Welcome. My name is S. Schneider and this is the leaders podcast and I'm really excited about talking with Pontus Lindwall. We go a ways back. Remember seeing you and your little kids who are probably all grown up now on the beach in Antigua way back. So it's been fun. Glad to have you on. We like to kind of look at some of the history with this podcast. And so what I'd like to do is start with you talking a little bit about what your background was before you even jumped into the iGaming industry.
Yeah. I was born and raised in Stockholm, Sweden. Had quite a big interest in technology in general and my father was actually one of four founders of Cherry. So I grew up in a gaming family. I grew up with gaming and gambling and I kind of decided that that was not something that I would want to work with. Not for any particular reason but I was more into technology. So I studied at university and I came into the world of computers and I like that and when I finished my studies I took a short-term work at Cherry working with gambling anyway and that I kind of ended up in it from there.
And talk about when you did start this and really kind of what drew you into the very beginning stages of the industry there.
Yeah, I will tell you that because that's quite an interesting journey because I was working in the early '90s. There was a program in Sweden to introduce what is called VLTs, video lottery terminals, which essentially are slot machines that are connected to a central computer. And I was working with that project within Cherry and we did good progress. And we were setting up an operation and everything looked really good and after like 2-3 years of work when it was finally going to be decided about the framework of that operation it was decided that only a state-owned company could do that. So I lost the opportunity to work with that. I'd put three years into it and I decided to never ever work within gaming again because it was too much controlled by authorities was my view. But then later on mid-90s, 95, internet started to happen and become more popular going into people's houses more and more and I was like okay maybe this is the way to do gaming you know from anywhere in the world and that's when I started to explore it and 96 I kicked off the company Net Entertainment that later became NetEnt.
Mhm. And actually Sweden was a pretty big hub at that point in time with both software and operators. So that you were in the right spot for that.
Yeah, it's I think that happened partly because the government at the time decided that they also saw that the internet was going to happen. They made some kind of tax benefit if you bought a computer that was hooked up to that could be hooked up to the internet. So more or less every Swedish home acquired such a computer because it was state subsidized.
So that is often referred to as a reason for Sweden being quite in the forefront of internet development back then.
Yeah. And at this point I think when you have a jurisdiction that is not yet regulated, they call it pre-regulation. Well, the whole world was pretty much pre-regulation at that point in time other than actually a couple of like you know maybe some Caribbean jurisdictions like Antigua and Costa Rica and things like that.
Talk about what that pre-regulation period was like.
Yeah, that period was it's exactly like you say there were no regulations around and not even any countries speaking about introducing regulation rather speaking about how they would stop eventual internet gaming which is of course a very hard thing to do. So at that time we opened up you know for more or less most customers globally on an English site with English language very simple and we invited most parts of the world to participate.
Well, when you look back at that period, I know from my standpoint, mine was more in the events and publication side of things, but we were all kind of making it up as we went along because there really weren't any rules. So, when you look back at that period, that had to be a pretty heady period from the standpoint of creativity and being able to really let loose because you didn't have any of those constraints. How did you handle that side of things? Did you look back now and say, 'Wow, that was really a fun part of it or a real creative part of it that we really got to do?'
Yeah, that's how I see it because it was of course a totally new way of business and we didn't know if it would work. We didn't know if people would trust, you know, to pull up their wallet and do a payment to a gaming site which they don't know too much about. These were the things that we struggled with and at the time I remember myself when I was doing some e-commerce at the time buying books on Amazon I used a separate debit card where I had just as much money as I could afford to lose you know because you never knew what would happen if you did a transaction on the internet that was the general opinion whereas today everybody believe and it very much is very safe to do transactions on the internet. So that was a different time but very interesting and very creative because we had to invent all the way as we went along.
Mhm. What was when you look back to that time frame, what were some of the biggest challenges that you had to do? Because again at that point there weren't regulatory challenges. The whole thing was open. But what kind of challenges were you experiencing?
It was of course technical challenges because the infrastructure at the time wasn't that well developed and the kind of speeds that you have with internet connection today is something totally different from when people were using modems to connect to our offering. And we were one of the first ones to offer gaming through the web browser because I was convinced that that would make us more accessible. Whereas most other operators at the time, they sent out CD-ROMs with a huge massive amount of software on it that was totally impossible to distribute via internet. So that was one groundbreaking idea that we worked with and at that time then it was all about making the client as thin as possible and make it load as fast as possible.
