Entrepreneurs

How an amateur launched a million-dollar racing league with $500 clunkers

Some million-dollar businesses are born from intense market research and focus groups, while others spring from a joke among friends after too many beers at a Chinese restaurant.

This was the case for former automotive journalist Jay Lamm who became disillusioned by the money, egos and prestige of the racing world.

"I feel like 20 years ago the car hobby started to really lose its sense of fun and its sense of humor," the former "Vintage Motorsport" editor told CNBC. "People started doing it because there was a lot of money tied up in it and a lot of status tied up in it, and fewer and fewer people seemed to be doing it because it was fun."

24 Hours of LeMons founder Jay Lamm inspects a car in the paddock at High Plains Raceway in Deer Trail, Colorado.
Zack Guzman | CNBC
24 Hours of LeMons founder Jay Lamm inspects a car in the paddock at High Plains Raceway in Deer Trail, Colorado.

Lamm's remedy for such elitism was simple: First, take the world's most prestigious endurance race, France's 24 Hours of Le Mans, and strip out its cut-throat competitiveness and seemingly infinite budgets for super cars. Next, replace the Porsches and Ferraris with cars that cost no more than $500. And finally, dub it "24 Hours of LeMons."

The pun on "lemons," a term for a defective car, was enough to convince his friends it would at least be a fun weekend, which is all the idea was meant to be when Lamm collected money, wrote a check and organized a race in 2006 at the now-defunct Altamont Raceway near San Francisco.

"We didn't know what we were doing," Lamm said. "The green flag drops and all of a sudden it was just brakes squealing and sliding tires and I say to myself, 'If I get out of this alive, I am never doing this again.'"

The weekend drew 33 cars, about half of which were brought by his friends in the automotive-publishing space. This meant it didn't take long before car enthusiasts were reading stories of clunkers being raced in the desert, prompting more car enthusiasts to urge Lamm to continue hosting events.

A Ford Anglia is inspected before a 24 Hours of LeMons race at High Plains Raceway in Deer Trail, Colorado.
Mary Stevens | CNBC
A Ford Anglia is inspected before a 24 Hours of LeMons race at High Plains Raceway in Deer Trail, Colorado.

In the second year, Lamm organized three races. The following year, LeMons put on six races, before growing the number to 10 in 2009.

"It became pretty obvious that a lot of people wanted to do this, and I had to make the decision: 'Is this what I'm going to spend all my time and energy working on?'" Lamm said, recalling the decision to shut down his automotive publishing business. "There was a lot of risk in that, but if you're going to start something new there's always a lot of risk."

Now, the series consists of 20 races spanning 12 states and Australia, with plans to expand to other countries in the coming years. Lamm confirmed the racing series had surpassed the million-dollar mark in annual sales, but declined to discuss specific figures.

A decorated BMW awaits inspection before a 24 Hours of LeMons race at High Plains Raceway in Deer Trail, Colorado.
Zack Guzman | CNBC
A decorated BMW awaits inspection before a 24 Hours of LeMons race at High Plains Raceway in Deer Trail, Colorado.

"It's hard to believe that there is a market for something like this, but apparently there is," Lamm said.

What "this" exactly is consists of a lot more than just track time and the opportunity to race a $500 car against a handful of other lemons. To be fair, it also costs a bit more than $500, including travel costs, the thousands of dollars spent on required safety equipment like racing seats, suits, roll cages, and the $1,200 in registration fees for a car and team of four drivers.

It's no surprise, then, that the common thread connecting LeMons customers is an intense passion for cars and a willingness to put in the time to prepare a clunker for racing. Still, Lamm didn't expect his customer base to be as diverse as it has become.

"I thought it was going to be all mechanics," Lamm said. "But we have everything from super successful entrepreneurs, I.P.O. guys, hedge fund guys, to guys who save every penny from their paper route to come and do this once a year."

Even legendary Formula One driver and five-time 24 Hours of Le Mans Champion Emanuele Pirro, among other professional racers, have battled in LeMons races. Women account for nearly one quarter of all LeMons racers, a proportion Lamm points out is higher than the average around the motorsports world.

A decorated car awaits inspection before a 24 Hours of LeMons race at High Plains Raceway in Deer Trail, Colorado.
Zack Guzman | CNBC
A decorated car awaits inspection before a 24 Hours of LeMons race at High Plains Raceway in Deer Trail, Colorado.

The roughly 8,000 racers LeMons attracts every year don't solely show up for racing. Part of the allure is the lack of seriousness that is expected with an event carrying the name "24 Hours of LeMons." Drivers are encouraged to dress in themes and are invited to bribe judges with gifts if they spent more than $500 on their cars. Penalties for drivers found to be misbehaving have included hula hooping in the pit stop or having to parade through the paddock apologizing to other drivers.

"Some of the attraction for coming back to race after race is just the community," explained three-time LeMons Champion Anton Lovett, who notched his 67th LeMons race—and first wedding—at the High Plains Raceway LeMons race in Deer Trail, Colorado, this June. "People come up with all kinds of wacky themes," he said, moments before his then-fiancee Sophie Aissen strutted to her bridezilla-themed Dodge Neon.

Sophie Aissen stands in costume with her crew beside the bridezilla-themed Dodge Neon.
Qin Chen | CNBC
Sophie Aissen stands in costume with her crew beside the bridezilla-themed Dodge Neon.

"The pretentiousness that I've always associated with racing...I don't really feel here, like being really serious and arrogant dudes flanked by hot women," she said. That made it easier to eventually get behind the wheel herself three years ago after watching her husband as a spectator in the years since they met online.

During the past decade, Lovett estimates he's spent just shy of $100,000 in total to pay for races at LeMons events. "But it's totally worth it," he said. "I am marrying Sophie Aissen, my best friend. It's going to be great, and it has been."

Sophie Aissen and Anton Lovett are wed by 24 Hours of LeMons founder Jay Lamm at High Plains Raceway in Deer Trail, Colorado.
Mary Stevens | CNBC
Sophie Aissen and Anton Lovett are wed by 24 Hours of LeMons founder Jay Lamm at High Plains Raceway in Deer Trail, Colorado.

Jay Lamm's services as the racetrack wedding officiator came free, marking the 10th ceremony he's led—eight of which have been LeMons weddings.

"When customers come to you, and they ask you to perform their wedding...I can't imagine a better thing as an entrepreneur to have customers who have that kind of relationship with you," Lamm said.