Welcome to How leaders lead where every week you get to listen in while I interview some of the very best leaders in the world. I break down the key learning 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 Mud, the president and chief operating officer at Churchill Downs. This weekend, Churchill Downs will host the 150th running of the Kentucky Derby , one of America's most beloved sporting events. And I'd go so far to say, as 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 got to 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, Bill Mud. You know, Bill, when this airs, we'll be just days away from the 150th running of the Kentucky Derby. Do you already have your pick? Well, there are a lot of great horses that's still very early to be able to determine who is going to be the favorite. But a lot of really high point races, which is how you earn the right tour in the Kentucky Derby, because there are only 20 spots. But we'll see those unfold over the next few weeks and I'm excited to watch that unfold. I'm curious, as an officer at Churchill Downs, are you allowed to bet on the races yourself? 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 w ager. I tend not to wager, but I do have some race horses that do ride from time to time. Well, I wish I tend not to wager, because what I do, I don't usually win. But I have a heck of a lot of fun trying. How many spectators do you expect to have for the 150th running? Well, we set the high water mark. I think around 2015, 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. Probably 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. How many people will watch the race on television all around the world? We usually top out around 17 million people in the United States. Outside the United States, it's really hard to get those numbers. But I'd say we're well north of 20 million people. And I'm just curious, how much revenue do you think the Derby will bring into the city of Louisville? Well, the economic impact on an average year is about 400 million. So I think we will more than top that in 2024. Outstanding. I think it'd be great if you gave us a little history lesson on the Derby and Churchill Downs. First, the Derby was started. The first Derby was around in 1875. And it was created by Maryweather Lewis Clark. He was the grandson of Lewis and Clark, Louisiana Purchase Group. He had a fascination with horse racing and went and found the Epsom Derby in England and came back and said, hey, we want to do a three-year-old race in the United States modeled after the Epsom Derby. At the time, it 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 race tracks 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 and app right on your phone, basically at any horse racing United States or in the world. You know, I did that with my grandkids a couple of years ago. My granddaughter picked Rich Strike. I gave her $50 and I think she collected like $2,000. You know, that was a lot of fun to be able, when you couldn't go to the Derby, to actually enjoy it at home, watch the races and bet. How popular is that and how's that coming along? It's extremely popular. I think just under 50% of wagers placed on all of our sites are 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. Yeah. 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? 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 facility and we like to think about the experience for our customers from the time they leave their car to the time they get back in their cars. 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 air conditioning units and heating units and just old infrastructure, it took away from the experience. We want people, when they walk through those gates to see those spires, that's the first thing they see and how beautiful those spires are when you walk in. 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 kids about when you experience the event. So when you walk in now, it's going to be shaped like a coliseum with the bottom of the dome open. So when you walk in, there's going to be eight foot decline into the paddock. The paddock is three times bigger than it used to be. The stalls now are there two-sided so you can stay directly through them into the area where people are sitting right next to the windows looking in and back toward the paddock. Those people can also walk out to the rail to watch the races. It's going to be a spectacular venue and probably one of the best in the country for watching the 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 and the jockeys and how they got there. So it's a more interactive experience for folks. 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? We had this dream going back. When I joined the company, I think we were at $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 risk. And this is a bigger risk, right? This is a lot of capital to put into a facility because you're building it really for one big week in 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 Populist who is 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 architectural skills to help develop a concept that customers will enjoy and you can operate in a background without causing too much destruction to your guests. Fantastic. And for those who never been to the Derby and 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 in the world. And I've luckily been fortunate enough to have been to Super Bowls and Final F ours and the Masters and a lot of other sporting events. And it is a very unique sporting event. It is all about all the people are there. The people watching this fantastic women are dressed up in their hats. It is the food and the celebrities and the horse racing. And you have got somebody that is placing $2 on a horse that is cheering just as hard as the person to put $20,000 on the horse. There is nothing like that to create groups of people that want other people to do well because everybody is doing well if they are betting on the same outcome. On the day of, it is a very long week first of all, David. So you think about 360,000 people coming through our venue. There are 70,000 people with Super Bowl. That is five Super Bowls in a week. That is what our team is putting on. That is one way to think about it. There are 120,000 people that are on Friday night. They are leaving all their garbage and their glasses and all the food and the beverages that we have gone through. All that has to be restocked, cleaned up, turned around for the next day. So it is a tremendous amount of work on the team. So the day of Derby Day, Bill Carstandian, my CEO and I, I am in very early in the morning. We will walk the backside. We will talk to the backside superintendent and his crew making sure we know how the track