Mhm. Yeah. I think a lot of people that may be newer to the industry or younger people when you tell them that people would send out CD-ROMs by mail to get players and especially when you have a lot of players that may be using multiple operators, you know, multiple sites. It's really interesting. I think a lot of people don't understand that part of the history where it really that was a different world.
It was. Much has happened since then.
Yeah. You talked about being able to go global right out of the shoot and you were, but talk about that part. I mean, that had to be really eye opening that you're not just talking about Sweden, you're talking about the whole world. So, how did you view that and that whole revelation and then make, you know, implement that part of it?
Yeah, it was of course it was a very nice situation to kind of have the idea that wow we have the whole world as a market we can you know reach and we can reach anyone but at the same time we didn't know what kind of traction this offering could have. So at the time we were thinking that yeah if we managed to scale up the company to being like 10 people and then you know make profits on that then we are successful that was our you know measurement of success. So even though we had the whole world to go for, we were not that convinced ourselves how big this industry was going to become because it was very much a discussion about trust at the time.
Right. Well, and you've referenced payments and trust around that and things like that. I mean part of it is you as an operator and software company you had all these other components that you needed to work with like payments and the whole marketing and all that. Can you talk a little bit about some of those ancillary things that were essential to you making this a success and they weren't very sophisticated at that point either. So how did you work through all that?
Yeah, they to set up the whole thing and get it from an idea on paper up to something that worked on the internet and where you could pay, you could play, you could win, you could get your money back. That was a lot of things that we had to build ourselves and just, you know, invent how it should work. I think you can say that we had to build up you know the full knowledge pool about that internally on a very few on a handful of people really to make this happen because we couldn't afford to bring in consultants and bring in other companies and things like that. It was we have to build this ourselves and we have to get it to work. So we had to really learn and understand every single step of the industry from how the games should work, the pay tables should be built, the payments should be connected, what is an affiliate and how much should they earn and how should we connect to them so that they can trust us. You know all of that we had to build it ourselves.
Mhm. So you were looking to scale up to 10 people just out of curiosity. How many are in your organization now?
Yeah, now we are some 3,000 plus consultants. So quite a lot more than 10.
That's amazing. And that's a learning curve to be able to manage all that I'm sure. So as regulation comes into play, you start seeing it first frankly first in offshore jurisdictions and then in more established companies. That had to bring a lot of opportunities but also a lot of questions in your mind on where to really target. Can you explain a little bit about your thinking as you looked at some of these that are beginning to come into play and how you determine where you want to concentrate your efforts?
Yeah, I think we realized when after some years when we saw that this industry it was really taking off and it was quite a bunch of different companies that were successful in different markets. So at some point we started to realize that this will not go away. No matter what politicians say it will not go away. So they will have to regulate at some point and we kind of yeah we appreciated that because we believe that I mean a regulated industry then there's a will from the politicians to have that industry and that's obviously something that we strive for and we didn't think too much about taxes and things like that back then but so Yeah. So in general we embraced and we welcomed regulation and then as we all know it has happened step by step and some markets has been more successful than others and today we live in a reality which is far more complicated because in it such as in our case we deal with 25 different regulators in 25 different jurisdictions And that's a hassle of course but anyway we still believe in the regulated markets and that and we believe that regulators are on a learning curve still. So we are optimistic that things will be better.
Mhm. And where did you concentrate your efforts at the very beginning as you were really branching out? So where what parts of the world were you really concentrating on at that point?
I think we can say that Europe was first out in regulation and we established in Malta to operate from there in 2005 or around that time and then we actually took on local regulations as they came. Denmark was in the Nordics one of the first ones and yeah we have kind of you know added on local licenses as we deem them to be viable. Some countries we have stayed out from because we think it's not a good regulation but that's how we did it. We have taken them one by one as they come.
Mhm. And ironically, Sweden is still sort of up in the air in that regard. I mean, how have you handled that at home? Because at this point, you're a very good corporate citizen there. So, that whole issue of how Sweden has evolved has been interesting to watch.
Yeah. Sweden is now regulated since 1st of January 2019. And yeah, one thing that they did very well in Sweden is that they allowed the operations to continue like full steam ahead until the 31st until New Year's Eve 2018 and then we had to flick the switches to the regulated environment on the 1st of January. So there were other restrictions and things and the whole market just went from non-regulated to regulated in one single second that was interesting. Our neighbor country though Norway they have chosen a different part and it's one of the few countries in Europe which has chosen to run a let's call it monopolistic model. So, we don't have any operations towards Norway anymore. And yeah, it's a different story in a very similar neighborhood country.
