Show #149 – Chris Carlson of FourCubed Discusses Recent Acquisition by SharpLink

FourCubed was recently acquired by SharpLink, and today we have the pleasure of chatting with the FourCubed founder Chris Carlson.

Ryan Knuppel

Hey, what’s going on everybody? Ryan Knuppel here, Knup Sports Show Episode 149. Really excited that you all are here listening, taking part in this igaming show that we’ve kind of grown into something bigger. We’ve always had dreams of growing this show and bringing on amazing guests and just talking to people in this awesome space. And we have another awesome guest for you today. And I’m excited to hear his story and hear all about what they have going on.

So I won’t spoil it before I bring him on, but first of all, we are live here. We do encourage questions. So if you’re watching this live on YouTube, on Facebook, on LinkedIn, wherever you might be watching this, please ask questions. We’ll pop them up on the screen. We’ll ask our guests to put them on the spot and go from there. So we do encourage that as we go here.

So without further ado, I’m going to bring on my guest. I have Chris Carlson. Chris formerly with FourCubed. Now with SharpLink. Chris, thank you for joining me. How are you?

Chris Carlson

I’m good. Thanks for having me, Ryan. How are you?

Ryan Knuppel

Oh, I’m doing well today. I’m here in Orlando, Florida enjoying the sun. I know it’s cold in a lot of places in the world, but I’m enjoying this Florida weather.

Chris Carlson

Minnesota.

Ryan Knuppel

How about you? Where are you at to today, Chris?

Chris Carlson

I’m in Minnesota and walked the dog this morning. It was about eight degrees maybe.

Ryan Knuppel

Whew!

Chris Carlson

So yeah, I was just down in Florida though. So I miss that sun for sure.

Ryan Knuppel

Oh yeah. That sun is good here and I’ll be flipping. I’ll be heading up to Minnesota in a couple months or a month here. I’m actually heading up for a little visit up there. Don’t ask me why I’m heading to Minnesota in the winter. It’s another story, but heading up for a little visit.

Chris Carlson

Because it’s wonderful up here. It’s wonderful and balmy.

Ryan Knuppel

I’ve heard that. I’ve heard that. Well anyway, first of all, thank you so much for joining me. I’m excited to hear your story. And I know we were talking before kind of off air that we’ve kind of been running in the same circles for several years. So I love talking to, for lack of better terms, true dinosaurs in the industry. People that have been around the gaming industry forever and that’s you. So why don’t you first off tell the audience a little bit about yourself, a little bit about your background in gaming and kind of how you’ve came up in this industry.

Chris Carlson

Sure. So I guess you could say I was kind of marked for this, to be in this industry at a young age.

I grew up in a really competitive family and always loved strategy games and I played sports. And so kind of coming into a business where I just kind of eat what I kill and if I don’t perform, I’m not earning any money, seemed it was perfect. And it really matched my personality.

So when I was a kid, I actually, I ran a blackjack game at my high school. So, there’s my entrepreneurial spirit. My first sports betting fiasco, I was probably in fifth grade. I had four older brothers and it was Thanksgiving and they showed me filling out parlay slips. And I thought, “This is, I mean, God, I can put in $2 and make $16 or whatever it was.”

Ryan Knuppel

Hey, well we lost Chris there. He’ll be back in just a minute, I’m sure. I think he was having some technical issues. So, hey, you’ve got me for a minute here. Hopefully he’ll come back and give us a little bit of that background of his story and talk a little bit about their acquisition. We’re going to jump into the FourCubed acquisition of SharpLink. Man, what a big acquisition that was. SharpLink Gaming. We actually had Rob Phythian on previously in the past on this show. And so, he talked all about SharpLink back in the day. Now, with Chris and FourCubed coming on board with them, I’m excited to hear more from them.

In the meantime, I’ll just kind of fill some time here and chat a little bit about what we have coming up. We have several other shows. We got another one this afternoon going live with Dan Gratzier. We have him coming on later today and then we also have a whole slew of people coming up next week as well. So more great shows for you to watch next week.

Hope everybody’s doing well in the industry. Events coming up as well. I don’t think there’s many events right now. I think the FSGA Conference is coming up in February, that’ll be a fun one to go to. If any of you have not been to FSGA, I’ve heard it’s a great event. I actually haven’t been there myself, but I’m definitely planning on going this year. And then obviously, SBC has moved their event into July, so that’ll be coming up and then we have several others. So should be a good time.

