#249: Zak Brown, CEO of McLaren Racing – Performance is everyone’s job

0:00Every person at McLaren knows how they contribute to putting performance on the race car, have a very much a performance mindset that everything you do at McLaren leads to performance on the race car. You know, you can have talented people and have the right strategy, yet still come up short. Today, we're digging into why that is and how to fix it. Welcome to How Leaders Lead. I'm David Novak, and every week I have conversations with the very best leaders in the world to help you become the best leader that you can be. My guest today is Zach Brown, the CEO of McLaren Racing. Now, McLaren is an iconic brand, and their racing division is one of Formula One's most popular and successful teams.

0:39In fact, they're the only team to have won racing's triple crown of the Indy 500, the 24-hour Le Mans, and the Monaco Grand Prix. And you know, it's funny. When we think about winning a race, we think about one guy on the podium spraying champagne everywhere, but Zach is leading a team of 1 ,300 people, and he wants each and every one of them to feel connected to that big mission, whether they're sitting in the driver's seat or sitting in the HR department. Now, if you want to win as a team, you've got to make sure everyone knows how their work contributes to the outcome. You're about to hear exactly how Zach does it, and trust me, his path of leadership is not what you'd expect.

1:22His story alone is worth the listen. So here's my conversation with my good friend and soon to be yours, Zach Brown.

1:34You know, you've got one of the most interesting jobs in the world, you know, running a Formula One team. But I want to start with the fan in you, you know, just what makes you a fan? What's the moment that you first fell in love with racing? I remember it like it was yesterday and I carry it with me today as far as not only my fandom for the sport, but how I personally engage with the fans and how I expect our team and drivers to engage with the fans. And that was 1981 Long Beach Grand Prix. I'm from Los Angeles. My mom and dad took my brother and I. And just because it was kind of the circus is in town.

2:13They didn't know anything about racing. I didn't know anything about racing, but a 10-year-old boy running around with his 8-year-old brother. The Long Beach Grand Prix, the sound, the speed. I remember the grandstand I was in. I remember the first racing driver I met. I remember who won, which was Alan Jones, the then current world champion. And some funny tiebacks to it, such as the gentleman, Montserrat, who's unfortunately since passed away, brought me into McLaren was a sponsor of that, uh, that racing team that won that day. So all sorts of cool stories, but it was when I was 10 years old and I just fell in love with racing at that point.

2:56And then the whole visceral experience, and I still have the race program to this day. I'm a bit of a hoarder of stuff. Always have been. I love that. And I got to ask you now, here you are after, you know, getting the passionate 10 years old, you're CEO of McLaren racing. What car are you racing to work with these days, Zach? And what do you drive to work? So I'm a, as you can imagine, I'm a car guy. So most days it's a, not that a Range Rover is boring, but it's not quite as exciting as the other cars in the collection, but I'm a big car collector. And you can see a variety of cars from, of course, McLaren's, as you would expect to cool Porsche 959s, the old Cobras from 1963.

3:39So I think the team gets a little bit of a kick out of, based on the noise that I make, what car did I drive to work? I love it. You know, there's been a surge of young fans coming into F1. And, you know, thanks to things like the Netflix show, Drive to Survive. What's been the most surprising part of that growth from your perspective as a leader? I think it's the amount of growth, which is great because when Netflix, when it was first presented to the sport, it was like, yeah, it's going to just kind of be another shoulder programming TV show. We do them all the time. It's been a game changer for the sport.

4:15Of course, there's a lot of contributors to it. But, you know, if I had a dollar for every time someone said Netflix got me into Formula One, it would be amazing. And what it did do, if you looked at where the sport was pre-Liberty's acquisition and where the sport needed help, was women, youth, and North America. If you kind of think about the geographic demographics of where Formula One needed to kind of pick up the pace, if you'd like. And Netflix, I think you got to give a lot of credit to now. The most often time I'm going through the airport, the most common comment I get is from a female who says, I never watched Formula One before and I love it.

