Cuando Guenther Steiner, the team principal of the fledgling Haas F1 team, said the goal for its inaugural season in 2016 season was to score points (requiring them to finish in the top 10 at individual races), industry insiders shook their heads.
And with good reason. In past years, new F1 teams struggled to hit that target. The Lotus and Hispania teams both came and went without scoring a single point, and the Virgin/Marussia/Manor team only had one ninth place result to show for its then six seasons in the sport.
And the previous three teams to enter Formula One from scratch all went out of business.
Yet to everyone’s surprise (except those on the U.S.-based Haas F1 team) they scored 29 points, including a season-high fifth-place finish in just its second race at Bahrain. Heading into this weekend’s season finale in Abu Dhabi, the team has scored 47 points in 2017– and if things go particularly well in that race, could end the season in 6th place in the constructor’s championship.
So how has a startup racing team — one with a budget of less than half that of Mercedes, Ferrari, and Red Bull, and only 206 total employees — managed to beat the odds in such a highly competitive industry?
To find out, I talked with Guenther at Haas F1’s Kannapolis, NC headquarters about how the team was started, how he and Gene Haas (Haas Automation, the CNC machine tool company Gene founded, has annual revenues of over $1 billion) built the organization from scratch, about the team’s approach to hiring…
And as you’ll see, starting an F1 team is just like starting any other business.
Gene owned a successful NASCAR team (Stewart-Haas Racing) but he wasn’t looking to start an F1 team. So where did the idea come from?
I’ve been in racing for over 30 years. I came to the U.S. to start the NASCAR team for Red Bull. Then I started my own business.
But all the time I was thinking about an American F1 team. There wasn’t one, and the sport is so huge, I thought it would be a great opportunity for the right person.
So I wrote up a business plan. I knew all the people in the industry, I knew how to put a team together, I knew all the regulations… and I took it around to see if anyone was interested.
No one was. (Laughs.)
Then I talked with Joe Custer, who at the time was working with Gene on his NASCAR team. I didn’t know Gene but I did know Joe, so I asked him to see if Gene was interested. Gene said, “Let’s talk about it,” and we spoke over a period of two to two and a half years… and finally he said, “I want to do this.”
That’s a long time to talk about it.
It takes a lot of money to start an F1 team. You debería talk about it for a while. (Laughs.)
Deciding to do it is one thing. Actually doing it is another. Where did you start?
You start a race team the same way you start a “normal” business.
But there are a few exceptions. In F1 you need a license, which is not easy to get. Many people think they can start an F1 team, but you need to have a lot of ingredients in place — and most people lack one or two of the ingredients. Money is certainly one of them, but the biggest ingredient many people lack is the understanding of money y racing.
It’s hard to find people that have the amount of money needed y the experience in racing — but Gene has that. He has the NASCAR team. He knew what he was getting into.
It’s like if you and I decided to go to Silicon Valley and build a cell phone business. Good luck with that. We would fail. (Laughs.)
Gene understands it. He knew what he was doing.
The FIA (the licensing body for the sport) doesn’t just hand out licenses.
Getting a license definitely isn’t easy. You need all the credentials, you need the right people, you need the right money to show that you can sustain the business for a period of time, you need to provide financial guarantees… it’s extremely difficult.
So we started with that. We went to Switzerland to give our presentation, which was like going to school. I actually knew all the people sitting there because I had been in racing for so long… and now I had to tell them that we can do this. It was pretty strange. (Laughs.)
But that’s part of the process, and I think it’s a good process. It minimizes the turnover, which is good for the sport. If you look back, the last team to enter the sport that still exists is Sauber, and that team is 25 years old. All the other teams who came into the sport after them are gone.
So the FIA is naturally cautious about letting new teams in, not because they don’t want them… but because if they’re here and then gone, what good does that do for the sport? They’re very protective of the licenses, and for good reason.
So once you have a license…
Then we started doing what you do for any other business. You look for facilities. We went tto England to find facilities we could rent and made a short list of three.
Then Gene was coming over to look at those, and the day before we left we learned that Marussia was going bankrupt and having an auction. So we checked it out and Gene asked if they were selling the building. They said it was not part of the auction since they were leasing the building. So we contacted the owner and bought the building.
