Charles Cohen: You Only Learn on the Way Down: Lessons from a $300M Reality Check

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There's no room for denial. You can't negotiate with it. You can't finesse it. It is an absolute change and you've either got to accept it and adapt to it or get out and walk away. The closest I can explain is it was a feeling of seasickness, a complete nausea because you suddenly realize that everything that you have assumed, everything that you're doing and all the promises that you've made and all the people that you've hired and everything no longer applies. The lesson that I took out of it ultimately is you don't learn anything on the way up. Everything you learn, you learn on the way

down. All the valuable lessons. We would have these conversations at the board when we were doing fundraising. Why don't we just do a desktop version of it at least to generate the revenue? And I always resisted it. It felt to me that if we were going to build real value in this business, we weren't going to achieve that if we were just a different version of what everyone else was doing. This is mobile first, mobile only. And that's the bet that we're placing on the future. all this Silicon Valley horseshit about defining the future. It's just complete nonsense. You cannot bend the arc of the

universe. You can react to it and you can try to influence it to some extent, but your job is to be aware, be rational, and be decisive when you need to be. >> Welcome to the I Gaming Leader podcast. I'm your host, Leo Judkins, founder of I Gaming Leader Mastermind. And on this show, I sit down with some of the most inspirational and forwardthinking leaders in our industry, diving into the real challenges, high stakes decisions, lessons that shape our industry. If you're a VP, director, or an executive in I gaming, this podcast is built for you. Before we dive in, a quick thank you to

our sponsor, Sumsub, the full cycle verification platform trusted by top i gaming operators worldwide. Sums up helps onboard players quickly, stay compliant, and prevent fraud, all without slowing growth. More information in the description. Hi everybody, welcome to the I Gaming Leader podcast. My guest today is a man who's lived through the highest highs and the most isolating lows of the I gaming industry. Charles Cohen is an Oxford PPE graduate who went from writing policy at the UK Parliament to building one of the internet's first digital currencies, Beans.com, raising almost $und00 million and hitting a $3 million valuation in three years before the com bubble burst. He

then pioneered mobile gaming with probability when the rest of the industry was still focused on desktop. We were just talking about that. And he took that company public eventually selling to GTech for about 20 million. He spent the next seven years as vice president of IGT leading their global mobile and US sports betting expansion following the Pasper repeal and today's the founder again with Department of Trust while serving as an industry expert for the UK Gambling Commission and a board member for uh Vatouse. I don't know how to pronounce that properly actually Charles. Sorry. >> I think it technically it's fake house but the thing

I've learned about Finnish is that it has a lot of vowels. >> How's that for an intro? Did I miss anything? >> That was good. The only thing about beans, it was a $300 million valuation, but that's okay. What's a couple hundred million between friends? >> 297. We're Yeah, we're fine. Nice little gap. Let's uh let's actually start there because that's the thing that always everybody wants to talk about and you know, it's such a long time ago and I, you know, everybody focuses on that kind of $300 million evaporation because of the headline. That's what I'd love to hear. What happened in the room

the day you realized that kind of that com bubble burst and it all kind of went wrong? The closest I can explain is it was a feeling of seas thickness like complete nausea because you suddenly realize that everything that you have assumed is the underpinning of everything that you're doing and all the promises that you've made and all the people that you've hired and everything no longer applies. It's a real paradigm shift. There's no room for denial. You can't negotiate with it. You can't finesse it. It is an absolute change and you've either got to accept it and adapt to it or get out and

walk away. And obviously walking away was not an option. And we'd seen it coming. It really didn't take very long. But you move from a position where people weren't just reducing their usage of the service. they were just stopping entirely and disappearing because the client clientele, so the businesses that were transacting the currency with the consumers and with each other, they were all com businesses themselves. And so they were all living off VC funding. And in a funny kind of way, when the AI bubble that we're currently in bursts, it's going to be a very similar set of experiences for the people that are working

in that sector because they will suddenly find that nobody's around to use their subscriptions anymore. >> Yeah, makes sense. So, let's talk through that. I mean, it it was one of the first digital currencies in the world. A lot of parallels like you said with AI, of course. So, let's talk a little bit about that kind of up to the steep down. How did that trajectory go from starting to building up to being at your highs to being down at the lowest lows? What did that journey look like? >> It was incredibly quick for one thing. I mean I think I started it in kind

of 199798 and you know started gathering people together friends that you know people that have been working with me on my business that I had started at the time which was a web design business and it just it you know a rising tide except this was this was this was a extraordinary moment when you could for the first time go from being a a completely unfunded startup from zero and raised money from very very serious investors. And we you know the I mean it went from me funding it on the back of my credit card to meetings with really top tier venture capital funds in

