David von Rosen, Founder of Lottoland on Majority Stake Investing, Loving Risk, Dubai’s Energy, and the Steve Jobs Turtleneck Story

0:00Hello and welcome to another episode of Riding Unicorns. Today we have David Von Rosen. It's great to have David on. David is a serial entrepreneur and investor. founder of Lotto Land which allows users to play lotteries around the world and also Ultra Lux property developer 25 Degrees which has won numerous awards for their dealings in Dubai. So David thank you so much for joining me it's great to finally do this. You've built and backed business across a number of sectors gambling, fintech, property, energy the list goes on. What I'm really interested in is what is consistent? What are the fundamentals you look for when starting or investing into a business?

0:40Yeah. Hi, James. Thanks for having me. It's a very good question. I don't really find a consistency and that's because I'm not a big fan of consistency. I like volatility. I like to try out new things and learn new stuff and learn new industries. So I think if I had been more consistent, I would have still be in the same old industry. And so I like to look out for new things. And of course, I think that the one maybe, if you will, the one consistent factor is that I always believed in the new ventures, in the different industries I invested in or I founded. So I had a big gut feel that this was the right direction to go.

1:18But other than that, I find it very difficult to find any consistent factor, to be honest. No, fair enough. So it's more of just about seeking innovation rather than trying to sort of nail down any one or two principles that might then limit you. Absolutely. I don't like, I'm not a big fan of copying things. Maybe, yes, sometimes you can make things better, which others have already innovated. But I find it much more exciting to come up with new technologies, ideas, new products, which haven't been out there before. So it has to have some new facet, some new innovation for it, the product that is.

1:55Other than that, I find it boring just to copy what's out there, right? So, yeah, maybe that's another consistent factor, as you rightfully say. Awesome. And then as well as being a serial founder, who's had great success, you do also invest, but you do it slightly differently. You're not so into the minority state type investing. So tell us a little bit about your sort of investment viewpoint. Yeah, I think it has to do with me being a founder or having been a founder before. I just find founding so much more interesting than investing, to be honest. And if I had the time and I would be younger, I'd still go for founding.

2:39I just find it doing things with your own hand much more exciting. But at some point, I did want to divest a little bit. And also, I was very interested, as I said before, in new industries. And the only way to get to know many different industries and many different people and diversify your portfolio is to become an angel investor or venture capitalist, whatever you want to call it, and invest across a number of companies, across a number of sectors and industries. And I wouldn't have been able to do this as a founder. So that's why I think my approach to investing is very entrepreneurial, if you will, or very founder driven, because I do want to have some say in the way that I want to be involved in the business operationally.

3:25I always like, I'm a very operational person. I always have loved to be operationally involved and roll back my sleeves and get dirty hands, if you will. So that's why I think having a majority stake, it doesn't need to be a majority, but a significant stake rather than your normal portfolio approach where you have, I don't know, 100 businesses plus with two or three, four or 5%. I don't find that interesting. I find it much more exciting to have less companies which I invest in, but with higher stakes. Because then also, if something goes right, and that's the reason why I do it, correct? If something goes right, then it also changes the needle.

4:09And it's a bigger celebration, if you will. And on top, I just want to get more involved. If I own directly or indirectly 20%, 30%, 40%, 50%, then only 2 % or 3%. Yeah. And when you talk about being an operator, what is your kind of superpower? What do you think you're really good at? And what do you bring to a company when you do invest and support operationally? I think I usually have a lot of ideas, always have had ideas. And that's ideas for new businesses, but also for existing businesses, what they can do differently. It's not necessarily only me. It's also other people, if they come in from a different sector, they don't have the tunnel vision, right?

4:50They bring new ideas. So I've had very good experiences also with hiring people from another sector, bringing them into a business in a completely different industry. But I know they're good. They're hungry. They're motivated. They want to do something. And I think creativity is one trait I'm always after. And I would consider myself as a quite creative person, not in a musical or artistic sense at all, but I always have ideas. And that's ideas for the product. That's ideas for the strategy of a business. and that's what I really enjoy. So that goes not only for myself, but as I said, also for the employees and colleagues I look for.

