Updated: Social gambling site Pikum cashes in its chips and closes

Next Story

Video iPhone concept looks, eh, alright

Pikum, an online social gambling startup which had £3.98 million ($5.92m) in investment from Virgin USA and First Round Capital has shuttered.

We’ve tried email and phone calls to get hold of the CEO and will update this post when we get official comment [UPDATE: See statement below from chairman and co-founder Sean Glass. We’ve yet to hear from CEO and co-founder Johannes Larcher]. However, the image on Pikum’s front page says it all:

Meanwhile, sources close to the company said “I think they ran out of money. As far as I know they spent a lot on getting the right gaming licences on Alderney and putting the infrastructure in place. Then they spent a lot on marketing.”

Pikum’s users could choose to play for fun or money but the latter meant it had to be registered as a gambling entity in the off-shore juirisdiction of Alderney in Europe – generally an expensive enterprise – and was therefore based in London, while engineers resided in South Africa. Competitors were sites like Party Gaming, 888, Betfair and Tradesports, but Pikum reputedly failed to gain much traction with users despite hefty amounts spent on marketing.

I gather Pikum was going for a second round of funding, but it was not helped by Virgin USA changing focus. Dan Porter, who is understood to have led the Pikum investment, left to join Iminlikewithyou as CEO.

Certainly Pikum spent plenty on marketing. One sources tells me they spent £5,000 on an adwords campaigns which yield, literally, zero results.

Pikum was the brainchild of 29-year old American entrepreneur, Sean Glass, who previously co-founded higher education-focused online financial services company Higher One (pictured right). Glass was co-founder and Chairman. The CEO was Johannes Larcher, who bizarrely remained largely invisible day to day, leaving Glass to front the business. Larcher was formerly with Academy123 and VP & General Manager, International, prior to that.

Glass was made to dance by First Round in their bizarre video Christmas video card last year (2mins in).

Pikum also probably spent a great deal on a weekly 10 minute-long video webcast “Mega Football TV” on YouTube featuring Setanta Sports presenter Charlotte Jackson. The studio-shot show started three months ago and ran for 14 videos until ending two weeks ago. The show never had more that 1,000 views an episode.

Then there were the “Pikum Girls” who warranted their own dedicated web site. These were six young women who were clearly aimed at the younger male end of the betting marketplace, to say the least:

But despite the big marketing budget, Pikum seemed to embrace social media – which can often help spread the word more cheaply – rather half-heartedly. Their Twitter account was started in March last year but only had 28 updates and the last tweet was Oct 28th, announcing that “Mega Football Pikum is coming”. All previous updates had simply been URLs only. Hardly the stuff to get any followers excited. Luckily there were only 28 of them. Chatter on Twitter was equally non-existantapart from the company itself.

Perhaps it’s a shame Glass only just came across VC Fred Wilson’s advice. In a Tweet on Feb 7, Glass noted: “@fredwilson post-J.Schachter- “reduction of services to the simplest user experiences is a powerful generator of focused activity.”-profound”. Did Pikum actually need Pikum Girls? Perhaps not.

At any rate, if his Tweets are correct, Glass is packing up and heading back to the US in May, presumably a lot older and wiser. At least during his year in London Glass threw himself into the local London scene, making plenty of friends and even guest posting on TCUK.

One site that won’t be shedding a tear is Flutterama, a boot-strapped site from design agency Vexed Digital – although players can not bet actual cash there.

Current Pikum players must now withdraw any remaining balance and any bonuses due. Any remaining balance not withdrawn by February 13th will be sent by cheque to a player’s registered address. Players can contact the site on here.

UPDATE: Chairmand and co-founder Sean Glass has now sent in an email response:

There was not a hefty amount spent on marketing. The amount of $ raised skews some things as when we raised it, the exchange rate was close to 2.1 : 1, and the money was being spent in pounds – so it was really £2.6MM pounds raised in Nov 2007 (there was a bridge so it closed in March 2008)… legal and infrastructure to be able to provide real money gaming was very expensive. It is disappointing that we were not able to find support to continue the business as the revised product platform had started to perform well, but the consumer focus required a large amount of funding even with the CPA we were getting – which was lower than almost any sports book we spoke to. We approached a large number of european funding sources and potential acquirers, but in the current environment, there wasn’t appetite, and closing become the preferred preference for our investors.

  • http://www.facebook.com/people/Paul_Walsh/557395866 Paul Walsh

    You win some, you loose some and then win again.

  • reader

    Look at the bright side. At least they got to hang out with babes.

    Sidetrack.. is it me or is the feedburner of TC showing 8476 readers at this moment. There’s no ‘K’.