New York probably within about 6 to9 months and closing several rounds of funding. And I was very very lucky because with each round we sort of got more skilled, more capable people, better networked people who could go up to the next level. But of course the strange feeling was that we didn't really need to do very much in order to be considered to be more successful. It was an entirely I guess nowadays you'd call it a momentum play. So the success wasn't so much in the traditional virtues of building an organization, building a business. It was more in okay but putting more fuel in burning

it getting more fuel people going oh you've managed to burn all that fuel that's fantastic have some more you know your your behavior starts to get influenced by the metrics rather than the coal so the metric was how much money can you raise so we took money from a Japanese fund and the condition was we had to open an office in Japan which was great but you know it was never going to be a good market for beans just because of the way that the the Japanese economy and the Japanese consumer worked. You know, we we had a similar thing in in in South Korea. You

know, we open an office in Seoul. No reason I could tell other than the fact that it was there and and investors were interested. And so they said, "Okay, well, you know, create beans Japan or Beans Beans South Korea and and we'll give you some cash." And it was it was the most extraordinary thing to to end up with you know staff in 13 countries I think or 12 countries and 13 offices you know and the whole thing was probably within about 18 months. >> How did you manage to keep your feet on the floor did you I mean is that does that I mean

that rise right like that >> the question is which floor the floor that my feet were on mostly was a Boeing 747. What happened was that my first daughter had been born about a week or 10 days before we went live with beans. And so there was all of that going on at the same time. And that was extremely difficult for all of us. But, you know, this was one of those things where you just had to keep going. And so I was on a plane for a significant amount of the time. And it's all a bit of a blur, you know, to be honest. And

it was a long time ago. But you a lot of people listening to this podcast will know that feeling of waking up in a hotel room and you usually use the same hotel chain. You know, it's always like a Hilton or something and you wake up and the rooms are always the same regardless of which country you're in. And you actually don't remember where you are and that's a somewhat sobering experience, but it happens to you rather than because of you at that point. >> Tell me more about that. What do you mean with that? Well, these things kind of take on their own momentum

and and you become a passenger on your own train. There was one point where I had to go to a meeting uh with investors actually in New York and the flight was delayed and so I landed very early in the morning and I was wearing jeans and a t-shirt and I called the CFO and said, "Look, I'm going to be late cuz I got to go and get changed, put my suit on for these investor meetings." And he said, "No, no, no, don't put the suit on. we need you to come in looking like crazy English techno guy that came up with the idea. We

don't want you in a suit. >> Yeah, >> I'd taken the role of BTO. So, I was in charge of the product cuz I didn't want to do the corporate stuff. And so, they kind of put me in that role and I just Okay, well, there you go. I'm playing that role now. That's what I'm going I'm going to do. >> So, then yeah, then bubble burst. You said you saw some of it coming. Tell me about that. It was like a tidal wave and you know it started with there was a couple of public companies where the suddenly the the the air went out

of their valuations and you started to see funding drying up for startups. People weren't able to get their follow on rounds. We we had cash and were actually in the quite late into the process of planning an IPO. There were various issues with that including we needed to make some changes in senior management and that actually had slowed us down and it's just as well it had because I think if we'd have been listed at that point we would have been a real bubble stock and and it would have been horrendous for everybody. But you could tell that everything that you'd assumed about the growth

of the online world was just about to either stop completely or at least take an extended pause. And so we, you know, we all met and decided right there's no IPO was going to happen for sure. We had cash in the bank, but we were burning at a heroic race. So we decided that we were going to really do what we could to scale down the business. There wasn't a clear and obvious what I I called like the Phoenix plan, you know, changing the business model or anything like that. Yeah. that there wasn't anything obvious that that could have been done because there was so

much uncertainty out there that you just didn't know what was gonna what was going to happen. And so, you know, and I I was incredibly lucky at this point as well to have such an experienced senior team, particularly the the board members who had been around the block a few times. And we made some pretty quick but solid decisions to first of all reduce the headcount dramatically, you know, and and Steven, the CFO, basically went on a plane around the world firing people and closing offices, which was unpleasant to say the least. And we we started looking for someone to buy the technology and buy

the brand. And then I got a phone call saying uh you know, congratulations, we sold the business. Your redundancy payment will be made at the end of the week. You know, funny enough, I was standing outside what is now the Hippodrome Casino in Leicester Square when I got the phone call and it was actually a relief. >> Yeah, I bet. >> Apart from anything else, there were people who, you know, where these firms went bust and there was a real destruction of value. We at least returned some cents on the dollars to people and we did everybody got what they were entitled to and there

were no legal issues. It was all done entirely, honorably, and by the book. and it was acquired by a company called Carlson who were big in the sort of loyalty and CRM business. Then about I don't know it must have been a week or two later it was 9/11. >> Wow. >> I think that that was just you know horrendous for them in many ways and and the whole thing just went into a filing cabinet and became a tax write off. >> It must have been so sickening just to see it happening as well. the revenues evaporating. So, you know, you've got to reduce the