The ability to react is very important. Gene is very entrepreneurial. When he sees opportunities, he jumps on them.
Then I began contacting people to recruit staff, just like you would when you start any other company. You build staff, buy materials, get plans made… starting a race team is like starting any other business. It may be a little more complex, especially logistically, but if you’ve done it before and understand the complexity you can get it done.
How close was your original business plan to the actual execution?
Time-wise we were very close. You have to because in racing you cannot move the starting point. In a business you can say, “We planned to launch in January, but we need to push it back to March…” and that’s okay, especially if launching too soon means getting it wrong.
In F1, the first test is in Barcelona in February, and if you don’t show up… you fail. You guaranteed you would be there, both contractually and financially. So you can’t miss the date.
Financially we were a little bit over our estimate, simply because F1 is so complex and every year the costs go up because the complexity gets higher and higher. My business plan was based on a ’12 or ’13 car, and we started in 2016; that made a substantial difference.
Gene understood that, and he was okay with it.
You were a startup. You needed to build a team but you knew you weren’t going to win right away. So you had to have people willing to be part of building something, and also pick people that, say didn’t work for Mercedes where they’re used to having what appear to be unlimited resources… so how did you go about picking the right people?
First, I have good contacts. There are a few “base” people that I hadn’t worked with for a number of years, but I knew they were right for this job.
As for the people that came from big teams, who came “down” to a smaller team, for them it’s actually an “up” because first they could advance their careers. Some people would rather be the head of a mouse than the tail of a cat. (Laughs.)
Others wanted the chance to show their skills. On a big team, you might be one of 10 people. Here, we had only one: If you do something well, you’re noticed. A lot of people want that challenge.
That was the thing that was most attracted to people. We got very high quality people for a small team, especially considering some had to wonder if we would make it — after all, the last new teams had gone out of business. But once we signed Roman Grosjean, a well-established driver, that made us credible.
And the word quickly spread that we were doing the right things. Our base in England is in “Motorsport Valley,” and once people there saw that we were doing the right things… we could attract a great bunch of people.
And your turnover is surprisingly low.
You’re right. We haven’t lost a lot of people. We had some turnover, but that’s normal for racing. In racing, the neighbor’s grass always looks a little greener. (Laughs.
There are lots of great people who want this kind of challenge. They want to get up in the morning and work hard and be creative and have real authority and responsibility… and not just be part of a large group. They’re ambitious, and they love the sport.
Speaking of ambition, how do you set goals? You famously said you planned to score points the first season. How did you decide what you thought you could achieve?
Mostly it came from gut feel and experience. I knew what we had, and I knew what we could achieve.
We knew we couldn’t compete with Ferrari, Mercedes, or Red Bull. All the other teams, we felt we should be able to compete with. And we do. We are in the mix. We are not at the top end of the mix, but we are in the middle, and that was the first goal we set.
The next goal is always to move higher, but we know we can’t get into the top three. That’s why I hope F1 and the new owners try to create a bit more parity with cost control and by dividing the money a little bit more equally.
If that happens, we have a good chance because we are very efficient. We’re very lean.
At the moment, we cannot compete with the $400 million budgets. Do we really want to? No.
You’ve had ups and downs this year, which is to be expected. From a team morale perspective, is that tough to manage? Do people get too down, or too up?
Our ups and downs this year are better than last year’s, so there is that. (Laughs.)
What our people understand is that every team in the midfield has ups and downs. Williams finished on the podium in one race and finished last at the next one.
Why? If we knew the answers, we wouldn’t have ups and downs. (Laughs.)
Even the big teams have ups and downs. Sometimes Mercedes is a half second faster than Ferrari, then suddenly they’re a half second slower. Even they struggle to understand the car.
But to answer your question, our people are smart enough to understand that’s how racing works. Even if we have a long down period, the people who work here know that we try to do our best. They know we’re not struggling because we’re a bad team. They know we aren’t struggling because we’re are stupid.
It’s such a hard sport. You need to keep your people up, and I think we manage that pretty well.
How do you decide what to work on in terms of improvements?
In racing, it’s very simple: You analyze where you are weak, and then you keep on working.
