David Novak 0:04 

Welcome to How leaders lead where every week you get to listen. And while I interview some of the very best leaders in the world, I break down the key learnings so that by the end of the episode, you'll have something simple, you can apply as you develop into a better leader. That's what this podcast is all about. Well, my guest today is Bill Mudd, the President and Chief Operating Officer at Churchill Downs. This weekend, Churchill Downs will host the 100 and 50th Running of the Kentucky Derby, one of America's most beloved sporting events, and I'd go so far to say is one of the world's most beloved sporting events. It's an unforgettable experience for everyone who attends it's on everybody's bucket list. But great customer experiences like that don't happen by accident. For starters, you need to have a great product and hire great people. But even that isn't enough. As you'll hear today, you'll also need to put process around everything that matters in your customer experience. That operational strength is crucial. If you want to get the details right. And wow, the people that you gotta make happy your customers? And let me tell you, nobody does that operational excellence like Bill. So let's get into it. Here's my conversation with my good friend, and soon to be yours go mud.

You know, Bill, when this airs will be just days away from the 100 and 50th Running of the Kentucky Derby. Do you already have your pick? Well,

Bill Mudd 1:41 

there are a lot of great horses, it's still very early to be able to determine who's going to be the favorite but a lot of really high point races, which is how you earn the right to run the Kentucky Derby because there are only 20 spots. But we'll we'll we'll see those unfold over the next few weeks. And I'm excited to watch that unfold.

David Novak 2:00 

I'm curious as an officer at Churchill Downs, are you allowed to bet on the races yourself?

Bill Mudd 2:04 

I am. There are people that are directly involved with the racing, such as our Secretary of racing, he's not allowed to the president of the racetrack itself is not allowed to wager. I tend not to wager, but I do have some resources that do run from time to time. Well, I

David Novak 2:21 

wish I tended not to wager because when I do, I don't usually win. But I have a heck of a lot of fun trying how many spectators do expect to have for the 100 and 50th running? Well, we

Bill Mudd 2:33 

set the high watermark I think around 2015 and a little over 170,000 on Derby Day. And that was probably too many people, we have clawed back and removed some seats to make it a better experience for a number of people. So that's not how we measure success, the way we measure successes are the people that are on site having a wonderful time. And we found that sometimes a little bit smaller numbers a better number. So I'd say 150 to 160 160,000 would be the number for this year. But over the whole week, we'll see 360,000 people at our facility.

David Novak 3:06 

How many people will watch the race on television all around the world. We usually

Bill Mudd 3:11 

top out around 17 million people in the United States, outside the United States. It's really hard to get those numbers but you know, I'd say we're well north of 20 million people.

David Novak 3:19 

And I'm just curious, how much revenue Do you think the derby will bring into the city of Louisville?

Bill Mudd 3:25 

Well, the economic impact on an average year is about 400 million. So I think we will more than top that and 2024

David Novak 3:33 

outstanding, I think it'd be great if you gave us a little history lesson on the Derby and Churchill Downs.

Bill Mudd 3:38 

First, the derby was started the first derby is ran in 1875. And it was created by Meriwether Lewis Clark, and he was the grandson of Lewis and Clark, the Louisiana Purchase group. He had a fascination with horse racing and went and found the Epson Darby in England and came back and said, Hey, we want to do a three year old raise in the United States modeled after the Epson Darby at the time was a mile and a half race. And he found a plot of land. He was orphaned at a rather young age and his uncle's inherited land from his grandfather, who last name was Churchill. So his uncle's the Churchill family donated the land where Churchill sits today. That's why it's called Churchill Downs. So that is the heartbeat of our company. Churchill Downs Incorporated is actually a NASDAQ listed publicly traded corporation. We're about 10 billion of market capitalization about 14 billion of enterprise value. We have nine racetracks across the United States around 30 casinos and historical horse racing facilities. We've got a big online company, we're the largest distributor of horse races via the internet so you can wager on twinspires.com An app right on your phone it basically any horse race in the United States or in the world. You know, I did that

David Novak 4:58 

with my grant. kids a couple of years ago and my my granddaughter picked rich strike. I gave her $50 I think she collected like 2000 bucks. You know, that was a lot of fun to be able when you couldn't go the derby to actually enjoy it at home, watch the races and bet. How popular is that? And how's that coming along?

Bill Mudd 5:17 

It's extremely popular, I think just under 50% of wagers placed on all of our sites or via the application and via the internet. So it's doing very well. And I'm glad to hear that we have a lifelong fan and your granddaughter now.

David Novak 5:32 

I think she's definitely a lifelong fan. And she loves doing it and can't wait for this race as well. You know, what's happening this year at Churchill Downs, that's never been done before.