5:28Yeah, really interesting. There's a couple of threads I'd love to put on there. The first is hiring people outside of the sector and bringing them in to give a fresh perspective. How do you measure if their skills will be transferable? Is there any tips you've got on that hiring process to make sure that you're bringing someone who's going to bring those fresh ideas, but equally they're going to have enough context or enough understanding to really those ideas to be valuable i think it's just somebody who's really interested and motivated in that but who's got a fire burning for that venture you want to do it doesn't really depend where they come from i'm not a big fan of education if if somebody was educated as a dentist he can still be a brilliant cmo right i i really believe this all the businesses i went into, and many of them have failed, yes, but all of them, I had no idea, no clue about the industry before.

6:22I like to think about myself more as a generalist. And that's also what I look for in at least senior hires, generalist people who have either experienced different companies, or also what I also like is just young people, because motivation drives and it goes across borders and it jumps across hurdles. So if you really feel that person is hungry and motivated, then I think it's 80 % a good hire. So to answer your question, I go with gut feel. A lot of it is gut feel because I was wrong also so many times with hires. And I think it's very difficult to hire somebody off a CV. So I hardly look at the CV.

6:59I more listen to the person and see whether it's somebody who talks too much, also is really interested in listening. That's what I do as well. I like to listen rather than talk. interesting interesting and and then you mentioned having lots of ideas and there'll be people listening to this that work in companies of all different sizes they might be a two-person founding team all the way up to someone working at a massive management consultancy who's thinking about starting a company when people have ideas how do you find it's is the best way to present new ideas, whether they're small or quite strategically big?

7:39What's the best way to present ideas and to actually get them implemented to make change? I think the question, if I can rephrase, for me always has been, when is the best time to present an idea, right? Because it could be very early when you've just had the idea. And yes, then you want to present it to your friend, your partner, your children if you're older and get some feedback. So that's something I would always do, just to get a sanity check on your idea and how people react like a mini market test, if you will. But then if you want to talk to potential investors, partners, co-founders, I would wait.

8:20I would really wait until you've thought about it a lot. I think a lot also changes in the thought process. I've had it many times that I start with idea A and then becomes idea B, C. It changes because you also have to go a little bit at least where the market is. I think it's wrong as an entrepreneur, as a founder, to stick to your idea inflexibly and try to go through the wall with your head no matter what. In a way, you've got to go where the market is, where the demand is, for example. You have to keep that flexibility to adjust and steer a little bit to the left or steer a little bit to the right.

8:56Once you are fairly certain that your idea and its core is right and you've written it up for yourself, that's what I always do. Now, you can, of course, use AI, but I still am very much paper-based and, you know, I just juggle it down on a Word doc and then I run it via AI. But just to understand for yourself what you want to sell to people and then, yeah, you go the next step. But if you sell it too early, and that's probably a VC question, and if you want to go to a business angel or venture capitalist too early, then you're going to be diluted too much. You're going to sell the business for too low.

9:29So the more you can do it yourself with your own resources, the longer I would wait. And the longer you can work on your very own idea before having to present it to the outside world, the better, in my view. I'm not talking two or three years, but just get the idea ready. So you don't have to change the idea after because that always looks strange. Yeah, great. So a little bit of when and also who to. So early, you know, trust, trusted circle, get a little bit of feedback so you can improve on the idea and then really take time to present it and get it in the right format and the right. And before taking it forwards, I think that's very, very solid advice.

10:10And David, you've touched on already the fact that you're a fan of, in your words, volatility, but clearly you embrace risk, whether it's in the personal life, business life, you like to take risk. What is it about risk that most people get wrong? And why do you purposely seek risk? Well, I think I've learned very early in my life that risk also gives you higher returns, right? And that is in your private life, I find, as much as if you do riskier stuff, it gives you adrenaline, it actually makes you feel alive, whether it's hobbies or sports or whatever. and the same in my view goes for business.

10:55I'm not talking about stupid risks, but the higher in general terms, the higher the risk, the higher the payback. And one big factor of risk is to invest early in startups, right? And the risk is always higher, but I enjoy that. I mean, I wouldn't be able to go in as a majority or a big stake investor in a company that's already out there for a couple of years, making hundreds of millions of revenue or even EBITDA. So that's why I look for young companies. And then obviously the risk is higher. And also for companies who are doing something completely new, which hasn't been done before, also here the risk is higher.

