European sports betting is big business. And it's getting bigger all the time. France gave sports betting official sanction in 2010, along with poker and horse racing. Germany followed suit two years later, granting private companies the right to offer gambling amenities. Not long ago, Russia sanctioned Match TV, which features live football matches, allowing punters to place bets during the matches.
Almost twelve years ago (2004), sanctioned online bookies in Denmark handled betting transactions to the tune of $13 million per annum. Meanwhile, the transactions handled by unregulated, offshore bookies were more than twice as much. After the Danish government made the decision to permit online betting, albeit stringently regulated, betting took off.
Sports betting in Western Europe is now a $3 billion per year industry. Everyone is happy. The punters are happy because they can place a bet on their team; the governments are happy because of the tax revenues; and the online bookmakers are happy because they're making profits. It's a win-win situation.
Across the pond in the U.S., fantasy football is all the rage. The state lotteries are going like gangbusters, and more states are open to the idea of regulated sports betting. Everyone knows regulated gambling is coming. It's just a matter of when.
To that end, I thought I'd talk to one of the founders of Better Collective, located in Copenhagen. The company owns and operates BettingExpert.com, an online community for sport tipsters. It's not a bookmaker; it's a tip site that provides gamblers with information with which they can make more educated bets.
I sat down with Jesper Søgaard, who is the CEO and Co-founder of Better Collective. We discussed a variety of topics: Copenhagen, Venture Capital, management style, Denmark's welfare state and his company. I think you'll find his remarks enlightening.
How do you define success as a business owner?
For me, success is creating a sustainable business, as a minimum requirement. From that point, it becomes about creating an environment that enables the business to grow further, by setting and achieving new goals. Ultimately it is about trying to chase the vision. In our case, the vision is to empower e-gamers, share knowledge and make their gaming and betting experience as convenient and safe as possible.
What are your goals for yourself and the company over the next 3-5 years?
For me, the company's goals are very much aligned with my personal goals. The primary goal for the company is to attain the size and maturity to be listed on the stock exchange. And in order to reach the goal we need to grow our revenue before taxes, and to be as professional as possible, since we operate in an environment where companies get a lot of outside attention.
Getting there is as important as reaching the goal. That is why it is crucial for us to have a good ride as well. Therefore my personal goal is to make sure that the road toward our business goal is smooth and enjoyable.
What is the single most critical talent you possess in your role as a business owner?
I and Christian Dam Rasmussen are the two people who founded this company. According to our personality-test results, we are completely opposite people with different talents and weaknesses. Christian is very detail-oriented, while I am less into details, which works well as we complement each other and it does not affect business negatively. From my perspective, my biggest talent is to be able to spot and nurture other talents. I am good at creating an environment and finding people who can prosper in it. At least I think this particular talent of mine has contributed to the company's growth over the years.
What skills or talents do you think would make you even more successful?
I wish I was maybe a bit more detail-oriented, but I don't derive energy out of repetitive things.
If you were to design the perfect team of 4 people to help you run this company, what characteristics would those four people have?
Basically, I have already designed it! Co-founder Christian, Thomas Høgenhaven, who is extremely good at understanding internet marketing trends. I have Camilla Wissing Bille, who is very good at the organizational side of things, and the fifth member of management is Henrik Lykkesteen, who worked previously in Saxo Bank and who is good at executing things quickly.
How do you keep your employees happy and motivated?
For me it is about providing an environment for the employees and establishing the direction for the company as a whole, making sure that people believe in what we are trying to achieve. What is important is that you don't create rules in response to a few people; rather you deal with those few who may not be able to follow. If you really want to motivate people, you need to give them some freedom, but you have to be sure these people want to be part of your business. Our culture is based on employers trusting employees, of course some misunderstandings occur when people abuse the trust and take advantage of too much freedom; then as a manager you should react to it immediately by asking the person direct questions and try to resolve work-related or personal issues she or he may have.
We are extremely dependent on employees taking the initiative. We determine the direction and expect employees to come up with ideas to get us there, and they are just as eager to reach the goal as management is.
Are there opportunities for talented, creative women in your company?
For me, this is a strange question, one I never think about since our society is equal in terms of genders. We have a lot of talented women in the organization, in top management as well, who all have the freedom to grow professionally.
How would you describe the "culture" of your company?
We have a performance-driven culture in the company now, whereas before, a couple of years ago, it was more characteristic of a family unit, where we struggled to give honest feedback to each other. Now we have grown up and have more people with different backgrounds; they are ambitious and want to attain personal goals as well as business goals. The core value of the company's culture is respect for each other, our partners, our users and for the work we do.
In one word, how would you describe your management style?
It's a very trust-based management style - the exact opposite of micro-management. It requires that I step back and do not attempt to control everything, but create an environment where people are confident in their abilities and clearly perceive the goal. My trust-based style provides an environment where they can conceive ideas, address problems and find solutions.
As you are sitting here today with me, what do you think I need most of all in order to be a successful employee at your company?
To be a successful employee here you would need ambition, dedication and drive. We are not going tell you what to do; instead we will show you where we want to go. You need to be creative and work smart. I don't keep track of how many hours you work. I look at the outcome of your work. Talented people sometimes need to work less to achieve more.
Your company is called Better Collective, which operates various gambling related sites, including tipster websites, such as BettingExpert.com. Where on earth did you come up with the idea to work in the gambling industry? Did anything in particular inspire it?