4:59Or a husband who says, my daughter. It's been amazing the audience that Netflix has brought to Formula One. So we now have the world covered because North America was a weak spot for the sport for many years. And our demographic, which every sport wants, every consumer product wants, which is effectively what we are, is you want tomorrow's audience today, and that's the youth, and you want a diverse fan base. And when you come down to the almighty spending power of consumers, you want a nice balance that represents the world. And so So that's what's, I think what surprised me is it grabbed those audience and geographies, but how big it made it.

5:46It's like, we're not just on the map in North America now. We're big in North America and it's super cool. Yeah, it is cool. And for someone who's just getting into the sport, what's one detail or nuance that you should be paying attention to that'll give you a deeper appreciation of racing? Well, I think it's a great question because it's something that I've been a bit vocal with on Netflix and the broadcast. If we look at how we need to evolve our fans and grow our fans, our sport, the technology in it, the strategy behind it is insane, unlike any other sport. And I think you've got different levels of sophistication and interest in technology, so we need to kind of tee it up at the right level or right levels, depending on our audience.

6:41But if people had an even greater understanding and insight to what these race cars and race car drivers do, like the sheer speed, it's impossible to actually describe to someone how fast these race cars are. But there's ways you can do that. The amount of technology. We're talking terabytes. And I remember the first time I was like, I nod, like I know what a terabyte is. But actually, I didn't at the time. So I was like, kind of give me terabytes for dummies. And it was, Zach, that's like 10 million documents. It's like, wow, that's how much data we pull off of a race car to race weekend. So I think if we can now, that we've got the fans interested, they love the drama, the on track, the 20 drivers, the teams, but show them really how our sport operates, but pitch it at the right level of interest level.

7:35I think people will be fascinated if they knew kind of what I was looking at during a race on Pitwall. Well, you know, McLaren Racing is involved in more than just Formula One. You know, it'd be great if you could just give us a snapshot of the broader business and all you're responsible for as the CEO. We're a Formula One team. We're an IndyCar team, currently a Formula E team, and now going to become a World Endurance Championship team, which is Le Mans. I'll go back to why. So obviously, the center of our universe is Formula One and always will be. However, North America is one of, if not the most important market for most companies, huge fan base, great economy.

8:23And until Formula One took off in North America, we wanted to have a competitive difference to our other Formula One rivals with our fan base and with our corporate partners and have a bigger presence in North America. Even though Formula One's taken off in North America, we still want to be bigger in North America than our competition. So it's kind of the rationale behind why we're in IndyCar racing. The World Endurance Championship, which is the 24 Hours of Le Mans, we've just announced entry into, we're going to go into in 2027. That's where all the automotive sports car manufacturers play.

8:59You see our competitors, the Ferraris, the Lamborghinis, the Aston Martins, the Porsches. and it's a natural racing series for us to really collaborate closely with our automotive business. So that's why we're in the World Endurance Championship. You put those three together, you have what's called the Triple Crown, which were the only team to have ever won the Triple Crown, which is the Indy 500, the 24 Hours Le Mans, and the Monaco Grand Prix. But we did it in different eras. So kind of in different eras of our brand. We now are the only team in the world racing in those three huge, really the three biggest racing series.

9:40And so that offers us diversity of opportunity with fans, geographies, technologies, and for our corporate partners who might go, hey, Zach, this is a priority market for us, or we want to get closer to the automotive business. And so it's kind of like we're a restaurant, and if you have something more than just one cuisine on the menu, you got a greater chance to appeal to a bigger audience. You'll know something about that. You know, I'm curious. I just walked into that one. You're good. You're good. I can see why you're where you're at, you know, but you know, you mentioned F1, you know, Formula One taking a little longer to really develop here in the United States.

10:23Why was that? And then as a leader, how do you think about tapping into this opportunity now and really getting to explode here? Kind of three primary reasons why we hadn't been popular in North America. One, we never really found a permanent location dating back to the 70s. You were Long Beach, then you were Watkins Glen, then you were Dallas, then you were a parking lot in Vegas for two years, then you were Phoenix, then you took five, six, seven, eight years off. There was no Formula One North. Then we came back to Indianapolis. Then we had this tire gate, as we called it. So we didn't put on a good show.

