TK Kuegler, co-founder and managing partner at Wasabi Ventures, has spent the last 25 years as both a startup founder and investor. TK is a lifelong fan of the sport of horse racing and has taken his startup mentality and applied it to horse racing by founding Wasabi Ventures Stables in early 2017. Although a new stable, Wasabi Ventures Stables has been on a hot streak and has been steadily bringing new fans into the sport with its innovative co-ownership program, which makes horse ownership affordable for the everyday fan. The 5minutestopost team thanks TK for his time and perspectives on the horseracing industry. We hope our readers enjoy this interview and we look forward to following the progress of Wasabi Ventures Stable, as well as seeing their silks in the winner’s circle! This segment is part 2 of our two part interview with TK. If you are interested in reading Part 1 of the 5minutestopost interview, click here.
[5MTP] Who are your current co-owners? Do you see any trends in the types of co-owners you have recruited since starting up?
[TK] I’ll be honest…at the start, most everyone who joined Wasabi Ventures Stables were friends of mine. We were off to a hot start with our early runners and then people started to hear about us. A new group people joined the club – about 5-10 hardcore racing fans – and that is when the community started to build. With their large social media network, the “Wasabi Ventures Stables community” has been doing it on their own.
The average age of our co-owner base is early to mid 30’s. With the lower price point, the trend obviously is younger. Most of our active co-owners are female. Out of our top ten most active co-owners, half are female. And interestingly, the majority of female co-owners already had some experience in horse racing before joining Wasabi Ventures Stables. More of the men joining tend to be newbies. In addition, many of the female co-owners are currently or have been part of breeding group syndicates.
We have co-owners in 12 different states, including Michigan and Ohio. We predominantly race in East coast, Mid-Atlantic region. For those co-owners that are not near a racetrack that we run at or are not able to attend a race in person, we do a really good job with communicating to our co-owners on how they can watch the race on live stream. We use our private network to communicate those details. But, of course, not all co-owners are technically savvy, so we make sure to include those details in emails. We also send out a weekend kickoff email to summarize what’s going on with our horses.
Co-owners tend to average buying into in 3.5 horses. With our model, you can get into 3 horses for just $500, depending on which horses they are interested in. Co-owners have the option to own anywhere between 0.5% to 4.5% of a horse. It’s capped at 4.5% to keep it under 5%, just so we don’t have to get into the hassle of licensing. The key to our model is that we always retain ownership in the horse. There are some syndicates that will sell 200% of the horse. We always own a part of horse. We never sell more than 50% of the horse and at a minimum we retain 50% in every horse. We’re only selling you horses that we want to own.
[5MTP] There is a common misconception that horse ownership is only for the rich. What are the most common concerns that new co-owners have expressed? What is your strategy to help alleviate those concerns?
[TK] Yes, there is the misconception that horse ownership is for the rich. It’s true that this isn’t a game for the “poor”. In our co-owner base, most are not uber-wealthy, but they aren’t “poor”. Our model makes horse ownership easy. If you have disposable income and you have it earmarked for entertainment, you can own a horse for less than $100. It doesn’t mean you can run off and start buying your own horses because the cost of that is a game for the rich. Do the math…we currently have 13 horses in our barn at ~$4000/month. Well, that’s $50K in monthly expenses. Well, that’s not a poor man’s game.
The primary concern we’ve heard is recurring bills. In the majority of syndicates, you do get a recurring bill, typically on monthly basis. It could mean getting a $100+ bill every month. We make ownership easy. We take away the risk and take away the recurring bills. All the ongoing bills are on Wasabi Ventures Stable. Co-owners never receive a bill. The biggest thing we can do to a newbie is to explain why our model is so much different, so much better for them.
[5MTP] For the novice investor whose experience is limited to watching the Triple Crown races, there may be a false expectation of winning big. How do you set the expectations to a new investor that it is an outlier?
[TK] For me personally, I don’t want to win the Kentucky Derby. Now, if I ever have a horse that can compete at that level, then obviously I will change my mindset and will start dreaming about that. But, people shouldn’t get into horse ownership thinking that that is the end result. What you should be thinking is about winning a nice allowance race on a Saturday afternoon. That should be your dream. That is what I work on. I’m trying to build something sustainable.
