Alex Kornilov: We spent almost half a year working over our launch in the USA
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.
BETEGY is also a company that processes and visualizes data, and they managed to enter the US market towards the end of November 2020. One of the founders and the current CEO Alexey Kornilov tells the story of how his team made it.
You need to start some personal relationships
– Your company broke into the media space a couple of weeks ago. You open some media online and you can see Alexey Kornilov there. What happened?
It was a very important thing that happened to us. We (finally!) officially entered the US market with our product. We were working on it for over half a year, building it up from the very ground floor. And now all that work has become reality. We already have clients there, and we are now ready to grow..
The US betting market is growing, developing, and I believe in time it will become the largest in the world. We hope represented there constantly from now on. It was a real puzzle which we had to solve to get here. The main parts of the puzzle were getting finances in place and then bringing together the perfect team. So we started with choosing the right investor and partner that could help us enter the US whilst at the same time we were hiring our team.
Bill Pascrell has joined us as a board member this year. He is one of the industry pillars in the USA. Investment fund JKR Investment Group, that is focused on gaming and sports media, supports our plans, too. Two weeks ago we announced that we had gathered this team together.
– Did you expect the media attention? Did you work over it, or did it happen spontaneously – once you entered the market, everyone paid attention to you?
We have been working at brand construction for the last two years. We took part in all the conferences like SiGMA, iGB Affiliate Conference, Affiliate gaming show, ICE London, and SBC Events in the USA. We were increasing brand recognition step by step.
However quite suddenly many activities stopped because of the COVID-19 outbreak. So, nobody heard anything about us for almost a year. Of course, we were developing a way to explain what had happened. A very good press release was made and we worked many things through, but we never worked with any agencies and never had any promotional campaigns. When the time came, we just shared the interesting news we had, and everybody was glad to spread it. They said something like: “Yeah, that’s very interesting, especially now, that no one tells anything like that in the current situation”. We were preparing the announcement, but we didn’t push it.
– Participation in conferences is not cheap though. Why did you choose this option?
The industry itself is very small, if we compare it by the number of main players, not by the financial turnover. In this case, you need to start some personal relationships with the people around you. Brand and its construction are an important matter. If you have a service that may solve someone’s business problem, it gets you a foot in the door. Then the customers start to trust you, the ones that are ready to improve the system, transferring it to the new solution and the new processes. The trust should be presented in the market, and this trust is built not in a blink of an eye, it takes years of work, successful communication, and mutual introductions.
Of course, you need to be present at the conferences so that the people can see you, and clients’ trust will grow together with the project. Besides, we always have something to demonstrate, because we provide a service that remains unknown for quite a few people.
Let me give you an example: A person stops by your stand and asks: “Are you an operator?” “No” – we reply. “Are you a payment system?” “No”. “Are you White Label?” “No”. “Who are you then?!”. It is at this point that you start explaining who you really are. The thing is that 95% of the stands around are operators, payment systems and so on. They are typical of the market. When we appear amongst them, we need to show our product, explain the way we work and who we work with. That’s why exhibitions and offline events are very important to us.
– How much money have you spent on conferences?
We have spent 250-300 thousand euro on all the events and tours for the last two years. And we tried to save some money! I can not tell you the exact number of course, but I believe that is roughly what we spent.
Our typical client is a sports betting operator
– What kind of product do you bring to the US market?
We have been working with data, it’s analysis and visualization since 2012. But we’ve been focusing on the visual part for the last two years. We connect all the possible sources, like statistics streams and API, we collect some on our own or connect our customers' data. In the end, we create visual content made of all of this for our marketing channels.
We give our typical client (a sports betting operator) the possibility to create content for one event which can be used on all the channels: affiliates, news mailing, push notifications, social networks, banners, YouTube, Telegram, and so on. Sports constantly change and refresh. Content is a very important part of all these things. The problem is that this content has a very short shelf life.
I think it is also true that visual content is more important now, or at least is equal to the text part. That’s why we need to have an army of graphic designers and animators to satisfy the market and our clients.
– I assume that you have automated these processes?
