I said, well,
I disagree, because it's the attention to detail that is important.
And if the reception as a point of sale, fire
and I font team is not the standard. And what
(17:56):
is the rest?
Speaker 1 (17:57):
Why do people think they're mutually exclusive? You have great
engineering and a clean bathroom and lobby.
Speaker 2 (18:03):
Yeah, and chose your mindset, I guess. And you mentioned
the bathroom story, which has become a little bit famous,
and it's not being obsessed. But long before COVID, we
had had sanitizers that were drilled into the walls of
the races where we were going, we had a hygiene manager.
To today's many of them that looked after our health.
(18:23):
When you have sponsors and CEOs and husbands and wives
that are visiting our grand prixs and issuing big checks,
they are expecting these standards. You can't have a dirty bathroom.
And for me, there's no job too small, And I
know what I expect from going into a bathroom. So
this is how I taught them what I would think
(18:43):
it should be done. And yeah, it's maybe one example
of many others.
Speaker 1 (18:47):
I mean, it's an extreme example, but it points to
a certain culture and mindset. Talk a little bit about
the importance of culture to any organization.
Speaker 2 (18:59):
Culture is the immune system of any organization, the immune
immune system, because when times are tough, that keeps the
team together, keeps the people aligned beyond maybe the co objectives,
because when you fail, you know, those objectives become difficult
to reach. And here's the crux. You can quickly put
(19:21):
some values on a piece of paper and say that's
our culture now, and we projected on the wall the
PowerPoint and this is the standards we want to live to.
But the truth is, you've got to live it in
and they out. And for us, attitudes like loyalty and humility,
(19:42):
integrity just not just not words that we think about
some time because this, but these are the basic principles
upon we act. The old motto we're not all cost
doesn't work for us. And I don't want to work.
I don't want to win, not along those lines, because
it means you're not maybe you're playing matter rules or
you're stretching the rules to a degree that I feel comfortable.
(20:04):
We are in a business of reputation, and in that respect,
I want to do it the right way, and everybody
in the team wants to do it the right way.
We're playing the long game. It's not a game or
a race, but it's the next twenty years. Huh.
Speaker 1 (20:17):
Really interesting. I have a bunch of rule questions for
you later, but I want to stay on the topic
of culture and people. How do you invest in and
retain talents? And I don't mean just a driver, I
mean engineers, everybody across the board. How do you find
and retain the best talent.
Speaker 2 (20:38):
Like any other team and company out there. That's the
most complex of all actions because hiring the best talent
and developing isn't yet a guarantee to long term success
because environment change or exchange, people change, and I think
this is at the core of what we are trying
to achieve and retaining them in the same way. You know,
(21:01):
we've been successful eight times in a row, won the championship,
and then obviously people get interesting opportunity if somebody doubles
your salary and another team, you have to have the
responsibility towards your family to consider that such moves. And
that's why it's the normal lab and flow with people
coming and people leaving. But you want to stay with
(21:22):
that core team that your team as being essential for
the success.
Speaker 1 (21:25):
How do you plan for that? I know there's a
sort of hyper competitive set of I don't want to
use the term poaching, but someone says, hey, we need
this sort of mechanic or this sort of engineer. I
like that guy as that team. How do you plan
for that? How do you cope with that loss of talent?
Speaker 2 (21:46):
I think you need to have an overview about your
organization and the blueprint of how you want to have it.
And sometimes you operate even sometimes you operate along those
lines and you still fail in terms of the results.
So knowing who performs to which levels, where you're having gaps,
do you need to hire outside or develop from within,
(22:09):
bring up talent, and who is who is at risk
to be poached anyway, I think an overview of the
organization is key.
Speaker 1 (22:17):
So let's stay with that topic. Last year was a
really challenging season. How do you keep the team motivated?
How do you face challenges when just it seems like
maybe two years ago especially, it felt like everything was
going wrong for the first half of the season. How
do you keep everybody's spirits up and people focused on
the job at hand.
Speaker 2 (22:39):
It starts with myself. I have to acknowledge that maybe
my motivation or my energy levels are not that good
if our results just don't happen, but it needs to.
I'm the one who kind of needs to have that energy,
imparts into the organization and keep the organization up. So
(23:01):
do my colleagues on the leadership level. And that's not easy.
