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How to have a profitable global expansion?

3 years is a very long gap for not writing an article on this blog. Personally it has been busy, hectic, sometimes even chaotic. This is the usual climate when launching a new business.

In the past 3 years, I led several efforts of taking successful businesses to new global markets. We created several profitable businesses, made some mistakes along the ways, but overall cracked the code of certain main principles for success. There are many fine prints here but I guess the main pillar for success would be having a strategized approach.

Some successful businesses with excellent products/services are serving a few clients only. They are mostly profitable businesses running a steady operation. They are leaving a lot of money on the table by not growing. These companies either lack the skills to grow or sometimes happy with their status-quo considering growing as a risk rather than an opportunity. These companies are usually 10+ years old with the founder leading the company.

Some companies are new startups, but their focus is on the product and maintaining existing customers. These companies miss the human capital to grow but are too much product oriented.

Some are trying hard to grow, but are not getting anywhere since they lack the strategical approach or make some major tactical mistakes along the way.

Expanding into new markets can lead to new customers, more revenue, and better diversification of risk. However, international growth can also be fraught with challenges, including regulatory hurdles, cultural barriers, and logistical complications. In order to have a healthy international growth strategy, businesses need to be prepared to address these challenges and take a strategic approach to expanding overseas.

The first step in a healthy international growth strategy is firstly a self assessment. What are the strengths of our products and services, where do we generate value?

Next step would be to research and carefully assess potential new markets. This involves conducting market research, identifying potential customers, and understanding the local competitive landscape. This research should not only look at the overall size of the market, but also identify any specific nuances or cultural factors that could impact the success of the business in that region.

Businesses need to adapt their approach to fit the local market as well. This may involve modifying products or services to meet local preferences, tailoring marketing campaigns to resonate with local consumers, and adjusting pricing strategies to account for local economic conditions. It is also important to consider any regulatory or legal requirements that may impact the business.

Another key component of a healthy international growth strategy is building local partnerships and relationships with key stakeholders in the new market. This may involve identifying and working with local distributors or vendors, building relationships with local government officials or regulatory bodies, and collaborating with other businesses in the region.

Finally, businesses need to have a long-term approach a clear strategy to international growth. This means carefully monitoring and adjusting strategies over time, building strong relationships with local stakeholders, and investing in the development of local talent and resources. It also means being prepared to weather any short-term setbacks or challenges and being flexible enough to pivot strategies as needed.

While the path to international growth may be challenging, the rewards are potentially massive – businesses that are able to successfully navigate the global market can gain a competitive edge, reach new customers, and unlock new sources of revenue and profitability.

Clearly there are many fine prints to the general concepts above. In my opinion, the most important skills required would be speed and flexibility though.

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How to launch a new sports betting operator with 5000 dealers within 6 months from scratch?

Many people urged me to write about my experience at Şans Girişim (the operator of Iddaa).  After winning the tender of Iddaa, I was appointed as the founding CEO of Şans Girişim and faced a critical challenge of launching a new sports betting operator with 5000 retail shops, 6 online dealers within 6 months of signing the contract with Spor Toto. To add to this challenge, we only had 5 employees in the company at the signing date with no office space available.  Just to give a comparison, similar projects are usually completed between 12-15 months around the world.

Not everything was against us though.  We were backed with one of the biggest groups in Turkey (Demirören), with all their resources at our disposal.  Also, I was fortunate enough to have a full project plan ready from our partners Scientific Games, which was responsible with the central betting system software and hardware as well as with the manufacturing of the terminals.

Just to summarize the complexity of the task in front of us, here are some of the key challenges we faced:

  • Launching the entire service within 6 months with all the functionality at all channels
  • Hire at least 100 people 
  • Found an office from scratch with basic functions like IT, telecommunications, SAP, purchasing, HR, etc…
  • Multiple technical integrations like 6 online dealer, 2 banks, etc…
  • Delivering and setting up 5000 betting terminals spread out in all around of Turkey.
  • Signing several multiple million dollar purchasing contracts like datacenters, rollout, connectivity, hardware purchases, paper and other consumables.

When I take a high-level view now, main task I was facing was actually to manage multiple projects (around 50), hire the right people to complete those tasks, make sure to find solutions for showstoppers (a term used for problems which would prevent us from launching on time).  

During the 6 months before the launch, I remember more than 20 instances when my fellow colleagues came to my room with the news that we had a showstopper.  Fortunately, we were able to create solutions to each of them.

It is impossible to summarize all the key aspects of this journey, but I’d like to share some of the key take outs that I learned during this process, which was a once in a lifetime experience.

