The controversial online bookmaker’s brand Tom Waterhouse has cashed in.
Tom Waterhouse has reminded all of us of the power of a focused entrepreneur’s eye on the end prize when building a brand. We spend so much time observing the way brand’s build equity with their customer base, almost with the mindset that it is the end goal. That is while the recently announced sale of Tom Waterhouse’s online betting business to global betting giant William Hill is such a great reminder of the true end goal for many entrepreneurs.
Tom Waterhouse has simply viewed building an online betting community as means to end of giving himself a business that would undoubtedly become a target for a major player like William Hill. We have commented on Waterhouse’s own punt before. But it is a reminder to every entrepreneur to ask themselves, what is the end game. Waterhouse has had a minds eye to selling for quite some period and has been devoted to the cause. When that is the goal then it makes infinite sense to invest in building a customer base rapidly so that the industry consolidators of the world feel compelled to acquire it on their route to world domination.
William Hill very much fits that classification. It is an 80 year old UK brand seemingly dedicated to consolidating the betting industry. It earlier this year forked out $660 m to acquire the Sportingbet and Centre Bet stables. Now it has reached into its pocket for some small change of $34m to acquire Tom Waterhouse, plus some other earn-out provisions for young Tom (potentially up to $70 m if Waterhouse he achieves agreed milestones).
The lessons for those with a desire to create and exit, is to understand the dynamics playing out in the category, particularly the manner in which the market leaders respond to challengers. If the leaders have a propensity to buy-out annoyance brands, then there are real opportunities for smart entrepreneurs. In Australia over the years we have certainly seen buy the competition out behavior in the financial services sector. One only has to cast their mind back a few years to recall the myriad of mortgage brokers who were chipping away at the home lending market, dominated by the banks. But it did not take long for the banks to work out that the simple way to get rid of the annoyance was to buy them out.
Entrepreneur Mark Bouris knows the game well. He cashed in a few years ago when he sold his mortgage broker brand Wizard to GE Money for $500m, and is now on a repeat journey with his financial services business Yellow Brick Road. It will only be a matter of years and one of the giants of the financial services will want to acquire Yellow Brick Road, and rest assured it will be up for sale, because Bouris knows the end game.
There is a lot of sense in making the end game, the main game.