For those who don’t know, I co-founded the company that became Betfair, and have a keen interest in the space of online gambling.

I continue to wonder how opportunities are going to develop for startups in this space in the US.  Outside the US, most of the companies that have been built have pretty much been an online representation of what takes place offline.  (Betfair being one of few exceptions).  Consequently, most of the spoils have gone to pre-existing (pre-internet) companies who leverage their brand and presence to build an audience.  If all everyone does is put blackjack online, it boils down to a game of  customer acquisition and those with big brands have an unfair advantage.

Which bring me to the question of: what, if any, is the opportunity for startups in the USA if gambling gets legalized?

First, an aside for … Read More »

One of my CEOs just surprised me!  I just did a pre-board meeting call, scheduled at the last minute.  Actually, I just did two of these in two days.

I think of this as the “bad news call” — when the CEO sends me an email and says he just wants to catch up on something before the meeting, but gives no indication of what it is, I’m left speculating:  who’s quitting?  who did we fire?  how badly did we miss the quarter?

It’s borne of a good impulse: if you have bad news, you should absolutely get out in front of it, and diffuse it 1-on-1 with individual board members.  If you don’t, you risk the conversation going in a way you didn’t expect, or the group getting in a downward spiral.  It’s absolutely best practice to handle it this way.

But … Read More »

Quora just announced its Series B fundraising, and I’m pleased to be a part of it, as Matrix is one of the large investors in the round.

I’m a huge fan and avid user of the site, and I think it has the potential to be one of the cornerstone web properties, and help make the world a better place.

I’ve spent a ton of time in this shared knowledge category on the web over the last 8 years.  In 2003, when I was looking to start my next business, I came onto this idea of community shared knowledge.  In the post-bubble era, no one was investing in content for the web because there was no economic model to support it, but by 2003-04 a number of things were happening.  Wikipedia was just beginning to … Read More »

I agree with everything in @jasonfreedman’s outstanding blog post about raising seed capital in today’s environment.  I urge all seed stage entrepreneurs to give it a thorough read.

As Jason says, no investor should begrudge entrepreneurs for a strong fundraise in an attractive early stage financing market — but keep some perspective, this is a long game, and you can’t win it today at your seed stage financing.

I wasn’t able to make the YCombinator demo day this time due to a board meeting.  But For context of what I’m talking about, let me anonymize and share a representative email exchange from the previous demo day:

On Wed, Aug 24, 2011 at 1:24 PM, Josh Hannah <jhannah@matrixpartners.com> wrote:

Impressive presentation and interesting business.  Would love to learn
more, if you’d be up for a meeting?

Josh

Hey Josh,

We’d definitely love to talk!  We’ll look for … Read More »

Before joining Matrix, I’ve had some experience with seed investors — I had a dozen or so of them at Betfair (Flutter), my first company, and then made a number of investments myself when my entrepreneurial investments began to bear fruit.  The following advice comes out of my experience, and while I was not terrible at it, I can’t claim I did this perfectly as a founder — you learn from what you do wrong as well as right.

Seed investors generally have little information rights, and that’s as it should be — as CEO you shouldn’t be spending a bunch of time updating these guys.  However, I’d argue it’s in your best interest to make at least a minimum of effort in communicating with your early supporters.  You should do this on a regular basis, whether the … Read More »

Thoughts below are my personal opinions as a VC looking to invest in internet startups, and do not reflect any views on Betfair or its strategies, intent, or prospects in regard to the US gambling market.

All forms of online gambling, with the exception of horseracing, have been effectively treated as illegal in the US for the last decade or so. (Before that, they were essentially ignored).

The reasons for this effective illegality were somewhat murky.  After all, gambling is traditionally a state issue, where we leave states to decide what kind of regulation their citizens want.  Utah can ban it, Nevada can permit it, and everybody’s happy.  In 1961, however, Congress passed the Wire Act, in an attempt to control the spread of the mob, who at the time controlled the illegal betting industry.  The Wire act states:

Whoever … Read More »

James McManus recently wrote an excellent summary of unfortunate unraveling of online poker in the US this year.

I remain surprised at how surprised everyone seems to be at the unraveling of the poker ecosystem.  You needed no expertise at all to realize that the legal framework in which PokerStars and FullTilt were operating in was, at the very best, dark gray, and likely explicitly illegal.  Now, you might think, so are speeding and jaywalking, and despite being illegal (or nearly so), you might choose to do it anyway.  Fair enough.

But people were trusting these guys with a lot of money.  McManus reports having close to $20K in PokerStars when assets were frozen, and many people had much, much, more.  People seemed to trust that the operators were ringfencing the client deposits from the operating expenses … Read More »

I’m now a all-electric two timers:  bought (and sold) Tesla Roadster #48 a few years back, and now the proud owner of a Nissan Leaf.  Each with their own merits, though the Leaf has found more “product-market fit”.

The Leaf has a practical range of 80-85 miles, which means a Bay Area commuter like myself must occasionally rely on charging outside the home.  Luckily for me, 120V wall sockets are plentiful at the Matrix West Coast HQ, so I can top it up during the day at work for an anxiety-free ride home.

But what of public charging?  I’d have to guess that the Bay Area is tops in the country, but still locations are precious few.  Palo Alto City Hall has a couple of spots just a block from our office, and I’ve enjoyed a publicly subsidized top off at Oakland … Read More »

As a bunch of you asked for it, my recent discovery on moving large ($10K+)  chunks of money from British Pounds or Euros to Dollars (and back).  (For smaller amounts, I’m told PayPal works well but I haven’t tried it.)

Here’s the challenge I have had:  if I want to move it from a bank in the UK to a bank in the USA, I have to go through a complicated process to initiate the movement – often requiring me to be in the country where the money is, which is rarely where I am.  So I am in the bank’s office in London, or on the phone with them at 3am, and go through an hour of bureacracy (ID checks, paperwork, waiting) until the money is ready to be wired.  Then, they call their exchange desks and … Read More »

I’ve always learned by doing things. Trial-and-error may not be the best way to learn a known answer, but when you’re inventing (as entrepreneurs must do), you gain insights as you go and change the plan accordingly. One of the tough challenges in moving from entrepreneurship to VC is that my actual operating and market experience decays over time. You get a lot of new knowledge from seeing hundreds of presentations from entrepreneurs, and to some extent from the investments you have made, but you don’t accrue a lot of experience from hands-on activity. And there is no pivot in VC: I have to commit upfront to an investment, and back that entrepreneur come what may.

Nevertheless, I think you can learn from experimentation in this job. So I’m going to deliberately try … Read More »