Bill Mudd 5:43 

Well, I think the big thing that you'll see this year is we spent $200 million reimagining the paddock. So we've taken when you used to come into the into the facility, and we like to think about the experience for our customers from the time they leave their car to the time to get back in their car. So we want to manage every piece of that experience. And as you're walking through the gates, and you're looking at the back of the old saddling building, and then you look at the spires and you see all the infrastructure the old you know, air conditioning units and heating units and, and just you know old infrastructure, it took away from the experience, we want people when they walk through those gates to see those spires. You know, that's the first thing they say and how beautiful those spires are when you walk in. And that's what you want to remember, that's where you want to get your picture taken. That's what you want to tell your kids and your grandkids about when you've you know, experienced the event. So when you walk in now, it's gonna be shaped like a coliseum with the bottom of the dome open. So when you walk in, there's gonna be, you know, eight foot decline into the paddock packs three times bigger than it used to be, you know, the stalls now are there two sides, you can stay directly through them into the area where some people are sitting right next to the windows, looking in and back toward the paddock. Those people could also walk out to the rail to watch the races, this can be a spectacular venue and probably one of the best in the country for watching a sporting event. And now there's also layers going up three stories for people to stay in, watching the action within the paddock with a great audio visual experience to blend with it. So and of course all the LED lights now you can put a lot of information about the horses of the jockeys and how they got there. And you know, so it's a more interactive experience for folks.

David Novak 7:21 

How do you go about creating that kind of experience? I mean, that sounds like you've really put a lot of thought and imagination into it. What was the process you used as a leader,

Bill Mudd 7:30 

we had this dream, you know, going back when I joined the company, I think we were $345 million market cap company, we're 10 billion now. So we have the ability, because we do have a much bigger footprint to take bigger risks. And this is a bigger risk, right? This is a lot of capital to put into a facility because you're, you're building it really for one big weekend a year. So there's been an iterative process over a number of years of what we would love to do. And then you bring in people like populus, who's our architect, they've done sporting events and venues all over the world. They bring a vast amount of experience, and a vast number of people that have, you know, architectural skills to help develop a concept that that customers will enjoy. And you can operate in the background without causing too much disruption to your guests. Fantastic.

David Novak 8:17 

And you know, for those who never been to the Derby, and you know, almost everybody I know, has the derby on their bucket list, something that they've just got to do. Describe what race day is like and the experience you want to have the guests have. Yeah, that's a great question. And it is unlike any other sporting venue, just to start with that event and

Bill Mudd 8:38 

the world. And I've luckily been fortunate enough to have been to Super Bowls and Final Fours and the masters and a lot of other sporting events and it is very unique sporting event and that it's all about all the people are there the people watching this fantastic women are dressed up in their hats, it's the food and the celebrities and the horse racing and you got somebody that's placing $2 on a horse that's cheering just as hard as the person who put $20,000 on the horse. So there's nothing like that to create groups of people that want other people to do well, because everybody's doing well if they're, they're betting on the same outcome. On the day of it's very long week. First of all, David so you think about 360,000 people coming to our venue. There's 70,000 People with the Super Bowl, that's five Super Bowls in a week. That's what our team is putting on. That's one way to think about it. You know, there's 120,000 people there on Friday night, they're leaving all their you know, garbage their glasses and you know, all the food and beverages that we've gone through all that has to be restocked, cleaned up turned around for the next day. So it's a tremendous amount of work on the team. So the day of, of Derby Day, Bill car stands and CEO and I come in very early in the morning. We'll walk the backside we'll talk to the backside superintendent, his crew, making sure we know how the track is where the turf is, you know in good shape for the day. Any challenges they might have. We try to help address See if there already. And usually there aren't because we've prepared for this day for so many months in advance. Then we will walk on the infield. And we'll look at all the infrastructure and see what you know for ready out there, what the challenges we have. We'll walk around the front side and check out all the areas, make sure it got cleaned up from the night before, talk to our front line, make sure our valets know what they need to do. You know, all the security guys, we know any activities going on security wise, we have every agency I think, in North America from the FBI, the state police, the Homeland Security, we've got drones and canine units, we've got so many different units we're coordinating. So we're doing all of that in the morning at about 1030 the gates open, we have to go in and change clothes, put on our suits and ties, and then welcome guests there. And then all day long, you know, you're talking to investors, you're talking to politicians, you're talking to big industry, folks, international political figures, and it runs the gamut. That's all day long. We're very programmed and what we had to do, so I get a card in the morning, for my system says here's where you need to be at this time. So it's a very regimented schedule that we had to follow.

David Novak 11:09 

So basically, what's your most memorable operating challenge from the derby?