We are recruiting staff in the areas of brake dynamics and aerodynamics, we now have a good group of people in terms of quality y quantity. We were a little bit weak last year in terms of quantity so we’ve upped our staffing.
We also need to get better with what I call tire management, which includes brake dynamics, and that is what we are recruiting for now.
But just like in any business, you determine your weakest areas and that is what you work on. That’s your job.
Is it harder to do that since you get engines from Ferrari and your your chassis from Dallara? Does that make finding ways to improve easier or harder?
I think it’s actually positive.
To produce a chassis, you can put an infrastructure in place, but Dallara has the infrastructure… and we don’t have to build a car and waste energy and thinking time on that. We use our time to make us go faster.
The chassis is part of it, but we designed that with people from Dallara, and our design team is embedded in Dallara’s Parma headquarters, so ultimately we are responsible.
Another example: We buy the suspensions from Ferrari. With suspensions the gains you can make are minimal, and Ferrari doesn’t have a bad one, by the way. They win races. If a Ferrari suspension isn’t good enough for us, I think we’re dreaming. (Laughs.)
It doesn’t make sense to spend more energy and more money than necessary for something you can buy.
Exactly. Take the steering rack. It’s incredibly complex. If we decide to design our own, we need designers, engineers, test equipment… and if you make it perfect, you wind up with the same steering rack as Ferrari. Steering racks are already at such a high level there are really no gains to be made.
That was part of our business plan. Gene is very good at saying, “Why would we make this if we can buy it, especially if we can’t make a better one?” There is no low hanging fruit involved in designing your own steering rack.
That means you have to be humble enough to say, “I’m not going to do better — and I have other things I need to focus on.”
Some people would say, though, “If it wasn’t built here, it isn’t good enough.”
It doesn’t take humility to realize you can’t do something better. It’s arrogant to sometimes think you can do something better.
It’s not being humble, it’s being intelligent. Sometimes you need to think simple.
Let’s go back to the first year. What was the biggest challenge?
Not many people have asked me that. Another way to ask that is, “What would you do differently?”
Not much. I wouldn’t change a lot because I think we did pretty well based on what we hoped to achieve. We didn’t waste money. There is nothing where I can say, “Hey, we really screwed up here.”
But I should say that. I’ve been doing this for a long time. If there were a number of things we should have done differently, I shouldn’t be in the job. (Laughs.)
That’s the benefit of having time and experience in a variety of aspects of the sport.
We always did what we said we were going to do. We said we would be ready for the first test. We said we would be ready for the first race. And we were.
This year we were more ready, if that exists, and we were better organized… but that’s part of growing. You cannot come in and be perfect. People have to gel. Systems have to gel. An F1 team is highly complex: Not just the car but the whole organization, all the logistics… it’s very complicated.
We said we wanted to get points the first year. Many people were laughing at the idea we would score points in the first year. They felt it was unrealistic. But we did it. We are not shouting about it, but we did it.
We said we want to get more points the second year. We just try to do what we say we will do.
What is the plan for next year?
To score even more points and keep getting better.
That’s the only thing we can do. As soon as you stand still in F1, you quickly go backwards. That’s true in motor racing in general but especially in F1 because there are more people and more money and more exposure. Everything is bigger.
The pace of it is brutal.
Do you worry about people burning out because of the relentless pressure?
People come into this sport understanding that, but it is something we try hard to manage.
And it will only get tougher. Next year there will be 21 races, and I think someday we’ll get to between 22 and 24 races per season. More than that would be extremely difficult in terms of logistics. No team is is ready for that.
We’re slowly building our team to take some of that pressure off of people. This year we built a group of five to six people that can be drafted into the race team (the travel team, so to speak). They primarily work at the shop, but they can fill in at between two and six races a year.
We’re experimenting with that, and if we have more races in the future we’ll need to do more of that.
A race weekend takes up a lot more than a weekend.
Absolutely. And keep in mind I have nothing against more races as long as we organize and plan any expansion to the schedule well.
For example, we normally go out on the Saturday prior to set everything up. I would like for F1 to not allow teams to set up their garages before Tuesday. We can do it in less days… but right now, if your neighbor does it, you need to do it. (Laughs.)
I don’t want to make this a “cheap” series, but there are things we could do more simply if we all agreed.
