Beyond the Biz | Jason Kellerman

23 January 2009
During the dawn of dotcoms, Jason Kellerman was at the epicenter in San Francisco, Calif. After a 10-year run with Mercer Management Consulting, the Princeton University grad found himself at LookSmart Ltd., a search-engine solutions provider.

He joined the growing company as director of e-commerce in March 1999. During LookSmart’s heyday, it worked with all the top tech names including Microsoft Inc., AOL and Yahoo Inc. At the zenith of Mr. Kellerman’s tenure, he served as chief executive until he stepped down in 2004 shortly after the company lost its top client -- Microsoft.

According to CNet News, Microsoft accounted for almost 67 percent of LookSmart’s revenue, and the loss caused the company to lay off more than half its staff. However, Mr. Kellerman said he left the post to start his own company. He founded PurePlay in 2005, and four years later it’s well known in the I-gaming ring as one of the few legal United States poker sites around.

Mr. Kellerman took a break from Tuesday’s presidential inauguration hoopla to discuss his past, the current United States regulatory “blip,” and that other Web site he has made part of his daily routine.

How did you get involved with the online gaming industry?

    I came to it from the search-engine business. I decided to start a business with my co-founder. Initially we had two key criteria. One, it had to be consumer-facing -- second was that it had to be fun. We were looking at online games -- not necessarily online gaming, per se -- and we realized that there wasn't anything that existed between casual gaming on the one hand and gambling on the other.

    In other words, something more competitive than casual gaming were people play for pure fun and for free, but not as risky as gambling, where they could lose money. The vision for PurePlay goes way beyond poker and gaming-type games. But poker is such a category-killer -- it's just so huge, so many people are playing it world-wide, it made a lot of sense for us to start with poker, and that's kind of how we arrived in the online gaming space. Our plans are to take this type of gaming model -- the subscription model for prizes -- and go beyond poker.

Were you a poker player prior to your current profession?

    I was a casual poker player. I've gotten a lot better over the years (Laughs). Especially over the last three years.

Tell me about your best day as a C.E.O.?

    I guess it would be the day that we launched PurePlay. When you start a poker site, you are always worried as to whether people will come and play. And there's an issue called the liquidity issue. It’s when someone shows up at the site, and there's not a game going. Or if there is not enough people for a game, they are going to leave.

    And we were really, really pleased the day that we launched. We had many thousands of people show up on day one, and we never had a problem with liquidity. It was just one of those things where you launched and, well, as Kevin Costner said: “You will build it, and they will come.” Well, we didn't know if they would come, and they did (Laughs). So, it was a pretty exciting day.

How about your worst day?

    That's easy, actually. I can tell you it was the day that David Carruthers was arrested. We had a term sheet on the table for a big funding round from a local venture capital firm. Literally, we were about to sign the term sheet -- I think it was that afternoon or the next day -- and the news came on that David Carruthers was arrested. Some of the partners in this firm freaked out and basically pulled the terms sheet -- even though they understood that we were very, very different and that we were a legal model, so on and so forth. They just sort of freaked out.

At what point did you realize you were going to work on the online world?

    Oh gosh, I'm in the Bay Area, and I've been in the Bay Area since 1991. So back in '97 and '98, everywhere you went in San Francisco, you know, the Internet was . . . this is where it really was happening. So, you go to dinner parties, and you talk to people. It was just so exciting what they were doing. So, pretty early on I got into it.

If the Internet had never been invented, what would you be doing?

    I don't know, but I know I'd be doing something entrepreneurial. For me at the end of the day, I love building things -- I love building businesses. So, it would be making some kind of product for consumers.

What's the best part of working in the online gaming industry?

    Immediate feedback from customers. The online gaming customers are very vocal (Laughs) and know pretty quickly whether you've met their needs or you haven't met their needs. There's a large contingent of people on our site who help us on shaping our product direction. They tell us what they want.

Is there an online trend you hope will soon fade away?

    Well, I was trying to watch the inauguration today on live-streaming video on CNN. It was unwatchable because they just couldn't get the technology to be smooth and get it to work like television. So, I hope they fix that (Laughs).

    About 15 minutes before it started everyone in my office, we all tried to pull it up on CNN and other Web sites. So, we just had to go downstairs and watch it on TV (Laughs).

