A Data-Driven Approach to Finding the Right Horse with EQB, Inc.’s Jeffrey A. Seder

September 16, 2015

John Shegerian: Welcome back to Green Is Good and we’re so excited to have with us today Jeffrey Seder. He’s the “Entremanure” or really the CEO of EQB. You can find EQB at www.EQB.com. Welcome to Green Is Good, Jeffrey Seder.

Jeff Seder: Thank you. Happy to be here.

John Shegerian: Hey Jeffrey, I was so excited to do this interview with you because I heard you before on the radio and in other interviews and you are truly doing unique and amazing work in the field of horse racing and data analytics, and so before we get talking about your company and some of your massive recent successes with the Kentucky Derby and the Triple Crown winner – American Pharoah – I would like you to share the Jeffrey Seder story. How did you even get or come up with this business enterprise of consulting and helping the greatest stables in America choose the best horses?

Jeff Seder: Well, I took a ride one day in May at a rental stable in Southborough, Massachusetts – while I was in law school – with a girlfriend and I fell in love with horses, and I just went crazy with it, and I ended up owning a horse and learning how to ride a racehorse and this and that and the other. Then I was getting JD-MBA degrees at Harvard, the law and business.

John Shegerian: Yeah.

Jeff Seder: And my thesis advisor was Archibald Cox. You may remember him from the massacre in the Nixon and Watergate.

John Shegerian: Yup. Sure do.

Jeff Seder: If you’re old enough. And I hadn’t done my thesis by like March. I didn’t even have a topic. So I had to sit in his office and he said, “What are you working on?” and I had to admit, “Nothing.” And he said, “Well, what are you interested in?” and I looked down and I said, “Horses,” and I thought he was going to kill me. And instead, he reached – his office was in the stacks way down deep in the library, a little desk in the middle of a corner of dark library stacks – and he reached around behind him and he took this huge book out from behind him, and he clopped it on the desk, and the dust rose up, and he said, “This is the statute that governs horse racing in Massachusetts and I don’t think anyone in Harvard has ever looked at it so why don’t you look at it?” And I went crazy looking at it. I studied it, and I went in the archives in Boston and the capital there, and I went to the racetrack at Suffolk Downs, and I ended up getting an “A” on it, and I learned a lot. I decided I really wanted to do something with horses, and I loved animals and outside. I was too big to be a jockey and I didn’t know anybody in the sport. I didn’t have any money, really, and I didn’t have any connections, so I couldn’t own them or train them. I thought, “Well, I know stuff they don’t know.” I’m looking at what they’re doing, and they’ve been doing it the same way for 300 years.

John Shegerian: Whoa.

Jeff Seder: And I can bring science and modern management. So I decided I would try to do that. I graduated in 1976, when the East Germans broke on to the scene with all these medals and scared the shit out of everybody. United States and Russia used to compete for medals, and all of a sudden this little country was doing it supposedly with mad scientists getting kindergarteners and training them and providing them with gold and science stuff. The United States created a response – and I was a young lawyer. I was part of creating what became the United States Olympic Sports Medicine Committee, so I got to work with the guys in biomechanics and exercise physiology and all the sports science stuff. Then I broke away to do it for racehorses, and that’s how it started. Way back. I was doing Moneyball before Moneyball.

John Shegerian: You were doing Moneyball before, and you were doing it for racehorses.

Jeff Seder: Yeah, for racehorses. It took a long time in the – we had professors from MIT and doctors from Harvard and veterinarians from the University of Pennsylvania Veterinary School and New Bolton Center, and we had statisticians, and we had biomechanist from the United States Olympic Sports Medicine Committee when it was just starting. I put together a hell of a team and we did a lot of work. We spent a lot of time and a lot of money and it finally came together after a long time. Meanwhile, I had another job. I was still leveraging my house, so I could afford to do the research.

John Shegerian: Ah.

Jeff Seder: Otherwise, I would never have done it.