burn rate by reducing costs, but you also know that that's not going to solve anything. It's just going to be a slower death. >> You can't negotiate with reality. >> Yeah. >> You've also got to keep these things in perspective, right? Especially when you see real buildings collapsing, right? It is important to stand back and go, it is just a business. And okay, we were closing down an office in San Francisco. We weren't shutting down the mill in a small town upon which everybody's livelihoods depended. Everybody was going to be able to get another job fairly quickly maybe in another sector and move on with

their career and this becomes a really interesting CV point. So you do have to keep perspective on it. >> How much of your identity was tied to that though Charles? Did you feel that that was a loss of identity or was it it was just business that you were part of? I mean you lived that business for a long time in a plane mostly. Yeah. Well, I mean, you know, it was only a few years and so I'm guessing that in terms of my own kind of personal who am I, what am I type thing, I I'm I'm quite I was quite sanguin about it. I

mean, the whole thing just seemed completely bizarre to be honest. You know, my wife and I were sitting in a pub, I think on like New Year's Day or something, and there were these people at a table next to us reading the newspaper, and one of our shareholders, like a small cutless father and son duo that were investors, and they'd bought some stock in an early round, and they were floating their business, or they'd floated their business. It was called Jelly Works. And all the buzz was about the fact that this was the first stock that you could buy that had a share in beans.com. And

these people were sitting at the table next to us talking about it and going, "Oh, I got to buy some of this. This is amazing." And when I just thought, "Oh," and then it took a while before the penny dropped that they were talking about what I was doing. And I just thought, "Okay, this is now this is just become a you know, it's like watching a play. It doesn't make any sense." But I I think the one thing that I I I'm suppose bit like a broken record, but the lesson that I took out of it ultimately is you don't learn anything on the

way up. Everything you learn you learn on the way down. all the valuable lessons. >> It's so true. And it's the same for the macro, right? If the market is propelling you forward and everything you touch turns into gold. Yeah. It doesn't teach you a thing. Doesn't force you to make the hard choices to, you know, to make the difficult decisions that have no good like have no good option. So yeah, completely agree. We Let's talk about the next one, which is let's talk about probability. You you founded probability when when people were laughing at the idea of gambling on a phone, right? Tell me

about that that market and tell me about the day you thought that maybe you even thought everybody else was right and and you were making a massive mistake with moving into mobile gaming. >> People said why don't you just launch a website like a regular desktop website. We had a brand called Lady Lux and we had a couple of subbrands and what we discovered the methodology for launching a B2B platform which was the I call it the Teddy Saggy playbook but I didn't know it at the time that what you do is it's very difficult to market a new B2B platform in I gaming cuz

it's you know it's the kind of the operational DNA of a business and so getting somebody to replplatform is a highly difficult thing to do so the only way that you can really do it is by effectively finding new businesses or new brands that want to come into the market and are prepared to run it on a on a different pam. In many cases, the best way to do that is to find people to run a business and basically go into business with them to some extent. I mean, obviously, you have to have independence and you need to maintain sort of Chinese walls between you, but

we essentially followed the same pattern that Playch did and everybody else did pretty much did with the dragon fish business. And of course the problem was that we were very early because we were the pioneers in mobile gaming and so the volumes didn't it was like a rounding error compared to what you were getting on for desktop. We would have these conversations at the boards and particularly around when we were doing fundraising which would be well why don't we just do a desktop version of it so at least to generate the revenue and I always resisted it because it felt to me that if we

were going to build real value in this business we weren't going to achieve that if we were just a different version of what everyone else was doing. We had to be doing something very different. And so we had all gone into this going this is mobile first mobile only. And that's the bet that we're placing on the future. >> Huge puns, right? Because in the like looking backwards, it's you would describe it probably you you describe it as visionary, right? That's but that's that's in hindsight. >> Insane is the word. >> Exactly. Because you must have had moments there, Charles, where you also started doubting

that punt, right? Where you also went, well, I'm not sure this is actually the right direction. Or were you so convinced about that decision of going mobile first that like you were unshakable? In fact, to me, it wasn't really a realistic option unless we decided to give up on mobile. The real inflection point actually came when the iPhone was launched. >> So, let's talk a little bit about before that because that was all WAP based or what was that like? >> Oh, it was so it started out as WAP based. So, the first game that we released was a WAP based if anybody knows what