It's not easy. You're having fald stones. You said your
expectations based on the previous results, and if they were great,
then obviously everything is a failure. So it's been a
process over the last three years to rationalize, not be
carried away with your emotions either way, and it's a
(23:23):
valuable time. And I'm sure we will be looking back
in ten and twenty years and saying we had those
eight consecutive World championships, and then we had a P three.
We finished third in a championship, then second in a championship.
Now it's more complicated at force, but we want three races.
So this is still a more successful season than the
once before and it's all part of the learning, as
tough as it is when you're right in there.
Speaker 1 (23:45):
So you're working on a new legacy with two young drivers.
What can we expect from Kimmi Antonelli? How do you
compare his driving style to his predecessors?
Speaker 2 (23:56):
Obviously, Louis Hamilton is irreplacible, is the greatest champion that
has existed. He's a fantastic personality. He's a core family
member of our team. But he decided he wants to
pursue the Ferrari dream, and like every Formula One driver
wants to do that, he got a fantastic framework of
(24:16):
an agreement and I'm at peace with it because we
decided to sign a short term deal with him because
we wanted to promote them to nailin to the team
and not lose him like we did with a Stub
ten years ago. So that is all very structured and amicable.
And now we have two drivers in our team that
are really juniors since the early days. George Russell was
(24:37):
a menacedest junior since he was seventeen and Kimmi since
he was twelve. So having a lineup of an eighteen
year old and twenty seven year old is our future
and that means developing and there will be moments where
we tear our hair out, but he's quick and we've
seen that in the same way George. It's a great
opportunity for George to be the more senior driver and
(24:59):
the team at that stage. I'm happy about it.
Speaker 1 (25:00):
So Hamilton one Silverstone in July kind of felt like
a bittersweet victory. What were you thinking when when he
took the podium.
Speaker 2 (25:10):
It was only sweet. That was no bitter part of
it because we're still racing together. He will be part
of Mercedes's history forever, and him winning the British Grumpuin
his final year with Mercedes, against all odds, we couldn't
have scripted it better.
Speaker 1 (25:24):
And there has to be some sort of farewell we're
planning for him at the end of the year. What
are you thinking about? How are you gonna, you know,
put a put a cap on this long term relationship.
Speaker 2 (25:39):
When you look at it from a let's say, purely
professional side, When he's leaving Mercedes, he's going to one
of our competitors. Do we want to leave that like that?
And the question is the answer is no, certainly not.
We had so much success with each other. We want
to celebrate the time that that we had. And in
that respect, I think there's more many activities planned. He
(26:01):
doesn't know about it. He doesn't know what it is.
Speaker 1 (26:05):
Secrets here.
Speaker 2 (26:05):
No, he knows that something's coming, but he doesn't know
what it is. And I'm very much looking forward to
that emotion, which is to this moment that's clearly going
to be very emotional.
Speaker 1 (26:14):
It does seem like you are playing a very different game,
a very long game, than everybody else. I sometimes and
I know Drive to Survive is, you know, emphasizes the
conflict and stuff, but it sometimes seems that people are
just thinking about this race or maybe this season. You
(26:35):
guys really are looking out a decade or so into
the future. How is that built into your DNA?
Speaker 2 (26:42):
I think, without wanting to be disrespectful, it's different if
you're running an organization as an employee that has a
certain shild life and needs to perform in order to
stay in the job, or my situation as a shareholder
being able to look at the long term if you're
if you know that, you know, I know if I'm
not in principle, I'm going to be on the board
(27:03):
or cham and still responsible for the overall company. So
I kind of get that that other people need to
have more short term perspectives. It's their livelihoods and their
professional career. And on the one side, I can look
further down into the future, but that shouldn't be an
excuse of not being successful at the specific moment.
Speaker 1 (27:24):
You mentioned. Some of your drivers have come from Mercedes
junior teams. Where do you see talent coming from these days?
Not just driving talent, but crew and team members, mechanics, engineers.
Where are you looking for the next great hire for
Team Mercedes.
Speaker 2 (27:41):
You just need to have a knowledge about the various
channels that talent can come up in. On drivers, we
are looking at car drivers from the age of eight
years old, and we're seeing who can you know who
is outstanding?
Speaker 1 (27:53):
You're literally tracking people a decade before they can even think.