It was a coincidence. When we were at school, I and co-founder Christian learnt that it was possible to make money from bonus offers various gaming sites gave out to people. We utilized the bonus offers and wagered the amount that was required, and then played to grow our bankroll; afterwards, we withdrew the money. It was entertaining, but at the same time we wanted to create value: provide other people with information about how to make money with gaming sites' bonuses. That is how we started our first website, CasinoVerdiener, as it's called in German. Later on we bought a tipster website which is now known as Bettingexpert.com. It is a community where people can share their knowledge about sports and the leagues they follow, and predict outcomes.
In my opinion, placing a bet on a football match makes the game more fun and entertaining. I would like to emphasize that betting is like drinking alcohol, you must be responsible about gambling. Not too much and responsible.
What's the difference between a tipster site and a bookmaker?
A tipster site, like BettingExpert.com, is a social platform for sharing knowledge and not a place where you can place an actual bet for real money. Here you try to predict the outcome of a particular game (NFL, NHL, MLS etc.) and compete with other tipsters to win in the end of the month. The more winning tips you have, the more expertise you have among other professional punters. There are 1.5 million users posting more than 100,000 tips a month on BettingExpert; people discuss team rosters, statistics, previous games, while having fun. It's absolutely free. No money has to be spent.
The European betting market has grown in leaps and bounds over the last ten years? In your opinion, why has this explosive growth occurred?
Europe has historically been a place with a strong betting tradition. Look at Horse racing in the UK. The United States also has a large audience who'd like to place a bet on sports; however, Europe slowly regulated online betting, while in the US you are still discussing whether fantasy football is a skill game or not. Both sports betting and fantasy leagues are dependent on the element of skill. Regulation creates a healthy market. I believe the U.S. will open the market soon. So much TAX money can be collected from licensed gambling activities and it is in the best interests of everybody: state governments, gambling operators and people who want to bet safely on legal sites.
With such explosive growth in the betting market, the competition from other similar sites must be fierce. What methods and innovations do you utilize to stay on top and remain competitive?
We monitor what happens in other markets and try to adjust our strategy. For example, we look at the financial markets, which are very similar to sports betting in terms of operational mechanisms and information flows. We try to develop and enhance BettingExpert, increasing site speed or the monthly competition fund, adding new tools, such as a Calculator of Probabilities and Best Bookmaker Finder. When you create a great product you spend less on advertising. We pay a lot of attention to our content. The information and quality content we provide to our users is one of the keys that help us stand out from competitors. Many similar sites just try to rank high based on Google keywords, while our main goal is to give the user exactly what he is looking for in a user friendly interface.
What is the primary source of your company's revenues?
The business model behind Bettingexpert.com is based on affiliate relationships with our partners. This business method requires that i-gaming operators pay BettingExpert for the traffic they receive from our site. Basically the same model used by discount airfare search engines or hotel booking sites.
What makes Copenhagen such a hot-bed of start-ups?
Copenhagen attracts a lot of talented people from all over the world. Despite the country having the highest tax rates in the world, it is easy to start and operate a business, even without external investors behind. The Danish concept, a pillar of the welfare state, known as Flexicurity, allows people to focus on work and creativity rather than on worrying about where to get the money to pay bills, as the system eradicates such worries from employers and employees. Healthcare, Daycare, schools, universities, infrastructure, etc. are all taken care of, so you do not have to be concerned. Just focus on growing your company. It is a good balance of work and life here.
Copenhagen has a foundation called 'Copenhagen for the Win', which was created by and consists of young entrepreneurs who support each other and share knowledge.
A welfare state model with a pro-active labour market policy, like Flexicurty, consists of three triangles: one side of the triangle comprises flexible rules for hiring and firing, which make it easy for the employers to dismiss employees during downturns and hire new staff when things improve. About 25% of the Danish private sector's workers change jobs each year.
The second side of the triangle is unemployment security in the form of a guarantee for a legally specified unemployment benefit at a relatively high level - up to 90% for the lowest paid workers.
The third side of the triangle is the active labour market policy. An effective system is in place to offer guidance, a job or education to anyone who is unemployed. Denmark spends approx. 1.5% of its GDP on its active labour market policy.
Is Venture Capital easy to obtain in Copenhagen? If yes, why? If no, why not?
We have not received any capital ourselves, we grew organically. It is not Silicon Valley; it is harder to get Venture Capital here, but it is easier than it was six years ago.
There are pros and cons to starting a business with venture capital. You can't grow that fast without external investments. It can also be a good thing, because when you have investors you need to reach growth targets fast and if you miss important targets on the way, this error can later kill your business. When you grow organically, you set your costs according to what your actual revenue allows, which means you learn on the way; and yes, perhaps you go slower than your competitors with investors do.
For us, it worked out well to grow our business without investors. First of all, we were studying at that time, we could not work full-time (students in Denmark are allowed to work only 15 hours per week), and we did not want to drop our studies. Today, if I was starting a new business, I would probably try to grow as much as I could with my own funds, but I would definitely be open to new money.
Running a company such as Better Collective must demand a talented pool of technological expertise. Where do you find people with the talents you require? Do you actively recruit or does the talent come to you? Do you employ 'headhunters' to identify and hire your programmers and developers?
It is not easy to recruit IT developers. Resources are scarce in Denmark, tech companies are fighting for them. We do some outsourcing.
What is the age and sex of your target market? Does your company utilize any innovative ideas to target the female market?
Males, 18-40 years of age, who are interested in sports and betting. We have women among our tipsters, but it is only around 1-2 % of all users. Women are more interested in lotteries than in sports betting. However, we are not doing anything in this regard yet.
Is Better Collective continuing to expand?
When considering expansion, we analyze microfigures. Population size, GDP, whether the market is regulated or not.
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