11:06Then we disappeared again. So you're not going to have any sport be popular in North America if you're not there or you have no date or location equity. We also were a sport that was very exclusive or perceived to be very exclusive and not very inclusive. And that's where when Liberty came in and acquired the sport, they went, And, well, the sport's huge, but it doesn't really engage with its fan base like the NBAs, the NFLs, the MLBs, even the Premier Leagues. It was kind of look, but don't touch. And I think that was fine for a long time. But now when we're in an era of engagement, not awareness, we weren't engaging with our fans.

11:47We weren't letting them inside. We were look, don't touch. And so when Liberty bought it and you had the Netflix come in, we started kind of letting people see behind the curtains. People went, wow, this sport's awesome. I've never seen that before. I've never been close to it before. Then we get, you know, over time, three races started with Austin, which is one of the best Grand Prix's on our calendar. So, you know, you went from being not here exclusive to here inclusive and very focused on engagement. And I think what Formula One has learned and continuing to learn is sport is entertainment.

12:27And you'll hear sometimes in Formula One where we go, no, we're not entertainment. It's like, well, as far as I'm concerned, if you buy a ticket to sit in a seat to watch a movie, a motor race, a baseball game, a rock concert, a fireworks show, you're going to be entertained. And I think the sport has now embraced that there's an entertainment aspect of what we do. And the fans are responding accordingly. You know, it is taking off big time, but I want to take you back a little bit. You talked about how you first got into racing when you were 10 years old. That's when you found your passion. But do you have a story from your childhood that really kind of impacts the way how you lead today and want to take charge and get results?

13:14I think more than having one, I've got hundreds, if not thousands. And I was fortunate back when I was racing to hang out with successful people at an early age, people like yourself, because when you're racing cars, you've got CEOs around you. And so it was a great education for me. And I was always very interested. I had to fund my own racing career through sponsorship. So I needed to understand how business worked so I can understand how I could deliver motor racing sponsorships to build their business. So instead of kind of, you know, I'm an advocate of everyone go to school. That's what I told my kids.

13:56They're doing a great job. One's graduated and one's close. That wasn't my background, but I got mine by hanging out with CEOs of these great companies, seeing how they worked, what they did great, where they had some blind spots and learned along the way so much of what to do, what not to do. So I've kind of developed my own ways of working, if you'd like, but it just comes from years of being around successful individuals and quite frankly, some unsuccessful individuals to go, oh, I would do that. I wouldn't do that. And a lot of what I do today are things that I've seen and I've learned from my mentors.

14:38I've got an advisory board of 20 people that I had at my old company that I've always had, which is kind of a build on, surround yourself with great people, whether you work for them, they work for you or their mentors. And for us, they're very engaged. And I just learned a lot over the years. So how would you describe maybe in one sentence or two, just your formula for success? So I'm a classic workaholic, but there are many people that are workaholics, but that's probably a pretty common theme. And that's great most of the time. But as you'll know, that comes with some challenges and balance issues.

15:23So I run very hard. I've kind of done all the jobs myself, not on the technical side, but as far as, you know, I started my own business. So when you start your own business, you're your own receptionist, your own CEO, your own marketing director, all at financial director, all at the same time when you're the one and only employee. So I'm comfortable getting my hands dirty. Also very comfortable delegating. That was an art I needed to learn because when you're a one man band, you delegate to yourself. So that's something that I think I've matured at over the years and recognizing and being able to get people that are much better than you in aspects of the business.

16:04I believe in fun because who likes to be around miserable people? So I think the amount of push I put on my people and my team, if I didn't do that in a fun loving way, I think they wouldn't like me because I, I, I, I push hard. Uh, but by the way, I pushed myself hard. I lead by example, you know, no, no one's kind of sending more emails or on more plane flights than, than, than myself. But I, you know, the minute I'm not ribbing you, you're in trouble. You know, I, so, and I think I can get away with pushing really hard because I, I have a tremendous amount of respect for the team. It's my way of saying, I love you, but go, go, go, go, go.