is, whether turf is in good shape for the day. Any challenges they might have, we try to help address if they are already. And usually there are not because we have prepared for this day for so many months in advance. We will walk on the infield and look at all the infrastructure and see if we are ready out there and what the challenges we have. We will walk around the frontside and check out all the areas and make sure it got cleaned up from the night before. Talk to our front line and make sure our valet is know what they need to do. All the security guys we know, any activity that is going on security wise. We have every agency I think in North America from the FBI, the state police, the homeland security. We have drones and canine units. We have so many different units. We are coordinating. We are doing all of that in the morning. In about 10-30 the gates open. We have to go in and change clothes, put on our suits and ties and then welcome guests in. And then all day long, you are talking to investors, you are talking to politicians, you are talking to big industry folks, international political figures and it runs the gamut. That is all day long. We are very programmed in what we have to do. So I get a card in the morning from my assistant says, here is where you need to be at this time. So it is a very regimented schedule that we have to follow. That is amazing. What is your most memorable operating challenge from the Derby? I have been here this is my 17th year. The most challenging one was probably between 2020 and 2021 during the COVID years, the pandemic years. And if you remember in March of 2020, that is when the world kind of shut down. And Bill and I looked at each other after we had taken down our revolver and kind of set people home and we are closing facilities and doing all the things that everybody had to do back then. You have to decide what are we going to do? We have to run this event. This is the longest continuously held sporting event in North America. Number two is West Minister Kennelclav and that is 148 years. So this one has been ran every year. It was ran during World War II. They canceled it. The war kind of ended in '45. They ended up running in September. So we did not want to be the people that did not have that to happen. So the first thing we did was like where can we put this in the calendar whether we can run it live or not? Let us pick a day. We picked that Labor Day weekend because there was nothing else in the calendar around there. So we called NBC. NBC are great partners. They said you are the first ones to call. We will lock that weekend in. We locked that weekend in. By that point it came around. Toward September it was 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 consistency of this event happening. I think people sitting at home during the pandemic needed that entertainment and I think it turned out very well. Then the following year when we ran it with 50% capacity because that was a period where we were first big event to be done after the COVID period happened. There were people who were worried about wearing masks and having signs that said hey make you keep your mask on and our customers are not really accustomed to that. You are 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. My favorite moment of the Kentucky Derby is when everyone sings my old Kentucky home. Do you have a favorite moment that day? That is absolutely my favorite day. So I am fortunate enough to be on the pagoda which is directly across from the finish line where we give the Derby trophy out. And I am watching it from the pagoda. So I am 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 started singing my old Kentucky home. The horses are walking on the track. Absolutely my favorite part of the day as well. It is riveting and it really touches your heart for sure. By that time you have had a few drinks or at least I have had and you actually think you 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 is like what rhythms and routines have you established with your team to make sure that big week has pulled off. Well there is clearly a big run of show and there is months and months and months of planning before we do this. Even years right so the new paddock facility we started envisioning you know three years ago broke around over two years ago and it will debut this year. But we have weekly operating meetings going through every detail of what happens. How people get on the buses. Where are National Guard folks going to be. What roads are going to have closed. Where are we going to have bollards established to make sure our perimeter is secure and people are safe. How many people do 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 is derby over to write down all the things we learn so we can implement those into the next year. So we have that whole list like we have 149 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. That is a heck of an operational challenge for sure. And you know I want to talk more about how you are leading the Churchill Downs. But first what is the story from your childhood build that shaped the kind of leader you are today. You know I grew up on a family farm in Central Kentucky and my father also worked in the 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 have been waiting for dry enough weather we will harvest those soybeans until two o'clock in the morning. I will empty the gravity wagon. That will go to bed. We get up and we do it the next day. We just do what we had to do to get things done. You know I think you have got to lead by example. You have got to be able to put the time in, put the work in, get the results you need. And I would say my father is the one that kind of developed my leadership style . You also understand when into the army. What drove that decision? I have always admired folks that protect our freedoms in the United States. And my father like I said 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, widow maker. And I was going to Bellarmine. I was borrowing money from the federal government. I was also borrowing it from the bank. And I was like okay I got a, is it expensive school for me at the time? I'm like I got to 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 I came back and said you know I kind of like to steal. I joined ROTC and ended up getting a full ride from ROTC to join the military. I spent 14 years in and that was the other defining characteristic that of probably the most defining in terms of teaching actual leadership traits that I like to emulate. Well tell us about what you learned from that experience that you might not be able to get from another one. You know I 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 to 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 