Why people bet on certain horses?

The finest thoroughbred horses line up at the Meydan for 2019 Dubai World Cup. A staggering $12 million is on the line - the highest pot in horse racing history. The bell rings and the gates open as the packed stadium watches in silence, some clinching their teeth. 250 meters to go and it looks like the dominant Gronkowski is heading for triumph. Thundersnow, is if possessed, covers tremendous ground, galloping at the speed of light. It’s neck and neck now, as the race reaches its final furlong. The finishing line approaches, with only centimeters separating the two worthy opponents. Thundersnow extends its neck to take the prize, becoming the first horse in history to win the World Cup twice. 

These few centimeters were not luck. They were the byproduct of a world-class operation, with perfection across each of its verticals – be it the horse, jockey, trainer, or team. The gamblers expect nothing less – largely choosing logic over a blind bet. 

Working in the tech industry, I see many parallels between horse betting and IT. The horse is your product, with the jockey and coaches as your founder and team. The people betting on your product are the venture capitalists. 

With this comparison in mind, I wish to present some of the key characteristics of a winning horse and team from the lens for a professional gambler, in hopes that the reasoning behind their bets can help you understand why capitalists chose certain products and companies over others. Much like a flagship product, the horse must possess certain traits that make it an attractive proposition: 

1.    Track record: A strong indicator of success is how the horse has performed historically. How has it fared in the last few races? On different racetracks? Under different wind speeds and temperatures? Similarly, a VC will look at a business’s ability to deliver quality time and time again, in different verticals and markets. An attractive company to investors will show consistency, thereby developing trust that the funding will reap rewards. 

2.    Speed: The number one statistic on a gambler’s mind will be the horses speed. Be it at the start to gain a clear lead, in the middle to maintain position, or for one last push at the end. Each of these sections has a complex strategy attached to it, perfected through thousands of hours of training. The VC will look for similar characteristics when evaluating your product i.e. the go-to market strategy, pace of delivery, new feature and integration timelines, and capacity to scale. 

3.    Agility:  Agility in horses is the ability to outperform regardless of circumstance. Turning ability when in close contact with other horses, the give and take of control with the rider during various end points, and improvisation during unforeseen events are some examples. Modern VCs always invest in products which work in an agile, customizable way. It can adapt and outperform in changing conditions and take bold steps while not losing sight of the main goal. 

4.    Appearance: As human beings, we automatically associate positivity and confidence with beauty. We are just wired that way and the gambler is no different. Statistics have shown that the body and looks along with the bloodline play a large impact on the number of bets a horse receives. As they say, the first impression is the last. The UI and UX are seen in a similar way by the VC, both at a conscious and unconscious level. 

5.    Spirit: Perhaps the most important characteristic is its heart. With that self-belief in its abilities comes the courage to overcome all circumstances, the motivation to power through and go beyond the norms of racing to deliver a uniquely spectacular show. After all, racing is all about winning! The VC looks for a similar, “special something” in a product to filter through the sea of offerings. It judges the capacity of the product to go to the next level through its investment, the unique edge that it holds, and confidence in itself as something that can impact the world, and bets on the products ability to truly be a winner. 

The logical gambler evaluates not only the horse while choosing his bets, but meticulously studies the associated jockey and team. Here are the some of the core features it looks for: 

1.    Outstanding Jockey: The role of the jockey is highly complex – with many variables to consider at a given moment. He has to balance his weight and movements very precisely, acknowledging full well that even the slightest shift can affect the balance and speed of the horse. He knows exactly the right time to deliver a command and what results it’s going to have. The jockey also has to form a very deep relationship with the horse, so that in most scenarios, the horse makes the best possible decision by default. The jockey and horse are in a sense completely synchronized. VCs are interested in exactly this kind of leader, with great foresight and on-spot decision-making abilities, as well as mentorship capacity to distill knowledge to its workers. 

2.    Excellent Team: The Jockey is just one key component of the formula that includes so many other stakeholders. The trainer, the breeder, the farm managers are just some examples. All of these components play an important part in the core machinery that goes into producing a winning horse. Startups are no different, with the modern ideology moving away from the one-man-shows to a collective uplift of an entire organization, with excellence at every step. All of this is judged by VCs when investing in your company, ensuring that there is competence at every level. 

3.    No Fear: Of course, all of this would be in vain if the jockey and horse fail to let go of their fears. Sometimes, certain risks have to be taken. All or nothing moments. New strategies have to be tried out on the fly. This has proven to be an integral part of all the legendary horse racing teams, and it is only these that have their names jotted down in history. Founders and teams who choose to go down the “No Fear” route find new territories of innovation and thought, of excellence beyond comparison. It is the secret sauce.