Speaker 2 (27:57):
Absolutely, we have our scouts that are on the more
junior of international count races that are looking at those kids,
and we're not the only ones for Oris doing that
and some of the other teams. So and when it
comes to engineering, we have a very strong undergraduate program,
internships and work experiences. We're giving opportunities to underprivileged and
underrepresented groups into the team because we believe not only
(28:19):
for the sake of doing it to do good, but
we believe more variability and diversity in our people will
give new perspectives and new perceptions and a lot of
ambition and drives so very early into academic careers, we're
looking at people.
Speaker 1 (28:38):
Let's talk a little bit about that diversity. I read
following the Black Lives Matter protests and the death of
some American citizens at the hands of police. Here, you
had a long conversation with Lewis Hamilton. You painted the
car black, which was sort of unprecedented that hadn't been
done before, kept it that way for at least a season,
(29:00):
if I remember correctly, and then made a commitment to, hey,
the minorities are very underrepresented in F one. How can
we expand this? How has that process gone and how successful.
Speaker 2 (29:12):
Have you been? I think long before Black Lives Matter,
as a team, we have always strived to be diverse.
It was part of my upbringing that I saw what
it means to be discriminated. Anti Semitism was a strong
topic in my upbringing in Vienna, and so that is
(29:35):
always how we have been calibrated. And then when obviously
Lewis was pushing very hard for more diversity in our
population in the team, and we embraced that from the beginning.
And then Black Lives Matter started with you know, obviously
the things that happened in the in the US, and
he said, shouldn't we do you think we should paint
(29:55):
the car black, which is a highly unusual question because
the silver arrows very much how the Mercedeses are being
called in the racing world.
Speaker 1 (30:03):
That's the history going back to what the nineteen thirties.
Speaker 2 (30:06):
Yeah, the very the first Mercedes racing car or the
earlier Mercedes racing cars were too heavy, so we scratched
off the white collar and it was the Bay aluminium,
the Bell silver and that state but it was a
very quick decision. I called the board of Mercedes at
least listen, I have an unconventional question, and I think
it's good. Are we doing this? And it wasn't. It
(30:28):
was an absolute capital letter, Yes, let's do that. And
so you can see the support of the White the
Mercedes organization for these topics, and here we go. The
car is still black until today.
Speaker 1 (30:41):
Let's talk a little bit about Netflix and Drive to Survive.
I'm a fan of the show. I couldn't help but
notice that in the first season, you guys really didn't
participate in it. It now looks like you're not only participating,
but enjoying it. Tell us a little bit about your
experience with Netflix.
Speaker 2 (31:03):
Clearly, Ferrari and do has got that wrong at the beginning,
because we decided for ourselves work participants in the Formula
one World Championships, and my colleague at Ferrari outspoken Italian
said we're not seeing the Solai, so we're not going
to act. And my approach was try to be pragmatic
and said, the moment you have microphones on you and cameras,
you're going to start to act. And I don't want
my engineers to act for some cameras, so we said
(31:27):
we're not doing it. But that was a blessing in
disguise because as we were not playing as the main protagonists,
Netflix was showing smaller teams, was showing drivers that weren't
competing for racemans or podiums, and that in itself created
the interest from our fans for the spot. So you two,
(31:48):
we joined, and from then on it's been it's been
a blast. They're doing a fantastic job the impossible task
of showing is sport, a real sport and honest sport,
and on the other side trying to make it spectacular
and exciting and drama and glory. But it's been a
great success for Netflix and Formula one overall.
Speaker 1 (32:08):
So it's obviously brought a ton of new fans, and
not just overseas, but especially here in the United States,
and now there are multiple races that take place here
each year. How has the Netflix documentary expanded the audience
and expanded where you guys actually run races.
Speaker 2 (32:27):
I think there were a few pillars that came together
for it to be so Formula one to be so successful.
We were the first spot to actually race in twenty twenty.
We had a very discipline and strangent COVID protocol. People
were at home. Netflix was showing our series and the
racing was excited, exciting the first up Hamilton, Saga, the
(32:51):
Grand Prix that you mentioned, twenty one, Abu Dhabi, many
young drivers being avid social media protagonists, and all of
that contributed to a boom of Former One in the
United States. We've always been in Austin. It's a fantastic place,
and last year was the single biggest event in the
United States to my knowledge, with four hundred and forty
(33:14):
thousand people. And since then Miami has joined, in Las
Vegas has joined, and Formula one has been booming in
the United States in that affluent demographic. Our strongest growing
group is the young females fifteen to thirty five, believe
it or not, and that shows how you know, all
the things have come together and we are on a
(33:35):
successful path. But you've got to be wary. We know
that we are in the entertainment industry. We need to
provide a product that is exciting and if we fail
to do so, we could as well hit some stumbling blocks.