WAP is. So it was the original kind of very it was like a micro browser that existed on on that kind of first generation of what they called feature phones and it was clunky black and white 8bit thing. It looked like a pocket calculator display and you could do very very primitive animations and render content on a screen. There was no bandwidth to do anything with no sound nothing. It was just like and it's it was it was really basic to say the least. And of course, obviously, that is the environment in which you want to build a a a a new uh gambling product

cuz cuz why wouldn't you? So, the first product was a kind of a three wheel three reel slot cuz you could only fit three reels on one of these screens. And it had one symbol and it just was like an animation like a scratch card basically. And it went gang busters. It was fantastic. We couldn't believe how popular it was because so the hypothesis was that for low stakes instant win gaming mobile was the perfect environment. It was a perfect delivery vehicle for that because it was a complete impulse purchase. So that you know my problem with the desktop was that you had to go

to the computer. You had to go to the casino to play the games whereas if it was on your phone it came to you. >> Yeah. But surely you still had separate wallets. You had to fund those wallets on desktop, right? >> No wallets. It was pay as you go because there was no method to do stored value. You couldn't log in. You couldn't have an account. And we used to have this thing where right at the beginning. So you'd pay for it through your mobile phone bill cuz you couldn't use credit cards, you know, you couldn't pay for it in beans, unfortunately. So, so

when you wanted a withdrawal and you made a request and I got the emails from the system and my wife and I, we were just sit there on the afternoons at the weekend with PritStick basically printing checks and mailing them to people for their winnings. Yeah, it was great. I mean, not scalable, but that was the only way to do it. You know, we basically had a rule that first withdrawal always got paid as quickly as possible because, you know, I felt if it was me, I would want to see that I got that check in order to trust this platform in order to play

again. And that proved to be absolutely true, you know. So, we always prioritize that to get new customers in and and then they they loved playing it. I mean, it wasn't, you know, I think the 50p was the most you could bet at that point, but but it worked. It was great. >> Love it. And then iPhone came around the corner and revolutionized how we use mobile phones. So how did that affect you? >> So by this point W was gone and it was all Java applet. So Java applet for for also for the young young people on listening to this were you would download

a program like an an application to the phone and it would run on the phone. And so we were building games in these Java applets and they were becoming increasingly sophisticated. The problem was that every single phone and there were hundreds and hundreds of different models of phone had their own and different versions of Java that worked. So we built an entire infrastructure to support gaming through applets on every single phone and we were better at it than anybody else and it was it was incredible. And then Steve Jobs stands up and goes forget all that. This is what you're going to have right now. Now

the thing is that for the first few years of the iPhone it nothing really changed because the app store didn't exist and all that the iPhone did was give you give you was a browser a version of the browser and so we started building games using the new versions of HTML on the browser and you started I mean this is where you started to get the I suppose the merge merging to some extent between the desktop and the phone but there was still some fundamental differences that we we thought were really important about the way that people would interact and what they would expect from

these services. And it it became one of those things where you had you had this hypothesis, you had this theory about how things work and you have to stick to it until the evidence tells you otherwise. And I I know that people struggle with this a lot and particularly in the gaming sector when you start to gather evidence that tells you something about your business that's wrong and you realize you need to change it. In our case, it was we believed that people would want to continue to use the phone for kind of casual instant win type games. You weren't trying to try to develop

a game like, you know, these really immersive slot games with with like cutscenes and all this kind of stuff. It was all about speed. There was a lot to do with the ergonomics. So, once the first time you hold an iPhone, the one thing that was amazing about it was how big it was compared to a tiny little Nokia thing. You know, the naturally the way you picked it up was different. and the way you because it was a touchcreen and the whole thing was an infinite array of buttons. So we started to think about how do you design for this UX and it became

we kind of very quickly realized that there was going to be a specialism in designing games for this environment and it wasn't just a small version of the desktop and so that kind of happened but it was really the turning point was when the app stores opened and I think the whole thing was in jeopardy then until it became possible to have a downloadable gambling app in the app store because up until that point everybody was looking at having to do it entirely study through HTML. >> Yeah, I remember that. It was a really challenging time because there was very strong opinions on which direction

it was going to go, right? And it's again same kind of thing where you've got to running a business like that. You've got to stick to your guns and at that time you were no longer using a print stiff to email checks I suppose with your wife. You had a team. The business would grow and eventually company got listed right. So significant growth within the company. But what did that journey look like? Can we talk a little bit about kind of cash flow runway challenges there being able to still stick to your guns on making sure that there is sufficient lifeblood left in the business? >> Yeah. So

the early days were really really really tough. I mean I don't think I've I've spoken about this before but you know there were a few months where we couldn't make the whole payroll and you know when that happened I I was the one that didn't get paid maybe one or two other directors. I'm a big believer in always paying the bills, but you would never tell the staff cuz you'd never want to cuz, you know, obviously people are going to be worried about their jobs. I mean, I haven't had that experience again, fortunately. But there's two things I really dislike in in the kind of