Bill Mudd 11:14 

I've been here, this has been my 17th year, you know, the most challenging one was probably between 2020 and 2021, during the COVID years, the pandemic years. And if you remember in March of 20, that's when the world kind of shut down. And Bill and I looked at each other after we've taken down our revolver and kind of sent people home and we're closing facilities and doing all the things that everybody had to do back then you had to decide what are we going to do? We got to run this event. This is the longest continuously held sporting of that, in North America. Number two is Westminister Kennel Club. And that's 148 years. So this one has been ran every year it was ran during World War Two, they canceled it workout ended 45 They ended up running in September. So we didn't want to be the people that didn't have that happen. So the first thing we do is like, Where can we put this in the calendar, whether we can run it live or not. Let's pick a day we picked that Labor Day weekend, because there was nothing else in the calendar around there. So we called NBC ABC are great partners. They said you're the first one is called we'll lock that weekend. And we locked that weekend. And by that point, it came around, you know, towards September, it's like do we or do we not have people there we decided not to, we decided only to have industry participants. That was a tough call. But I think it was the right call because we wanted to make sure we kept the you know the consistency of this event happening. And I think people sitting at home during the pandemic needed that entertainment and I think it turned out very well. And then the following year when we ran it with 50% capacity, because that was a period where we were first big event to kind of be done after the COVID period happened. And there were people who were worried about wearing masks and you know, having signs and said Hey, keep your mask on. And our customers are not really accustomed to that you're sitting there with a cocktail all day long. Having a good time laughing with your friends. And you know what, it all turned out great. But at the time, it was a challenging decision to make. You know, my

David Novak 13:11 

favorite moment of the Kentucky Derby is when everyone sings My Old Kentucky Home. Do you have a favorite moment that

Bill Mudd 13:18 

day? That's absolutely my favorite day. So I'm fortunate enough to be in the pagoda, which is directly crossing the finish line where we give the derby trophy out. And I'm watching it from the pagoda. So I'm looking back at all of those people in the stands. You know, I have to say, How did I get here? You know, this is such a great job, wonderful event and they start singing while Kentucky Home The

David Novak 13:38 

horses are walking on the track. absolutely my favorite part of the day as well. It's riveting, and it really touches your heart for sure. And by that time you've had a few drinks, or at least I've had he actually think he can sing halfway decent. So you know, when you think about just the build up to this week that you have, you know, like all these seven Super Bowls. You know, it's like, what rhythms and routines have you established with your team to make sure that big week has pulled off?

Bill Mudd 14:07 

Well, there is clearly a big run of show and there's months and months and months of planning before we do this, even yours. Right so the the new paddock facility, we started envisioning, you know, three years ago, broke ground on over two years ago. And it'll debut this year. But we have weekly operating meetings going through every detail of what happens, how people get on the buses, where our National Guard's folks going to be what roads are going to have closed. Where are we going to have bollards established to make sure our perimeters is secure, and people are safe, plenty people that we need on admission lines, letting people in whether or not we have the right food drinks, we do an after action review. As soon as this year's Derby over to write down all the things we learned so we can implement those into next year. So we have that whole list. Luckily we have 104 49 iterations of experience, and we keep track of all of those items, and we follow up on them consistently every year trying to make the event better.

David Novak 15:08 

That's a heck of a heck of an operational challenge for sure. And, you know, I want to talk more about how you're leaving Churchill Downs. But first, what's the story from your childhood bill that shape the kind of leader that you are today?

Bill Mudd 15:19 

You know, I grew up on a family farm in central Kentucky. And my father also worked in a line at General Electric. So when I grew up, you did what you had to do to get the job done. So if it were harvesting season for corn or soybeans, and we've been waiting for, you know, dry enough weather, we'll harvest those soybeans until two o'clock in the morning, I'll empty the gravity wagon that'll go to bed, we get up and we do it the next day, and we just do what we had to do to get things done. You know, I think you got to lead by example, you've got to be able to put the time and put the work in, get the results you need. And I would say my father was the one that kind of developed my leadership style. You also understand went into the Army, what drove that decision? I've always admired folks that protect our freedoms in the United States. And my father, like I said, he was he worked on the line, GE but also had a farm when I left for college, I think that was a took a toll on him. He had a heart attack Widowmaker. And I was going to Bellarmine, I was borrowing money from the federal government, but I was also borrowing from the bank. And I was like, Okay, I've got a is an expensive school. For me at the time. I'm like, I gotta figure out how to do this, that asked my parents for a dime. So I'm like, You know what, I'm going to join the military. So I joined after the end of my freshman year, and became a crew chief on COBRA helicopters at the time, and came back and say, you know, I kind of liked the steel, I joined ROTC and ended up getting a full ride from ROTC to join the military spending 14 years in. And that was the other defining characteristic that I have probably the most defining in terms of teaching actual leadership traits that I like to emulate.