  • Define clear goals:  That was simple, to launch on time with the best possible product.  According to our contract with the Administration, the consequences of not launching on time were harsh.  We knew being on time was the utmost priority
  • Hire the right people with the right mentality:  Although we were backed with one of the Turkey’s leading groups, we were still a startup.  Yes, we had financial and other resources from Demirören Group, but still we needed people with a startup mentality in the team.  In each job interview, I shared the same two messages to each candidate that they should be ready to help other team members in different positions from time to time and work for long hours.  We didn’t hire any candidate who had problems with those two principles.  At the end we worked for long hours, argued from time to time but never had a major problem since we created the right company culture from the beginning.  
  • Find the right business partners to outsource non-critical functions: We set a very clear strategy to outsource any not critical functionality to meet our deadline with our limited headcount. Finding the right partners to work with was essential in our success, and we were fortunate enough to work with suppliers like Turk Telekom, Innova, Vodafone, Spintek, Hobim and many others.
  • Create the right corporate culture: That was one of the most important points for me.  We had to work hard and long and that can only be achieved with the right people within the right corporate culture.  We created a lean operation with minimum layers.  We worked for long hours, weekends.  We worked hard, but also had a lot of fun.  Most people were looking forward to coming to the office, honestly, we couldn’t succeed otherwise.
  • Be flexible:  It was important to hire very fast.  In an established company, usually hiring takes 2-3 months.  Since we didn’t have this luxury of time, we were hiring like crazy.  It was important to find candidates who can start very quickly.  So, once we had the right candidate, we hired them even if that person was not the perfect match.  We were revising the organization chart around the people we hired, which is the opposite of the traditional approach.  When I look back now, despite the time constraints, our success rate in hiring was over 95%.
  • Give people authority, hold them responsible:  We had more than 50 simultaneously running projects.  It was critical to assign those to the right colleague and make sure to hold them responsible for the results.
  • Never lose the positive attitude:  As the leader, it was important to show strength and optimism in a balanced way.  As mentioned, we had many moments that I thought we will not succeed.  In each instance like this, it was important to stay calm and assuring, since the team will be seeking guidance. 

I see myself very fortunate to have led such a unique experience.  At the end, it was a huge success which firstly belonged to the entire Şans Girişim team.  My role was simply just being a catalysator, making sure that everybody was reaching its personal potential.  I must thank many people, without them none of this would be possible.  It was a very challenging assignment, which also became a life lasting learning experince for me.

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Upcoming Iddaa tender for Turkish licensed betting monopoly

In 2008, Inteltek won the Iddaa tender to run the Turkish licensed betting monopoly for a period of 10 years.  Inteltek is a joint venture between Turkcell and Greek lottery operator Intralot.  2018 will be the year for the new tender.   I wanted to summarize my thoughts on the process. The biggest change for the new period would be that the payout rate will be increased to 70% from the current 50%.  The higher payout rate will allow the Operator to offer more single bets as well as live betting.  Legally single bets and in:play betting has been legal in Turkey for many years.   But Inteltek has been offering them rarely for risk management concerns. Turkey is a very big market for any operator.  With a population of 80 million, the annual turnover of Iddaa was about 11 billion TL in 2017.  That figure corresponds to around 3 billion Euros with 2017’s exchange rate.  Additional 40-50 billion TL turnover is fleeing to the offshore black market operators.  The black market operators attracted great interest from Turkish punters mainly due to their ability to offer in live betting, single bets, higher odds and alternative payment methods.

What will change with the new Iddaa tender?

The new law allowing a payout rate of 70% is the right step to minimize the share of illegal betting in Turkey.  Even there was no increase in the NGR, the turnover of Iddaa would still rise about 66,5%.  With additional NGR coming from the illegal betting operators, we can easily say that the turnover of Iddaa will at least double during the new period. Clearly, a licensed monopoly opportunity in such a big market is very interesting for any operator.  Inteltek is interested in the Iddaa tender and has an advantage as the incumbent.  But we also know that its partner and technology provider Intralot is having technical problems in some markets.  Also it may face difficulties in the new era with a more challenging risk management and much higher volume. Surely with the new payout rate, Turkish punters will start enjoying a world class product.  Also it will maximize the share of legal and licensed betting’s share in the country, hence the tax revenues for the country as well.  We expect that Spor Toto will issue the RFP documents in September 2018 with actual tender date in November.  The tender would be definitely an interesting event to watch !
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White Paper – How to choose the right betting platform provider?

How to choose the right betting technology and provider for a leading operator.

This article aims to summarize my experience in selecting the right betting technology and betting platform provider for a leading national betting operator in the CES.  Please see the notes on the end of the article as well.

1. Background

The Operator has been acting as a licensed monopoly for over 5 years but facing several challenges like:

  • Limited growth
  • Unreliable technology
  • Market share loss to international operators
  • Very poor online and mobile offering
  • Low customer satisfaction

Product-wise, the Operator was offering very limited number of single bets. Besides major leagues, a punter needed at least an accumulator of 3 games to place a bet in a minor league. Also, the number of live events were very limited. Further, the odds offered by the Operator were around 15-20% lower than international competitors. There were two main reasons for these challenges. Firstly, as set by the authorities, the operator could only offer a 69% payout rate to the punters. Secondly, the risk management was not robust and risk averse. The risk managers were reacting aggressively even to short term fluctuations.