John Shegerian: Yeah.

Jeff Seder: And what separates me from a lot of the other guys who are trying to do what I’m doing is it takes huge databases, and it took a lot of time and a lot of money. I’m probably in the major referee veterinary journals on – when I do a study – I mean, some people do 10 horses on a treadmill and ponies on a lab in a treadmill.

John Shegerian: Yeah.

Jeff Seder: I was doing 10,000 major racehorses at major racetracks, following every split of the races over 10 years and publishing scientific papers about it and getting them in referee journals, even though I didn’t have a veterinary degree, because I had all these luminaries in different disciplines at major universities designing and carrying out the studies. We did some good work.

John Shegerian: Wow. So, really, what sets you apart – and I want to talk about what you exactly do for our audience out there – but as you were doing a day job, but for years you amassed all this science and all this data that no one else can do overnight if they want to go in and say, “I want to be the next Jeffrey Seder”; you can’t do it overnight. This is a lifetime of work you’ve put together to get you to this point that you are today.

Jeff Seder: Yes, it is. There aren’t that many American Pharaohs; there aren’t that many Kentucky Derby winners, so if you want to have a lot of them and know what they looked like when they were babies, you have to pay your dues and put in the time and you have to look at a lot of horses.

John Shegerian: Right. Talk a little bit about what you do at EQB. Tell our listeners what you do and then we’ll get more into the American Pharaoh story, because there are a lot of questions I want to ask you about that.

Jeff Seder: It’s not just the difference, knowing the difference between an ordinary horse and a great horse because that is – a lot of good horsemen could do that. But it’s to know the difference between a good horse and a great horse that gets really tough.

John Shegerian: Yeah.

Jeff Seder: Well, my job is to bring to somebody A. when we’re looking to buy a horse, young horses.

John Shegerian: Yeah.

Jeff Seder: Or breed them. By the way we’re also – our major client we’ve been working with for 10 years has also become the leading breeder two years in a row in the United States and a leading racing stable. Eclipse, that’s the brand.

John Shegerian: Really? Wow.

Jeff Seder: But what we do is we have people who are really good at traditional stuff, which is how the horse is put together, a confirmation in the pedigree and all the traditional horsing chip between trainers and jockey. And, on top of that, we overlay whatever is a practical noninvasive use of science and medicine. So we use slow motion photography, and we digitize it to look at how they run and all the different parts of the stride. We also look inside the horse at the size and the shape of the major organs that affect that exercise physiology – the heart, the lungs, the spleen. We look at the size and shape of the windpipe. We look at the functioning of their larynx and their epiglottis because – I don’t want to get too technical on the radio but a lot, a lot of horses when they are under stress in a race they are breathing – the larynx and the epiglottis start interfering with the air flow and it stops them. That’s why a lot of horses will go a short distance and then kind of just can’t go any further.

John Shegerian: It’s from an entrapped epiglottis.

Jeff Seder: Yeah. Things like that. Or just other exercise intolerances in the airway stuff. So there are ways to look for that and help predict it and that’s another thing we do on the horse. Then once somebody own the – another thing we can do is we can look at horses that ran four-and-a-half furlongs early as a two-yea- old and won the race, which may or may not mean anything, and we can know who will be able to – as a three-year-old – go a mile-and-a-quarter in the Kentucky Derby in a competitive time by extrapolating how their fractions and how they run, that logarithmic fatigue curve and their fatigue patterns, which was developed by the United States Olympic Committee to look at things like repetitive motion – stuff like swimming – to see if somebody – younger kids – would be swimming 25 yards, extrapolating it out to what they might be capable at at 100 yards for example. And it works, and we’ve been doing that for – we developed huge databases so we know the logarithmic – the shape of the logarithmic curves and how it changes as they get older so we can extrapolate what these young horses will do. So when a horse wins by 10 lengths in its first start in a very short race, when it’s very young, we know whether it’s something that we want to try to buy or whether it’s no big deal, and when it gets a little older, it’s not going to be – at long distances it’s no big deal. And by the way like 90 percent of them are no big deal.