David Novak 17:02 

Well, tell us about what you learned from that experience that you might not be able to get from another one. You know, I

Bill Mudd 17:08 

think the first thing is, you got to listen to what the task at hand are. And I was a captain, when I left, you always get operations orders that come down from the top, people on the ground, need to know the details and how to execute what the operations order is. So you got to communicate, communicate, communicate, make sure everybody's on the same page with respect to the outcome you're trying to achieve. You got to be laying in the front, you know, show that you're willing to do what you're asking them to do. And you got to be decisive, you've got to show that you can solve problems, you got to empower them, once you give them, you know, the commands and what we need to execute that they can go execute what you're asking them to execute, and if they mess up, and it's okay, as long as you don't do it twice. I mean, so it's a you know, kind of build loyalty, empower people to do what they need to do to execute the mission at hand. And make sure you everybody's on the same page to communicate.

Koula Callahan 18:10 

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David Novak 19:08 

And then I understand you, you started your business career and finance at General Electric, which was known for leadership development. I mean, at that time, in particular, I'm sure they were known for Croton Ville and Jack Welch was a big leadership development person. Tell us a story about who taught you your biggest lesson in leadership at GE.

Bill Mudd 19:28 

I have a lot of great leaders. You know, Steve said data and my case are being two of them. And finance. You know, I think it's okay to fail, you know, stretch yourself, you could do more than you think you can do. And if you don't succeed the first time keep going back, try it again. Maybe you got to do something different but try it again. And I got moved around a lot. I did all those programs at GE talked about at Croton Ville. Business Management course and all the financial management programs got moved to Hungary and And at the time, I was executive level at this point, when I moved over there that combined two businesses. And when they put the businesses together, there were a lot of issues with accounting that had to be fixed. And that was one of the things that I had to go there to do. And there's also a lot of operational challenges. With respect to too many distribution centers, too many 32 manufacturing plants, we had to consolidate. And I learned that, you know, sometimes making tough decisions later, you have to do that, in order for the outcome for the whole to be better than long term. And that's probably, you know, one of the toughest roles I've ever had and one of the most fulfilling roles at the same time.

David Novak 20:35 

Did you learn how to speak the language,

Bill Mudd 20:37 

I teach you module, just a little bit of Hungarian. We were located in Budapest, we had plants all over Europe, Middle East, Africa, and India. What brought you to Churchill Downs, I was at GE water and Philadelphia, Pennsylvania at the time. And when I left home, I'd leave for three weeks at a time. And I had three small kids. I think our son was in the seventh graders in his sixth school by that point. And a headhunter reached out to me through my wife's email, unfortunately. And she said, Hey, you're going to interview? I was like, ah, you know, horse racing. I don't, I've got a great deal here at GE have got, you know, bright upside, a lot of upside. And I said, Okay, well, I'll go interview since it is Hall, we are from Kentucky. And when I came here, they had a clean balance sheet, they had a great management team, relatively new management team entrepreneurial spirit. And I thought, you know, I could go there and learn a lot of the skill sets that you don't get to experience a GE like dealing with outside debt holders, dealing with investors dealing with the audit committee, SEC reporting, all the investor relations stuff. So I said, Okay, I'll go here for a couple years and and check all those boxes, we'll go on to something else bigger. When I got here, I've ended up loving it. And it's turned out great. And we've been able to execute on a very good strategic plan.

David Novak 21:54 

Did you come in as finance and work your way into operations? Or did you start out as operator?

Bill Mudd 21:59 

Yeah, I started 2007 here as a chief financial officer. And then I became the president in 2014.

David Novak 22:05 

How'd you get up to speed on a totally different industry? It's like, you know, going from GE to Churchill Downs, that's, that's a new one.

Bill Mudd 22:13 

Well, that's one of the other things about GES right now, was in everything from appliances, to light bulbs to switch gear to factory off software, automation, and then in water. So I've already seen a lot of experiences. The one thing that's very transferable across business is the finance function. And when you can understand how the finance function works, you can really start to learn how an industry works. And of course, I've came from a farm. So are you whichever the horse would kick, so So I had a leg up on him on that one. But you know, I get pretty immersed, I've always been somebody that's very engaged in the operation, understanding how things work, understanding where the bottlenecks are, where the opportunities are, where the risk realized, where you need to have mitigation plans. So I've worked my way in and I love the operation side. You know, I

David Novak 23:02 

have a new book coming out, called how leaders learn, which talks about the importance of always learning and having that as your mentality as a differentiator. How do you make continual learning work for yourself?

Bill Mudd 23:16 

At Tinder, read a lot of books, I'm involved in a lot of forums with YPO. I listen to podcast, I've read the Wall Street Journal, religiously. I love, you know, reading Warren Buffett's letter to shareholders every year, I always get one or two tidbits from that. So there's a series of things that I do to try to, you know, continue to improve, you know, speaking and learning. What's the most interesting thing you've learned about your customer base?

David Novak 23:39 

And how do you act upon it?