20% of my co-owners have looked at other syndicates. Of course, we would encourage people to check out other syndicates. Also, if we feel that a potential co-owner is looking for something different from what we can offer them, we will happily refer them to another syndicate or encourage them to look at another syndicate. For example, we’ve had people come to us wanting to get involved in the breeding side of the business, which we are not currently involved in, so we have referred them to syndicates that focus on breeding.
[5MTP] What types of horses do you target (eg claiming, yearlings, two year olds in training) for your program and why?
[TK] We currently have two “buckets”:
- Horses that we claim – we claim in the $10,000-40,000 range. We have claimed a few lower priced ones, but those have been a few exceptions.
- Two year olds at auction – If buying at auction, so far, we’ve purchased horses in partnership with other syndicates and the range is between $30K-100K.
Outside of those two buckets, we are also exploring venturing into yearlings later this year.
The great thing about claiming is that it gives co-owners instant action. We have a group of co-owners that only want claimers. It’s that instant action that they want to be part of. On the flip side, we have co-owners that don’t want claimers and they dream about the “potential” with the young horses. With the two year olds, you don’t have the instant action, but you get to watch the horse develop and grow up. Some people only want to be involved in claiming and others prefer the two year olds. We cater to both groups.
Another key point is that we don’t pressure people to anything. We are buying horses we want to be part of. If you want to join along, great! If you don’t, that’s ok too because we purchased these horses because we want to own them.
[5MTP] Six months after starting up Wasabi Ventures Stables, has your approach/business plan changed since then and if yes, how?
[TK] It has changed. Before we started, I honestly thought we would have around 500 co-owners at this point, but instead, we’re at about 150. I’m a little behind where I thought I would be. Some of that has changed how I approach things. Most of the change is how we are messaging what we are doing. It’s tweaking the messaging. And because of that, it has worked – we seen more growth over the last few months than we’ve had prior to that. It’s more about telling people this is about education, fun and entertainment. If you are remotely in sports ownership, we can bring it to you. Some of that messaging has resonated.
Another aspect that has changed our approach is thinking long term about what horses we want to be part of. This time next year, I am anticipating we’ll have a stable of between 25-30 active horses, which is significantly more than the number of horses we have now. We’ll also increase the quality of horse and continually move up the stack.
Based on feedback and interest from our co-owners, we’ll also be exploring yearling, possibly in the fall. We’re mixing it up. With any business, you want to continually evaluate and re-evaluate what is working and what isn’t working. We will always allow new people to get into ownership for a few hundred dollars. Perhaps in the future, we may add another level of people who graduate, if you will, and come in with more money to spend. We’ll figure out a plan with them. Bottom line is, we’ll be flexible. We will always own a part of horse and will never sell more than 50%. We aren’t tied to this being the only model, we are exploring other ways of doing things. We will always allow people to get into ownership for a small amount, but if there are people that want to invest more we’ll figure out a plan.
[5MTP] Although your horses run up and down the Mid-Atlantic, most of your stable is based at Pimlico. Why Pimlico?
I grew up here and I’m a Maryland guy. I am committed to the Maryland racing scene. I’m also 100% convinced that Maryland racing is the one scene where everything is on the uptick. It’s going to continue to get bigger and better. The Stronachs are smart track owners. They know how to market. If you’ve visited Laurel Park recently, they have done a great job with enhancing the facility. The purses are going to get bigger and the purse money is secure, from a politician standpoint. But, that said, we’ll run where the horse can win.
Being primarily based in Maryland, we do try to target Maryland-bred horses, as the bonus program is so advantageous. So far this year, horses that have been claimed away from us, for 50% of those horses, we’ve been profitable. A big part of it is that we’ve been very selective about the horses we have claimed. If you claim a Maryland bred, you get a 30% bonus. For example, we have a Maryland-bred horse, Horseshoe Harbor that has run 6 times for us. He has won once and came in second and because of the Maryland bred bonus, he’s been profitable for us.