16:52And then you got to obviously surround yourself with people that like that energy and aren't put off. But I've met a lot of rude people over the years and a lot of people are like, you know what? There's not enough money you could pay me to want to work for you or work with you. And so I've never wanted to be one of those guys that people didn't want to work with me. They may not love how much I push them all the time, but they know it's coming from a good place. And, you know, I'd like to think I take care of everyone because they do work their butt off. Hey, everyone. It's Kula from How Leaders Lead.

17:27And if you've watched our podcast for any number of episodes, you probably know that a common theme from all of the great leaders we interview is that they are active learners. They had this commitment to continuing to learn and grow so that they don't stay stagnant and so that they continue to see success in their leadership and in their life. This theme of active learning is so important. And it's what David's latest book, How Leaders Learn, is all about. It's all about helping you develop that skill of active learning so that you too can continue to see success in your leadership and in your life.

18:00The book is really entertaining. It pulls stories from some of our greatest podcast guests and pairs those stories with insights that you can incorporate into your leadership and into your life right away. Grab How Leaders Learn on Amazon or wherever books are sold. And I think you're really going to love it. You feel David's personality through the pages and through his storytelling. And it's a really powerful way to level up your leadership. You know, our mutual friend, Jeff Yang, told me that you had quite the journey in high school. Tell us about it. Yeah, he's heard all the stories. Yeah.

18:34As I alluded to earlier, I was not a fan of school. I went to a few different ones, never graduated the final one. And I was kind of a punk, a bit of a fighter, terrible grades. And I think looking back on it now, there's probably things that you take today for it. And if I was into something, you look at my report card, it was FFFFFA in baseball. I love baseball. DDDFFA in work experience. So I was a kid that, and I kind of still am today, if I love something, I was just awesome at it or tried to be awesome at it. And if it was something I didn't want to do, I just didn't show up. Now, you know, you can't do that in today's world.

19:27You got to take the good with the bad. But fortunately, there's a lot more good that comes along with the job than bad. But I think I was just a kid that wasn't interested in, you know, world history at 12 years old. And, you know, coming back to the fighting part that Jeff's probably alluding to in my final year of high school, which was my third high school, I wasn't known because I hadn't grown up through the system. So I was like, people didn't know me and I had a little altercation that ended up with me breaking the high school president, school president, not the student jaw in a fight. And that was, you know, I had some anger issues as a kid.

20:14So he's heard all of those stories. Now I'm a gentle teddy bear. I leave my competition on the racetrack. But yeah, I was probably one of those kids that in high school was most likely to end up in a bad place, wouldn't have been to end up running a Formula One team. And that's what you've done. And you talk about the importance of falling in love with what you did. And you made A's in doing that. And you fell in love with racing. And you became a race car driver. And what did competing behind the wheel teach you about leadership? I get asked that question often, and I think I've got a great answer because so many similarities.

20:53So if you think about what you do as a racing driver and what you do as a CEO, you start with got to surround yourself with great people. You're only as good as the race car that you have, the people that are building the race car. So I learned from being a racing driver. I raced with some great teams. I raced for some terrible teams. And it's all about the team. It's about the culture. It's about the loyalty. It's about how hard everyone works. It's about how smart they are. It's risk-taking. So you got people and team. But then as a racing driver, you need to know how to communicate well because you got to go, I'm feeling this in the race car.

21:32You also need to know when to shut up and listen because your engineers are telling you what you need to know to drive the race car better. So you have to have a great talent of communication, which is going out and coming in. You got to have trust. You're driving a race car at 200 miles an hour. If you're not confident what you've got going on around you, you can hurt yourself. You need to know risk versus reward. Do you make that pass? Well, it's going to cost you a position or you're going to hurt yourself. Same thing in business. What level of risk are you prepared to take? What are the consequences if you get it wrong?