11:36But if you get that right, then the payback is so much higher. And also I do enjoy the volatility. I think it just gives me some form of satisfaction not to be on a straight line, whether it's flat or upwards. But I want to have these days where you jump up and down because something has been going on and something has gone well. And then also, I don't enjoy it, but I think it's part of life that you do get punched in the face and you're on the floor and you've got to get up again. And I was there many times, but I like that volatility, albeit I have to say now, the older I get, the more risk averse, on a higher level, I suppose, but the more risk averse I become.

12:15I think it's just a function of age and that pretty much goes for everybody. I have met in my life. The older you are, the less likely you are open to risk, which is strange because in a way it should be the other way around, right? Because then you have less time to live, which would mean you should go for crazier stuff, be it jumping off a cliff with a parachute or invest your money in really strange things because it's just fun, but it's the other way around. But risk has been a very important part of my life and I really enjoy taking it. Again, not talking about stupid risks, but risking money, risking a broken bone here and there.

12:55I don't mind because it gives you great payback. Yeah. And where do you think that comes from? Is there like, where does that come from? From your upbringing? Is it just your mentality? Was it ever installed in you by a parent or a mentor to embrace risk? I mean, what really drives that do you think? Well that's a very philosophic question right how are you born do you have it in your DNA do you learn it on the way do the people you who surround you play a big role in that I don't know I can tell I can say that both my parents were not entrepreneurs but they had their own business they had to take those businesses over from their parents small businesses but businesses nonetheless so my parents were always working hard and so I saw that from a very early age my mom had to take on a big amount of debt back in the days when her father died so she had that big risk on her shoulders and it I think actually brought her down for a couple of years but she could live with it and she did live with it she had to live with it and in a way I think I learned that from very early ages and then on my way after uni when I went on and founded my very first business, I thought, well, that's a risky step.

14:09But I also thought, well, if it doesn't go well, I'm going to get up and try another one, right? And because at whatever age it was, 20, 21, 22, you're young. Most of the people at that age don't have a family to support. So I think that's probably the best age to start a business. And not saying you can still do it when you're older, but when you fall then, it's so much easier to get back on your feet. But yes, I think it's a combination, really. It might be my parents. It might be my upbringing, the people who surround me. Yeah, it's very difficult, but I am what I am. Yeah, it's probably a combination of many factors.

14:45Yeah, and let's just touch on that bit about the right time to start a business. I mean, I also, first thing I did out of university was become a founder, and it didn't succeed. But it did force me to accelerate my learning curve, I think. because you are exposed to everything that is required to run a business. And it does, I think, get a little bit harder as you get older with different responsibilities to do your first one. I think once you've had some success, there's sort of never a bad time to launch something else because you kind of have the gravitas and the status to attract capital and people and things like that.

15:26But tell us about some of the learnings from those early businesses and what did that give you that then helped you succeed to a greater level with some of the more recent businesses? Well, every situation is very different, is it not? I mean, that goes for the businesses you invest in, but also my situation is very different to anybody else's, to yours when you were young and you did your first found, you first founded your business. So I find it difficult to give advice, which is good for everybody in every situation at every age. It doesn't really work that way, right? Everybody has to find their very own way.

16:03But in terms of my very personal learning curve, and I don't know whether that's transferable to anybody else, but I did learn to have a thick skin. So when things don't go well, try to swoop it away and keep on going. And you do get punched in the way and it's up and down. And the earlier the businesses or the younger the businesses, the more that's going to happen. But you have to grow strong in a way. You cannot be demotivated either by people saying it's not going to work, by your very own people in your team saying it's not going to work, but also by punches in the face because if whatever the product fails, etc.

16:41However, a second learning, and that in a way goes hand in hand, and here you have to find the balance, is also if it doesn't work, you got to let it go at some point, right? You cannot keep on going in the wrong direction. Yeah, absolutely. And I think in the US, they're a bit faster at making that decision. If it's not quite working, just close it and go again with a new idea. Absolutely. We have a problem with this. obviously perseverance is highly valuable, but equally understanding that it's not going to work is important because the opportunity cost, especially the opportunity cost to not do something else with that energy is huge.