Speaker 1 (33:46):
So you do a pretty good job at not only
maintaining your emotions but not revealing a lot. I kind
of got the sense in the beginning of the first
season that you participated in I was like, all right,
this is an annoyance, but I'll play it. Seems like
over the past few seasons you've kind of learned to
(34:07):
enjoy yourself more on camera, and sometimes it feels like
you're just throwing out these little bombs and leaving them there.
For some of your competitors, especially at Red Bill, you
seem to like to get under other people's skin in
a very subtle way. How much fun has the entire
(34:27):
Netflix Drive to Survive experience been for you?
Speaker 2 (34:30):
At the beginning, most of the teams gave Netflix a
full access to the premises and to the team members.
Speaker 1 (34:38):
And by the way, you could do that if you're
the back of the pack, right, you have too much
stuff that you don't want anybody else to see.
Speaker 2 (34:45):
Yeah, but even front running teams failed. They needed to
be left and sent into the camera, and that's not
something we wanted to be, so we gave we immersed
them fully for our race to season, and funnily enough,
these were always our worst performances, but not Netflix's fault.
And over time you just you just realize that you
embed those people into the team. We put them in
(35:07):
team cloth so they weren't looking like aliens in the garage.
And since then they have just been part of our
of our of our sport. And they've always been very
fair when it comes about, you know, cutting out stuff
that it was not appropriate or that wasn't right to say.
And it's been a great, great relationship. And some of
(35:29):
our you know, some of my colleagues, they they're just
keen and being a little bit more on Telly. I'm
trying to stay authentic to who I am. Sometimes that
you know, makes me shine in a not so good light.
I'm not proud for some of the moments that were
captured on the other side. I want to just continue
to to be like I am and not act. I'm
not good at acting.
Speaker 1 (35:48):
That's very fair. Let's talk a little bit about what's
going on in F one today. It's pretty clear that
over the long haul, no single team has produced the
best car. Year after year, you could have a run,
but eventually the platform changes, the rules change. It's sort
of cyclical. Just how challenging is the F one engineering.
(36:12):
It seems like it's at an incredibly high level.
Speaker 2 (36:16):
Formula one has always been at the pinnacle of racing
and high tech. We're an organization of two and a
half thousand people, half of them on the engine, the
other half on the chassis, and it's science. We're trying
to utilize the best infrastructure that there exists today, things
that are starting to really kick off on AI and
(36:37):
as an example, we operate wind tunnels and computational fluid
dynamic technologies, etc. Etc. And in that respect, it is
a huge, huge engineering challenge. But you know, having the
best people and the best infrastructure is still no guarantee
for success, as it's been shown in our performance. At
(36:57):
the moment, rules change and Formula one and rules change
to have balance performances out and twice these changes were
thrown at us and we came out on top. And
this last time with ground effect cars, we were caught
out and we were not among the winning teams.
Speaker 1 (37:13):
So let's talk a little bit about some of those
rule changes, including rules that don't really seem to be enforced. First,
what's your most and least favored rule change of the
past few years.
Speaker 2 (37:26):
Well, obviously have a certain bias, so if I look
from the team's perspective. Ground effect cars caused a lot
of problems because the lower you're round to the ground,
the faster you are. That smashed the flaws up. And
we were really not great at finding the best compromise here.
But you know, the rules are the rules. You need
to be trying to be the best and it's the
(37:47):
same conditions for everyone as long as everyone plays by
the rule book. And that's the tricky bit.
Speaker 1 (37:53):
So let's talk about that. What rule do you think
should be more strictly enforced? And they kind of softly enforced,
Like what are we not being strict about that we
should be.
Speaker 2 (38:06):
I think the FAA, which the governing body, is trying
to be compliant and to enforce regulations, but sometimes you know,
they are facing a group of many thousands of engineers
on the team sides and they are maybe twenty so
they are always on the back foot trying to keep
the spot under control and that's not an easy task.
