Toto Wolff says the cost cap, about $200m a year, forced Mercedes to count every engineering resource and limited long-term lab work.
Wolff says Mercedes' DAS steering wheel system was banned by the FIA after about a year, after a month-long rules dispute with rivals.
Wolff says he sold all nine dot-com investments in 1999 and 2000 before the market collapsed, after his CFO warned a valuation was absurd.
A cost cap turned Formula One teams into valuable businesses
Formula One has gone from a loss-making sport to a valuable business, and Wolff's Mercedes stake shows it. The cost cap limited spending and teams now share in the profits, while live sport is seen as safe from AI. Wolff's own record rests on timing, from selling dot-com stakes before the crash to buying into Mercedes.
Takeaways
The cost cap made Formula One investable. The cap of about 200m dollars a year counts all engineering spend and limits long-term lab work. Before it only Mercedes, Ferrari and Red Bull won races, and teams were loss making with no valuations before COVID.
Mercedes now earns like a top sports franchise. A recent deal valued the team at 4.6bn pounds, about seven times its value a few years earlier. On roughly one billion dollars of revenue and a 30 percent margin, Collison puts that near 15 times EBIT. No owner wants to sell.
Selling dot-com stakes early built his base. Wolff's firm backed Austrian and German internet startups and sold sms.at to T-Mobile for 250m. His CFO called the valuation absurd on the flight home, and Wolff exited all nine investments from late 1999 through 2000.
Mercedes came through a Daimler request and buybacks. A Daimler board member asked Wolff to run the team. Mercedes bought back a 40 percent stake from the Abu Dhabi sovereign fund and helped finance his share. INEOS later offered 600m in sponsorship for a stake, leaving three equal shareholders.
Mercedes hires for character and guards its secrets. About 150 people travel to races within a 2,500-person organization. Wolff rejects brilliant engineers who lack humility or integrity. Core technology is firewalled to 20 to 25 people, and staff moves are limited by up to twelve months of UK employment law.
Fan growth rests on new audiences. Drive to Survive was a big hit, and 42 percent of F1 fans are female, with young women the fastest growing group. Teams receive a large share of profits under the Concorde Agreement, renewed every five years.
Wolff wants the team to outlast him. He plans to split his job between two or three people. A clean break is unlikely while his family owns the team, his children have no interest in the business, and he still enjoys running it too much to step back.
How Mercedes tests a rule-bending idea
Engineers argue both sides of a proposed innovation in an internal mock trial.
Wolff and the general counsel act as the judges.
If the idea is fully defensible, Mercedes deploys it and argues its case.
The FIA may accept it, or ban it after a season or sooner.
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On this episode 2
Show 1
The DAS system added a push and pull movement to the steering wheel to change tyre temperatures, and the FIA banned it after about a year.