UK business culture. One is that this thing that if somehow you've had a negative business experience that that's a mark against you, you get the complete opposite and you go to the West Coast, right? But in this country, it's like, oh, I mean, I I've actually had this even with with raising money for due trust. People have said, "Oh, well, you know, I've looked at your thing and you know, you you had this thing 20 years ago where where it's it wasn't a success. I don't you know, I'm not investing in people with failures." Like, what? You got to be kidding. You know, and we

had it in probability as well. The same same thing, you know, people said, "No, no, no." And the other thing is this is this idea of who's taking the risk, right? And I think that this idea that the only people who take risk are the people that put in their money, their capital is is misguided because everybody is taking a risk because they are choosing to work for your company rather than another opportunity that they might have and they can't get that time back, you know. So the process of going from kind of bootstrap startup through to listed company was excruciating. But we got there. We

got listed and we had some great shareholders and some real characters. And then just after we listed was the 2008 financial crisis which was just challenging. And then you had UIA happened which obviously took the took the air out of the whole sector. And it was another one of these feelings that everything is happening to you and you're not in control of events. And I I kind of reached the conclusion probably 20 years later than I should have done that you you're not in control. Your job is not to this all this Silicon Valley horseshit about defining the future. You don't you you cannot bend

the arc of the universe. It's just complete nonsense. You can you can react to it and you can try to influence it to some extent, but you your job is to be aware, be rational, and be decisive when you need to be. >> Love that wise words from a man with battle scars to prove them. Right. So, I love that. Uh Charles, tell me a little bit about what you just said. Like who do you talk to about those kind of things as you go through it? Your wife, I assume those are things that you know you can't really share with your staff, right? >> You

can't because you want to insulate them from those sorts of issues. Interestingly, I had a there's some companies that we've been talking to recently who we're partnering with and one of them their founder suddenly popped up as at the center of a moneyaundering investigation and this is a regulated business, right? And it was almost like the first thing that they said to me is look, we need to make you aware of this problem and this is how we're dealing with it. And the transparency was tremendous and really encouraging, you know, so they'd obviously taken the view that, okay, that's what we're going to do. But

I mean, in a situation like that where you're talking about, you know, potential criminal activity, that's obviously something you can't keep from people, but you know, the senior team obviously needs to know the directors because it becomes a governance issue. But below governance issues, you want people to be getting on with their jobs. I mean, you can't you can't lie to them if someone asks you, but a lot of the time with these situations, you can't talk about it because there's potential legal implications. >> Yeah. Or even the cash flow, right, that you were talking about, the runway thing where you're not paying, you can't

tell your staff because they think they're not going to be paid, right? They're not going to have a job tomorrow. >> Yeah. But that's a judgment call, you know, that was very, very early on. And I suppose where do I take that from? I would have got that from the family members. I had family members, particularly my father and some uncles, who all had their own businesses. I I worked for my father's brother. He had a property finance business during the school holidays. And his rule was he had this incredibly elaborate phone system installed. I mean, this was in the kind of must have been

in the early 80s in his office where when a phone call came in, if it wasn't picked up within a couple of rings by the person whose phone number you were calling, it rang every phone in the building, right? And his rule was nobody waits more than three rings. And I yesterday found myself moaning in somebody that we weren't replying to emails quickly enough. And of course, you know, in the environment that we're in now with Slack messaging and Teams messaging and we have clients, you know, all of our clients are connected to us via these channels, it's like the phone ringing to me. It's

sets off this kind of Pavlovian response in my brain that someone's sent a message through. It must be replied to immediately. Even if you don't have anything to say, you just pick up the phone. And you know that that's the kind of thing that you absorb, I think, without always knowing where you saw it first. >> Crazy how that goes. It's um yeah the how our behaviors really kind of they come from our past and from things that we've done and good connection there. And then you took the company public. So let's talk about that for a second. That's all of a sudden everything you

know the performance the failures they are there 24/7 right it's not just you and internally share prices go up and down like how did that feel? How did that change things for you? So we listed on the AIM market which is the junior market of the London Stock Exchange and there was a brief window of time where you could do that as a tech startup what we call a micro cap stock. So anything below 50 million is considered a micro cap. The reasons that we did it were all sensible. The number one reason was for reputation and we were dealing with regulators, we were dealing

with big gaming operators. we were dealing with multiple countries and if you're a PLC that comes with a certain degree of cache and seriousness, everything is out in the open. You've obviously been through significant due diligence processes and people will trust you. You're not about to disappear. And in a world in what we were doing on our B2B business where we were trying to convince big operators to use our platform for their mobile gaming strategy that obviously was important and valuable. Actually raising money was a secondary consideration. We didn't really raise very much at the IPO. We we did a couple of places I think

afterwards not significant but we were in that early stage growth mode. So it wasn't all about the profits. It was all about the growth momentum around user numbers and technology and jurisdictions and the the kind of general building of an asset which had some potential value for acquisition. And and then the third reason for doing it was that we then had paper that we could use for M&A of our own. We acquired a company in Switzerland that had clients in Italy and Italy became our second market. >> How did that go? How did you feel about that whole process? >> If you asked uh so

you know some of the people that were involved, people like Paul Leland and Robin Chabra who were involved around that process to them this was the sort of thing they they'd done loads of times. I' I'd only got this far once and it certainly would have been different listing on AIM versus the NASDAQ if I'd have ever done that dodged a bullet on. But it's it's it's one of those things where it's not done until it's done. And it could easily go wrong or not be viable for sorts of reasons, often completely unconnected with you. It's I I I think about it actually the nearest