Speaker 1 (38:25):
What's your take on the budget cap that's now imposed
on F one teams. When they did this in the
National Football League here, it was to create a level
playing field so all teams could be competitive. What are
you seeing with this cap, how is it affecting the
way you guys hire and engineer the cars.
Speaker 2 (38:45):
Well, the cost cap was implemented by Chase Carey, who
knew everything about media and football in the United States,
and he said, I'm gonna I need to protect you
from yourselves because Red Bull, Ferrari and Mercedes were outspending
each other to have the best talent and best technologies,
and therefore we were always going. We were going faster
than many of the small teams. And he came in
(39:08):
with that. I was against obviously because we had the resource,
but he came in and our business models have changed
since then. We have profitable entities and not just the
marketing activity. And you can see this today there's four
teamstead of I think for for race victory. So he
was right.
Speaker 1 (39:24):
Where does the budget cap show its biggest effect? Is
it in the top speed of the cars? Is it
the handler in the cars? Is it the driver selection?
Where do you see the biggest impact of that that cap?
Speaker 2 (39:37):
Well, drivers for example, are still excluded, which is something
we are looking at for the future, and certain marketing costs.
But as a matter of fact, everybody spends the same
amount of money to date, it's about one hundred and
six and sixty five million dollars a year on engineering.
Speaker 1 (39:53):
And that's a big number.
Speaker 2 (39:54):
That's still a very big number, But we spent double
before that. So how should a small team like has
compete with a Mecedes juggernaut that's spending double the money
on engineering today it's the same. Obviously, that catch up
phase is going to take longer because we have infrastructure
that's been created since a long time. We spend a
billion in our sides I guess in the last ten years,
(40:14):
but over time that's going to level out. And that's
why it was the right decision.
Speaker 1 (40:18):
So let's talk about some other teams. First of all,
what do you think about Andretti? Should he be allowed
to join? Should there be another team in Formula one?
Speaker 2 (40:28):
First of all, the teams have no say in this.
It's the governing body and the commercial rights holder. My
personal opinion is that if a team wants to enter
Formula one, it should be carefully evaluated like it's being
done in the US, like the NFL decides who is joining,
and for us, it's a very easy exercise. If a
team can contribute to the formula success, Formula one success
(40:51):
by increasing its audiences, marketing power, etc. Then it's a
logic consequence that as a team we would be for it.
But then of course we have no vote, which just
can we just give our opinion? And I think this
is the exercise that formula one and the governing body
you need to evaluate who is providing a real usb
(41:14):
and providing a contribution to the spot that makes it
grow beyond the current CP.
Speaker 1 (41:21):
Right. So in the US, when we expanded baseball and
we expanded football, there was a little dilution of talent.
You had a little you had fewer Juggernauts, although arguably
Tom Brady and the New England Patriots ran the table
for quite a while. Is that a risk if we
(41:41):
add more teams or there's plenty of talent to go around.
Speaker 2 (41:45):
I think you need to embrace all competition. We are
there to fight against the other teams, and whoever's not
doing a better job this deserves to win. So that
is not at all a limiting factor. I think the
US leagues have done it. It needs to be carefully
evaluated what the benefit is of increasing of increasing the
(42:07):
amount of teams joining for the incumbents and also for
a new team and the sport overall.
Speaker 1 (42:14):
So let's talk about drivers Lewis Hamilton, Max Rostab and
the previous generation Michael Schumacher. How do you rate these
top Formula one racers.
Speaker 2 (42:27):
Each of them was the predominant driver in the areas eras.
Each of these drivers have been the predominant drivers of
the of their era. And it's very difficult to compare
Fangio to Moss, to Senna to Schumacher and Lewis Hamilton
(42:50):
for stubm now because they're all different and we wouldn't
do them justice by doing such a simple comparison. But
if you look at the pure numbers today, Lewis has
scored the most victories, the most boy positions in his
unequal power with Michael Schumacher in terms of titles, maybe
he should have could have one more in twenty twenty one.
(43:13):
So that's the fact of the methom huh.
Speaker 1 (43:17):
Really interesting. So here's what I'm going to do. I'm
going to ask my curveball question, and then I have
a whole bunch of technical questions. You had this fascinating
quote in a voting international which I thought was really
really interesting quote. I think in life you must have
three motivations, somebody to love, something to do, and something
(43:41):
to dream of. Explain that that's not exactly what I
think of when I think of a Formula one principle.
Speaker 2 (43:49):
I think I had some tough moments in my life.