Well, let’s try to get Chris back on here and see what we’ve got. Chris, are you with us now?

Chris Carlson

I am with you. And wow. To say I’ve been working in technology for 17 years and get cut off is not a good look for me.

Ryan Knuppel

Hey, you know what? It happens to the best of us. And I thought it was on me at first and I’m my, “I don’t know.” So anyway, I just filled a little time. I talked a little bit about other stuff in the industry. So why don’t you just pick right up where you were and just start talking a little bit about your background?

Chris Carlson

Sure. So, like I said, I was playing cards and I started receiving what we called rate back back then, where an individual who was a marketing affiliate would pay me a percentage of the fees I paid to the house. So he was paying me that rate back and actually in poker, it turned out to be pretty significant payback.

So I had started doing that for other players and kind of built a name for myself on the internet in these different gambling communities. And that’s how it really was back then. This is 2005. This is pre-Facebook. This is pre-social media. And these websites and communities were social media back then. It’s basically exactly what they were.

So then I had eventually over 300 players I was managing on Excel spreadsheets and it wasn’t doable, right? And I got really lucky being in the right place at the right time. And, I had tons of people who wanted to play cards with me. So I found a developer and we built software that logged into all of my affiliate accounts. It downloaded all my statistics, parsed them, managed them. It was a backend auditing accounting system as well as a front end marketing platform.

So I did that for individual players and it just exploded again. I found a developer who was in, I found all poker players, which, and gamblers who really know what they’re doing, tend to be pretty logical, pragmatic, statistically, probability-oriented people. So found a great developer.

And it’s funny now with COVID, right? Everybody’s doing virtual meetings and video, and everybody was like a fish out of water and we’ve been doing it, as you know, since 2005 for me. So it was kind of old hat.

So point being that developer I had, I didn’t meet him in person for two and a half years and we built a business that was very successful.

So after Rate Tracker, there’s a CPA model as well. So there’s a flat fee per each player attracted to a room. And, we had traffic with players that would just go test out things. So we went after a CPA-type business, alongside our rev share business, because there was more market opportunity and market share and revenues to be had. So we did that.

And then that software we developed, a lot of affiliates were attracted to it. The affiliate companies had that software, however, none of the marketers really did. And nowadays having a platform like that is paramount in order to be a real affiliate out in the space.

So what I did was at first I tried to charge affiliates a licensing fee. I priced it too high and a couple of them made their own and I created competitors. So, love the free market. So then what I did was I took my software and I white labeled it so that it could sit on a publisher’s website. They could keep their users in brand and I provided them back office support and they had to use my affiliate accounts in order to get the access to the software.

And the real reason that happened was Black Friday. So I grew the business in the US market and Black Friday happened and I lost a little more than 80% of my revenues on a Friday. And I remember I was in the meeting. I remember coming out of the meeting and seeing this and it was like the sky had fallen.

However, I was lucky that I had this PAS business, right? This affiliate marketing network, because it enabled me to pivot into global markets. I wasn’t really sure how to penetrate them. It was either find translators and translate all my content. Then I had issues because the business model I really believe in is creating relationships with gamblers and players and creating some sticky marketing hooks where I get their information and I continue talking to them and they’re coming back to me for some reason or another. And this really helped around Black Friday because I have these relationships, all these users, I lost because they’re not tracked because these rooms went under. I can talk to them again and I can move them to new rooms. So it really, really helped me tide those things.

Ryan Knuppel

Let me interrupt you real quick because I want to make sure the audience understands what you’re talking about on Black Friday. Because I do, but let’s make sure we’re not thinking of Black Friday before Christmas or whatever. Explain Black Friday back in the day and what that meant.

Chris Carlson

Sure. So in 2011, the US government went after the financial banking system. I mean, it was an affront on online gambling, but the way they did it was they passed the law where financial institutions couldn’t facilitate transactions into gaming companies. So like I said, I was heavily involved in poker and they went after poker sites and they actually seized the domains to where homepages had a federal government insignia on it, which was, I don’t know if I’ve ever heard of that. And I still don’t know if we’ve heard of it since, but so I lost my whole market.

And luckily for PAS and that white-label solution, which really enabled publishers in their local cultures who knew how to talk to their users, who know what they want, they could get in there and do it and handle that local aspect and then we took care of everything else for them.