I can say is that listing a company is a lot like meeting the person you're going to marry. Could be the right person but you meet at completely the wrong time or it could be the right time but the wrong person or you meet in the wrong place and it just doesn't work. And the number of different things that need to come together in order to have a successful listing, even a small one, is extraordinary. And the fact that it happens at all is quite surprising actually considering. But, you know, it was really well, it felt to me like it was very touch and go, but

with hindsight, we got it over the line. You could say it was always going to happen, but that would not be true. >> Exactly. Um, and then you sold later on 2014, you sold for 19 million to GTech or IGT. Most people think that that's the that's the jackpot, right? They think, "Oh my god, it's great. Sell for a big number." You described it as one of the most stressful periods of like super stressful going through it. Why is that moment of winning often the hardest part of the journey >> because it's such a big thing. It's so binary. It's not like anything else you

do in a business career because it doesn't happen slowly over time. It's a transaction that's either going to happen or not happen. And that you never know until it's actually done whether it's going to go ahead. And you know again that process is a lot like the listing process where it's very iterative. It doesn't matter who started the discussion. You've you know we had an we had two or three pe potential acquirers as well in the process. It got quite complex. You have multiple advisers. So there's lots of people in the middle of it. And then when you get down to the legal issues, we

had the whole thing nearly went south because we had a partnership in China where we were going to be working with a Hong Kong entity to supply mobile instant win games to one of the Chinese state lotteryies. And it turned out that there was a potential conflict between that deal and one that GTech had, right? The whole thing nearly didn't go ahead for that. But it if it wasn't for the really clear thinking of our lawyer and also our counterparty in GTech that go the no this is really not a problem it's not a material issue the whole thing could have quite easily fallen over

and so you've got the combination of great uncertainty but equally if it does happen you know that everything is going to change not just personally and professionally but also for all the people I didn't realize this at the time and I kind of laughed about this with Fabio Sheldon he was the M&A guy under the GTX side that their main concern apparently was that I wouldn't stay with the business. My main concern was that they wouldn't want me. So that goes to show right how the communication is really really difficult and I actually kind of came out of that process with a great deal of

respect for the people that do these transactions on the inside of the two businesses that are involved and of course the all the advisers and everybody in between cuz it's a really really complicated thing to do >> once it was finally done. Then Charles, how did that moment feel? Take me back to that moment when you knew when it was actually all done like was that celebration? What was it? >> I remember being just so tired cuz it had been, you know, we were in pretty much all night with the the paperwork and the lawyers and everybody and the advisers getting the deal done and

we had to get shareholder approval. So everything was subject to subject to subject. But because it was a listed company, the the process of the announcement was set out in the regulations. And so there was, you know, as soon as we had all agreed that that was this was going to happen and and the the document was finalized, I remember going into the office in the morning and telling Pete, who was our CTO, Pete Russell, what had happened. And I was like, "Yeah, there you go. What's happening?" You know, like, "Let's just get on with our jobs." did take a short holiday with the family

but then you know really as soon as it closed which was you know it took a few months to close because of all of the approvals that were needed you know we we were then part of of of GTech they were great actually they were really welcoming and you know there were obviously some people who whose lives were going to be disrupted by this group coming in and you know others who were just really thrilled and excited that we were there. >> Yeah. And you you stayed on for seven years as now in the corporate machine, right, of GTEC or IGT and as a VP. How

was that going from kind of that founder CEO level to being in that environment? >> Somebody I think actually opened a book informally on how long I would last because I wouldn't have I would not have bet very long. Not because of GTech themselves, right? Because I mean, who knew? But I just couldn't imagine myself working in a corporate environment. >> Yeah, exactly. I can totally imagine that. There is this mythology, isn't there, that that entrepreneurs can't work in corporate and vice versa. It's not true at all. I don't know whether I just got extremely lucky, but we had a great time. Most of the

people that you know came across stayed for quite some time. A lot of them sort of naturally I suppose over time moved on to other things. But what's really great is that a lot of them have all stayed together. They're all working in the same company now, which is fantastic. You know, I love that. I feel really I'm feel really proud of that. So, how did it feel to go into corporate? Well, we I I was lucky because I had great managers and because what we were doing was strategically important and we were enthusiastic to help and support and GTech was like everybody else at

that time going through the same transitional process where the techn we were in an era new era of technology was emerging and in the gaming sector it was mobile or die and we were the mobile people. So that was how that worked. And I had a couple of great managers, Matteo Montverdie first and then Enrico. And Enrio was like the best chairman you've ever had, right? Cuz just his personal style. And you had Ian Freeman, I think, on the podcast before. So we but we met when we were working for Enrico and his team. He was running a business within a business. You know, we

had the support of this big corporate entity which had tremendous infrastructure and a global footprint. and you know incredible depth of resource and talent but we were effectively a startup business within that business and it was great and I don't I think at the time I realized quite how lucky I was to have had that but the day that passport was repealed I could actually was probably more exciting than pretty much any day in my career where it was so obvious that wow this was an enormous change and an opportunity but I was in absolutely the right place at the right time rather than being

