In Issue 22 of SBC Leaders Magazine, SBC Advisory’s Founder and Managing Director Anton Kaszubowski shares his expertise on the world of emerging technologies and the key ingredients for success that start-ups should consider when looking to make a mark on the sports betting and igaming space.
What would be your advice to startups looking to make a mark in the sports betting and igaming industry? Are there any key ingredients for success?
Build an expert team that intimately understands the market that you are addressing with your product or service. That will give you the highest probability of gaining traction with the business. Understand your customers and what problems they need solved or the ways in which you can improve their experience and then you have a good basis for an idea.
Then it comes down to having a team that can execute a strategy in times of adversity and is always looking to follow success with improvement. In my experience, business – and especially the business of startups – is an exercise in perpetual problem solving, whether it be fixing an issue, or seeing an opportunity and making good on that. Practical intelligence and a strong work ethic is key in this respect.
Then, of course, there is a large dose of luck and timing in success. Almost anyone who tells you differently has an over inflated opinion of themselves!
So I think the key ingredients to success are actually pretty straightforward, but it’s incredibly difficult to have all of them come together at once.
At this early stage in the development of emerging technologies such as the metaverse, is any investment purely speculative?
I don’t think that in conceptual or real terms, emerging technologies like AR/VR and metaverse are speculative at all. It is crystal clear that these technologies will have significant impacts on the future of society and therefore will create lots of opportunities for new types and models of businesses.
However, until the markets are well developed, being able to pick what will be the most successful applications, products or services within those technologies is clearly an act of speculation. You can transpose certain types of existing businesses and business models to these emerging technologies, for example video gaming into VR, but the opportunity for new types of application are even greater. So not all ideas will be totally speculative.
However, timing is also a major factor. You can have the best idea in the world but if the market is not developed enough in terms of hardware and addressable customers, you may well fail. The adoption of VR for example has been slower than many people predicted. Consumer adoption has been quite slow as devices have not been cheap or super user friendly.
We are clearly still waiting for VR and AR to have an ‘iPhone moment’ where the tipping point of mass adoption is crossed, which then releases potential for the growth of many new applications – it is obvious and simple if you think about it in terms of the growth of the App Store. Industrial, medical and military uses have actually been far more useful and wide ranging for VR.
What areas do you think are going to be a key focus when it comes to investment and acquisition within the emerging tech space?
I think the most important developments and deepest changes to the industry will be driven by AI and machine learning technologies that will eventually replace or improve a lot of the functions that are key to running a successful sports betting or gaming business. I am not saying that all human roles will be replaced – but some certainly will – and increasingly humans will be working alongside and complementing AI driven processes.
The increasing use of blockchain to manage information and transactions is also an obvious area that will continue to transform the way people transact and do business.
When looking to invest in areas of emerging tech, because futures are far from clear, how can you tell the difference between unicorns and those which may not take off?
I’ve invested in successful companies but no unicorns, so I am not the best person to ask! However, the clearest factor is picking businesses that have a very large addressable market that they can scale into or have a very high value niche market. It also helps if you are early to a trend. First mover advantage is definitely real, if not always a winning factor.
A team with a proven track record of success can give you some comfort, and experience definitely counts. But no entrepreneur gets success right every time.
In your opinion, how should the leaders of this industry be responding to emerging tech and blockchain, the continued growth of esports and a virulent VC market?
Leaders should increasingly embrace emerging tech and treat having a long term strategy of innovation as an area where they can build a clear competitive advantage. We are now increasingly seeing this happen with larger companies developing innovation labs or developing VC style functions in-house.
I was a mentor in William Hill’s Innovation Lab competition in 2016. While it was a commendable endeavor that created a lot of good PR, it never felt like a long-term commitment to embracing innovation. The fact that it was a one off suggests that feeling to be accurate. Across the board, however, I do think that attitudes have changed as a result of the increased focus from early stage and also now later stage investors on early stage tech companies during the pandemic, creating many unicorns.
This trend has started to be reflected by companies in the gambling sector also taking the view that both financial value and strategic competitive advantage can be created through having a stronger focus on investing into innovation.
In the gambling sector, this trend has also been driven by the quick development of the US market. The highly developed investor ecosystem, larger appetite for risk and enormous amounts of funds available means that an early stage investment community of professional investors and funds focused on betting and igaming has developed. This never really happened in Europe despite myself and several other even more prominent and successful individuals trying to create funds focused on innovation in the sector.