    • Joey

      Because this is a post from TC UK. If you go back to the main Techcrunch.com page you get different numbers
      -joey

  • http://www.thoughtsintime.com Sean Glass

    Hi Mike,
    Thanks as always for the coverage. I definitely have learned a lot from the experience with Pikum that differed from our success in building Higher One (and it’s continued success). It is very disappointing, however I believe that the right thing to do when something doesn’t work is to examine it closely, learn what one can, and focus on building from there. I can’t comment directly on Pikum here (and by CEO, I am assuming you mean Johannes who was CEO), but I do want to share that I really have enjoyed being part of the London tech scene. There are a lot of authentic and talented people and although we do plan on moving back to the United States (primarily to be closer to Kellee’s family), Kellee and I plan to visit often, continue to look at investments out of the UK, and to be active as friends of the community no matter where we are.

    • http://blog.mercury-rac.com Jed Christiansen

      Sorry to hear about Pikum. Better luck next time around, and enjoy the land of huge supermarkets!

  • http://www.thoughtsintime.com Sean Glass

    Mike – one specific point I can comment on… the video we created was produced with some amazing student interns. Production cost was the price of lunch and dinner each week for two days (one for shooting, one for editing and post prod).. If anyone wants referrals to these talents students, shoot me a note.

    • http://www.linked.com/in/garethwong gareth

      Sean

      sorry to hear, pls do give me a shout, and hope 2 meet before you set off.

      I am founder of Gambit special interest group btw: http://www.TheGambit.info we could have helped if we got to know each other sooner.

      meanwhile, pls do forward me your video contact info.

      BR
      Gareth@cxo.org

    • http://www.rogavi.com Richard McBriar

      Hi Sean,
      Im sure you will be back soon. If you could help out another entrepgheneur would appreciate it. Could you put me in touch with FirstRound?
      We are looking to expand Rogavi with a round of investment. This is the worlds first legal prize raffle site. We are currently going live on the affiliate networks : )
      CheersR

    • http://www.rogavi.com Richard McBriar

      Hi Sean,
      Im sure you will be back soon. If you could help out another entrepgheneur would appreciate it. Could you put me in touch with FirstRound?
      We are looking to expand Rogavi with a round of investment. This is the worlds first legal prize raffle site. We are currently going live on the affiliate networks : )
      CheersR

  • http://www.startuprevival.com Russ Thau

    Hi Sean,

    The statistics show that an entrepreneur is successful about 1 out of 4 times…..good thing you already have the 1 under your belt. As you stated, “I believe that the right thing to do when something doesn’t work is to examine it closely, learn what one can, and focus on building from there” is how all Web 2.0 companies should grow.

    On my web siteStartup Revival I am trying to collect all of this content for future entrepreneurs to learn and grow. When the time is right please stop by the site and share.

    Thanks…..

  • http://www.facebook.com/people/Vanchau_Nguyen/1054890042 Vanchau Nguyen

    $5k on AdWords campaign that resulted in nothing is no biggie, but spending millions?

    Seems like there should have been PLENTY of opportunities to stop the bleeding and hire someone who actually knew how to market online.

    Also mind blowing is why an investor would put their money on guys who were in the education space now wanting to do a gambling site.

    • Adam Welch

      It’s about time someone mentioned how worthless adwords are. They don’t work.

      Until more people talk about how bad adwords do for them, the more people will not pay for them.

      Adwords DO NOT work. I paid $50 and have NO results at all. Adword is just a gimmick. Nothing more.

      • http://www.mibbit.com Mibbit

        Adwords work, as long as you track them properly, and get the right people clicking.
        £5k is a very very small spend if you’re going after the gambling market.

  • http://ki-work.com Jim Wolff

    Sorry to read about this – hope it’s not a sign of other UK startups shutting their doors.

    Best of luck with your next venture Sean – I don’t doubt therel’ll be many

    Jim

  • http://independent.hubdub.com Nigel Eccles

    @Sean

    Bad luck this time round. Good luck with the next venture.

  • http://www.ojointernet.com/noticias/pikum-dejara-de-funcionar/ Pikum dejará de funcionar

    […] un sitio de juegos online que recibió 2,6 millones de dólares de inversión el pasado marzo, ha anunciado que cerrará el próximo 13 de febrero, según un anuncio aparecido en la página de inicio del […]

  • http://uk.techcrunch.com Mike Butcher

    UPDATE: Please see statement the updated post with a statement from chairman and co-founder Sean Glass. Incredibly, we’ve yet to hear from CEO and co-founder Johannes Larcher.

  • http://smarkets.com Jason Trost

    Sean Glass is savvy entrepreneur and will land on his feet.

