In Good Company with Nicolai Tangen - HIGHLIGHTS: Zak Brown - CEO of McLaren Racing

Starting point is 00:00:00 Hi, everybody. Tune in to this short version of the podcast, which we do every Friday for the long version. Tune in on Wednesdays. Hi everybody and welcome to In Good Company. I'm Nicola Tangen, the CEO of the Norwegian wealth fund. And today I'm speaking with Zach Brown, the CEO of McLaren Racing, one of the most remarkable turnarounds Formula One has ever seen. Well, I would argue it's one of the most remarkable turnerals I've ever seen anywhere. Zach has transformed McLaren from a struggling mid-pack team into a champion-leave. and you are currently dominating the F1 season. Well done.

Starting point is 00:00:34 So let's just dive straight in. Why are you winning everything this year? People, if I had to give, of course, it's not a simple answer, and it's never quite as simple as one thing. But it's our people, and specifically our culture. What we've been able to do here, you know, if I take a step back, where the second most successful Formula One team of all time,

Starting point is 00:00:57 second most historic next to Ferrari, which is a good company. And we certainly have won a lot of races and world championships over the years, but we really started to struggle, you know, 10, 15 years ago and lost our way for a variety of reasons, but probably the biggest impact being we lost our way as a team, teamwork, and that culture. And so, of course, we've had great investment. We've got great drivers. new wind tunnels, all the things that people are the tools that they need to be able to get back to the front, but the way we've been able to unlock the performance of our people through a

Starting point is 00:01:41 great culture of transparency, hard work, incremental improvement, real talks, park your feelings at the doors, all those things have just made everyone row in the same direction when you get you know, 1,400 people row in the same direction, can be pretty powerful. But, I mean, what exactly have you done if you just take us through some of the steps? Yeah, so you joined in 16, right? I joined it very end of 16 December. Following some pretty bad experiences with the Honda. Yeah, we were at a record low in sponsorship, in results on track.

Starting point is 00:02:20 Our fans weren't happy. And it was a pretty toxic work environment. As I say, other than that, everything was great. But what we did have was a great brand in a great sport with great history. And clearly we had great people because we have people that have been here for 20, 30, 40 years. And you still have a lot of the same people, right? So you haven't really smoked out of the people. Yeah, well, I would say, you know, the majority were here during our winning ways.

Starting point is 00:02:50 And also when we were terrible. How important is the car? very important critically important you so you have i mean i mean it's a stupid question right but you said it's about the people no it's not a stupid question it's one i'm i'm asked all the time and here's how i would say first of all you need to have both yeah but i would say there are six drivers that can win the world championship out of 20 but they have to be in two of the best cars so two of the 10 cars can win the driver's world championship, but only six of the 20. So you got to have one of the best two cars in the business, or it doesn't matter who's driving. How do you get two

Starting point is 00:03:38 of the best cars? How do you make them? What do you do? Good question. I mean, as I tell people in Formula 1, the worst team is really good. Two percent separate the best from the worst. If you think about all the industries out there, 2% is our margin of error, which explains why we work so hard for the smallest incremental gain of milliseconds. It's an aerodynamic game. It's a tireware game, which also comes from aerodynamic. So it's primarily an aerodynamic game, but that then facilitates your mechanical grip, your tireware.

Starting point is 00:04:14 And then, of course, you have things like strategy. And you've got to have the best of everything. Let's talk about some of the really good sniffing you've done later. Why are Landau and Oscar so good? First and foremost, they're unbelievably naturally talented, right? You see this in all sports. It's that anticipated rookie coming in who's just had a stellar career through high school, college. They just run faster, they throw better, they read the game better, whatever it is.

Starting point is 00:04:51 Lando and Oscar are two of the six best drivers in the world on a grid of of 20. Then you get into the qualities of them as a human being, highly intelligent, which you need to be as a Formula One driver. This isn't just getting a car. You need to technically understand what's going to. So they're high IQ people. They're great in a team environment. They're honest.