Absolutely correct. Our system immediately generates a necessary picture or animation for every format and need with the event that the operator wants to share. For example, if you like table tennis and I like chess, we will never receive information about soccer. We will receive information exactly about table tennis or chess. And only one operator’s manager will work over it instead of the 40 or so designers that would draw it otherwise. We make it with the help of a data visualization system and our experience in connecting media business and sports betting. We help to tell a story about an event instead of a simple sharing of numbers.
Working in this area, we have found a format which unites bookmakers and sports media. Because all the operators should either merge with media companies or become such media companies on their own to make the best advertisements. Many companies already do that.
Promotions, bonuses, or other activities are important at some point, but it’s not enough to attract the younger generation or to construct a brand. Because the established rivals will always have a better promotion or a brand. What is really important for an operator are the people. Clients rarely come to get a bonus, they come for the emotions and for the experience. You need to become a media brand to attract those clients. Take a look at the work of big operators, and you’ll see that they have the coolest adds, the coolest athletes and the most fashionable ambassadors. The whole industry is moving towards this kind of work. Those who stay at the level of just offering promotional bonuses will be limited in their development. We cater to these companies that want to compete!.
– Are you planning to work only with sportsbooks in the US, or do you think some B2C as well?
The product was created as a co-operation with Yahoo Sports initially. The idea was brought to life in 2016. We had a problem when we started working with them. The editors used to spend 50% of time searching for a picture for visual content that they could use without violating the copyright laws. We are talking about a simple picture. For example, if we make some content for a match between Real Madrid and Barcelona, then we definitely need a picture of Messi. Meanwhile, they had to buy a lot of data without knowing what to do with that. They used it only for the front end and the apps.
We realized that it was a huge problem for the editors and other sports content makers. We created our own system for media companies, but we understood soon enough that no one was ready to pay more than 10 thousand euros for the stuff like that in Europe. Because a department must get back every cent that they spend on a tool through sponsorship contracts.
– I would never have expected that Yahoo can’t find the money.
I wouldn’t think so either. We work with big media companies, like Yahoo, Ringier Axel Springer, Turkcell, and they say “Cool, but we’d like to pay only after we have found a sponsor for your content”. Media companies then offered our product and content branding to some sponsors and it was a very long process.
We work with a lot of companies and people, but we never could scale the business so that it would be effective and developing in Europe. Because of the structure of sports media budgeting mainly. Then we realized that in the cases where we add odds, it immediately becomes a product for the operators, and they have an even a bigger problem with entering the media market. There is a legion of affiliates that do not have access to what we would consider normal creative work and they make some awful content.
That was the moment we realized that this was our place. Operators are always ready to pay for such a source because this problem is more serious for them. That’s how we focused on betting, whilst still continuing to work with media companies time after time. We cater to sports operators, but our work doesn’t need to be licensed. This is why we can work on so many different markets.
– Who are you planning to work with in the US?
We already have two clients in the US. These are ESPN, who are the largest sports media company in the world, and Win.gg, who is an “E-Sports” platform. Working we them, we got used to the fact that US media companies are structured in a different way and they are used to paying for everything: data, tools, process development, proper time management. It’s much easier to communicate with the media companies in the USA because they understand an important thing - the tools that help to enlarge the business can’t be bought on the cheap. They also communicate with us well. Although we’re not limited to the media, we do have deals with leagues, clubs, everyone who own the copyrights.
When we negotiate with MLB, NBA, NASCAR, etc, everybody understands us. No one says anything like “We’re gonna sell you first, and then we’ll make up how to work with you”. That’s very interesting. “Hm, that’s funny, so, this is how it really works” – that was my first thought at that moment.
– You will have integrations with fantasy there, I guess?
The United States are more developed in terms of analysing numbers. The customer demands statistics, analytics, and odds. They have a lot more numbers in sports. For example, there is a final score 1:0 in soccer – this is pretty much it, no more statistics. In American football the final score may be 20-30 or more, in basketball, it may be 80, 90, 100. That’s why they have been working with a more complex level of analytics for a long time. And it’s cool that we have a fantasy. I believe that it is simply betting with another name. It works in the USA.
Fantasy sports gave a foundation for the operators. It demonstrated immediately the way a bookmaker should enter a market: having an analytics department, statistics, cool content, media promotion and so on.
