ALEX TAI is the team principal of Formula E team Virgin Racing. Tai, who was born on a Royal Air Force base in Germany in '66, started his career with Virgin as a pilot for Virgin Atlantic in '95. He played an integral part in the '04 launch of Virgin Galactic and became its chief operating officer later that year. When Virgin Group Founder Richard Branson decided to join F1 ahead of the '10 season, Tai was named team principal. After two rather unsuccessful years, Virgin left the sport at the end of the '11 season. However, the name Virgin Racing has found a new motorsports home in the first fully-electric racing series, which made its debut in September. Tai talked to SBD Global about the decision to join the series, its relevance for road cars, initial hesitation of sponsors and working for a billionaire.
On why Virgin Group joined Formula E...
Alex Tai:
First of all the Virgin Group is a wide variety of various different companies. We have something like 430 different trading organizations around the world. From a marketing perspective, we have an awful lot of demographic and an awful lot of geography to cover, so we look for activations. We look for sports properties and rights, which cover a global basis. This is why we liked Formula One. We do like to cover the entire planet because we get much more impact. Formula E gives us an opportunity to get involved at the ground level on a worldwide activating sports rights platform. We believe that the reach will be quite significant, even in the first year we are looking at having access to something like 1.1 billion homes all around the globe. And the message it portrays is exactly the one we want to associate with. There were some issues with Formula One in terms of getting credentials. We thought that we could try it from inside by having a team. That didn’t work out for us. Also we thought there would be a cost cap in place. [F1] was a very interesting sporting platform given that it reaches over 1.7 billion homes around the world. It has a great following. We believe [Formula E] is possibly going in the same direction.
On attracting fans...
Tai: We believe that through activation on social media platforms, making it much more fan friendly and more interactive, [Formula E] will appeal to a different audience. I think it's going to be a much younger audience and possibly an audience that normally hasn't been attracted to Formula One. The first requirement is to provide a compelling and entertaining platform. That is something that we absolutely must do. The organizers, the FIA, all partners, teams and drivers, everyone understands that. But really it’s up to us to make sure that we don’t constrain it. In exactly the same way a referee at a football match can kill the game, we can kill the game if the regulations and the sport itself is not policed properly. That's the biggest challenge.
On making sure Formula E is compelling...
Tai: We are looking at format changes all the time. My input is it needs to be very clear. It shouldn’t be too confusing. It’s possible to confuse people by being too clever. I think the format has to be fair. It has to give the ability for the better drivers to win, but it also needs to be kept close so we don’t have one team sort of dominate, which becomes again very boring. One of the biggest issues these days in other Formula series is that if you have a dominant car then that will win. In Formula E there is the requirement that you have to sell any technology to the other teams. If we develop a car which is so much quicker than everyone else’s car then we need to sell that car to any of the other teams that apply to us. This means that you don’t have a dominant team. The Mercedes team of Formula E would have to sell their technology, all of their technology and not just their engine, to any of the other teams, which means it gets down to the competition of the drivers.
On the hesitation of sponsors to join the series...
Tai: Initially it’s unlikely that there will be many sponsors. You need to have compelling numbers to prove a sponsorship. An awful lot of sponsors will say, "Show me the advertising value equivalency of the media platform. Show me the demographics of the fan base," before they want to make an investment. So we need to make sure it’s relevant to them. We are talking to a huge number of them and very rightly so they say, "Let's see what happens in the first few races. Let's see how many people it attracts." Then they’ll start coming in terms of sponsorship dollars. Very early on it’s really down to the equity investors and team owners to take that risk. They are rolling the dice on the basis that it will be a compelling platform. It’s three to four million sterling a year in terms of the cost of a team. Some spend more, some spend less. There’s a cost cap on the basic elements. We probably spend more on the commercialization of it. We’ll spend more on the activation. These are elements which are not regulated. People can spend as much money as they want on the development of the car but then they have to sell those developments of the car to other people. I think what will attract some of our sponsors, some of our partners, is the fact that they want to develop that technology with us. Samsung, LG and GE all of them have a relevance in this technology and they may want to join us on the technical side.
On the relevance of Formula E's technology to road cars...
Tai: The sort of technology that we are developing in Formula E has been regulated by the teams just to those ones which are going to be more likely to blow through to the car manufacturers, which are making parts for cars for you and I. In Formula One the sort of things they spend the most amounts of money on are double diffusers, arrow design and superalloys, which are very light, but never make it to us. If we are developing the energy density of the battery of our car, and people tell me that we can increase it by more than 8 percent a year, then it has a direct effect on how far you can go in your electric vehicle before you have to stop for another charge. That’s much more relevant than a double diffuser on the back of your car. We want this technology to flow down into the vehicles on the streets. The systems that have relevance to the electric vehicle market are the same ones that are being developed in Formula E.
On Richard Branson's involvement in the Formula E program...
Tai: He loves this. Primarily he’s an environmentalist who very much cares about the planet. He knows that a lot of industries and companies have a negative impact on the planet and he wants to do something about it. He believes that we need to find ways to work much more in harmony with the planet, and certainly electric vehicles are something that he believes are the right way forward. There are huge benefits to the planet and our own health. He’s very involved from that perspective. I hear from him an awful lot. I work directly into him in this program. I think I get more attention than most of the other CEOs in the group.
Hangin' With runs each Friday in SBD Global.