17:26And I was with a friend last night who now lives in Dubai and there's a growing movement, a lot of people moving to Dubai. You have your property business there and interest there. Apart from the sort of obvious tax benefits, what is really drawing people to Dubai? And why is it such a sort of growing hub? In one word, energy. There is so much energy in this city, in this country. People from all over the world come there. Yes, some of them might come there. And those are the wealthy ones for tax reasons. and then you've got the lifestyle for those people because there's so many things you can do and that's what Dubai has been doing great, investing in lifestyle and I'm not only talking about the restaurants which are pretty much the world's best in my view and easily comparable with the cities of London, New York, etc and the beach bars and the climate but also if you're into sports, if you're into hobbies, now they have arts, you can go into the desert and ride a motocross bike or go in a buggy, You can jump out of a plane.

18:35You can go on the biggest and tallest buildings in the world. And you drive to Oman. The Middle East has so much to discover. So lifestyle is another reason. But thirdly, and this is more for younger people, for entrepreneurs, really, for business people, there is so much opportunity. And it's quite deregulated and a lot of talent. So it's not only the wealthy people, in my view, who are going and coming to Dubai, but it's also young talent from all over the world because it is a melting pot it's in between the west and the east so you have people from asia from europe now more and more from the u.s and from all parts of the world really well educated people out of uni who are hungry and who want to do something and it just feels like it's like the u.s in the 1920s everything you touch will turn to gold not that is of course not true for everything and everybody but in a way it's it's It's self-fulfilling because everybody believes it.

19:32And there's such high demand. And people are also, as a market now, people are open to experiment with new products. People are very tech-savvy. It's a young population. But also as a hub to do business from and reach the rest of the world, I find Dubai great. Again, a connection between the West and the East. And I have not seen such hungry talent in a good way in so many years. When you go to Europe, yes, we have great people in Europe. also people who want to thrive and want to climb up the social ladder and want to do something with their lives but i just find the density of those people much higher in dubai and that's why i think this combination of capital and talent is nowhere else to be found at the moment i i see i think yeah it kind of naturally attracts people that want to do something and then that density of all those people in a melting pot together it must be a very exciting energy what are the misconceptions what do people not know about dubai we we hear the energy and the talent and everything what are the bits that people maybe don't understand i think what i still always hear and i hate hearing it frankly is dubai doesn't have any soul now who is that person says to judge what has a soul and not?

20:49Is it because they think a city has to be, a country has to be a couple of hundreds of years old in order to have a soul? It's got a different soul. It's got a modern soul. Now, Dubai is geared towards the future, whereas many other, unfortunately, economies are geared towards the past and they still hold up their morality and maybe even with a bit of arrogance and say, this is where we come from. We have thousands of years of culture, which is great. I'm not saying culture and heritage is bad. But what I like in Dubai is exactly they have a long-term approach. They did a couple of years ago hire the best talent in the world.

21:24They think big, bigger, faster, and they pay their people well. And now look at what has come out. Many years ago when they first came out with a plan and said we're going to be a growing city, a hub in the Middle East, not only for tourism but also for business, people laughed at them. And they've exactly created that. And again, everything they do, they think big, something which has not happened in Europe, at least. I mean, Americans still think big in a way, but I find this so highly attractive. And that combination of everything I've just said is unique in the world. Yeah, absolutely. It's super interesting.

22:01And I mean, I know a number of people that have already gone. I know a number of people that are planning to. So it is definitely drawing some really great people, great talent. So it is fascinating to see it unfolding. So, David, we've covered some of the more general view of investing and being a founder. Tell me a little bit more about the Lotto Land journey. So from what I can see, it's a very big company, very successful. tell me a bit about how that all started and the journey that you've been on with the business well it all started really when i was uh still a boy living where i'm a single child still living with my parents in germany my my parents were lottery players right and they always like to dream and that's the core of the product if you play the lottery if you buy yourself a ticket then the action stars in your head your fantasy stars you're gonna think about what would i do if I won a million, 10 million, 100 million.

23:06Nowadays, it's a billion plus in the US. So that's what I always liked. It's entertainment in your head. And when I was a smaller boy or teenage boy at some point, I was dreamt about cars. Well, I'll still do really. So I already had them specced out in my head what I would do if I won a big lottery jackpot. I would get that car and that spec and that color. And that just kept me dreaming for many years until I was a younger adult. And there was a huge jackpot in the US, a billion, no, it wasn't a billion then. It was a couple of hundred of million, but so much bigger than anything you could get in Europe.