John Shegerian: Right.

Jeff Seder: You don’t want to buy them even though they look great in that first race. But then there’s the rare one. So we help on that, buying them off the track. We help buy them at auctions. Once they have the horse, we can continue to help in what kind of race, what distance they’re most appropriate for and what surface. We can spot early lamenesses before it’s really showing up any other way, the tools that we have. Then when they go to the breeding shed, we can help know who they should be breeding to because we have massive databases of who is a match in terms of the heart and the lungs and the spleens and all the other major organs and the way they’re put together. So it’s been successful – I’d say – in helping one of our major clients over 10 years become the leading racing owner, winner of races and the leading breeder in the United States two years in a row.

John Shegerian: So talk about the success. And I know you’re a very humble guy. I know you and I have shared emails and stuff. But, I mean, talk a little bit – I want our listeners to hear – because we only have a limited time today – how successful are you? How many of the leading stables do you consult to, and how do they now really need to leverage your data otherwise they will be behind the other stables? How big are you now and how successful have you become?

Jeff Seder: Well, we’re a boutique, but we do work for six of the top 10 stables in the United States.

John Shegerian: Unbelievable.

Jeff Seder: And our record at graded stakes races – I don’t know how many people know it but there’s an international committee that grades stakes – those are the top races. So there are a zillion stakes races out there. They could be for $10,000 in Okefenokee Downs.

John Shegerian: Right.

Jeff Seder: The graded stakes are much – there are only 500 in the whole world. There are 100 of them in the entire world, grade one stakes like the Kentucky Derby or World Championships and there may be a little over half of those in the United States. Less than one-half of 1 percent of the horses can win those kinds of stakes. It’s usually a once in a lifetime thing. We’ve had three or four just in the Kentucky Derby that we bought for clients every year the last four or five years. And we’ve had 37 grade one wins in the last five or six years.

John Shegerian: Wow.

Jeff Seder: And I don’t think there is anybody else that has come close to that track record. And we buy – by the way – for these clients we are buying at below average of the auctions where we go to. We’re not buying the sale toppers that everybody else is.

John Shegerian: Right. You’re watching their pocketbooks at the same time.

Jeff Seder: Well yeah. It’s not on purpose, but it just turns out that way. I see all the time million dollar horses that you couldn’t give me. I found a hole in them and I don’t want them and they don’t run. They don’t run.

John Shegerian: Wow. And for our listeners who just turned in, we’ve got Jeffrey Seder on. He’s the CEO. He’s really the visionary and the genius behind EQB. To learn more about EQB, go to www.EQB.com. Now we’re going to get to what our listeners really want to talk about. They want to learn about American Pharaoh. I heard you, Jeffrey, before the Triple Crown ever took place. Before any of the races I heard you in an interview, and I want you to share part of this with – this is how fascinating and how visionary you really were. You – on this interview I heard before any of the races were run – said, “His lungs are bigger, his left ventricle is bigger, his heart is bigger,” and you even talked about his knees and how they don’t buckle back when he gallops – his front knees – which most horses their knees buckle back. Can you share with our listeners all the data points that you knew? The only thing that you said then before any of the races were run is that, “We don’t how he’s going to be in the head when he’s roughed up a little bit, but physically, he’s a super horse.”

Jeff Seder: Yeah, we didn’t know when he had to run against the really top in the world, and they look each other in the eye going up the stretch like firing line.

John Shegerian: Yeah.

Jeff Seder: And at the end of that Kentucky Derby, some horses will just back off, and you don’t really know ‘til they’re challenged whether they’re going to.

John Shegerian: But I want to talk about lungs, hearts and knee buckling, then I’m going to talk about the Derby, specifically, because I have some questions for you. But talk a little bit about testing. You had tested – like you said earlier – part of EQB’s business is you know the lung size, the heart size, the knee buckling. Talk a little bit about Pharaoh and how he was truly a super horse based on your data.

