The Business Acumen of Poker
Kajagugu highlighted a recent 2+2 thread of an internal FullTilt email generated by Howard Lederer. It was posted by Jimmy “goboboy” Fricke, last year’s runner-up at the Aussie Millions. Here is a snippet of Fricke’s request to FullTilt and the comment from Lederer.
“Hi, I’m Jimmy Fricke, and I took 2nd in the Aussie Millions tournament last year and received a large amount of television coverage. I’m coming back for all the tournaments this year, and was curious if Full Tilt would be interested in sponsoring me in some of the events or maybe the main event in exchange for wearing full tilt gear and maybe some
other things. I’m unaffiliated with all sites right now and I have a bunch of friends coming to the tournament who are strong online tournament players who also have no affiliation. Let me know if you’re interested in doing business.”Â
Their response, with Lederer’s email comments at the bottom:
“Thank you for your interest in becoming a member of Full Tilt Poker. Unfortunately FTP does not take open solicitations from players wishing to join the team. It is an invite only process that does not have set standards or qualifications. In the future, if we are interested in adding you as a FTP representative we will contact you directly. We wish
you the best of luck and we hope to see you at a final table soon.
JD”
Fricke:Â “I’m like okay, whatever, I had to expect it. I peruse the rest of the email and discover that this genius had included an email that Howard Lederer sent to him regarding his final decision. This is that email:
“From: Howard Lederer
Sent: Sat 11/3/2007 7:21 PM
To: Robert H. Wolf; Ray Bitar
Cc: Jason Newitt
Subject: RE: Aussie Millions. (KMM4237266I19928L0KM)
The guy’s a freak and a very weird dude. He is also quite young. I think we should stay away.”
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None of this is very unusual.  FullTilt obviously has every right to add or subtract to the seventy-plus team of players they are endorsing. They have every right to use any criteria they like in determining who to be associated with. And which of us hasn’t accidentally forwarded an email, message, chat, or voice mail to someone exposing out thoughts and impressions meant to be private?
Yet this seems to be one of a long list of data points that put the poker industry in a poor light when it comes to the basics of doing business. Examples include the multiple accounts of ZeeJustin et al, the WSOP operational disasters (e.g., registration woes, the Heads-Up event debacle), the Absolute Poker debacle.
How different is the Poker Industry to the dot-com businesses before the NASDAQ meltdown six years ago? People grabbing cash left and right, where management capabilities lagged the need to gogogogo for the next round of investors or projects. With the poker boom in full force before the IUGEA, businesses involved were almost printing money. Magazines popped up, established players thickened with ad pages, online sites spread advertising dollars far and wide, and site after site launched to get in on the cash.
When the free flow of funds started drying up, business models and management skill started to kick into gear. Companies and investors had to start answering some tough questions:
- Can we provide excellent customer service?
- Can we attract new customers and keep our best existing ones?
- Can we create value and excellence in our industry?
- What are our core values as we aspire to our goals?
- Can we reinvent our culture while we streamline our operations?
And all of this boils down to management, to executives in charge who have experience in their discipline of expertise, who can work effectively to foster a team of managers and employees, and who can navigate a strategic direction while driving tactical improvement.
What does this latest incident tell us about the state of poker, this FullTilt Lederer email leak? Sloppy email practices aside, it gives us another glimpse into the gap in management expertise within poker. I’ve never met Howard Lederer (through my own fault, as Linda invited me to his WSOP party each of the last two summers), and I don’t doubt his intelligence nor his poker expertise. But why is his opinion relevant regarding who FullTilt should use as part of their stable? Exactly who is the target customer for new customers to online poker sites? High school and college age males. What exactly does Mr. Lederer know about this market segment?
It actually in my mind is not very different than Harrah’s having Annie Duke on their Players Advisory Council. Ms. Duke is a well-known advocate of doing away with tournaments for women, this after the largest WSOP Ladies event in the history of the World Series. Women are vastly outnumbered in the ranks of poker players, so why would Harrah’s want someone advising them who clearly does not have the pulse of a market segment ripe for growth?
And does any of this matter for any of us? Is poker an industry of excellence or of mediocrity, and is it even a relevant question? More thoughts to come. I’d be interested in what you think, and I’ll have more next week. Have a great weekend.
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November 9th, 2007 at 11:05 am
Well, both Tilt and Stars have their stable. Seems a matter of quality over quantity for the most part. You have to wonder at some of the choices. The Tilt criteria seems as much old boy network as anything else.
I don’t have any idea of the sponsorship Tilt provides. But, it sure doesn’t look like they get a lot from it. They have a nice core that they’ve marketed well. Then they have the other 80%. My guess on them is they are more reduced rake for old B&M buddies than a conscious marketing effort.
Even post UIGEA the big sites remain cash cows. Once you’ve established a brand that attracts play, you can run the business by whim. Seems the case, anyway.
November 9th, 2007 at 11:08 am
So far the poker industry has shown signs of greatness as well as weakness. What I think will happen in the end is that the smaller, less well managed sites will disappear and the big dogs will either eat them out or just grow stronger. I especially love the way PokerStars is running the EPT and the new APPT. Full Tilt is in catch up mode and has some good brains behind it (despite this unfortunate slip up). Eventually, if not already, this market will become comoditized and the differentiators will be the following:
1. Ease of funds transfer, in and out. UIGEA put a big dent in that one and made it top of the list.
2. Game variety. FTP added KO games, but needs to catch up to PS with HU tourneys.
3. Customer service. FTP has to figure out a way put a final table deal system in place. Like, right away.
4. Features. As the competition increases, small things become more relevant. PT and HUD support, Tourney results, Resizeable tables and lobbys, etc. are all going to become major differentiators.
5. FPP programs, rakeback, cost to play.
November 9th, 2007 at 11:09 am
LOL. I meant to say eat the up not out.