Alex Kornilov: How we found investors, as well as a man who worked with US Presidents!
About the expert:A serial businessman with experience in sports data analytics, sports media, and gambling in general. He is the founder and CEO of BETEGY. The company offers an automated system of content creation for bookmakers and sports media. The service provides personalized visual content based on various data streams. The main clients are ESPN, Tipico, Ringier Axel Springer, Parimatch, Bwin, Yahoo Sports, Sportsbet.io, Winners.net.
In my interview, I promised to tell the story of how our company was entering the US market. To be precise, it’s not the story of “how”, but more a story of “who” was the one to help us. Bill Pascrell and JKR International Investment were our partners. I am going to tell you all about them.
I’d like to start by talking about the money, and JKR as an investor in this story. The company has huge experience in the gaming, sports media, and sports betting business. I had been looking for a financial partner to share my ideas with for a very long time before I eventually managed to find one. I told them: “The operators have such a problem”. “Yes, Alex, we know about it perfectly well” – they responded.
We met each other a long time ago and immediately realized that they would come along. We didn’t have to do anything extraordinary to make them believe that the things we were going to do made sense. However, it was only a year ago that we and JKR decided to make something together. Yeah, it takes time to negotiate all the details. Even if it seems that you have found a perfect partner, people that believe in your business, and that you have a common understanding of development, targets, and strategy. Guys from JKR gave me the time for planning everything. They told me: “Alex, we’re not in a rush, we’d like to see how the product works”. They started to look through our clients’ portfolios, met with them, trying to do something. They’re not typical investors that simply give you the money and that is it. That’s why we had a lot of things to discuss like planning for the US, Europe, and the other parts of the world that we’d like to enter. We had to understand what we wanted to do, our acquiring strategy, market volume, our final target. We were working over it for a long period of time before we came to realize that everything was OK, and we could seal the deal and sign the contract.
A new board member
Bill Pascrell worked with John Kerry as part of Bill Clinton’s administration. He helped to obtain licenses for Donald Trump’s casinos, and he was the main lobbyist who helped to open betting markets in the US. He’s a very big person in the United States. So, I am sure that you want to ask me how we managed to get him.
“Bill, I understand that there are companies that pay you a huge amount of money, but…” – I told him.
A year ago, I was sitting in the hall at the World Gaming Executive Summit listening to Bill speaking about the US market. He was saying all the right things without any slides or unnecessary words and phrases. He was just explaining the situation, explaining which States were about to open up to new situations. It was a very bright speech, with a great understanding of the current situation. I like people who don’t blabber, but just say the things that are really interesting using good language.
I immediately decided to talk to him, cause I wanted to work in the USA. He was standing alone after the speech with nobody talking to him. I was the one who came up, introduced myself, and we started our conversation. Bill asked me where I was from, I answered that I lived and worked in Poland, and we started to talk about business.
We met again at another conference, and he told me: “If you come to New York or New Jersey, we can meet. I can help you with a lot of things”. So we became closer because of that personal communication. I was in Trenton, where his company office is, in November 2019. He was glad to see me, and I thought that Bill is a great person that can guide me through the US market as well as some other things. I decided that I wanted to invite him to the supervisory board.
“You know, I have two types of clients: those who are quite boring, but they pay you well, and those who don’t have a lot of money, but they’re more interesting. I guess you’re the second type, so far, so let’s see what’s gonna happen in the future” – he responded.
He works with companies on another level, but still, he told me that he would help us because it was interesting to him. He said that he saw a gap in the market and that he didn’t know a similar product.
He agreed to become a board member and we spent about 3-4 months discussing all the legal details. Our company is registered in Poland, he lives in the United States, and we had to settle many things. We had to understand how we were going to hold board meetings, how he was going to participate in it. We needed to clarify what he was agreeing to do, and what we were agreeing for him to do. We had an initial wish to work together, but we needed 3 more months to settle everything. I had to confirm his candidature to the board and had to convince my investors that we needed Bill as well as then introducing everyone to each other.
It seems like it was done in a blink of an eye, but it actually took time. We were building good relationships step by step. He started to give us some advice, opening some doors. Bill can introduce me to somebody, but he can also tell me how I should manage the company. I appreciate that a lot.
Our people in the United States
We hired two more people besides Bill. They work as salespeople. The first one is Rob Wussler, an ex-executive of 21st Century Fox. His father is a founder of CNN. This gives us a direct way to NASCAR, MLB and other US sporting giants. A couple of direct calls from Rob and you can meet the MLB Head of Product. It’s a very important piece of our business model. The second person is Phil McIntyre. He worked as a service provider for big sports media companies for many years. ESPN, CBC, NBC – these are the companies he worked with.
These two people fitted our team right away. Bill Pascrell is a board member, he may guide us, but all the operational work was by me. I had no time to work everything through, for sure.
A person like Bill Pascrell wouldn’t work for free, of course. Rob and Phil cost quite a lot of money, too. It costs at least $5000 per month to make a US expert do something. And I am talking about consulting, full time’s going to be more expensive. After the first meeting, you think something like “Wow! Cool! US – is a land of possibilities. We’re gonna do everything together”. After the second meeting, you realize that you’ll have to pay for it.
A piece of advice for those who are entering the US market: don’t expect that you’ll find someone who will work with you less than for $5000.
To understand how we manage to negotiate with the people like that, you need to look at the US start-up system with options and taking a share of the business. There’s a period when everybody gets used to each other. If everything’s going well, then they can get the payment via the stimulation program within 2 years. We talked about all these details with Bill, and we managed to agree.
American people always wonder about equity, asking questions about shares and percentages right away. It’s a background thing in Europe, but in the US it’s a culture and the market standard. They want to have options, stocks, virtual stocks, etc, etc. Especially at such a high level. How can I attract a Fox Media executive with money? There’s no way. He has a parachute that allows him to live without any problems for five years not working at all. I can only attract him with a cool idea, make him excited about the product. It takes a lot of work. By the way, if a person is 40-50 years old, they want to consult more doing less. In this case, you can bring them something they’ve never seen, but they can appreciate knowing the area.
To sum up I can say the following: you need to convince the Americans that the idea is cool and can be successful, and also you need to offer them a percentage of future success. The more successful your business, the better. And this approach fits everyone in the US. I am not William Hill so my budget does not allow them to work with us only because of the salary I offer.