Bill Mudd 23:41 

The most interesting thing is how diverse our customers are, you know, we look at credit card information, you get information from people that there's so much information out there now, we're in every segment of the economic scale. And you'll see that our prices go across all parts of the economic scale. It goes across all diverse groups of folks. We're very heavy women, particularly on that weekend over 50%, which is really odd for a sporting event to be 50 plus percent women, we see that from the NBC results. And we use that to decide hey, who are the right sponsors, and partners are for our product. So we use that information to say hey, you know, which automobiles which, you know, clothing lines, which spirit providers, we use all that information to help determine who are the best partners for us that will yield the best outcome and they will want to be here.

David Novak 24:35 

You know, some of our biggest learnings, unfortunately come from failure. What's one of yours and what was the biggest lesson you got from it?

Bill Mudd 24:44 

We bought a company out of Seattle called Big Fish Games a few years ago. And when we bought it, we were excited about it. They did a lot of casual games. So you think in Candy Crush and those sort of things you play on your phone and it had a you know, studios that they had to develop. And they were all designing characters and doing gameplay mechanics. And. And when we got into that we didn't realize how hard of a business that is, I mean, you're really trying to create, you know, the one hit movie, and you're gonna have 99 failures, in order to get to that one hit movie that that's going to pay for those nine failures. And our culture because we are publicly traded, you know, we worry about every quarter profitability, we don't worry about, you know, 10 years getting one hit. So that was a, I wouldn't say it was a failure, we ended up selling it. We did make money on it after purchasing it and reselling it. That was a very tough couple of years, when you're, you know, all the metrics were, what does it cost to acquire a customer whether you can retain that customer long enough to pay back that cost? And you're designing like, how many more games do you want to invest capital in to keep building our business wasn't really set up that level of risk. But, you know, the one thing I would say about that, that I learned from it is, don't be afraid to take a chance. Don't be afraid to say, you know, what, we probably made a mistake here. You know, pivot, go back and do what you're good at. And we were decisive about it. We didn't get hung up on. We're the ones that bought it. We got to make this thing work. And you know, what, our shareholders, they appreciated that we said, You know what, that's not a business that I think we can be successful in long term. It was a $820 million acquisition, we sold it for 950. We made some money in between, they ended up being very happy that we said, we're glad that you all said that. That wasn't a core competency of yours. So I think that was a big learning. You know,

David Novak 26:39 

you mentioned that Churchill Downs is traded on NASDAQ. And you know, you've had tremendous success going from $300 million to $10 billion dollar market cap. That's pretty good. Bye. Anybody standard. Tell us about the business model that you have at Churchill Downs.

Bill Mudd 26:53 

We operate in three segments is what we what we say. But we really treat the derby as independent. So we've got live racing. And we have nine racetracks, racetracks in and of themselves don't produce a good economic output their, their cost of capital is too high. The derby is fantastic, though. I mean, it is a organically growing cash generator, that it is the heartbeat of the company. Then we've got historical horse racing machines, which are basically slot machines. We have those throughout Virginia, Kentucky, we're going to be building a place in New Hampshire. Along with that we own twin spires is that distribution of horse racing that we talked about? We bought a company called exacto which provides the central determinant system, which is kind of that technology for historical horse racing product. So it kind of determines what polls you play in and the outcomes and that sort of thing. We own the tow company, which is marries all the wagers as you know, and horse racing, you're betting into a pool, and you're betting against everybody else, we just take a percentage off the top, all the money goes back to the people that bid on the right horse in the paramutual. Pool. And then we got full blown casinos, we have about 20 HHR. And casinos do about 30 of those in total. You know, there's such a rich history that you have at Churchill Downs. Can you give us an example of how that history impacts the way how you and your team makes decisions today? Yes, I mean, everything we do is we are the stewards of this great event, right? I mean, we've been here I think I was here for Derby 136. This is Derby 150 We're really standing on the shoulders of giants here. Steeped in history, number of people like Matt when went out of their way to make sure that they've pulled people in from New York and around the world to write about this. They went out of their way to pull celebrities and they made the event what it is today. So everything we do is to make sure we protect that asset. And the traditions that go along with it. Whether it's mint julep garland, the roses, the silks colors, for the jockeys, but then even when we do our designs, when you come through the new paddock, and you look at the design we put in, we have built in all of the features that were part of historical structure. So when you go in, you're going to see the JC and the turn, which meant Jockey Club. At the top, you'll see all the vents were exposed all the original stone and brick that were part of the original facade. So we try to pull all those historical elements into our designs from a aesthetic and investment capital perspective as well. You know, was such a story brand,

David Novak 29:35 

you know, I'm sure any change that you talk about doing beats was some kind of resistance, I would imagine. How do you think about innovation? And how do you get your team galvanized around the right kind of ideation?