is on the same page with respect to the outcome you're trying to achieve. You got to be late from 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 a build loyalty empower people to do what they need to do to execute the mission at hand and make sure you everybody is on the same page. You communicate. Hey everyone it's Kula here from three more questions and if you haven't downloaded the new how leaders lead app you are missing out. If you're leading a team I know it's really hard to find time to consume leadership development content and continue investing in yourself. That's the whole reason we launched this app if you just take two minutes a day each morning to watch the daily leadership insight in the how leaders lead app you'll stay inspired with practical leadership lessons from the world's greatest leaders. Imagine starting your day with inspiration from Condoleezza Rice Tom Brady and Jamie Diamond just to name a few. I've started using the app and I love how the daily leadership inside gets my mind right before the busyness of my day starts. Download the how leaders lead app today in the app store and stay inspired with amazing leadership wisdom and just two minutes a day. And then I understand 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 Crotonville and Jack Welch was a big leadership development person. Tell us a story about who taught you your biggest lesson in leadership at GE. I have a lot of great leaders. You know Steve Cydida and Mike Caser being two of them in 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 Crotonville business management course and all the financial management programs. Got moved to Hungary and at the time I was executive level at this point. When I moved over there they 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 was also a lot of operational challenges with respect to too many distribution centers, too many or at 32 manufacturing plants. We had to consolidate. And I learned that sometimes making tough decisions is later you have to do that in order for the outcome for the whole to be better than long term. And that's probably one of the toughest roles ever had and one of the most fulfilling roles at the same time. Did you learn how to speak the language? I had Kichim Adjural just a little bit of Hungarian. But 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 in Philadelphia, Pennsylvania at the time. And when I left home I'd leave for three weeks at a time. I had three small kids. I think our son was in the seventh grade. He was 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 interview." I was like, "Ah, you know, horse racing. I've got a great deal here at GE. I've got, you know, bright upside. A lot of upside." And I said, "Okay, well, I'll go interview. Since it is home, 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, SSC reporting, all the investor relations stuff. I said, "Okay, I'll go here for a couple of years and check all those boxes. I'll go on to something else, bigger." When I got here, I ended up loving it and it's turned out great. And we've been able to execute on a very good strategic plan. Did you come in as finance and work your way into operations or did you start out as an operator? Yeah, I started in 2007 here as a chief financial officer. And then I became the president in 2014. How did you get up to speed on a totally different industry? Like, you know, going from GE to Churchill Downs, that's a new one. Well, that's one of the other things about GE is great. Now, I've was in everything from appliances to light bulbs to switch gear to factory software automation and then in water. So I'd 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 I read you which end of the horse would kick. So I had a leg up on that one. But 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 rely and where you need to have mitigation plans. So I've worked my way in and I love the operations. You know, I 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 different iator. How do you make continual learning work for yourself? I tend to read a lot of books. I'm involved in a lot of forums with YPO, a listen to podcast. I've read "The Wall Street Journal" religiously. I love reading more and buffets, 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 continue to improve. Thank you in learning what's the most interesting thing you've learned about your customer base and how did you act upon it? The most interesting thing is how diverse our customers are. We look at credit card information. You get information from people that are so much information out there now. We're on every segment of the economic scale. 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+% women. We see that from the NBC results. We use that to decide, hey, who are the right sponsors and partners for our product? We use that information to say, hey, which automobile, which clothing lines, which spirit providers. We call that information to help determine who are the best partners for us that will yield the best outcome and they'll want to be here. Some of our biggest learnings unfortunately come from failure. What's one of yours and what was the biggest lesson you got from it? We bought a company out of Seattle called Big Fish Games a few years ago. When we bought it, we were excited about it. They did a lot of casual games. You think in Candy Crush and those sort of things you play on your phone. They had studios that they had to develop and they were all designing characters and doing gameplay mechanics. When we got into that, we didn't realize how hard of a business that is. You're really trying to create the one-hit movie and you're going to have 99 failures in order to get to that one-hit movie that's going to pay for those 99 failures . Our culture, because we are publicly traded, we worry about every quarter profitability. We don't worry about 10 years getting one hit. 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. 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. Then you're designing how many more games do you want to invest capital in to keep building. Our business wasn't really set up for that level of risk. 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. Pivot. Go back and do what you're good at." We were decisive about it. We didn't get hung up on where the ones about it. We got to make this thing work. 