[5MTP] As your stable is based at a Mid-Atlantic track, which has competing meets with other neighboring track, races often don’t go and owners are forced to ship out. Have you encountered this much?
[TK] It’s a problem with the industry. The bottom line, in the Mid-Atlantic, everyone needs to get together and figure it out. Until they do, nothing will change. The right people in these states need to get in a room and figure it out. It would make the entire industry better. The Mid-Atlantic would dominate and be known as the best place for racing in the country. You need visionary people who understand that sometimes being unselfish allows you to be profitable. There are enough of these kinds of people, but you need them in the right spots and at the right time. It requires change. Great things always take visionary people. It’s every industry, not just our industry.
[5MTP] There have been numerous discussions on whether or not slots belong with racetracks to help supplement purses, etc. What are your thoughts on this?
[TK] The problem with slots money is that it is like crack cocaine. The tracks and people involved in racing get addicted to the money, instead of actually coming up with visionary ways on how to transform the industry. And so they get addicted to the crack cocaine. I’m not saying slots aren’t important, but the problem is it doesn’t fix the underlying problem. Think of West Virginia. They were the only place around that had slots and everyone went there to race because the purses were so big. Well, that was fantastic, but it didn’t solve the underlying problem. Think about Parx…no one goes to Parx most days. Most people don’t even know there is live racing at Parx, yet there are big purses because of the slot money.
Now, if we took the slots money and used it as tool, but at the same time, got creative, got visionary on fixing the entertainment value aspect for the audience, we are going to be successful. But you can’t be successful if you just rely on slots money alone to solve the problem.
[5MTP] You’re an avid horseplayer. Betting is an important component of the horse racing industry. With Keeneland raising their takeouts, it has reinvigorated the discussion amongst serious horseplayers. As a horseplayer and owner, please weigh in on the topic of takeout.
[TK] It is short-sighted. You have to increase handle and not increase your cut of it because sooner or later, it is going to hurt handle. If you hurt the handle, you’re going to hurt purses and then no one is going to want to own horses. That’s really what it boils down to. You can’t do that. It may help short term, but certainly not long term.
And remember, horseplayers do have a choice where they choose to bet. If they don’t like a track’s takeout, they have the choice not to play that track. In the modern world, you aren’t limited to betting your local track. You can bet at whatever track you want.
[5MTP] What do you see as the biggest challenges facing horse racing? What do you think horse racing needs to do to remain viable and grow?
[TK] What they have to do is understand first and foremost that they are an entertainment business. That should be their primary focus. As much as some of us love tradition, this is how we have done it for hundreds of years. That does not mean that is the way to continue to do things. There was a point in our existence as a country, only about 100 years ago, where the three most popular sports were baseball, boxing and horse racing. Times have changed. It is all about entertainment. It is about providing an entertainment value. We’ve seen some of it. Every Saturday racing should be a festival. Make your meet shorter. Make it more fun. Have a rock concert. If you are a racetrack owner and you do not have active racing going on, why are you not using the venue for other things, such as rock concerts, food events, etc? Why not maximize your dollars on your piece of property? And then, when you do have racing going on, make it a festival. Listen to your audience. Listen to what they want. People want less time in between races. Don’t string out the races. Make it shorter so that there’s 15-20 minutes in between race. Make it more intense. People want that. We are a fast twitch society. Never lose sight that we are in the entertainment business, so be entertaining.
In closing, my personal goal is that three years from now, my primary focus will be running Wasabi Ventures Stables and not my other business ventures. It doesn’t mean I won’t do other things, but my vision is to make Wasabi Ventures Stables my primary focus. If I’m doing that, then that probably means that we are doing really progressive things with a large group of people. And, we’ll have 50-100 horses around the country running. That will be how I know I’m doing well. This is the nature of the start-up world, you try something, you fail and then you try it again. You don’t give up, just because it’s hard. For me, it’s not about making money and it’s never been about making money, but candidly, I’ll be in a place where I don’t need to make money at all. It’s what I want to work on and it is my lifelong passion.