22:12What's your fallback plan? Oh, okay, I missed the pass. I got repassed. But hey, it's halfway through the race. so I can go again versus a last lap pass where it's like, I got no chance now. And so that risk versus reward, communications, trusting people, surrounding yourself with great technology, and then being awesomely competitive. And then when you listen to a racing driver do a debrief, it sounds like all we do is complain because all we're trying to do is go faster. so you have 15 corners on a racetrack and you might be fine in turn one so you don't talk about turn one but if you're not good in turn two you spend all your time talking about how can i be better in turn two and is it under braking is getting on the throttle so you break down turn two into all these kind of it's not one corner a corner is got about 10 segments to it from breaking, coming off the breaking, turning and going back.

23:11And so taking that same mindset to business, and this is where I think my team likes how hard we push. I'm just trying to go a little bit faster today than I did yesterday. And then that means you got to be real with yourself. You got to be challenging each other. You got to be going, you know what? Yeah, we've won seven out of nine races, but we had a lot of close calls this weekend. And so we can sit here and pat ourselves on the back and go, we finished first and second. But actually we were pretty close in very small ways that, you know, no one will ever see that, you know, we knew that were going on.

23:47It could have been a human error because we put them in a position for human error to mechanical failures. And so taking that same approach to business that, yeah, business is great, but of course it can always be better. And if you can get in a mindset where you're just trying to do better every day, then that's what gets you kind of up and at it every day, pushing, pushing hard. So, you know, as you transitioned into business, Zach, what was the single biggest skill that you had to pick up and how'd you go about learning it? Probably. So I was always good at the racing side of the kind of social aspect of a business, right?

24:26You got to get out and you got to do deals and create partnerships and work with people. So I've always been a people person because I wasn't well-educated. The understanding the mechanical fiscal elements of business was something that, you know, when I was running my own business, my level of sophistication was, do more people owe me money than I owe them? Do I have more contracts today than I did yesterday? day. And that was kind of how I balanced the books. Obviously, I mean, it's a great start, but when I had private equity that invested in me, they started going, Zach, I bet you have some business that actually isn't good business.

25:09You think it's good business, but there's this thing called margin and there's things that go into margin. And so that was the part in business that when I had, it was Spire Capital who invested in my marketing agency, who really started to take me through an education of, I couldn't read a balance sheet, barely read a P &L. Balance sheets are still could be a bit tricky. And so getting that education, because ultimately data is hugely important to running business. It's not the end all be all, but the more data you get, it comes back to my being a racing driver, you get data, you can understand how to start moving the needles.

25:49And they helped me become a better business person by understanding the economics and mechanics of a business. And they were right. I had some accounts that maybe were smaller sponsorships, but were actually better accounts than the bigger sponsorships because the margins were out of balance. And so that was something I learned from the PE group that I carry with me today. And I'm now much more comfortable. And you did found this great marketing agency, Just Marketing International. and you built it into the largest motorsport marketing agency in the world. What was the pivotal moment, that pivotal growth decision that you made that took JMI from startup to the top in the industry?

26:35People were telling me early on in my career, hey, you're really good at this sponsorship stuff. You should stop racing. But when you're in the middle of a racing career, it's like, no, no, I'm a racing driver. all the sponsorship stuff is that enabled me to go racing. Then the last couple of years of my racing career were not fun at all. Coming back to you got to have fun. So if I'm not having fun at something, I'm losing interest from doing it. I was having fun in business because business was growing. I was winning in business. I was losing in racing. And then everyone's telling me you got to make the jump.

27:11When I eventually made the jump and stopped racing in 2000, business went from that to that because I was just totally focused and had no longer had the distraction of racing. I was able to give 110 % of my time to the business and get into full fun winning mode. That's when business took off. Yeah. And at JMI, you paired brands with, with, uh, uh, with racing and, and now you're doing the same at McLaren. You're, you're, you're, you're bringing in these sponsors and they're paying huge amounts to tie in with your great teams. You know, how do you look at negotiation? And, you know, are you one of these guys that looks for the win-win or are you just trying to kick everybody's ass?