Bill Reynolds - Life Real Loud - John Lefebvre, Neteller and the Revolution in Online Gambling

“There was this one chick,” says Edmunds, “who kept phoning in and saying, ‘Wow, I guess I must be lucky, every time I phone in I always get you, John.”

“That happened a number of times,” says Glavine. “John was working ridiculous hours. He was probably home for four or five hours a day. I’d come in at six, seven, eight in the morning and John would already be there. I’d leave at eight, nine, ten o’clock at night and John would still be there for another three or four hours. Work till the wee hours, go home for a few hours and then go back in and do it again. He had a guitar and some clothes, living in this one-room rental. That’s how Johnny was rolling.”

Lefebvre the busker became Lefebvre the phone call center. Meanwhile, Lawrence the CEO was busy finishing off one of his condo projects in Calgary’s Bridgeland neighborhood. Glavine says his job was a “handful” at that point because he was working on new programming while backstopping Lefebvre. Edmunds the money guy came in afternoons and looked at any sales reports Glavine might have had time to generate, but he too jumped on the phones if necessary.

Neteller seemed to have built its own self-defeating filter, weeding out potential customers by the thousands. The persistent ones, they were true masochists: the phone calls, the talk-throughs, the talk-’em-downs. Not only was this wave-of-the-future system screwed, it was doubly screwed. Since it cost the company fifty bucks to sign up a new customer, they were actually losing money signing up clients who then couldn’t, or wouldn’t, use the system. That was bad enough, but even when a customer did figure it out, there was another problem: Neteller didn’t have a business number for processing Visa and MasterCard transactions. When a customer did get his card/PIN up and running — and it did run smoothly once he got there — Neteller couldn’t convert any credit card receivables into cash. “When I first went there in August,” Edmunds says, “we were accepting credit cards, but we didn’t have a credit card processor, so we had no way of getting that money.”

“Actually, we did have one,” says Glavine, “but within two or three weeks it blew up and we were forty grand in the hole.”

So they jotted down customer credit information in a ledger — and waited. They could accept bank deposits, the old-fashioned kind made by customers in person, but even that process was a nightmare. There was a common American system in place, Automated Clearing House, which handled financial transactions. ACH was like an electronic central nervous system that connected all the banks together to process money back and forth — credit and debit transactions, payroll and vendor payments, mortgage and insurance payments, you name it. Any bank-to-bank transfer, for instance, went through ACH. The problem was, Neteller didn’t have an ACH account, so it had to do things the hard way.

Edmunds says,

Somebody would go into Bank of America, who had an account at Bank of America, and he would make a deposit to our account at Bank of America. Then he would phone us, and then he would fax in the deposit slip. And then we would phone the bank to verify that a deposit had been made so you could actually do a cash deposit.

I’m looking at this and thinking, Okay, so this is the high-tech, dot-com age and we’re using faxes …

“And the photocopies,” says Glavine, “sometimes would be really bad. You’d have to get them to send it again. It was horrible.”

Neteller’s vision, to create a streamlined process to move gambling funds efficiently back and forth, was still there, but it was getting blurry. It was going in and out of focus, like the victim in the film Se7en who is kept alive for a year strapped to his own bed. Edmunds figures they almost went under at least three times within his first four months. There was money coming in. Customers did exist, and they did pay, but there was no way of accessing large chunks of the sums accruing. By the fall of 2000, according to Edmunds, “Glav had just started working there and John and Steve were completely tapped out. The smart cards weren’t picking up, and things were just not going well. John looked at me and said, ‘Bobby, I think we’re well fooked here.’ We were right on the brink of This-Ain’t-Gonna-Go.”

The company was floundering. It had no cash reserves and few employees, but everyone kept banging away at it anyway — what else to do? Glavine explains, “By the end of September 2000 I had a new login system set up. Once we got rid of that card and PIN thing, people could sign up instantly and make a bet instantly. It was just a normal sign-up like any other website had then — which was a username, which was the email address, and a password, and away you go. No sign-up, no cards, you’re rolling. It was instantaneous. That was one of the big differences early on — getting the system so that people could sign on and bet right away. That’s when we started to get a lot more turnover in the system.”

Rob Eltom, who joined Neteller a few weeks later, was impressed with Glavine. Even though he had taught himself programming and was paid to look after the IT side of the business and develop the business from a technology standpoint, Glavine was brilliant at seeing the website from the customer’s point of view, not as code. “He understood that online people have the attention span of goldfish,” Eltom says. “He got the fact that what people really wanted was a big red button.”

Neteller went with both the new login system and the smart cards through October, but then informed all clients that it was discontinuing the smart cards. They would have the month to switch over, but after that it would just be a normal login.

For all the hard work, early numbers for the company were pitiful. When Neteller went live in July, it earned about $600 in revenue. August wasn’t much better, maybe $3,000–$4,000 from clients. Edmunds says, “This is booked revenue, but it’s revenue for credit cards we can’t process, remember. This is just what our fee would have been if we actually got the money. There ain’t no money coming in.”

The next month, they watched a little uptick to around six grand. In October, after Glavine had it set up so customers could sign up and use accounts immediately — no more delays — finally there was a significant jump, up to around thirty grand. In November, revenue more than doubled to over seventy grand, and by December it almost trebled, to just under $200,000. After all the near-death experiences, the money started to roll and the desperation began to fade. Lawrence and Lefebvre could now afford to pay themselves—$2,000 a month.

Still, it was a hectic first couple of months. The chaos started to abate for Glavine about when Neteller hired a new full-timer, Meranda Glesby, who was trained to shoulder his customer service load. Glesby was twenty-three, five years younger than Glavine and yet older in some ways. She’d been on her own since she was sixteen. When she didn’t get along with her dad’s new girlfriend—“A woman from hell!”—they kicked her out of the house. She had to grow up fast. She had to get herself to school on her own and to work at various jobs to pay the rent, and, free to do as she pleased, she got a fake ID to hit the bars underage. She started getting drunk at a place called Cowboys. She noticed the bartender sold cigars for four bucks a pop. She wanted to try one. She still smokes them.

But for all the partying and sixteen-going-on-twenty-five behavior, Glesby had instilled in herself a formidable work ethic. She always had a job, sometimes two, and she got that high school diploma. But in summer 2000, she quit a long-term job and, uncharacteristically, hadn’t lined up another one. “I had been on my own since I was sixteen, and you just don’t do that.”