FanDuel, DraftKings and the others have shown the way it’s supposed to be. If the operators go this direction, they will be entering markets very successfully. The customers will switch from fantasy to betting because betting is simpler, I guess.
We need to adapt the product – there should be no soccer.
– What should a company do to enter the US market?
They need to at least attract some of the necessary people and make the necessary investments, first. But those are a separate topic. I think I’d better talk about it later in more detail.
There is one very important thing to do which is you need to adjust the product, all presentations, sales material and what have you to the local market. There should be no soccer for example. We tried to start with soccer, but it was to no avail. I guess it is the same if someone would offer lacrosse betting to the customers in Europe. It’s funny but pretty useless. So, we had to create demos, modules, and other things, especially for American sports. And then you can see the fire in the people’s eyes. They say: “I support Baltimore, what’s gonna be the result of their match?”
We spent three months preparing the product for release. Here’s a simple example: the home team is written from the right side always in the US. All our materials were previously made according to our tradition which has the home team on the left. Or another example. Lebron James. I used to think that his name is James, and the last name is Lebron, but it’s just the opposite. It’s the equivalent of writing Messi Lionel in Europe every time. And there’s a lot of other examples. Sometimes we can think that we know everything, understand everything, but no way, it’s not true. The Devil is always in the details. And no one will speak your language before you manage to understand all these details.
– So, you need to understand the US sports. What else?
The executives of different media companies of the world have their own sports world and betting world, American odds, for example. You need to understand how they work so that everyone who makes the product would understand it. All my developers should know what -250 and -350 each mean.
That’s why everything took more than a year: a story with Bill, a story with the product. I think, these are the most important things, although the promotion is important in the USA, too. You need to attend conferences, see what other companies offer, what’s the current state of the local market and if there are a lot of rivals. We had to explore many things before we could start. For example, we needed to know who our probable rivals were, what kind of visualizing systems already existed, how the broadcasters worked, what they used. You need to explore everything. Otherwise, you can start working on the market and then you realize that there is a company that has been working here for 20 years, and everything you do is going to be in vain.
– Do you have may rivals?
Well, a European company has an advantage here, because there are companies that provide visualization for broadcasters in the local media business. They have had virtual field lines for football for a very long time. They can colourize the ball flying into the net in the NBA. You need to have real-time data, coordinates capture, three vectors positioning capture. We can’t even dream about things like that in Europe, because sometimes FIFA even bans trackers in the official matches. So it’s still about 10 years before we can do the same. We collect soccer data manually. Not us, but the companies that sell the data, to be precise. They keep on pushing the buttons, marking every action. It’s way better in the US.
But! We come from Europe. Betting as we classically understand it is much more developed in Europe. Our product is made for betting, and when we show how they can add cool betting to all these American cool things, they say something like “Wow, no one does it here!” This is what gives us an advantage, that highlights us right away.
There’s one more interesting thing. When some local companies with a long history buy some software, they calculate its depreciated value. If you buy a graphics package for a TV channel, it should keep on working for about 5 years. Technologies and requirements for graphic design is changing so fast, however, that a graphics and visual data package becomes outdated almost every year. There is a big difference between 2015 and 2020. And we enter the market with a fresh, cool, and simple product, which is more interesting than old graphics packages. Big companies see this difference. It happens because we didn’t look around us in the USA, didn’t compare our product with the other ones here. The interface is not better or worse, it’s just another one. But the processes we want to bring here are better.
We’re interested in working with top companies
– Let’s talk about operational processes. Do you have to hire many new employees?
We’re in this process now. I mind taking a lot of money to hire a lot of people. COVID demonstrates that such an approach may kill a company. You need to go step by step, hiring particular employees. I can’t say now who is going to join us. We need to make the first steps, get the capital and grow further.
– But you have a business plan, right? Can you tell us an approximate timeframe?
Sure. We have a target to open an office and we know the number of employees that we need. To immediately rent some real estate, start a company, open an office, and pay taxes is a stupid strategy. We have external capital. But everything we do should be justified and worthwhile. We have started with hiring the people who can lead us to some new deals and make our business worthwhile.