Jeff Seder: I think that a regular horseman would have thought he was a really beautiful specimen. He had all the traditional stuff. He looked the part. But when you watched him run his stride was much longer and easier at the same velocity. He would fool you about how fast he was running.

John Shegerian: Right.

Jeff Seder: So you wouldn’t really know unless you had a stopwatch, and then you’d think maybe you did it wrong. I watched. I just completed an auction here. I just watched 1,200 horses at racing speeds that are at an auction, and I do that all the time. I watched many thousands of horses, and I take them apart in slow motion, and I digitize them, and I’m looking for the things that go wrong. Their ankles wobble and oscillate, so you don’t know what angle their foot will be when they put it down. It would bear about 8,000 pounds. They’re 1,000 pounds going 40-miles-an-hour. There is at least 8,000 pounds on their leg when they do it right. When they put the foot down wrong, they usually chip this or it hurts or they get tired or they scrape things, and when they run, they put all their weight in their foreleg, the whole leg kind of buckles and it bends the wrong way in most racehorses. They wing, they don’t bring the legs straight back and straight forward. They wing. It kind of loops around a lot of them. Or they go forward with their knee kind of, and then when the knee gets to the end of the knee, then the rest of the leg comes upward instead of sweeping it from the shoulder, so it’s a low clean action. They don’t reach under themselves all the way with their rear feet – like a greyhound – so that the rear feet are literally coming ahead of where their girth is before it touches the ground. And a horse like Pharaoh, when he puts down his two hind legs, before the front legs come down, the whole horse is going upward like a rocket. It’s an angle. There is so much power there to be able to push this 1,000 pounds, and it’s not just push forward, but it’s push upwards. So the stride is longer, so he gets a foot or two more than the horse next to him with exactly the same effort every single stride when he tried. Plus, his spleen is much bigger. They were cheating in the Olympics – the Russians at one point spurred by blood doping themselves. They would give themselves transfusions of red blood cells before the race, so they would have a higher blood [inaudible] and higher red blood cells to carry the oxygen. But in a horse like that, the spleen contracts. It’s a huge organ and it can dump almost double the red blood cell volume, and this horse has a huge spleen, so he literally is just blood doping himself when he comes out of the starting gate and that spleen contracts.

John Shegerian: Wow.

Jeff Seder: And then he’s got a heart that is more efficient. It’s bigger, the muscle quality is different, the shape of it is different, the chambers are bigger, the thickness of the walls is bigger. I mean, usually, we don’t give details of anything about our clients or what we do for them.

John Shegerian: Right.

Jeff Seder: But I don’t see how it can hurt for people to know that this horse is so special, especially in ways you can’t even see special too.

John Shegerian: Wow.

Jeff Seder: Yeah.

John Shegerian: Wow.

Jeff Seder: And I think he can pass it on, because we see that when they’re that – that’s how we help people in the breeding and we help participate in helping Ramsey become the leading breeder of the United States because we’re picking out these very special physical specimens and that’s what you should want to breed to.

John Shegerian: Right.

Jeff Seder: A horse that has no holes in him. Not one that won one race and had a break year. One that not only was able to win but had everything that had an extra chance at getting the advantages physically.

John Shegerian: And just to be clear for our listeners to hear this part, Jeffrey, you were the ones who told the Zayats, “You cannot sell this horse at the auction. You have to buy him back.”

Jeff Seder: Well, they were our clients and our job there was to find them yearlings, tell them who we think they should buy and stuff.

John Shegerian: Right.

Jeff Seder: So our report to them was, “This is what we’re looking for, this is the one you own,” and I know he was going through all kinds of things. They had a bankruptcy within the year or so of that.

John Shegerian: Yeah.