Bill Mudd 29:51 

Well, you know, there hasn't been a hesitancy for innovation, whether it's be wagering via your telephone, which people expect to do now right? Because When you do that you'll eliminate lives. The big board that we put out, there was a $12 million investment was the largest 4k video board in North America at the time, nobody now can go the derby say I never saw a horse, there's always a horse, you can see, we heard that for years. So when it comes to integrating technology, people come there, now they expect to see, you have Wi Fi and you have the ability to, you know, put your Tiktok videos online or your reels online or, you know, do Snapchat. So there's a certain level of technology that is expected. And if you don't have that, you're going to lose customers very quickly. But in terms of other innovations, a few years ago, we changed to a it was 10 years ago, now, we changed to a point system, again, the race and the past, it used to be on graded stakes earnings, what we learned was we don't control who gets graded stakes. And we also there's too many horses that can run five furlongs on the turf, when we really want to run the best mile and a quarter on the dirt for three year old race in the world. So we changed it where we get to say which races get points, and kind of narrows the field so that the best horses have to run against each other prior to the Derby, which makes it a better betting race. It's still a complicated system, because it's a complicated sport. But the people that are be involved now, they really liked that methodology, because now you don't have people that are setting up a pace of fate far too fast for the other horses, and it just burns the field out. So it makes it a lot more fair race and a lot more exciting race. So those are the type of innovations that I think, you know, people are acceptable to technology, you

David Novak 31:35 

mentioned that as being a key driver of your business. How have you, as a leader, learned about SNAP or learned about all the different social aspects of the whole game, I mean, it's a big task are people that know it?

Bill Mudd 31:50 

I'm a novice at best on on all of those things. We have a very, very good team of folks. And we supplement that team. I had the luxury of attending the masters. And I thought we were good until I went down and see what they do. They have, you know, whole buildings established that do nothing but social media and television. And it's really amazing infrastructure they have down there. So we have something to aspire to. When it comes to that, in terms of the other technology, you know, we have a very, very good Chief Technology team. You know, we've got a couple of technology officers, one that used to be that now is the president of, of twinspires. And exactly business. We have another AK from GE, he brought a guy in that's now our chief technology officer. And we spent a lot of time on IT security and making sure we have the right business intelligence tools and hardware and software that money can buy.

David Novak 32:49 

Will be back with the rest of my conversation with Bill Mudd in just a moment. If you really want to go all in on the leadership lessons from the world of horse racing, you got to listen to my conversation with Bill Farish. He's the general manager of the lanes in farm. And his career reminds us of how important it is to invest in your industry. I

Speaker 1 33:10 

tried to hire great people. And you know, our industry is pretty small. We try to encourage young people to move on from us to other farms where they can move up the ladder and in terms of their role. And because we have a relatively small number of managerial type positions, it's important that they do move on. And I think we've had a lot of success over the years, training people to move up in the business. And that success encourages young people to come to us, I think,

David Novak 33:42 

go back and listen to my entire conversation with my friend, Bill Farish Episode 133, here on how leaders lead.

So you've got this great resource of people who really know what they're doing as a leader, what's your role with them? I mean, how do you see your role when you get these people who know more about something than you do? You know, in the room?

Bill Mudd 34:12 

I think the key thing is asking the right questions. And you know, coming at it from a perspective of, you know, either a customer or an investor, or anybody that would have a stake in the game. So that whatever we develop, it answers those questions. You got to give customers what they want. I think we have got a good team that can keep the finger on the pulse of what the customers want. And then I think it's just asking a lot of great questions and making sure you put the right people in the right seat to do those jobs.

David Novak 34:42 

Do you have one question that you ask that you think is one of the better ones?

Bill Mudd 34:46 

What keeps you up at night, I think is a question that everybody likes to ask what is the thing you're most concerned about? You know, going down on Derby Day, you know, as part of Derby 150 We're gonna get a lot of attention which it could be good attention. It could be bad attention. Who else have you had looked at this right? If you use the third party to penetration test the system and what was their output? I always like third party experts, because this is what they do all day long. We only know the environment we're in. So those are the type of questions I think are the most productive. You know, sports betting is now a huge part of horse racing, you

David Novak 35:20 

know, in terms of technology, you know, how have you focused your efforts to really grow that part of the business? Well, first

Bill Mudd 35:27 

of all, we did get into online horse racing on the edit with twinspires. It's a different business, we do do continue to do all of our own retail sports wagering, which means if you go into one of our sites of brick and mortar facility to place a sports bet there on our kiosk, we create those kiosks for the entire industry. Anyone could buy our kiosk, and we sell those in terms of the online side, we got in that business, but it's a very much a different model business, those investors are paying for growth. And our investors at Churchill, they pay for cash flow, they want to see cash, well, when you're growing a business like that, you're spending a lot of money to require customers to go online. And that ends up being a drag on cash for a long, long period of time. With the belief that over the long term, you'll create a highly profitable business, that investor base is a little different than somebody that's investing in what we do today, which is we generate a lot of cash. And you got to make sure you retain those customers in order to get a return because they're very expensive to acquire on the upfront, we decided to get out of that business, because we didn't we didn't think long term, it made sense for us to be in that role. So we got out of the online sports wagering business and focused on retail, there's a lot better margins. And that makes