What's the best spam message that’s found its way into your inbox?

    Well, this is going to sound a little boring, but someone sent me a spam message that said, “Important Information About Your Account” -- that was the subject line -- and it made me open it. And I am super cautious about opening e-mails. I'm paranoid that I'm going to open an e-mail, and I'm going to get some virus on my computer. I open it up, and I realize after I open it that I didn't really have an account with this company. As soon as I saw the content in the e-mail, I realized. But, it was very clever.

Do you have favorite non-gambling-related Web site?

    I'm kind of hooked on Facebook these days, I have to say. A lot of our investors are from the Bay Area, and one of them is even on the board of Facebook. So, I've been involved with Facebook in some way, shape or form through folks I know since it launched. I never really used it regularly until early to mid ’07 and now it’s become a daily part of my life because everyone I know is on it, and it's just a great way to connect with everyone you know from your life. It's pretty cool. Are you a Facebook user?

Oh, yes. Since '05.

    It's amazing. Owen Van Natta, who was the chief operating officer, is an investor in Pure Play, and so is Peter Thiel, who is on the board of Facebook. So, we were always talking about it. And it's just amazing how it has exploded.

What would legalization of I-gaming mean to you?

    For us, it would be a big, big opportunity. We have a lot of users, and it would just be another product we could offer -- you know, real-money gaming. We would be in line for a license. Obviously, we would want to get a license, and we'd want to offer that product. That product is extremely profitable. We are sort of in a good position with the largest U.S. footprint out there in terms of the gaming space.

Do you think the new U.S. president will have an impact on the gambling industry?

    I think, eventually, yes. I don't think that it's on his top list of priorities. I think that the gaming industry may have initially overreacted with exuberance about his election. As he said today in his speech, there are a lot of issues. And there are a lot of issues that are more pressing to the nation and the administration than online gaming.

    I think, yes, it will have a positive impact.

Where could we find you when you're not working?

    I try to stay active. I go to the gym. I play golf. I ski a little bit. I just got back from Tahoe. I read a lot. And I live in San Francisco, so there's just a ton of stuff to do here. I love going to new restaurants here -- it's just a great place to be.

What is your favorite vacation spot?

    Easy. Byron Bay in Australia. I like it because it's extremely low key and extremely beautiful. It's untouched. The first time I went there, I was with my girlfriend, and we sort of happened on it. Somebody told us, “Hey you should go there.” And we went there intending to stay for two days, and we stayed for a week.

Have you had any memorable experiences while traveling on business? Any cultural differences?

    (Laughs) Yes. I've done a lot of international travel. I was a management consultant for the first 10 years of my career, and I spent about five of those 10 years living in many, many countries.

    The one that had always stood out for me is I was consulting to an oil company. I was in Karachi, Pakistan, and the executives of this oil company in Karachi, they were all Western-educated and were all sort of upper-middle class -- the meetings were very Western-like in nature. You could barely tell you were in Pakistan. But we decided to go out and visit a bunch of the service stations, and I was with one other person from my consulting firm. All of the executives piled into one big van, and we had to go separately from them with two armed guards with AK-47's in a separate car because they were afraid to travel with us (Laughs). That was kind of a cultural difference.

What’s been your most extravagant purchase in the last year?

    Well, I don't make a lot of extravagant purchases, but I'm about to buy a really nice elliptical machine for my place because it’s easier than driving 20 minutes to go to the gym. I figure if I have it in my house, I'll do it more.

That's what you think, but . . .

    That's the belief. I'm going to test that theory.

The future of online gaming -- what will it be like?

    Gaming is never going away, and it's always something people like to do worldwide. I think it has a very bright future -- particularly online gaming. What we are seeing now -- restrictions in the U.S. for instance -- I think is a temporary blip, I think the market demand will ultimately lead to sort of the right decisions being made. And I think online in particular . . . you don't need to build billion dollar hotels in order to offer it. So, I think that it's a highly capital-efficient business. And I think it will be huge.

Jeanette Kozlowski is a staff writer for IGamingNews and manager of Clarion Gaming's Gaming Industry Media portal. She lives in Kirkwood, Mo.