23:43And I called up a mate who was living in the US and I'm asking, well, can you buy a ticket for next Saturday's draw, please, for me? And I'll give you the five bucks whenever we see each other next. And then he said, of course, I'll do that. And we hung up. And then I thought, well, is he really going to remember that particular phone call with me if that was a winning ticket? I'm not stupid. I know my odds. It's, you know, one in 200 million plus, but I still wanted to be sure that if I do get lucky, that I also get the money. So I didn't want to take that additional risk, which I would have deemed as a stupid risk.

24:12I'm happy to take that risk and invest five or 10 bucks for a lottery ticket because it lets you dream. And that's another part and another aspect really of taking the lottery. It's an emotional satisfaction I find you get from it in the emotional aspect. It's not a rational product to buy. But anyway, there was no way to play international jackpots in the world. So it's a very monopolized, still is until today, a very monopolized business and industry. But why weren't you able as a German to play big jackpots, only for a million or two in Germany, but why not big jackpots, 100 million plus in the US?

24:46And that's what got me thinking, and that ultimately led to the foundation of Lotto Land. Yeah, and was there regulatory challenges in doing that? How does it work? because presumably the rules initially say it is for US citizens. So how did you kind of cross that immediate obstacle? Yeah, it's a very regulated industry, as you rightfully say. So what I came then up with is a bet on a lottery. So rather than offering lottery tickets, which was forbidden, so you could not buy a lottery ticket in the US and sell it, for example, to a French customer. I thought, well, can you not do a derivative out of it and base it on a bet?

25:32So ultimately then what I came up with, and we got a license for that, is that as a bookmaker, you can offer a bet to a customer, the customer betting a couple of numbers and saying, I believe that those numbers are going to be drawn next Saturday in the US when the Powerball lottery is drawn, but it's not really a contract between the customer and Powerball, but it's a contract between the customer and Lotteland in that instance, the bookmaker. And Lotteland would tell the customer, in case you're right, and let's say your six or seven numbers are drawn, as you rightfully state, then we're going to treat you exactly as if you had bought a Powerball ticket in the US, right?

26:18So it's a synthetic lottery, as people call it. It's a derivative and it's a bet, but you get exactly the same amount as a customer as if you had played the American, the Australian, the English or the Spanish lottery, for example. Very clever. So that's a good example of first principle thinking of sort of saying, well, it hasn't been done before but that doesn't mean it can't be done and all we need to do is really say this person wants to select these numbers for this draw and if those numbers come up that they should win and so you then sort of created a market for that um and i see you've now expanded into sports and other things poly market is very large in the in the us and growing here as well how do you see the future of lotto land where do you want to take it the opportunities are seemingly growing?

27:14Well, I can't answer that for lots of land because I'm not operationally involved in lots of land anymore. However, I am very much involved in the wider gambling industry because I know it well. And I see, yes, as you rightfully say, the US is a huge market and it's deregulating and it's going the right direction. So you have the prediction markets. And I think eventually in the US, you will also have an online casino market. It's not a question of if, in my view, it's rather a question of when this will happen and deregulate because the people are there, they're demanding it, right? And there's demand.

27:46And I find it wrong when a country controls the demand of adults, unless it's something which is really harmful, like drugs, for example. But in the form of gambling, if you regulate it, if you control it, it's so much easier and so much better for an economy, in my view, than to disallow it and prohibit it. So I find that very interesting. But also, after having done gambling so many years, I am also off to new horizons. Gambling is good and interesting. And I think it's great to make money and originate dividends, etc. But I find it so much more interesting to do other things now. Because, yeah, jump on the next ship, basically, and learn new things.

28:31In gambling, I've seen it all. So I find I'd be interested in learning other things in the future. Fair enough. So what is the focus now for you? Well, it's an area of things. So yes, it's real estate in Dubai and elsewhere, because real estate is the antidote to everything online, right? It's something physical, you can touch it, you can feel it, you can see it. I love design, I love architecture. and so that interests me and also I didn't know nothing I didn't know anything about real estate except for my very private use but certainly not in a commercial way and sense and I've learned that and I found it that super interesting so now that I've done that I think it's more a question of scaling this and then maybe something else in the future I've invested in a couple of companies around defense tech and payments which I also find interesting so I can't really say what else is out there.