Saturday, Oct 21, 2017
Others | Europe | Malta

The next big thing


3 years ago

Mr. Robin Reed, Managing Director
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Mr. Robin Reed

Managing Director

The Upper Reach Team interviewed Mr. Robin Reed, Managing Director of Guts.com and asked him about the attractiveness of the Maltese regulatory framework and about the fascinating evolution of Guts.com in the iGaming sector. He told us about the uniqueness of the brand and its success in becoming the first company to allow instant cash-out. Mr. Reed also told us about the investments Guts makes in human capital and about the company’s plans for the future.

This is a year of celebrations for Malta, and one comes to celebrate not only what the country has achieved in the last 50, 40, 35 & 10 years, but more importantly, the firm direction where the country is going. What do you think is the recipe for success in Malta and especially in the gaming industry?

I took note that during the financial crisis Malta was growing, while other countries were in decline. We came here in 2010, which was in the middle of that crisis, and it was really impressive for us to come and see a country doing so well. I came to Malta, having visited it only once before, so I didn’t have an advanced understanding of the place; however, after the first few months I understood that this is like the San Francisco of the iGaming industry and the financial services industry. I think that the Maltese have been running a corporate framework that is very attractive for major companies which put them in a very good position. The infrastructure, the support and the supply network was already in place before these companies came here. So when they started introducing the regulatory framework that focused on responsible and pan-European gaming, then they had everything in place for the industry. When we moved here in 2010 the gaming industry was already up-and-running as there were quite a few countries operating here. We are in Ta’Xbiex today, and from Ta’Xbiex to St. Julians you have all the iGaming people living. So in this 5 km stretch you have all the people in the industry working. You have this very vibrant and dynamic community of the companies and industry. The transfer of knowledge which is fueling innovation is very much present in Malta. The regulatory framework in Malta is one of the most attractive in Europe right now. So it’s not really about social responsibility, or taxes, but it is about understanding the practical mechanics that you need to cater for in this industry, and the Maltese are much further in this context than the other European governments, and that is why we are here.

We know that the regulation framework in Malta is very special, and that is the reason why many companies are here. But now in the EU there are issues related to the legal framework covering the gaming industry, asking for special licenses to operate in a particular country. How does Guts.com deal with this issue?

We are sort of in a limbo or in a status quo situation. In theory, if I have a license in one of the EU countries, I should be allowed to offer my services in another EU country. However, the iGaming sector is a special industry, because you have problems with gambling, just like there are problems in the alcohol industry. So the EU does not allow the possibility to have a monopoly, unless they do it for social responsibility to combat problem gambling. The problem is that a lot of the national monopolies are doing a lot of marketing. How can you say that you are protecting consumers from problem gambling when at the same time you are the largest advertiser in the country? When I grew up in Norway, you were allowed to gamble for up to 1,300€ from the age of 15. Then, when the Internet came along, it became impossible for regulators to enforce the national monopolies. In the majority of the countries they still try to sustain a monopoly in a very restrictive policy, however, more and more of the national states have realized that you cannot fight the internet so they introduced a settlement between the EU Commission and national states, which allowed them to keep a nationalistic fence in the industry in their country but they had to allow any company in the EU to get the license. This was favoring national companies. This settlement is for this limbo situation. The pan-European regulatory framework is progressing so therefore many countries are adopting this model. The UK did not like this model, and considering that they have one of the biggest gaming industries in the world, this legal framework is not entirely good for them. The companies operating from England come to Malta or Italy, France or Spain. The UK was the last country in the EU to start digging in this business model. I believe Malta has the right to offer a pan-European licensing framework. I believe that I should have the right to operate with my Maltese license in Norway. Things are complicated in the EU, it takes time. My company has now started obtaining additional licenses. We have obtained a license in the UK and we are looking into other countries.

From 2008 to now, after creating Guts.com, how has your idea of this business evolved?