2 years ahead and having no cash. >> You were in a business where you can make a change. So tell me about that. I don't want to fill it in for you. So tell me about that. Why why was that? Why did that feel like being exactly the right place at the right time? And what did you do? >> So one of the things that probability had done was we had a deal with MGM in Nevada, which we done through the relationship that I had with David Briggs and Anastasbury who were out in Nevada walking around looking for takers for geoloccation services. And one of

the opportunities was to do mobile gaming in Nevada. So when IGT was acquired by GTech and everything was oriented towards the states, a conversation happened with the team at MGM who ran their sports book because they had a really really really old system. I mean because you know remember that sports betting was legal only in Nevada pretty much at that time. We suddenly because of the IUT relationship with MGM and because of the probability relationship suddenly had this opportunity to take the sports betting platform that GTech owned which in itself had been acquired years before and bring it into Nevada. And this has started pretty

much straight away after the acquisition. So long time before passport was repealed. And it was ex I mean it was the toughest thing you can imagine, right? because you're talking about a series of regulations that were written probably in the sort of mainframe era, right? And trying to bring in a new technology and sort of all the crazy stuff that I'm sure will bore the hell out of people, but things like parlays and all this kind of stuff. Anyway, so what had happened was is that the timing was brilliant because we brought this platform into the US where we had a a great mobile offering, a

great desktop offering, and a great land-based offering. And we had a a risk management system which was fully localized for the US sports betting market. And you know, I'm sure you'll have other people on who were around in that period, but if you take a European sports focused platform and try to run it in the US, you quickly find that it's just not going to work, right? Um, for one very very simple reason, which is that American sports don't have draws, right? And so your whole bookmaking algorithms need to change. Everything is different. So we'd already done that work. When passport was repealed, we'd been

having conversations with the guys at Banuel because obviously that's the Patty Power lot had come over and they were already doing stuff in California and they were looking at the possibility that this might happen and so we did a deal with them and very quickly the the IGT platform became their platform for their market entry because it was a I'm not I'm going to say gold rush but it was really a it was a land grab situation, right? The gold comes later. We were just ready and just at at the moment that it happened and of course it had been building up and building up

cuz we knew that the Supreme Court was going to be hearing this and no one knew it could have gone either way. I mean it really could have gone either way or worse than that as it could have been off and half. They could have said this but that, right? But they didn't. They came down and it wasn't a decision about sports betting, right? It was a decision about states rights. And so sports betting just kind of came with that and that was the firing gun literally and then it was okay run. Rather than being a cashstrapped startup, I was working in this big organization

that had the resources that had the footprint that had people in every state which had a government relations and I had the support of a great boss who who had a line to the top and we just went for it and it was tremendous. It was a really really exciting kind of 12 to 18 months and that we had a team of developers in Belgrade in Serbia who had built this platform and they knew every line of code and we've been driven them mad for over a year trying to get it Americanized. Nobody could understand why we were doing this and then all of a

sudden we had like 30% of the sports bets in America going through this platform. It was fantastic. And then after that experience, Charles, you're choosing to do it again back in the trenches, right? Tell me a little bit about that. So with these exits behind you, why are you choosing the stress of being back in that trench and maybe being in another startup? >> I left IT at the beginning of co because not through choice actually I I couldn't get back into the country. Eventually they rescended all the visas and so I was basically stuck in the UK and agreed with Enrio that it wasn't

feasible to carry on. They needed to run the business and I couldn't do it from London. So that all came to an end and I certainly I knew what I didn't want to do and I'm sure lots of people have had this experience. Well, you know what? You don't want you don't want to repeat rinse and repeat. But then I knew the gaming sector and as a friend said to me when I was thinking about trying to pick up into a completely new industry, he said, "Why would you do that when you know you already know your way to the center of that maze? There

must be more things you can do within that sector that maybe are different to what you've done before." And that was when I started to get interested in some of the challenges around player safety, responsible gambling. And I'd had some exposure to it in probability when we had our own B2C business where you know and in those in that environment it was very very difficult for somebody to spend a lot either time or money on these games cuz they were so simple and slow and but but there were a couple of occasions where it was clear that there was a pro person with a problem

but I didn't really understand it and I think like the rest of the industry I don't think we really appreciated that the the the migration to mass digital gaming does come with a set of externalities that do need to be addressed. And I I I get I mean the industry gets this reputation for being almost deliberately pursuing vulnerable customers. I don't I've met a couple of people in the gaming industry who who do have those sorts of attitudes, but actually they are very much like a past generation that there's nobody that I've come across currently running or in a senior position in any of these