My upbringing wasn't easy. My father died very young, we
literally had no money, and over the course of time,
mental healths has been something that I have struggled with
at times. And so I came to the realization, after
you know, becoming older, what is it really that makes
(44:10):
us happy, that makes us strive? And these three things
kind of summarize it for me. When you are running
out of dreams or when you're running out of activity,
and if you can't have someone to share it with,
then for me, there is such a big gap that
(44:32):
exists in your life that I would you know, but
that's maybe just my personal view.
Speaker 1 (44:38):
Well, that's very philosophical. It's not what we typically think
of when we think of competitive sports. It's thoughtful and introspective,
and it just stood out to me, is not what
I would have expected from you.
Speaker 2 (44:53):
I deal with people, you know, this is all about
humans being on a journey in the team, trying to
be successful, and if you are, you know, more vulnerable
in terms of your feelings, you introspect more. That's happened,
That's happening to me all the time. So I think,
you know, we are more visible leaders in organizations. We
(45:17):
should be. We should be speaking more about mental healths
rather than appearing like the unbreakable, unbreakable individuals that have
never weak moments.
Speaker 1 (45:30):
So let's spend some time talking about getting a little technical,
talking about some F one issues that I think are
really fascinating. So it seems like a lot of the
head to head racing takes place in the middle of
the field, not the front of the field. What do
you think about some of the proposals and some of
(45:51):
the ideas to make that head to head passing in
the front of the field. How are the rules being
considered so that you just don't I'm Monaco is a
special case, but it seems like in some races it's
much harder if you have two people neck and neck
for the number two car at the front of the
(46:13):
front of the grid to pass the number one car.
Speaker 2 (46:15):
I think there's two reasons. It's very track specific. Many tracks,
even with close performances, you can overtake. Long straights are
important factor because the aerodynamic efficiencies of those cars are
so good that it's difficult to get out of the
slipstream because there isn't anyone any slipstream anymore. The other
thing is that the competition is to close. Sometimes you
(46:37):
have a second between P one and P fifteen and they.
Speaker 1 (46:40):
Are for four second. Wow, that's amazing, that's amazing.
Speaker 2 (46:42):
We have top eight cars sometimes separated within three or
four tenths, and that's why there is no car ever
to be so much faster. So it only works with
strategy and entire degradation. But this season has been pretty
successful in terms of overtakes and excitement.
Speaker 1 (46:57):
So there was a comment from Benito that making AUDI
successful will be like climbing Everest. What are your thoughts
on that.
Speaker 2 (47:08):
I think that's a pretty good analogy. Formula one is
a very high entry barrier spot. But if somebody can
do it, then an organization like AUDI. I mean, they
have been very successful in motor racing in general. The
Alemant program was the best ever, and they have the
(47:29):
capability and they will attract the people to make it
a success. But one thing that I've learned in Formula one.
You need time and I hope that as an OEM,
they are capable of giving the project enough time, like
Mercedes has given us enough time to become successful.
Speaker 1 (47:46):
Let's talk about gearbox and transmission development. Are we at
peak gear changing? Is there more performance to be run
out of that?
Speaker 2 (47:54):
Now we're getting very specific. Yeah, the gearboxes today a
fully thematic, seamless shift gearboxes and it doesn't go you know,
there's no talk break anymore.
Speaker 1 (48:07):
It's literally instant like there's just a millisecond between gears.
Speaker 2 (48:12):
You wouldn't even feel it, which is which is amazing technology.
So that is pretty managed, you know, to the max
of what it can be. And in power units in
twenty twenty six, we're becoming sustainable engines, still highly efficient,
highly powerful, fifty percent combustion, fifty percent electric, but with
(48:32):
one hundred percent waste based biofueld. And this is where
the world is going zero carbon carbon emission reduced to
zero because it stays in the cycle. So I think
we are rolled. We need to be role models in
the auto industry. We need to be innovative. Ev hasn't
been as the implementation of electric vehicles hasn't been as
(48:55):
quick as we all thought, and therefore fueling the best
engines in the world in the quickest cars in the
world with a biofuel, I think is a good way
of participating in the energy transition.
Speaker 1 (49:08):
So you guys have done a lot of work both
modeling and using AI for wind resistance and the dynamics
of the car in wind tunnels and how it's going
to react. It seems like that is the most challenging
aspect to take from the computer to the track. Is
(49:32):
there some sort of a formula where you're testing something,
How do you decide this is go or no go?