The Operator’s existing betting platform provider was having a downtime much higher than the industry average. As a result customer satisfaction was extremely low. Also online and mobile offering were significantly inferior compared to world standards. As a result, a lot of punters were shifting to international operators.

2. Challenges

Once a decision for a betting platform replacement was made, several key factors for selecting the new betting platform provider have been identified:

  • Needs to offer an omni channel platform.
  • Needs to be very strong on mobile and online.
  • High reliability
  • Strong and creative risk management
  • Fast response, agile partner

The challenge was to select a betting platform provider who would provide focused and high level service to the Operator. It should also solve the current problems of the Operator as well as have a vision to stay as a trusted and selected provider for the next 5-10 years at least.

How to choose the right mobile betting provider and technology?
Mobile betting technology

3. The process

Phase 1 – Exploration (2 weeks)

The initial step was to collect basic info on major betting platform providers in the market. The initial list was compiled through past experience, colleague referrals and internet search. At this point, we identified red flags of about 10 points. These red flags included items like country of origin, current customers, company size, etc. The list was decreased from 20 to 15 companies after the red flagged companies were eliminated.

Phase 2 – Clarification (6 weeks)

The short listed betting platform companies have been contacted. We shared initial scope of the project and signed NDA’s with each of them. We talked to each of them, received their basic info. Some of them made online presentations explaining the strengths of their products. During this process, we eliminated some companies according their ability, capacity and eagerness.

Phase 3 – Face to face meetings (3 days)

EIG Berlin was selected as the event where we can meet all the potential names face to face. The number of potential providers were 8 at this point. We actually did not attend the conference, rather rented a meeting room in a hotel for back to back meetings. We also had some shop visits with the betting platform providers who had existing operations in Berlin.

Phase 4 – Deep dive (4 weeks)

The number of potential providers were dropped to 5 after face to face meetings. At this time, we shared a detailed questionnaire consisting of more than 100 items with potential providers. This factsheet allowed us to compare all the potential providers objectively on the same page. We used a weighted average scoring system to come up with a final score for each provider.

Also, a pricing guidance was asked for the first time, to see if the potential providers were within the range of our expectations.

References were checked in detail for the remaining providers from their current and former clients, industry contacts, etc.

Phase 5 – Office visits (1 week)

The number of potential providers were dropped to 2 at this point to avoid distraction. We visited each company at their HQ to better understand their ability, corporate culture, product. A detailed presentation and demonstration were made by each company.

Also, we shared more guidance for our pricing expectation with each company at this point.

Phase 6 – Final negotiations (2 days)

Both potential providers were invited to our offices for clarification and final offers. We asked for binding offers at this point subject to contract negotiations.

Phase 7 – Decision (1 week)

Actually, this was the most difficult part of the entire process. Both providers were strong, willing and competitive. Their pricing offers were very close, but in the vicinity of the low end of our expectation. Both companies offered outstanding solutions. At the end, the decision was made considering both hard and soft factors. The product, price, references were surely important factors, but soft factors like top management engagement, team quality, eagerness to win this project also played a significant role in the final decision.

Phase 8 – Final negotiations and contract signing (6 weeks)

After the decision was made, actually final pricing negotiations were concluded very rapidly. The signing of the contract took about 5 weeks with the lawyers on both sides. Since both parties were willing to close the deal, contract negotiations were concluded in good faith. At the end, a fair contract has beed finalized between the parties.

4. Final thoughts

The entire process took about 6 months. At the end, the Operator was able to secure a new provider with a much better solution. Also, the platform costs were reduced more than 50% compared to the existing provider.

The new Provider was happy to sign a new client in a regulated market for a long period.

Certainly, this article is not enough to cover of all the details of such a complex project.

Also, confidentiality concerns prohibits me to share more details. The transition from the old to the new provider was in progress at the time of this article was written (July 2018). Once the transition phase is completed, I will share another article summarizing that phase as well.

If you have any further questions, feel free to contact me at ziya@proad.com.tr. I will try to help as soon as it is not covered under my current NDA.

Finally some notes on this White Paper:

I was assigned with the task of finding a replacement for the platform provider of the licensed betting monopoly (“Operator”) in a CES country. This was a challenging assignment considering that the Operator was already operating with 500 retail shops and a single online dealer. Also, the vast number of quality platform providers made the choice not easy. The goal of this White Paper is to share my experience and shed light to anybody who will go through such a challenge.

Although this White Paper shares the experience in a specific sector for a specific service, the same principles can be applied in any sector for any product in a systematic way.

All the brands, company names are omitted from this article. I am aware most of them will be apparent to any industry player, but the goal of this article is not (dis)credit any company or player, instead share my experience in a systematic way.

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Hi there

I used to own a blog in Turkish, decided to switch to English with the new one.  The goal of this blog is firstly notes to myself, so I can keep track of the things, places and food I enjoy mostly.  It is little bit about technology and some business eventually. 

Feel free to share comments and get in touch with me at ziya@proad.com.tr.