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 an $820 million acquisition. We sold it for $9.50. We made some money in between. They ended up being very happy. They were glad that you all said that that wasn't a core competency of yours. I think that was a big learning. You mentioned that Churchill Downs is traded on NASDAQ. You've had tremendous success going from $300 million to $10 million market cap . That's pretty good by anybody's standard. Tell us about the business model that you have at Churchill Downs. We operate in three segments is what we say, but we really treat the Derby as independents. We've got live racing. We have nine racetracks. Racetracks in and of themselves don't produce a good economic output. Their cost of capital is too high. The Derby is fantastic though. I mean, it is an 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 Exacta, which provides the central determinant system, which is kind of the technology for historical horse racing product. It kind of determines what pools you play in and the outcomes and that sort of thing. The Tote Company, which is Mary's All the Wagers, as you know, 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 bet on the right horse in the Param utia pool. Then we've got full blown casinos. We have between HHR and casinos. We have about 30 of those in total. 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. Everything we do is we're the stewards of this great event. 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. A number of people like Matt Nguyen that 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 in. They made the event what it is today. Everything we do is to make sure we protect that asset. The traditions that go along with it, whether it's the mint julep, the garland of roses, the silks colors for the jockeys. But then even when we do our designs, when you come through the new paddock, when you look at the design we put in, we have built in all of the... features that were part of the historical structure. So when you go in, you're going to see the JC and the turn, which meant jockey club at the time. You'll see all the vents. We expose 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. With such a story, Brian, I'm sure any change that you talk about doing meets with 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? Well, 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 eliminate lines. The big board that we put out there was a $12 million investment. It was the largest 4K video board in North America at the time. Nobody now can go to the Derby and 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 put your TikTok videos online or your Reels online or 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, it was 10 years ago now. We changed to a point system to get in 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 a 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 and gets each other prior come 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 being involved now, they really like that methodology because now you don't have people that are setting a pace that's 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 people are acceptable to. Technology you 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? I'm an office at best 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 whole buildings established that do nothing but social media and television and it's really amazing the infrastructure they have down there. So we have something to aspire to when it comes to that. In terms of the other technology, we have a very, very good Chief Technology team. We've got a couple of technology officers, one that used to be that now is the president of twin spires and the executive business. We have another AK from GE. He brought a guy in that's now our Chief Technology Officer and we spend 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. We'll 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 Ferris. He's the general manager of the Lane's End Farm and his career reminds us of how important it is to invest in your industry. I try to hire great people and 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 in terms of their role. Because we have a relatively small number of managerial type positions, it's important that they do move on. I think we've had a lot of success over the years training people to move up in the business. That success encourages young people to come to us, I think. Go back and listen to my entire conversation with my friend Bill Ferris, episode 133 here on How Leaders Lead. You've got this great resource of people who really know what they're doing. As a leader, what's your role with them? How do you see your role when you get these people who know more about something than you do in the room? I think the key thing is asking the right questions and coming at it from a perspective of either a customer or an investor or anybody that would have a stake in the game so that whenever we develop it answers those questions. You've 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. 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. Do you have one question that you ask that you think is one of the better ones? What keeps you up at night I think is the question that everybody likes to ask. What is the thing you're most concerned about going down on Derby Day? As part of Derby 150 we're going to get a lot of attention, which could be good attention, it could be bad attention. Who else have you had looked at this? Have you used the third party to penetration test the system and what was their output? I always liked third party experts because this is what they do all day long. We only know the environment we're in. Those are the type of questions I think are the most productive. Sports betting is now a huge part of horse racing in terms of technology. How have you focused your efforts to really grow that part of the business? First of all, we did get into online horse racing on the ad bit with TwinSpires . It's a different business. We do continue to do all of our own retail sports wagering, which means if you go into one of our sites, a brick and mortar facility to place a sports bet. They're on our kiosk. We create those kiosks for the entire industry. Anyone could buy our kiosk and we sell all of 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. 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. 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 besting in what we do today, which is we generate a lot of cash. 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 think long term. It made sense for us to be in that role. We got out of the online sports wagering business and focused on retail. There's a lot better margins than that. Makes a lot of sense. You mentioned the front line. As the head operations, how do you stay plugged into the front line and learn from them in terms of what's going on? Listen, the front line is our guest. That's the first person they see, whether it be at the track or whether it be at one of our casino properties. I think it starts at the top. You've got to have a good training regimen. You've got to make sure people understand what's important for our guest and how they want to be the experience and the feel when they come to. They want to see people that are smiling faces, that are friendly, that are helpful. I think we do a good job of training our front line and communicating to our front line. If they have any issues, they come to us and we try to address those issues because we want them to be productive in any barriers they have to do in a good job, we try to fix. It's the biggest problem that you see in the racing industry today and how are you attacking it? 