Starting point is 00:05:19 They don't have an edge to them. You know, a lot of that we look at families and upbringings. So they're just a complete package of what you see is what you get. And money and fame and success have not gone to their head whatsoever. It's gone to their car collection, but not their head. Can you predict that ahead of time where the success will go to somebody's head? Yes and no. I think it's something that you're looking for when you're bringing someone in of how grounded is this person.

Starting point is 00:05:48 But sometimes you get it right. sometimes you get it wrong, but it's definitely something that you're looking for in that early day analysis of, do I want this driver in my team? How important is the way they work with fans? I mean, you talk about the importance of your fan base a lot, right? Just tell me about how you look at fans. Without fans, there's no McLaren't. Just simple, straightforward.

Starting point is 00:06:13 We're in the sport and entertainment business. You had some people in the sport. It was like we shouldn't be in the entertainment business. And I just, I don't understand. Like, if you buy a ticket to go sit down and watch a fireworks, a movie, a football match, or a motor race, that's entertainment. Do you think you care more about your fans than the other teams? It'd probably be unfair of me to say that, but I think so. And I only say that because of how much.

Starting point is 00:06:48 And as a fan, let's say. say now I'm like a die hard like Lauren fans. What do how do I see that you really care? We did a great event in Trafalgar Square. Free open to the fans. 40,000 people through two days. We just did a huge fan event.

Starting point is 00:07:08 All of this on our dime and our partners dimes, time and investment in Austin to get us close to the fans. Only 1% of our fans will ever go to a race. So the amount of effort we put into bringing Formula 1 to the 99% that'll never go to a race, our drivers, you'll never see them not stop and sign an autograph and take a photo for a fan. We do, we went back to probably a greatest example, our iconic papaya colors, which you'll kind of see right there. We were a dark team. I described us as Darth Vader, which Darth Vader is cool, but, you know,

Starting point is 00:07:48 dark gray exclusive we went to papaya all our fans when I started were going bring back the papaya all right we're bring back the papaya and I remember one of the old school teammates around here was like we're only doing that because that's what the fans want I'm like is that kind of a trick question so our livery today our iconic papaya we brought back to McLaren because we listened to our fans that's what our fans wanted how important has Netflix been to build the value of their brand. They've been fantastic. I don't think any of us saw that coming.

Starting point is 00:08:24 It's brought in north of it. So if you look at what Formula One needed when Liberty acquired it, it needed North America from a geographic standpoint. It needed a more diverse and female fan base and a younger fan base. Tick, tick, tick.

Starting point is 00:08:40 You know, we went from one race in America to three to a new huge TV deal with Apple. 75% of our new fans are women and a younger audience, age 18 to 34. So it totally moved the needle in the three areas that when you went and talked to corporate sponsors, yeah, but North America is big for us and Formula One's not big there. The fan base isn't young enough.

Starting point is 00:09:09 It's not diverse enough. Netflix helped us lead the way on ringing the bell on all three of those aspects. And then, of course, we've built on it. You have your Brad Pitt movie. All these things have accelerated our new fan base. Do you personally celebrate enough? Not enough. Because you won last night and you look very sharp.

Starting point is 00:09:32 Where we want to win in Brazil. So that's something I've had to personally work on over the years. I've had comments from my staff, whether it was my old company here, of like, is he ever happy? He's always kind of busting our charts. Are you ever happy? Yeah, yeah, definitely. I'm happy. Just not happy for long periods of time.

Starting point is 00:09:57 Doesn't mean I'm unhappy. I just kind of like, I'm happy, that's right. But like, I'm thrilled we won last night. It was amazing. But like, we got a job to do with the next race in Brazil. We've got four races to go.

In Good Company with Nicolai Tangen - HIGHLIGHTS: Zak Brown - CEO of McLaren Racing

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