Jeff Seder: All kinds. So there was some pressure to sell. But a good horseman would have told them that this was a great beautiful yearling, but I think our opinion had a little more weight because it was beyond that. It’s not just really one of the best looking horses you can find, it has got everything else that is so rare, even in the good-looking horses. So that was our report. “We can’t give you a list of who to buy because you should take this one home.” So we did. And I can’t say I was the only one who thought it looked like a nice horse, but I think I’m the only one who really knew that it was an American Pharaoh.

John Shegerian: Amazing. You said it before. I heard your interview before any of the races were run, so now I’m watching the Derby. I had just listened to your interview a week before, and now I’m saying, “Let’s see everything that Jeff talked about, lungs, heart, spleen, the knee, his knee action, his back feet, everything.” Now I’m watching, and now he goes out there – and I used to be in harness racing so I’m very in tune to racing around the rail and saving ground – and I’m watching Pharaoh. He is three wide in the first turn, he is four wide in the last turn. How many extra feet did this horse have to run just to win the Derby? I’m like, “If he survives this mess, he could – Jeff’s right – he’ll go on and just blow them down.” I mean three wide and four wide. How many extra feet – for our listeners – did he have to travel just to win the Derby then? The horse that ran around the world.

Jeff Seder: I hadn’t calculated, but it didn’t matter because he was getting a foot or two every stride on them.

John Shegerian: Right.

Jeff Seder: And he just had so much more. And those were good horses. This was one of the best crops this year. They say, “Well, who did he run against?” He ran against some of the best horses in the world in one of the toughest years ever. But you know I’ve also done the opposite before races. there was a horse – the most expensive horse ever sold at auction was called The Green Monkey and right after the action – and they printed this in the Thoroughbred Times, one of the major magazines – they came to me and said, “Well, what do you think of his stride because it was so beautiful?” and I said, “It’s the wrong stride. It’s the stride they use coming out of the starting gate.” You only end up in that stride if you’re a green and not a good enough athlete to change your stride fully at full speed, and you end up caught in between them – what is called a “cross gallop” – and he did that the whole way. And it’s more energy and it looks terrific, but it’s a disaster to try and do it in a race. And they printed that, and that $16-million horse turned out to be a complete bust. So I’ve done the opposite as well. When everybody was freaking out about the horse, I said, “Forget it.”

John Shegerian: So once he came out of the Derby Sound, then he took them all on in the stretch. After being around the three wide and four wide, takes on all the comers in the stretch, looks them in the eye and keeps coming. Wins the Derby.

Jeff Seder: Yeah, and he did it in the mud, too.

John Shegerian: Right.

Jeff Seder: He did it in the mud. I thought the best race was the Derby, though, because Firing Line – it was the first time American Pharaoh had to run hard, had to try.

John Shegerian: Right.

Jeff Seder: And he had given him a lead, and he came around there, and then he pulls up next to him, and he’s running and Firing Line did not give in and he is a great horse.

John Shegerian: Right.

Jeff Seder: And he was not going to – he was going to have to really show something extraordinary, and he just kept going and finally he got the idea and away he went. Then, after that, I think that was he finally discovered what was really being asked for. Then they didn’t really have to hit him again. They had to hit him a lot to get him to wake up and say, “Now’s the time guy, wake up.” But in the Preakness and in Belmont, they didn’t have to hit him at all. He knew what he was supposed to do. He knew that when they guy shows him the stick that means “now,” and away he went. And it was fast. Every split after the first quarter, every quarter in sequence was faster than the one before. Every one. There was no fatigue curve. That in itself is a modern miracle. You never see that on the dirt race.

John Shegerian: Well, explain what you mean, Jeffrey, because I know what you mean but our listeners don’t. Whereas your theses and the sciences about every horse coming to the finish line, even if they’re winning, they’re slowing down. Explain what you mean, though.

Jeff Seder: Well, in a dirt race – it doesn’t always happen in the grass.