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 as safe as environment possible. We've hired multiple veterinarians to help do pre-race inspections. We've 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 do pet scans and cat scans and things that can help identify issues with horses. 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. You've had so much success in $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? What are you going to do to drive it? That's another great question. It's easier to grow from one to two than two to four and four to eight, so on. The base is bigger, so the growth has to be obviously much bigger. We spend a lot of time on strategy around here. We spend 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 five more that come up that are good ideas. We've got a list number of good ideas and a hopper. That's a great question. I wish I knew all the answers today. Basically, you're saying we've got the answers. Stay tuned. That's good. 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. I'd say clear thinker, decisive, and critical thinker. If you could be one person for a day beside yourself, who would it be? 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 he 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. Your 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 there you go. We can go with that one. What's something about the Derby you'd only know if you were the president of Churchill Downs? Well, after the horse is all across the finish line and they're safely home and we've awarded the trophy, Bill Karstandj and I go to the speak easy, and that's the first time I drank that week. I meant Jules to celebrate. Speaking of meant Jules, how many meant Jules will you sell on Derby Day? 140,000. Who was the last Derby winner that you picked? Oh, geez. It wasn't Rich Strike. I would have to say it was probably Justify. What's your all time favorite name of a Derby horse? Secretary would have to be my all time favorite just because I think it was such a fantastic horse. Describe your last pinch me moment. I can't believe it's happening to me. Every year when we sing El Kentucky Home when they're coming across, I'm like, how am I here? How am I so lucky to have this role? If I turned on the radio in your car, what would I hear? You'd probably either hear a news channel or old country music. What's something about you that few people would know? I love to fly fish. Fantastic. Great lightning round, Bill. 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 really brings you joy? Well, I think we've got two other big construction projects going on. One is Casino Hotel Resort in Terrejo, Indiana. It's $290 million project. We designed it. It's turning out exactly what the designs look like. I'm really excited to open that beginning of April. Then we've got another project, Northern Virginia, which we built on an industrial landfill. It's about 80 acres of landfill that we had to cover. Then we built a $460 million facility at the top of this hill. I just can't wait to see that done because it has been an unbelievably complex, complicated project. Bill, tell us something about your family and how you balance it all. Listen, I've got three wonderful sons. I think balancing and I have to give props to my wife. Like I said, we moved around the world and she gave up, sacrificed a lot with her career to be home with the children, participating and being a docent and things like that. She gave up her career, balanced it that way. Now they're all grown. We have a 29-year-old that he's a finance manager at GE and an R&D center up in Schenectady area. He's got a grandson. I've got my first grandson. I've got a little over a year old. He's doing his MBA at UNC. Really proud of him. His son is Purdue engineering student. He's out working on his masters at Johns Hopkins in engineering management and he works for Northrop Grumman up in Chicago. Then our youngest son is on the financial management program at GE Aerospace in Schenectady. My kids are doing, they're all doing extremely well and it couldn't be more happy. It's really interesting that there are a lot of GE families. There really are. I mean, it really is. You work there. Your sons are working there. That's really incredible. Why is that? I think familiarity, that's what they saw their dad doing growing up and whenever they came out of college, they were like, "Hey, to your point, they develop great leaders." They still develop great leaders. They still have wonderful programs for that entry level. They get to see four different jobs in the first two years and they get to see all aspects from commercial side of the business to manufacturing to in-control worship and planning and analysis. I think that's part of it. What do you see as your unfinished business now? She's looking ahead. You know, I 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 into our role and that we know they're going to be successful because we've spent time coaching and training and mentoring and preparing these folks for this position. Last question. What's one piece of advice you'd give to anyone who wants to improve as a leader? You know, I think the first and foremost thing is you've 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 the 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 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. The last couple of years because of her health, we had been doing the twin sp ires bedding at home with the grandkids and she wanted to go to the 150s. 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 to 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 frontline, 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. I wish she could too, David. I'm so sorry and thank you very much for the kind words. 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? What 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 WNBA. 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 flood this? How do I do my part? Because again, it was a group effort of the highest order. How do I not let my teammates down? So 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. [BLANK_AUDIO] [ Silence ]