I started this business with two empty hands. In 2008, Facebook was getting popular in Norway and we realized how big the role of the social media in the community is, and we went ahead and created a social network for poker players. At that time, I was a famous poker player in Norway, and Frode (my colleague) was the most famous poker player in Norway. This social network we created moved from Norway to another ten countries in the EU and we became one of the largest affiliates for poker players in the iGaming industry. That is how we started and it was a fantastic journey because when you have a social network you are extremely close to the consumer. I was raised in this industry by the consumers. We picked up a lot of information and opinions from consumers on how operators should be, and that ultimately led us to think to start operating ourselves. At that time we started advancing from forums and streams to move to online performance marketing. The online advertising industry had evolved significantly so we started to pick up more on the technological side. We built what we thought would be the platform for an iGaming operator for the future. This was how Guts came to life. We launched in 2013 and the day we went live we did not have much of a budget. We started with 250,000€ and there was no marketing budget. We did not think we needed one. The day we went live some person posted in a forum that this company is going to do something good for the iGaming industry. Over the next few weeks the thread grew. This was the first token for us. The feedback was impressive. Over the next six months we saw a word of mouth effect which was quite extreme for a casino. We got something like 20,000-30,000 players coming to our casino by word of mouth. For a small casino, that is quite a lot. We reached one million euros in revenue within the first six months. We didn’t have the marketing budget at that time so we focused on the customer side.

What other factors would you say differentiate yourselves from the competition?

When we started creating Guts we had all sorts of ideas, like creating game layers. The more we talked with casino players we realised that where we needed to differentiate is the core service of the casino. In the online casino industry it takes time to withdraw the money. It would take days. So we said we would be the first company that allows instant cash-out. Now we can do this in one hour and thirty two minutes on average, and we guarantee it in less than two hours. This was the main differentiator. There is a lot of work behind the scenes to be able to facilitate that. There is a whole infrastructure behind it. You need to have people 24/7 who can actually process the funds. You need to have algorithms in place to ensure that there is no money laundering.

Why Guts.com? Why did you choose this name and does the name offer you the brand which helps you to differentiate from your competition and to make people remember where they played?

When I started my first company I did all the mistakes you can do in the world. So when I started my second company I realised that a company is a group of people uniting. We started by thinking what we wanted to change in the world. I lived the full range of life. I’ve seen the good and the bad, and one thing that has helped me tremendously is that, you are always told you need to play it safe, but I don’t think you have to. I think a lot more people can step out of their comfort zone. That’s the idea of Guts. You should find the strength, take some chances, be more individualistic and have confidence to follow what you think is good.  

Commercially speaking, are you focusing on the mobile platform? How are working to develop your products and services on the mobile platform?

We believed strongly in mobile ever since we went live. It is interesting to see that when we went live we had around 9-10% of the deposits coming from mobile while today it is up to something like 31%. Mobile will get larger than desktop. Desktop is confined in space. While mobile you can bring with you. So mobile can help improve the service and grow the industry and I think it will be the biggest portal for the industry within the next 9 or 10 months.

I would like to ask you about human capital. It is a special industry and it is not easy to find skilled people for this industry. We would like to know how you are hiring such people.

It has been easy for us and it explains a lot the success we have had. Malta is a bit behind in the way they think about hiring and in terms of company culture. With Guts we are trying to create a community not a workplace. We are trying to get the most brilliant minds on board. Ultimately my job as the CEO is to hire people that are smarter than me to bring up the IQ of the company. We have a professional chef serving us food every day; which is bought from local farmers to avoid the processed food so our people can focus on work and not on what they will eat for lunch. We took the penthouse so people can rest their eyes by taking a break out in the balcony; there are no watches so people can manage their time as they want. There is a mentality of being attractive to our employee. I also think that when you are startup and you have many things going on for you, it becomes harder when the company grows.

In one year you have already 50 people working for you. The company is growing all the time. So in this dangerous process of growth how will you deal with this issue?

It is important to wake up every morning with a lot of fear so you do not become complacent. We have people in the company that have built companies before, people that have been stakeholders in companies that we sold before. If you can retain the first 50 people that work for you, which are the core of the company, then it becomes much easier to build the circles around. So we are focusing a lot on retaining the community of people we have on board already. People don’t leave us.

The title of the report will be ‘proud to be Maltese’. Although you are not Maltese, you live here; you have your family here. How do you envision the future of this country and what would be the message you would like to pass to our audience about living in Malta?

I see myself as Maltese, as I had my son born here, who was born in a local hospital here and now goes to school in Malta. Many perceive Malta as a country lagging a bit behind, but this country has picked up an inflexion point with its services going up. They are creating the Silicon Valley of Europe in this Mediterranean country. They are in a fantastic spot to unite all Europe around the technological scene; and the government has seen this and is doing a lot in terms of harmonizing the interaction between expats and local community, to ensure this growth.



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