John Shegerian: But in the dirt races when you see a horse passing another horse, making a big move at the end of the race, he is usually still slowing down. He is just slowing down slower than all the other racers.

John Shegerian: Yeah.

Jeff Seder: In the entire race, they’re generally slowing down, and it follows a predictable logarithmic velocity decay curve that you can calculate, and it’s pretty characteristic for each horse, so that’s how you can extrapolate and predict things. So you can nail it for each horse. Unless they get hurt or they’re sick or something, it stays that way. So what was extraordinary about this race was there was no fatigue curve. Just after the first quarter he started speeding up and he kept speeding up from there on, and every quarter was faster than the next one.

John Shegerian: Unbelievable.

Jeff Seder: It’s no wonder that Frosted and that other horse – the other horse is trying to get – there is no wonder they couldn’t keep up with him, because he is a freak. Those are really good horses he was putting away at the Belmont Stakes. And by the way his time was about two seconds slower than Secretariat’s but when Secretariat ran the Belmont Stakes, there were two things that were different at least. I think there was four inches less cushion on the Belmont racetrack.

John Shegerian: Wow.

Jeff Seder: So it is a deeper racetrack now. Plus, the drug testing was a lot more primitive back then.

John Shegerian: Wow. Interesting.

Jeff Seder: So a lot of the horses back then had caffeine and God knows what else. But anyways. So I think this was really an extraordinary performance.

John Shegerian: And you had a lot to do with it.

Jeff Seder: Well, I had something to do with it.

John Shegerian: Well, you were part of the team.

Jeff Seder: Yeah, I was part of the team. But Zayat is a colorful guy, but he is a very bright guy. He works very hard. He’s got a lot of the really good people. There are Kaplans in Ocala who helped raise the horse and break the horse. Everybody who had anything to do with that horse was really good at what they did, and I think that’s also very important.

John Shegerian: Including Bob Baffert.

Jeff Seder: Including Bob Baffert. Absolutely. Bob Baffert. Including Bob Baffert. A lot of people think the good trainers are only good because they get all these good horses.

John Shegerian: Nah.

Jeff Seder: Commonly, they’re good horsemen and they’re good managers. The horses are so fragile, their minds and their bodies. These things are like….

John Shegerian: Yeah.

Jeff Seder: They’re like fine-tuned race cars. They’re very fragile and any little thing – 500 things can screw you up permanently. And good trainers, they dot every “i,” they cross every “t,” they’re not just great horsemen, they’re great managers. So Baffert, yeah, he is.

John Shegerian: Hey, Jeff, we’re down to the last minute-and-a-half, and I want to leave you with the last words. So what does the future hold for EQB? And for our listeners out there, to find Jeff, it’s www.EQB.com, because if you’re interested in racehorses he is the guy. What is the future? You’re coming off this huge massive success story being part of a team – American Pharaoh. What is the future for Jeff Seder and EQB and for your clients?

Jeff Seder: You know, I just don’t know. It’s been a lifetime effort to get to here.

John Shegerian: Yeah.

Jeff Seder: I’m 66 years old. I may just start training other people to do this and write a book. I don’t know what I’m going to do, but I know that we’re going to stay boutique-y. We’re not just going to spray it all over the place. There aren’t that many great horses so you can’t give one to everybody.

John Shegerian: Yeah.

Jeff Seder: But we are looking for good people to work with, and there are more good horses out there than people know. We still go to auctions all the time and find a horse we love, and we can’t find anybody who wants it because they don’t like the pedigree, they don’t like this, they just don’t trust us. So there are still horses there that can be found for somebody, if they want them.

John Shegerian: And you don’t have to win the Kentucky Derby to have fun in the horseracing industry either, right?

Jeff Seder: No. I [inaudible] and I love the sport.

John Shegerian: Yeah. Well, Jeffrey Seder, thank you so much for coming on and joining us today and sharing your story of EQB and your own personal story with our listeners. You are truly making the world a better place and are living proof that Green Is Good.