David Novak 36:43 

a lot of sense. And you mentioned the front line. I mean, as the head operations, you know, how do you stay plugged in to the front line and learn from them in

Bill Mudd 36:53 

terms of what's going on? Listen, the front line is our guests, that's the first person they see whether it be at the track or whether it be at one of our casino properties. You know, I think it starts at the top, you've got to have a good training regimen. And you got to make sure people understand what's important for our guests and how they want to be the experience and to feel when they come to. They want to see people that are smiling faces that are friendly, that are helpful. And I think we do a good job of training our frontline and communicator, frontline. And if they have any issues, they come to us and we try to address those issues because we want them to be productive and any barriers they have to do a good job we

David Novak 37:28 

try to fix what's the biggest problem that you see in the racing industry today. And how are you attacking it?

Bill Mudd 37:34 

I mean, there's a number of challenges in the racing industry, I think first and foremost is safety. Making sure that the horses that run and the jockeys, the athletes that run are running in the most safest environment possible. And we've hired multiple veterinarians to help do pre race inspections, we bought new equipment to make sure the track stays as safe as it could possibly be. We've invested in equine triage center on the backside to help, you know do PET scans and CAT scans and things that can help identify issues with horses. So we've got a whole series of safety items that we're doing, as Churchill across all of our properties, to make sure we put on the best show in the safest environment possible.

David Novak 38:19 

You've had so much success, and you know, $10 billion market cap now, when you look 10 years out, how much change? Do you think it's going to really require for you to keep getting the kind of growth that you have? And what are you going to do to drive it?

Bill Mudd 38:33 

That's another great question. I mean, it's easier to grow from one to two and two to four, and four to eight, so on. So the base is bigger. So the growth has to be obviously much bigger. We spent a lot of time on strategy around here, we spent a lot of time thinking about adjacent industries or adjacent opportunities that we can be in every time we think that we might be running out of opportunities. We have, you know, five more that come up that are good ideas, and we've got less number of good ideas in the hopper. So that's a great question.

David Novak 39:02 

I wish I knew all the answers today. But well, basically, you're saying we've got the answers. Stay tuned. That's good. You know, this has been so much fun Bill and I want to have some more with my lightning round of questions. Are you ready for this? Yes, let's go. The three words that best describe you,

Bill Mudd 39:19 

I'd say clear, thinker, decisive, and critical thinker.

David Novak 39:24 

If you could be one person for a day besides yourself, who would it be?

Bill Mudd 39:29 

I would have to say Winston Churchill, if we can use historical figures just because he was such a great leader in a time when when and brought a whole nation together during one of the most tragic periods in human history. That I love reading books about him and learning about him. Your biggest pet peeve? biggest pet peeve being 20 minutes late to a meeting who would play you in a movie? I would like to say George Clooney, but

David Novak 39:56 

there you go. We can go with Alan. What's something About the Derby, you'd only know if you were the president of Churchill Downs.

Bill Mudd 40:04 

Well after the horse has all crossed the finish line and they're safely home and we've word the trophy. Bill car stands and and I go to the speakeasy and that's the first time I drank that week I have a mint julep to celebrate.

David Novak 40:18 

Speaking of mint juleps, how many mint juleps will you sell on Derby Day? 140,000?

Who was the last Derby winner that you picked?

Bill Mudd 40:28 

Oh, geez, wasn't rich striker, I would have to say it was probably justify

David Novak 40:32 

What's your all time favorite name of the derby horse?

Bill Mudd 40:36 

Secretariat would have to be my all time favorite. Just because I think was such a fantastic horse.

David Novak 40:41 

Describe your last pinch me moment. I can't believe it's happening to me.

Bill Mudd 40:46 

Every year. When we sing well, Kentucky Home when they're coming across. I'm like, how am I here? How am I so lucky to have this role?

David Novak 40:55 

If I turned on the radio in your car, what would I hear?

Bill Mudd 40:58 

You'd probably either hear news channel or old country music.