  • http://PickTeams.com Brad Hargreaves

    Sean’s a great guy I’ve known for a while. Sorry to hear that Pikum won’t make it, but I’m looking forward to seeing what Sean does next.

  • Monty Berlin

    That’s life. Hopefully the next venture will be a success. Good luck.

  • http://venturebeat.com/2009/02/10/roundup-intel-pours-cash-into-factories-nj-goes-solar-obama-taps-cybersecurity-chief-and-more/ Roundup: Intel pours cash into factories, N.J. goes solar, Obama taps cybersecurity chief, and more » VentureBeat

    […] plays its last hand — The online social gaming startup has shut its doors despite $5.92 million in capital from Virgin USA and First Round Capital. Tags: co:Cisco, […]

  • http://venturebeat.com/2009/02/10/roundup-intel-pours-cash-into-factories-nj-goes-solar-obama-taps-cybersecurity-chief-and-more/ Roundup: Intel pours cash into factories, N.J. goes solar, Obama taps cybersecurity chief, and more » VentureBeat

    […] plays its last hand — The online social gaming startup has shut its doors despite $5.92 million in capital from Virgin USA and First Round Capital. Tags: co:Cisco, […]

  • http://joyplay.com Joyplay

    It sounds like they were caught in “the fog of overconfidence + excess funding”. Obvious when you look back on it but at the time…

    Hard luck guys, I’m sure they’ll be back and all the stronger for it next time.

  • http://uk.techcrunch.com/2009/02/26/startup-news-roundup-2/ Startup news roundup

    […] charity to benefit from the winnings and ticket sales. Cute. Let’s hope they fair better than Pikum. SHARETHIS.addEntry({ title: “Startup news roundup”, url: […]

  • http://blog.twidox.com/?p=745 blog.twidox.com » Blog Archive » Startup news roundup

    […] • PlayOTTO.com, a new EU licensed online lottery with social gaming at its heart, has just been launched. Players play with their friends by creating a team and choose their own good cause or charity to benefit from the winnings and ticket sales. Cute. Let’s hope they fair better than Pikum. […]

  • Wresstevy

    продам Форд-Фокус 2008 года за 200 тр. торг возможет. срочно!!!
    +7 960 200 9209

  • http://www.betforce.com Blanchard

    Hi,

    We created a while ago (in 2005) a similar social betting application, and have been granted for a year a pool betting licence from the UK Gambling Commission. It took us quite a lot of time to get there as we did not raised any money. (our primary business is to provide e-gaming operators with strategy games/virtual world based on real money : http://www.zerace.com , http://www.my-greyhound.com)

    Betforce busines is not launch yet (beta application without real money involved). We are currently completely re-orienting it into a 100% widgets distribution strategy (betforce will only be a registering and money management website) : players will bet directly on widgets hosted by betforce affiliates.

    I wish to contact Sean to present him our business and see if he could be interested to take part (as an external advisor, or business angel) our venture… I am convinced that we learn more from failures than from success. Sean’s experience interests us A LOT after pikum experience.

    I went to his blog but could not see any contact details. Of anyone could help me to get in contact with him. Here is my email :

    sebastien.blanchard@palamax.com or sebastien.blanchard@betforce.com

    best regards
    sebastien

  • http://www.squidoo.com/SportsBettingSuccess Franich

    You Made Some Good Points There. I Did a Search on the Topic and Found Most People Will Agree with Your Words.
    As an Adicted Sports Betting Punter, I am Always Searching Online for Articles that Can Help Me. Thank You!

    P.S: Please Take a Minute to Visit My Website as Well: http://www.squidoo.com/SportsBettingSuccess
    http://www.squidoo.com/SportsBettingSuccess

  • http://www.squidoo.com/SportsBettingSuccess Collinson

    You Made Some Good Points There. I Did a Search on the Topic and Found Most People Will Agree with Your Words.
    As an Adicted Sports Betting Punter, I am Always Searching Online for Articles that Can Help Me. Thank You!

    P.S: Please Take a Minute to Visit My Website as Well: http://www.squidoo.com/SportsBettingSuccess
    http://www.squidoo.com/SportsBettingSuccess

  • David Copson

    Did anyone manage to get a contact email for Sean? Does anyone know who would be the administrator of the company? I’m trying to track them down….

    Thanks, Dave

  • http://www.getinlive.com Morten E. Wulff

    There is still much to be done in this space – lot’s of great start-ups.

  • http://bavaba.com/alderny/2009/02/09/updated-social-gambling-site-pikum-cashes-in-its-chips-and-closes.html Updated: Social gambling site Pikum cashes in its chips and closes | Alderny News

    […] here: Updated: Social gambling site Pikum cashes in its chips and closes Share and […]

blog comments powered by Disqus