It’s the $300 BMW WRC Build Party raconteur.
A few years back, this guy picked up an old beater BMW 3er off Craigslist, hastily prepared it for stage rally, then took it down to WRC Mexico. Since then, people have been talking about Bill Caswell – and not all of it pleasant. They say the $500 BMW had a $10,000 M3 engine. They say he half-asses everything he does. They say he has no respect for motorsport. They’re right.
We’ll get into that later, but first, we wanted to get to know the now infamous Bill Caswell a little better.
Who are you, Bill Caswell? Where are you from, what do you do, and why might your name sound familiar?
I am a guy who followed his dreams and got really lucky. I did some weird stuff with cars and entered some of my favorite races on the planet. I got to meet and become friends with my heroes, signed a movie deal, and am now fortunate enough to do amazing things and share them with more people than I can count on a regular basis. I might be the luckiest guy on the planet.
I’m from Chicago, but live in San Diego now. I’m not entirely sure what I do. I used to be an investment banker working in securitization – those MBS [Mortgage-Backed Securities], CDOs [Collateralized Debt Obligations] and other structured bond deals that destroyed the world economy. I now spend most of my time in the garage building cars and other strange stuff and then racing them.
My name might sound familiar because of an adventure I took down to WRC Mexico that was written up on Jalopnik. I somehow entered my 1991 BMW 318i that I bought for $500 off craigslist in the Rally America (not the same as the US sanctioning body) class of the 2010 WRC Mexico event.
Sure I wasn’t classified with the WRC cars but I ran the exact same stages, used their rules and time controls, participated in the open ceremonies and the afterparty set up just for the rally teams, crews and organizers. And we finished the three day rally with no team or crew. Just Ben Slocum and I to wrench on the car and keep it running. And if you’re more of a desert racer, then you might know of me from my 14 day Baja 1000 build starting on the floor of SEMA (more info at wired).
“Those MBS, CDOs and other structured bond deals that destroyed the world economy?” Not exactly the sort of thing we can just gloss over, Bill. With so many gearheads out there hurting as a result of the economic breakdown, can you tell us how you came to be involved in that sort of thing?
I started in securitization (the industry name for creating these instruments) in 2004 after graduating with an MBA from the University of Chicago. At the time, it was no different than joining any debt products group at any investment bank except that our deals were backed by hard assets that one could take possession of and sell if the bond started to underperform – as opposed to being secured by general cash flow and corporate assets which is a mess in a bankruptcy.
Securitization has always been a giant industry. It’s how the world finances mortgages, auto loans, commercial property leases, really just about every asset class. I truly believe it’s the best way to finance pools of cashflowing, diversified assets.
Why did those instruments come to be as popular as they were?
I think it became really popular for a lot of reasons, but mainly because of how much liquidity was injected into our world economy combined with the accounting banks used to reserve capital against these programs. As a result, there was a need for a product and an incentive to provide it – I believe our group had one of the highest returns on equity in the bank.
The problem started, in my opinion, when securitizations were done solely for profit instead of as an efficient tool for risk isolation and financing.
As the world relaxed its debt standards and the economy grew like mad, so did the industry that supported it. The more mortgages written, the more securitizations needed to finance them. The problem started, in my opinion, when securitizations were done solely for profit instead of as an efficient tool for risk isolation and financing.
Groups started selling synthetic transactions and transactions based on existing transactions. Well, all of sudden, you are no longer securitizing hard assets, but rather the risk itself. Combine this with the massive and rapid devaluation of the underlying assets on the real deals, and the whole industry fell apart. Home prices drop, putting the mortgage underwater, putting the deal underwater, and all of a sudden your bond is no longer overcollateralized and the whole thing comes down.
When you invest in your own work, everyone’s interests are aligned. You want the deal to do well as its yours.
But here’s where my job differed from some of the guys on wall street that pumped bad deals to middle America. We bought every deal we ever did for our own account. By the time the market blew up, our portfolio was around US$13 billion. When you invest in your own work, everyone’s interests are aligned. You want the deal to do well as it’s yours. You want it to be profitable for the client so they come back, and you want it to be a good return for the investor because it’s going to be you. We never sold the bonds to outside investors and we certainly never bet against them. I like to think we were the good guys.
Why did you get out?
I got out because the bank took our capital away. My friends that stayed at the bank sat at their desks without doing one new deal for like three years. I couldn’t sit there and pretend to work. Plus we went through three or four rounds of layoffs and most of my friends were gone. There isn’t one person from my original deal team left in the group.