David Novak 41:04 

What's something about you that few people would know? I love to fly fish. Fantastic. Great lied to you round bill. And I have just a few more questions for you. What's on the horizon? That you're really excited about a project or something that you're a part of that's, that really brings you joy? Well,

Bill Mudd 41:23 

I think we got two other big construction projects going on. One is a casino hotel resort in Terre Haute, Indiana $290 million project. You know, we designed it, it's turning out exactly what the designs look like. And I'm really excited to open that beginning of April. And then we've got another project Northern Virginia, which we built on a industrial landfill. It's about 80 acres, a landfill that we had to cover. And then we built a $460 million facility at the top of this hill. And I just can't wait to see that. Because it has been an unbelievably complex, complicated project. You know, Bill,

David Novak 42:00 

tell us something about your family and how you balance it all.

Bill Mudd 42:04 

Well, listen, I've got three wonderful sons, I think balance is gonna have to give props to my wife, like so we moved around the world. And she, you know, gave up sacrificed a lot with her career to be home with the children participating in being a docent, and, you know, things like that, but she gave up her career, balance that that way, but now they're all grown. We have a 29 year old that is a finance manager at GE and r&d center up in Schenectady area. And he's got a grandson, we've got my first grandson a little over a year old. He's doing his MBA at UNC, really proud of him. My middle son is Purdue Engineering student. He's out working on his master's at Johns Hopkins in engineering management. And he works for Northrop Grumman up in Chicago, and then our youngest son is on the financial management program at GE aerospace, in Cincinnati. So that's my kids are doing, they're all doing extremely well, and I couldn't be more happy.

David Novak 42:58 

It's really interesting that there are a lot of GE families, it really, really is where you work there your sons or work that's really incredible. Why is that? I

Bill Mudd 43:09 

think familiarity. That's what they saw their dad doing growing up, and whoever they, you know, came out of college, they're like, hey, you know, to your point, they develop great leaders, and they still develop Great Lakes, they still have wonderful programs for that entry level. They, they get to see, you know, four different jobs in the first two years, and they get to see all aspects from, you know, commercial side of the business to manufacturing, to controllership and planning and analysis. So, you know, I think that's part of it.

David Novak 43:37 

You know, what do you see as your unfinished business? Now? She is do you look ahead? You know, I

Bill Mudd 43:42 

think making sure that we have a team of people that can backfill us as we move on, at some point in the future, that they can step in our role, and that we know they're gonna be successful because we've spent time coaching and training and mentoring and preparing these folks for this position.

David Novak 44:00 

Last question, what's one piece of advice you'd give to anyone who wants to improve as a leader?

Bill Mudd 44:06 

You know, I think the first and foremost thing is you got to be empathetic. You have to listen to your team, you have to make sure you empower them to make decisions, but then support them when their decisions may not have turned out to be a great decision and be loyal to them. It's kind of all of that together. You know, Bill, I

David Novak 44:22 

can't tell you how much I've enjoyed this conversation. And I want you to know, you know, my wife just recently she passed away. Over the last couple years because of her health. We have been doing the twinspires bed unit at home with the grandkids. And she wanted to go to the 150 S. And so we actually organized we got a great group of people coming in and we can't wait to take them and celebrate her a great life at the derby. But I want you to know, I've been going in the derby for a long, long time, even longer than the number of years that you've worked there. But in the last 15 years, every year that I've seen, the derby just gets better and better and better the execution of the front line the operations that you have. Just the entire experience is just super and I can't wait to see the new paddock and enjoy the 150th. And I just wish my wife Wendy could be along for the ride.

Bill Mudd 45:22 

I wish she could to David, I'm so sorry. And thank you very much for the kind words.

David Novak 45:27 

Thank you very much for being on this show, Bill. Appreciate it.

Thank you.

Well, like I said, it won't be the same without my sweet Wendy. But I'm looking forward to being at Churchill Downs on Saturday, singing My Old Kentucky Home, and making memories with my family and friends. I know, it'll be a great experience, thanks to Bill and the leadership he brings to Churchill Downs. And if you want to give your customers a great experience, you've got to do what Bill does and put strong operational processes around what matters. The systems you have in place to train employees, monitor quality, develop products, it all adds up and shapes the bigger customer experience. So this week, talk to the team members who serve customers pinpoint a place where your customer experience may be falling just a little short. I can guarantee you there's got to be an operational issue at play. Make it your mission to find out what it is and then engage your team to improve it. So do you want to know how leaders lead? Well, we learned today is the great leaders understand that operations are key to the customer experience. Coming up next on how leaders lead is Val Ackerman, Commissioner of the Big East Conference, and the first ever president of the W NBA.

Val Ackerman 46:58 

The NBA had made the WNBA a priority. So it had to be great. You know, the stakes were high. That was the pressure. It was okay, how do I not flub this? How do I do my part? Because again, it was a group effort at the highest order. How do I not let my teammates down? So

David Novak 47:16 

be sure to come back again next week to hear our entire conversation. Thanks again for tuning in to another episode of how leaders lead where every Thursday, you get to listen in while I interview some of the very best leaders in the world. I make it a point to give you something simple on each episode that you can apply to your business so that you will become the best leader you can be