So over time, we were able to go global. And like I said, which really helped us fade the kind of Black Friday situation. And then the US market was showing signs of life again, right? It was around 2012, 13. Had some challenges on the Wire Act. We had some other good industry events and the future was looking bright.

So I built a team again and I spent, what was it? 10 years or so really playing defense and recovering from Black Friday. Not 10 years, but a handful of years before I went back into the US. Really assembled a great team and went into New Jersey. However, the market wasn’t fast enough to materialize.

And one of the issues we have in poker is we need liquidity. We need players to be at the table to play against other players. The beauty of sports betting is you don’t need that. All you need is a casino who’s willing to book a bet. So, that’s a wonderful thing. We don’t have a liquidity issue that we have in poker.

So we went after New Jersey. The market was too slow to materialize and we had to abandon that. And, this is one of the reasons I was really attracted to Rob. There’s a handful, but this was one of them was due to our capital structure and our financial situation, we couldn’t last long enough for this market to regulate and come out. So what I had to do was focus back on our global priorities.

So that kind of brings us to today, right? Roughly, and everybody’s looking at the US markets. Huge growth opportunity. There’s tons of money pouring in. And I’ve had a lot of really, really good conversations over the past couple of years and looking for the right spot and Rob really brings a lot. I’m really excited to be working with him.

Ryan Knuppel

Yeah. Yeah. So let’s speak a little bit to that. I mean, that’s a great story. I mean, you guys have clearly kind of built your path to where you are today and then just recently for those of you that haven’t heard, SharpLink Gaming has acquired FourCubed, your previous company. And now you’re serving as the VP of Conversion at SharpLink. Tell us a little bit about that deal and what that really means for SharpLink, I guess, going forward.

Chris Carlson

Sure. So, as I was looking at the US again, there’s a couple things I’m missing and in a regulated market like this was licensing. Is the infrastructure to deal with KYC? There’s just a handful of things that were really problems for me or what I thought were kind of walls for me to get into this space. Being a rev share affiliate or an NGR affiliate. It’s my bread and butter. That’s how I know how to make a living in this space.

And that was an issue. Rev share licensing in the States, that is a true barrier to entry for affiliates like myself. And, that was one of the things that also made me really start looking for a partner.

Now, Rob also has some other things, right? He has all of his Daily Fantasy experience and he has captive audiences from that. And the audiences I’ve been describing, I really like to work with. The sticky audiences, the ones that are in communities for a reason and we can kind of get in their user flow and start to talk to them and build relationships.

So with all that being said, here we are. Rob’s got a public company now, which is attractive and something I never really saw in my future, especially when this industry’s been under assault for so many years, year in and year out, how to navigate, but super excited about this and moving forward.

Ryan Knuppel

I always say being in this industry so long, like you have, I used to be super quiet about what I did, in a weird way. Not that I was doing anything wrong, but it just felt weird to talk about, right? And now, everyone’s shouting from the top of their are lungs that they’re working in the gaming industry in the United States. And I’m, it’s just such a different mindset. As you mentioned, it was kind of under assault for years, which it felt that way. It truly felt like just attacking this whole industry. And now all of a sudden, it’s 100% accepted and cool to be in this industry, which is so cool to see from our side. But it’s just a different mindset now. And I love that you have now positioned yourself to really shout and go forward with what you’re doing with SharpLink. That’s amazing.

Chris Carlson

Yeah. It is. It’s really the go for. I’m extremely happy with the deal and what happened and the outcome for my business and 17 years of work, but going forward is equally exciting. I feel I kind of plateaued for a bit and looking for something new to sink my teeth into. And over with SharpLink, there’s a ton of opportunity to really kind of go into the market, find those hooks, build those brands that are going to really make a difference in the space.

Ryan Knuppel

Yeah. So we had Rob on, I think it was Episode 126 of this show. So pre-FourCubed coming into the picture, we had Rob and Charlie and he talked all about their vision and what they’re up to. So for those of you watching or listening, please make sure go back, watch that show. It was a great episode as well.

But tell us a little bit, Chris, tell us a little bit about, I guess what you will be serving. What will you be doing specifically with SharpLink and what part of the business will you be really focusing on in your role?

Chris Carlson

Sure. So, my focus is finding players and delivering to the rooms. It’s that simple. And then we can go downstream and get as complicated as we want from there, on those strategies.