No one wants to be second in F1 at anything. We all want to have the best pit gun, the best pit stand… we’re all really competitive.
But some of the things that don’t change the competition at all, we can certainly simplify.
Haas is on the car. You could get other sponsors, but is that intentional because Gene is growing the presence of Haas Automation in Europe?
It’s half and half. We welcome sponsors, but it needs to be the right deal.
Gene does want to promote his company and give it more international visibility, so he’s fine doing it this way for a few years until the right sponsors come along that appreciate what we’re doing.
We’re thinking long term.
The visible product is the car, but racing is a people sport. How much of your job is focused on leadership, development, etc?
Quite a bit — and sometimes I feel I don’t do enough. I’m traveling so much; if I had more time in the office I would do that a lot more.
But on the other hand, we have good people. They don’t need much supervision.
We have meetings and communicate a lot, and for a two year-old company, we’re well structured. We are on two continents and in three countries — if your structure isn’t half decent, you’re a mess. (Laughs.)
Leadership is important, but the quality of people matters more. They take care of loose ends. They raise issues and solve problems. That’s something people underestimate in business; Knowing what your colleague is doing. Make things visible, so people don’t waste time asking the same question three times. People don’t have to ask when things are visible. When you know things are happening, you don’t waste time figuring things out.
We try hard to do that, but there’s still a lot of room to improve.
Speaking of what you know: You get tons of data from the car. How do you sift through all that to figure out what’s important, and what’s not?
That’s an area we can definitely improve. We have lots of data, but we can’t digest it all. We need more people to do that.
A typical example in F1 are the tires. We have a lot of data but we just don’t have the people-power to sift through and make a workable model out of that data.
That’s an area where we’re definitely strengthening our team next year.
We have an awful lot of data. Even the big teams, because there is so much there, you can computerize some of the sifting… but still, a human being needs to make a decision regarding what you should and shouldn’t do.
If you’re analytical you can always find more things you feel you could do better… and forget all the things you do well. How do you manage that?
People in racing understand that if you do well, you deserve it. You know where your car is. If you do a good job, you finish in the position you should finish in.
If you do a fantastic job, you can gain a spot or two. We did a very good job in Japan, where we finished eighth and ninth. In Japan it’s almost impossible to overtake; it has the second highest delta (speed difference) needed to overtake on the calendar, and we overtook a Williams.
But you have to focus on what you can do better. Doing better doesn’t mean you did something badly, it just means there is room for improvement. That’s what you need to focus on.
What is your favorite part of your job?
That’s a good question. Whoa. (Laughs.)
It’s the challenge to do better. What can we do next? We need to do well this year. We need to prepare for next year even though this season isn’t over.
There is not one thing I enjoy most or enjoy least — it’s the combination of bringing all these loose ends together to make something that works.
I enjoy racing is because on Friday, Saturday, and Sunday there is an immediate challenge. That gives me an adrenaline kick. That is in the end why you do it — for the racing. But getting to that point is just as fun.
To be successful, you need people who feel the same way. Now that you’re no longer a startup, when you hire someone, aside from technical skills, what do you look for?
I personally interview every person we hire. We do it by video if necessary, it’s just for 10 or 20 minutes… my goal is to see if they will fit well in the team.
Once candidates get to me, technically we know they can do the job. They’ve interviewed at two stations, if not three. So I just want to see if I think the person would fit, if his other personality will fit the spirit of the team.
After a while you get very good at filtering out people. Or, if you have questions, you can talk to the people they will work with. Maybe it’s how to overcome a lack of personality — or too much personality — and how we will manage that.
And I see if they want to come here for the right reasons. Like we discussed, we are different from the big teams. Why doesn’t everyone want to go to Mercedes and win world championships? Because we’re all different.
Our people would like to win a championship, too… but they’d also want to be a part of a group where they can make a real difference.
That’s one of the best things about working for a lean organization.
Some of our employees have been in motor sports for 20 to 30 years. They grew up in racing, and they like working here because they have responsibility and accountability. They like that we treat people fairly.
If you do a good job, you’re recognized. You matter.
And you can make a difference.
That’s true for me as well. I’ve been in motor sports for over 30 years, and I get to put all of that experience into this role and this team. I get to use everything I’ve learned.
That’s a very cool thing.