When it comes to actually implementing all of the aerodynamics
to the actual.
Speaker 2 (49:43):
Car, there's lots of science behind it. And it's not
only wind tunnels because that is pretty old technology, but
there's simulations, simulations, tool driver and the loop simulators CFD
and lots of other highly sophisticated development capability. But correlation
to the track is then another is then another topic.
(50:05):
First of all, you have a driver in the car,
the human being you could say, the engine is called
it the weakness between the steering wheel and the engine
good and bad days. How do you put that into data?
So correlating that is today the crux of the matter.
And that's something that all the teams struggle, that their
(50:28):
simulations are telling them one thing, but the drivers are
telling them something else.
Speaker 1 (50:32):
It seems more art than science.
Speaker 2 (50:35):
I know, I fundamentally believe, and we in the team
do that it is science and it must stay science.
But we haven't with this current ground effect cars all
of us figured out why sometimes it doesn't correlate with
the virtual world.
Speaker 1 (50:52):
It's a model. What's the old line from Professor George
Box All models are wrong, but some are useful. Is
that how the ground effects end up working out in
the real world.
Speaker 2 (51:03):
I I didn't hear that sentence, but it pretty much
sums up where we are today.
Speaker 1 (51:07):
Yeah, a famous quote about economic modeling. All models are wrong,
but some are useful. It very much works out. Let
me jump to my favorite questions that I asked all
of my guests, starting with besides Drive to Survive, what
else do you watch on Netflix? What keeps you entertained?
Speaker 2 (51:26):
Well? I was never kind of a TV person so much.
I preferred to read, do some sports, but most recently
there's more and more interesting streaming series coming out. I
like sports documentaries. The last one that I enjoyed was printers.
(51:49):
That was different sports that I didn't that I didn't
know a lot about. Still about speed, Still about speed.
I like to Tour de France, the documentary, So that's
more the kind of spectrum that I like to watch.
Speaker 1 (52:03):
Let's talk about mentors who helped shape your career, who
helped put you on the path that you've been on.
Speaker 2 (52:13):
When I was eight years old, my dad got very
ill and died a few years later, and my mother
could barely make our living. I was responsible for myself
and my sister, and that very much carved my personality.
There was no mentor I was. I had the responsibility
(52:34):
and accountability since my early years, and that's who I am.
Speaker 1 (52:39):
Our final two questions. Someone's interested in a career in racing,
in Formula one in high performance engineering, what sort of
advice would you give them?
Speaker 2 (52:50):
My advice to someone would be like, if you're able
at an early age to find out what you enjoy doing,
and that may change. I think by the way, young
people much too under pressure to find the so called
passion at the age of twenty two, which is nonsense.
Give them, give them time to be all around us
and then in the late twenties to find out what
they want to specialize in. But you can become all
(53:15):
you want if motor racing or engineering or driving is
what you think you're good at, and then give it
all you have and you will be eventually successful.
Speaker 1 (53:25):
And our final question, what do you know about the
world of Formula one racing today that you wish you
knew when you first started out with the Williams team?
Speaker 2 (53:35):
All of it? I mean literally, when I started, I
didn't understand many fundamental topics in Formula one. But it's
part of the trajectory. You've got to learn it the
hard way, sometimes by doing it by failing. So that's
all you know was all important.
Speaker 1 (53:52):
Thank you Toto for being so generous with your time.
We have been speaking with Toto Wolf. He is the
principal and CEO of Mercedes F one team. If you
enjoy this conversation, well, be sure and check out all
of the previous five hundred or so we've done over
the past ten years. You can find those at Bloomberg, YouTube, iTunes, Spotify,
(54:15):
wherever you find your favorite podcasts. And be sure and
check out my new short form podcast at the Money
conversations with experts about your money, earning it, spending it,
and most importantly, investing it at the Money wherever you
find your favorite podcasts or in the Masters in Business feed,
I would be remiss if I do not thank our
(54:36):
crack team that helps put these conversations together each week.
Steve Gonzalez is my audio engineer. Anna Luke is my producer.
Sean Russo is my head of research. Sage Bauman is
the head of all podcasts here at Bloomberg. I'm Barry Rihelts.
You've been listening to Masters in Business on Bloomberg Radio
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