The US might be several steps ahead when it comes to the sophistication of its e-commerce companies but there is one business in which Europe, and more specifically the UK, is streets ahead: online gambling.
The Founding Fathers' puritanical heritage has effectively put US companies out of the game when it comes to the lucrative and growing market for Internet betting. Fortunately, their loss is the UK's gain and industrious minds on this side of the pond have not been found wanting. In June 2000, former professional gambler Andrew Black and ex-city trader Edward Wray set up online betting exchange Betfair – and won the Ernst & Young Emerging Entrepreneur of the Year award for their troubles.
Black and Wray were quick to apply the collaborative power of the Internet to the traditional bookmaking model by allowing punters to bet at odds set by other gamblers rather than a bookmaker. The model was slow to take off at first, with the fledgling site matching less than £50,000 of bets a week in its first month. A year later that figure had grown to over £1m a week and it now stands at some £50m.
Given that Betfair matches some 1.5 million transactions a day – 24 hours a day, seven days a week – it is probably one of the most advanced Internet businesses in the world in terms of the scale and robustness of its infrastructure. As the company's chief technology officer David Yu is quick to point out, if Amazon goes down for a few minutes, then at worse customers get frustrated; if Betfair goes down during a vital race then all bets are off – literally.
Betfair's vulnerability to down-time has not gone unnoticed by the criminal fraternity. Earlier this year, Betfair, along with several other online betting companies, was targeted by cybercriminals threatening distributed denial of service (DDOS) attacks unless a ransom was paid.
Earlier this month, ZDNet UK took a trip out to Betfair's high-tech offices on the banks of the Thames in London's Hammersmith to quiz David Yu, recently voted Daily Telegraph IT director of the year, on the intricacies of running a true always-on business.
This is a pretty sophisticated business model which takes a lot of tech to make it work. How did it all come about?
The company is four years old and started with Andrew Black, the founder, developing Betfair on his laptop in his spare time. He hired in a few developers and basically took his laptop program and made it into a product. The last few years have been spent refining that – we have estimated that our software is some 20 times more efficient than it was three years ago. We take around two million transactions a day now, and we serve over 80 million page views, which has more than doubled since the start of the year.
The real challenge has been understanding user behaviour, learning how users actually use the site. When you first write the site you kind of predict what you think they will do, but until you really see it in action you don't really know. So what we will do is analyse logs, we'll analyse database statistics and basically look at how trading patterns change.
We have seen that people's usage of the site has changed over time -- not just because we add new features, but because their experience increases. We have seen people who have written robots that come and screen-scrape the site; in fact, some third party has written an application that refreshes the site more often.
I think the site development is very iterative. There is no easy answer – where you just do one thing and it's right straight away. It takes constant refinement and iteration.