I went rallying because it was a dream of mine for a long long time; ever since I remember Prodrive running E30 M3s. So I proposed to my girlfriend and asked for a year to go do everything I never got to do. First thing I did was buy a plane ticket to Turkey to see the F1 race, then flew to Amsterdam to party, then drove down to the Nurburgring for a few laps, and then drove to the 24 hrs of LeMans. Not bad for the first week with no job. I then came home and bought the $500 BMW off Craigslist the following week. This year was for living my dreams. Luckily that year started in June of 2009 and it’s still underway two and half years later!
Side note: Securitization generally provides a far cheaper form of financing to companies. Let’s say a company isn’t rated real well, like its credit sucks (the equivalent of a bad FICO score for a person), and you dont want to loan it money. Let’s say this same bad company owns some of the best, highest rated assets around. Well, if you could legally isolate the performance of those assets from the bankruptcy risk of the company, you could provide them debt at a much cheaper rate, as the loan is so much more likely to be repaid, and if it’s not, you can sell the high quality assets to repay the debt yourself. Typically the bonds are overcollateralized, meaning there are more assets than debt, so if you experience losses, you still have enough assets to over bond. Way over simplified, but you get the idea.
It strikes me the investment banker managing US$13B in assets who gets out at the peak and spends his first week out-of-work attending F1 events in Turkey, partying in Amsterdam, lapping the Nürburgring, and cruising on over to LeMans is maybe, just maybe, the kind of guy who can afford one of those no-expenses-spared race car builds we all know and love, yet you scooped up a $500 beater and seem to have cobbled it together in your own driveway, learning as you go. Why is that?
I definitely could have built a really nice rally car, but why? I wasn’t trying to win anything. I had a year to go do everything I wanted before going back to the cubicle. I had a no-expense-spared track car that I built over the years entered into my first rally, Rally Tennessee, and nearly destroyed it.
I realized I had a lot of learning to do and went and found the cheapest E30 (chassis designation for the body style of BMW I race) that I could. I didn’t want to wait all summer for a proper build, so I added a cage and safety gear and showed up at the next rally. I was there to have fun with my friends before going back to work. The results were irrelevant.
I was there to have fun with my friends before going back to work. The results were irrelevant.
Why did you go this route?
To me, it was like going to a track day or drivers school with your car friends, except we paid a registration fee and raced. It was about working in the garage with my friends, road trips in random panel vans telling stories about all the fun we’ve had with cars and dreaming of the cars we might get to race some day. It was about celebrating life in Small Town, America, before putting a suit back on and riding the subway to work again every morning in a concrete jungle.
It wasnt about winning, getting noticed, or trying to take things to the next level. It was about having fun with my car friends before all this comes to and end. I wouldn’t trade any of the adventures for anything, not even a ride in a proper WRC car. Those times with my friends are the key to this whole thing – they cant be bought, fabricated, or borrowed.
It only happens when you let it, and I get the feeling those days become rarer and rarer as you get older and start a family and all that good stuff. Don’t get me wrong, I love driving and love racing even more. But I’ll get to race my whole life. Road tripping around North America with your friends in a cargo van with a race car in tow might not happen for ever.
Rumor: The “$500 Craigslist BMW” that “won” at WRC Mexico happened to have a $10,000 M3 motor under the hood, and you were the only car entered in your class. True or False? Would you be so gracious as to shed a little light on your car and how it’s progressed over time?
The $500 car that I took to WRC Mexico had a stock 2.3L engine from an E30 M3 (known as the S14). I paid $3500 for the engine, trans, exhaust, and everything needed to complete the swap. I installed it because that engine feels different than all the other BMW engines and it sounds way different. My dream of running the WRC was in the Prodrive E30 M3 and, while I couldnt run that car, at least mine felt slightly similar and sounded really really close. I was short a 1,000 or so RPMS and about 160 horsepower, but it was the best I could do.
Up until then, the car ran totally stock with the 1.8L M42 engine. Maybe 140HP? I only swapped it because it was part of the dream and supposedly my last race before going back to work. I did have to add other gear like an FIA fire system which cost me nearly $800 after shipping and everything. And I needed three sets of wheels and tires which added $3600 to the bill for Mexico alone.
Grassroots Motorsport Magazine threw it into the build cost, but I consider tires to be wear and tear, but it helped create the illusion that the car is more expensive than it is. It is certainly more than $500. There are a bunch of haters out there that feel the story is misleading because they think the article says the car is worth $500 or can be built for $500. Those haters have obviously never been to a race or track day in their entire life. It was the purchase price of the running car of Craigslist. The steel for the rollcage cost about $500, the seatbelts were more than $500. Safety gear adds up, even if you borrow most of it from a previous track car.