We have a high touch sales model, that means that we negotiate a lot with customers, explore them. It takes time and demands building personal relationships. If we sold a product with the price of 500-1000 euro per month, it would demand another model, of course. In that case, you have more sales managers, that can make cold calls and you have a wider net.
– Can you describe your business model in more detail?
Many things we do are connected to personal meetings and so-called warm introductions. You work, even if a customer is not yours yet. Suppose, we meet with CBS, and they say that everything’s alright. But you still have to do a lot to start being partners with them: we need to get into their next year’s budget window, their technical planning window. Every big network company has a schedule busy for a year ahead. That’s why I understand why they have branches and separate departments that work only with innovations and new processes.
But we negotiate with our customers personally. I make sales, too, we work together. We don’t need many sales managers to call everybody, it’s another area, another target. We’re interested in working with top companies in media and betting. We want to know what they need, adjust our product to the market’s needs. We add some innovations to the processes so that they would be the most effective. That’s why the number of employees in the American office doesn’t matter much, the quality does.
5% of euphoria, and 95% fear of survival!
– Tell us a little bit about yourself, please. How did you get into this area and how are you developing here?
I’ve tried many things in my life. I was a janitor for Hilton, I also worked in McDonald's. I studied in several European business schools. I worked with big data in complex economical research institutes, started several companies like advertising agencies, and also a vending machine business. So I had tried many things before I found what I was really interested in. There was a period of time when I worked in a bank although I already had business experience. Then some necessary people appeared around me, one of them knew technologies, another – algorithms, and I knew what management was. We created BETEGY in 2012, found investments in Germany and started data analysis. The project switched from B2C to B2B later, and then to the data visualization.
I am a classical businessman. I’m interested in different areas, different ways of technological, business, and industry development. I have a good knowledge of sports media, big data analysis, data visualizing, gaming as a whole. This is the result of the 8 years working with the team.
– Where do you get so much energy, time, and money from?
I’ve got a favourite book, which is “Hard things about hard things” by Ben Horowitz who is one of the investors in Silicon Valley.
In this book, he tells that all these cuddly things like “Let’s give 20% of the time to the people for innovations” are good, but young companies work in another way: It is a rollercoaster of 5% of euphoria, and 95% fear of survival!
And it remains the same even when a company grows. This 5% gives charge to your batteries to go through another 95%.
You need to have a personal target. As a person, I’m not interested in doing something that is already done. I’m interested in doing something that no one’s ever done before, something difficult. I always ask myself – why do I work with technologies, isn’t there something simpler, more stable, more profitable? But I’ve come to realize that I’m really interested in something that I can barely understand. If my hands are wet during a negotiation, then I do something right. I come to the United States, meet some executives and think to myself: “Damn, I don’t understand anything. He’s talking to me, and I look like a child”. It’s a new market, new rules, new laws – everything’s new here. It’s not just a company’s strategical development for me. It’s a personal challenge, a new kind of a drive. And I think: “Wow, the hands are wet!”.
– Where does such a specialist come from? Kyiv? Moscow? Warsaw?
I graduated from polytechnical university in Kyiv, then I studied in business schools in France, Spain, Sweden. I settled in Poland eventually, the place where I still live.
– Have you ever placed bets?
Sure. We opened accounts for all the programmers when we were developing algorithms for the B2C service that was supposed to analyze statistics, odds and offer tips. We had a competition at our company. I gave 100 or 200 euro and we placed bets. That’s how we learned to do it. Some stopped placing bets after that, some kept on doing it for fun, and some even managed to make some money from betting. Anyway, we had to learn to enter the business.
– What is betting in the first place?
I always look at Wall Street. These are the financial markets, although a bit more entertaining. I believe that there would be no professional sports without betting. If we take all the spectrum of the world’s sports finances, it’s going to be less than all the sports betting revenue. Betting – is the way of growth for the sports. It has always been like this. It is an entertainment, some income, a way of showing your intellectual side, a way of learning more, a media. It’s also a difference in opinions. I think that your Messi is nothing, and Ronaldinho was a great player! I think that one side’s gonna win, you think that another will do so. Betting is a whole big world, which is very interesting.