businesses who thinks that it's a good thing to harm your own customers. The problem is how do you address it without at the same time either destroying your business or worse than that now which is this problem of the black market. You make legal gaming so unattractive that the people with the problems move somewhere where you can't even see them. That's actually the worst of all possible worlds. Got really interested in it because during co the gambling commission in the UK put in place some emergency regulations that led to a lot of operators coming up with really draconian risk management policies. You know, just created

huge amounts of problems without realizing it. And you know, you had a couple of things where people were hitting limits, being asked to send in months of bank statements, and you could see it on the discussion boards. You know, you you would need to disclose more information to place a bet than you did to get a mortgage. And I think to some extent the operators in some circumstances, they overreacted, but I think in some cases they actually were caught unawares or unprepared and it was inevitable that there were going to be some teething issues. But it was a big cultural shift, huge cultural shift because

a bit like in financial services, you now have to put the interests of the customer before yourself. That requires changes of behavior as much as changes in technology. >> You know, you see whole new departments popping up, right? New sea levels joining the board, right? >> I mean, my the joke that I always repeat is that compliance is the department where automation goes to die. And the reason that it happens is that the the business, and this is true for a lot of gaming businesses, and it's not a criticism, it's just an observation, the compliance problems, you tend to try to solve them by just

throwing more people at them. And you end up with a situation where even the senior leadership of these businesses aren't really conscious of the way that these policies are being designed and implemented. They are aware of the cost, the direct cost, but they're not aware of the indirect cost. >> Opportunity cost. Yeah. The thing is also people feel like when you do things manually it feels like control. I always think the other area of that is that when you're in a compliance role there is no upward potential to keep an account open and there's a lot of downward potential if you do make the mistake

there. Right? So there you see what I mean? >> It's completely imbalanced that way. Right? You can be certain if you turn the customer off that you're losing some revenue. Right? But if you leave them on, you're opening themself yourself up to significant fines, reputational damage, so on. Actually, it's if if you look at the judgments, the problem is not the decisions that are made, but the decisions that are not made, right? And it's actually when a customer is allowed to play and the processes aren't being followed or the person somehow fallen outside of the process. And that is a system failure. That is not

a failure of the people. The people in these departments are almost universally overworked, overburdened by very complex procedures and undere equipped >> with rules that are not even clear. So >> I don't think the rules are ever going to be crystal clear. You do need to have a riskbased approach. You need to have judgment involved. But in order to do that effectively at scale, you need really good systems and data. And that's what I decided to try to do with Department of Trust. >> So my last question, Charles, you've gone through so many ups and downs, right? from succeeding to exiting to the floor falling

from underneath you to being in corporate to starting again as a founder. If you would go back to, you know, your founding days and your CEO days, what's one thing that you would tell yourself that you would that you should know or should do differently for you to have more success or be more battleh hardened to the challenges that you were inevitably going to going to face? don't know that I would do anything differently. Maybe on a kind of a day-by-day basis, there are some things you would do differently, but that's called learning, right? Somebody asked me once, you know, what's the secret? I don't

like to think of myself as successful or unsuccessful. I think because you know, it's not done. We're not done yet. And and you know who successful? What does that what you know according to whom? I think the answer to the question is you should always have more questions than answers. And if you've got more if you've got the right the right balance there then you you stand the best chance of succeeding. But no no no one can guarantee success. And you know as we were saying earlier the problem is with a guaranteed success is not real you know and I don't know what lessons people

would take out of their own experiences or other people's or you know including including mine. They're just good stories and there's a what will I do in that situation type thing. And we all, you know, when you look back on these things, there's always going to be some degree of mythologizing it and editing it to make yourself look good or bad, which whichever way you go. But it's great because we all get to everybody gets to form their own judgment about other people's stories, which is what I love about what you're doing. And it's so I don't think it's a question of if I went

back, what what would I do differently? I'm sure I do a lot of things differently, but you you you act in the way that you the circumstances require. If you're honest and you make the right decisions and you've asked the right questions, then the outcome is what it is what it is. But I definitely would still not have built a desktop version of Lady Lux, right? >> Not even on WAP. Um, I love it, man. Thank you very much for your time, Charles. Been fantastic talking to you and getting to know you a little bit better. Thanks for uh for sharing your stories. >> Thank

you very much. I'm on LinkedIn if anybody wants to commiserate, talk, ask questions. >> Thank you for listening to the i Gaming Leader podcast. If you're a VP, a director, founder or an executive in I gaming, making the biggest decisions alone, that's exactly what I've built I gaming lead a mastermind for. Small inner circles of vetted senior executives, weekly hot seats, and accountability from people who understand the effects of the decisions that you need to make. Find out more and apply at iamingleer.com. And a final thanks to our sponsor, Sumsup, the full cycle verification platform for i gaming operators. Player onboarding, AML, fraudrevention, all in

one place. More at sumsup.com/gambling. See you next week.

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