EquineX CEO Derek Ivany believes his platform could dramatically increase industry integrity and transparency if widely adopted.
by Dave Briggs
When Derek Ivany first started hanging around the backstretch at the Woodbine tracks, it didn’t take him long to realize horse racing had some major challenges and impediments to sustainability and growth. What he saw soured him on the business at the time — “I heard lots of bad stories of fraud and deceit,” he said —but now the 37-year-old Toronto resident is using that experience, along with his entrepreneurial and tech start-up skills, to try to change harness racing for the better as CEO and founder of digital platform EquineX (www.equinex.com).
The app-based system aims to use transparency to increase accountability and integrity in the sport by creating secure, detailed records for every horse placed on the platform.
Ivany has had considerable success at a number of start-ups, including EuroLife Brands and, most recently, as CEO of cannabis company AgraFlora, which he helped grow from less than $2 million in market capitalization to a high of nearly $300 million before he exited when the company had a $250 million market cap.
First exposed to harness racing as a young man by a boss that had a small ownership stake in some horses, Ivany’s interest in harness racing was piqued enough to get his groom card so he could be in the backstretch.
“I tried to get involved a little bit more, but my boss was, at the time, getting screwed over, for lack of a better word, and that left a bad taste in my mouth. He never really made any money with it, it was just a non-stop flow of invoices coming in. I guess I lost my passion for it for many years and then, later on in life, I got connected with (standardbred owner) Paul (Simmonds) through a mutual contact,” Ivany said.
Simmonds, the chairman of EquineX, explained in a previous HRU story (full story here) that the platform makes the horse the center of the universe where secure records leave a full account of everything the horse has done and had done to it in terms of training and veterinary procedures. Simmonds equated the service to Carfax which changed the used car business by providing a full accounting of a car’s life cycle to provide transparency to potential buyers.
Ivany was initially trying to establish an Equine Exchange — hence why it’s called EquineX — “a stock market for horses, where people can buy and sell fractional ownership as if it was a different asset class.” But when he looked into the industry further he realized the sport was missing the equivalency of information needed for an Initial Public Offering (IPO).
“Having a background in capital markets and stocks and underwriting… I essentially took a deep look into everything and realized that really there’s no real paperwork or clear standard to start from to be able to put together an underwriting that’s a system,” he said.
“For horse racing, it’s not there. From a disclosure perspective, you can’t really do that because people aren’t transparent and you don’t know that that horse gets 50 shots injected into its knee or an x-ray that shows that maybe there’s a spiral fracture and that x-ray doesn’t exist today because obviously the seller wouldn’t want to tell you that. So, from a transparency perspective, I was, in my mind, saying, ‘We’ve got to put this in a tamper-proof record.'”
Hence, the first step was to try to get the industry to adopt EquineX as a standard for horse transparency.
“We decided to put the fractional ownership marketplace on the sidelines and work on building the basics and that’s what essentially started the whole EquineX integrity and transparency aspect, building the tool set that will allow the creation of these records and really, starting with 2-year-olds and even weanlings if we work with breeders, to get this adopted,” Ivany said. “So the records are being created, the vet records are there, the training records, the vaccinations, everything is in one spot, it’s consistent and, over time, if the standard develops, it’s an even playing field for everybody.”
The cost of subscribing is $29.99 (U.S.) per horse, per month, and with that, trainers use the EquineX app to both track everything with each horse — workouts, equipment, vet procedures and more — and use it as a tool to share whatever information they want with the horse’s owners.
“They can simply use this as a communication tool where they could track a workout or input private notes that they want to send, then — boom — it can go to the owner or all the owners, if it’s a syndicate, or whoever you want to receive that information. It doesn’t go anywhere else. It really saves trainers from having to be on the phone all day,” Ivany said.
All horses registered before May 31 that continue subscribing for 30 months are eligible to a new stakes series exclusively for 4-year-olds that will be added to the calendar beginning in 2022 at Lexington’s Red Mile. No further staking fees will be required. Twenty per cent of the subscription fees will be donated to a Coronavirus Hardship Fund for the industry.
Though the app is simple to use for anyone that’s ever used a smartphone, Ivany said one of the biggest challenges to people adopting EquineX is the fact the industry is resistant to change.
“There are a lot of people that are old fashioned in how they do things,” he said.
“Part of our training app, for instance, has digital equipment cards. You can instantly pull up equipment cards on the horse and you might just want to flip that (information) over to someone else that needs to know that if a horse is going into a race. Instead of taking a picture of a piece of paper that has a coffee stain on it, you can just go and send it instantly.
“There’s training records, historical records and seeing how this horse performed and then correlating that with shoeing changes, equipment changes, nutrients et cetera. All of this is way too complex to track on paper and in your mind. You might not know things are happening because you’re not going to remember what you did three weeks ago. Most people don’t remember what they ate three days ago,” Ivany said.
“It’s important to also mention that they only track what they want to track. They are able to customize their stable the way they want it and what they want on there goes on there. If they don’t want something on there, it doesn’t go on there. Nobody else sees their data, it’s only theirs. There’s nothing they have to be worried about. There’s no angle where somebody is trying to go and scoop up their stable or something like that. I’m not even sure the potential scenarios that might exist.”
Ivany currently owns a 4-year-old trotting mare named Weslynn Quest trained by Chris Beaver. Ivany said Beaver is currently using the app.
“He loves it, he thinks it’s great,” Ivany said of Beaver. “We’re doing all kinds of things where we are tweaking adjustments and tracking different types of training styles, whether it be fast, slow, interval training and things like that. We’re constantly improving some of the backend metrics that the user doesn’t see, but also some of the front-end metrics.”
Ivany also believes improving the sport’s technology will also help grow it with younger people that are noticeably absent among the ownership ranks.
“Since everybody is connected to their phones, if you can connect this business to a tablet or whatever, that’s your last hope to get a new generation into this. Otherwise, it will probably just be the kids of people that are already in the business that, may or may not have interest, that will be the future of the industry. It will continue to diminish over time until there won’t be an industry. That’s just my personal opinion and I don’t want that to happen, but people thought that Blockbuster was a great, great business model and it just took one thing to disrupt that and make it go away forever,” Ivany said.
“The smart people in technology are going to be the ones that keep control of this business.”