What we have is, Rob has relationships with leagues. So we have huge traffic sources there with professional leagues. So part of my job is figuring out how to get in front of them, get into their user experience and send them off to place wagers at gambling operators.

I also just bring 17 years of experience in the space. Same as yourself. We’ve really watched this mature and grow. And I mean, it’s still sitting on the cusp of the US right now, which is a phenomenally large opportunity. So, that experience also brings my network. I’ve worked with a lot of people in the space and we knew this back in 13 that brick-and-mortar casinos are going to play a piece of this role, but it’s the digital shops and the digital outfits that know how to play here and they need us. I mean, they really do. And there’s not a lot of people like us out there, especially in the United States. There’s not.

So yeah. I feel pretty fortunate to be in this spot for sure.

Ryan Knuppel

I love it. I love it. Well, congrats and great for you. I’m super excited to see where you head. Tell us a little bit about the betting landscape in Minnesota. I mean, is there going to be one? Are we going to have one? What’s the status in Minnesota? I know you have a little insider info there, I’m sure.

Chris Carlson

Yeah. I have a little bit. I think it’s an inevitability and I think we’re at a state of not if, it’s just a matter of when. As everybody gets in line here.

Minnesota has the issue of tribal gaming and them not wanting to open their compacts and open those back up to negotiations, right? So they have that hurdle. I know that they used a lot of their political capital on online lottery a little while ago. Beyond that, it’s coming. It’s just I’m not in those internal conversations, but it’ll be here.

Ryan Knuppel

Yeah. I agree. I keep saying the same thing for Florida. I know Florida has been battling back and forth with legal lawsuits and things of that nature, but I think eventually it’s going to happen across the board in nearly all states. We’ll see. Maybe not all all, but nearly all states. I think we’ll have it here shortly.

Chris Carlson

Right. Right. That’s the panacea. That’s what we’re hoping for.

Ryan Knuppel

Cool. Cool. Well, Chris, any last words for the audience here? Anything I didn’t touch on? Anything you want to touch on about the future before I let you go here?

Chris Carlson

Yeah. I mean there is one thing and that is a technology that we’re building and that we have. And I’m of the opinion that the affiliate space is ripe for some new technology. In my years, there hasn’t been a lot of innovation there. There’s been kind of that standard administrative accounting engine and I think there’s a great opportunity to differentiate with technology right now. And another reason I’m really excited.

Ryan Knuppel

Yeah. I agree with you. I mean, technology is, for sure, the future, right? We always say that it’s kind of a cliche statement, but yeah. I mean technology and growing technology is going to be huge in this space and in this industry going forward. So I’m excited to see what you guys have in the works here. And we’ll definitely be keeping an eye on you and SharpLink and everything that you guys have going on.

Chris Carlson

That’s great. Thanks, Ryan. Hey, look me up when you’re in Minnesota as well.

Ryan Knuppel

I will. I definitely will. And Mike, I don’t know if you remember Mike. Mike’s back in the day, but he says Minnesota’s a constitutional amendment state like Wisconsin. It’s a tough one. So he’s up in Wisconsin, but another original, I love seeing names from the past, man. You see guys from the past, and you’re, “Oh, I know these names! I know these people!”

Chris Carlson

How are you. Mike? Nice to hear from you.

Ryan Knuppel

Yeah. Really good to see some comments from some original people. So anyway, Chris, really good to have you on. I really appreciate your time. If anything I can do for you over the years, certainly reach out and holler and we’ll go from there. So thanks again for being here.

Chris Carlson

I appreciate it. Thanks, Ryan.

Ryan Knuppel

All right, guys, that was Chris Carlson of FourCubed, currently now with SharpLink. Exciting deal they had in the works and that they made happen. So excited for both Rob and Chris and that deal. That’s a super cool deal to see happen. And I’ll keep an eye on them as we go.

Hey, if you guys have any questions, comments, for Chris, I don’t even think I gave you links, but I’ll put links in the show notes on how to get ahold of Chris or how to reach out to them. So I dropped the ball there. I didn’t even ask him how to get ahold of him, but I’ll put links in the show notes, make sure that happens here after this. So be sure to reach out there.

Thank you for watching. We’ll have more to come. If you need anything, Ryan Knuppel out on all the social media channels. Hook me up on LinkedIn. We’ll go from there. Thanks everybody. Have a great day and we’ll talk soon. Bye bye.

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