My car does have some nice parts on it, though. I do run a sweet rear differential that I bought used for $1,200 and I run nice Recaro seats and top of the line belts from Schroth. Sure, I borrowed them from my track car, so it was not cash out of my pocket, but when I was working, I paid $3-4k for the seats and belts brand new. You can run cheaper stuff that’s legal, but I was working and had cash and bought the nicest safety gear I could afford.
I do run stock suspension, with 250LB front springs and some random stock BMW rear spring. I’m still racing on the Bilsteins I bought the car with. I think I bought a new front left strut after the off at New England, but otherwise it’s a relatively inexpensive build compared to a lot of the rally cars I see.
After that first WRC event, I swapped in a 1995 3.0L 5- cylinder from the 1995 M3. $3k for everything I needed, another $500 for swapping parts to make it fit. Way more torque and fun. Horrible off jumps due to the weight.
And, as for the number of entries in your class at WRC Mexico that year, why were there so few?
I’m not sure how many entries there were. Maybe 14? Over a dozen for sure. Not that many finished, but this is normal in rally, It’s like asking how many cars finished the 100 Acre Wood Rally. A quick glance shows 16 finished. I think others finished, but they must have been in the regional and not shown? The entry list shows 63 cars.
So more than 2/3rds crashed or broke. I know last year, only 4 cars finished the Mexico event. So, while we were 4th and last, I was more proud of my ability to finish a 3-day event with no crew, than I was of my speed. I’m not sure why so few enter. It’s been open to US cometitors for the past two years and less than 10 have made it. I would ask all the guys with racecars that didn’t show up why the number entry number is so low.
Rumor: You also procrastinate, wait to the last minute to prepare for your events, and don’t take rally or any other form of motorsport seriously. True or false? How important is motorsport in your life? Why do you approach these things the way you do? What’s your philosophy when it comes to motorsport at this level?
Yeah, it’s totally true. But it’s not because I sit around waiting or procrastinating. I just jam too much into too short a period of time. I would have been ready for 100 Acre Woods if I didnt go to Hawaii for two weeks with Melanie. I also would have been ready for the Mint 400 if I didn’t enter 100AW or WRC Mexico. But the car was in running condition and the race was only five hours away, so why not run it?
Dont forget, this was never meant to go this long and was about learning. You learn a ton about racing and what fails on your car when you roll out unprepared. It brings out all the problems. So I’ve learned a ton in the past two years about how to get by when the plan doesn’t go right. And I’ve had a blast fixing my car with unconventional solutions that my friends and I come up with; like trailer straps to hold an engine in the bay when the two engine arm mounts snap off. Sure, the motor swung around and I to be careful shifting and wait for it to settle before grabbing the next gear, but we finished. And because other faster cars didn’t, we took first overall in National 2WD at LSPR with a motor dangling from the shock towers. It was fun. But it’s also time for a change.
You learn a ton about racing and what fails on your car when you roll out unprepared. It brings out all the problems.
Now it’s time to put together a good plan and, if anything ever goes wrong, I know exactly what to do. And it’s a cash thing. It costs a fortune to do things right. We entered the Baja 1000 for less than $1000 after paying the entry fee. If you attempt the 1000 with a proper effort, you need to multiply that number by factors of 10. It’s just how racing goes. I trade some prep for cash and the fun of trying to solve problems with my friends. But I’ve done that and now its time to roll out a real program.
There will always be someone with a better machine, better prepared, than us, who can afford to run the entire series and take home the Towing Championship. First place is absolutely worth pursuing. By all means, we should focus on planning and preparation, we should seek victory as a reward for our efforts, but we should not lose sight of what is most important about motorsport – the way it brings us together on a global scale as gearheads.
Consider this a reminder: There is nothing wrong with seeking perfection – just don’t wait for it. Get out there, get behind the wheel, and go for it. Bring your friends with you. Keep each other in the race. Go fast with class. Never, ever, ever, give up. Press on regardless.
Time will tell what Bill Caswell’s “real program” looks like. Will having fun with friends take a backseat to rigid structure and the pursuit of victory? We sure hope not, but here’s to hoping Caswell Motorsport applies lessons learned the hard way, steps up their game, and really starts to bring home some well-earned results.
- What’s keeping you from doing more with your vehicle?
- How are you and your friends making things happen?