Meet Double Down’s Lone Investor: Ron Erickson Talks Online Gambling

8/23/12Follow @curtwoodward

Early this year, a small Seattle social video game studio called Double Down Interactive came out of virtually nowhere to be acquired by slot-machine company International Game Technology for up to $500 million.

It was a signal that online gambling with real money would start to engulf the fast-moving games industry, especially as the longstanding legal blockade in the U.S. begins to thaw. We’ve certainly seen that storyline pick up speed in recent weeks, with notable names like Zynga and Big Fish Games starting to stake out territory overseas in preparation for the U.S. market opening up.

The Double Down saga was also one of those fascinating hit-it-big entrepreneur tales. The startup was built with an initial seed investment of just $1 million, taken from the profits of the co-founders’ previous company.

But there was one nagging bit of mystery in the Double Down Interactive story: Who was the company’s lone outside investor, an angel who had made the return of a lifetime?

This week, I finally got an answer. It was Ron Erickson, a longtime Seattle-area technology entrepreneur and investor who has seen plenty of ups and downs in his career.

Erickson

Alas, Erickson wouldn’t say just how much his initial investment amounted to. But look at it this way: He put in less than $1 million, which was the amount Double Down spent to develop its first game. With an acquisition that could reach the half-billion-dollar mark once incentives are met, you could say he did pretty OK.

“I’ve made lots of investments that have done very well … I’ve also had a lot of deals go in the ditch, where I’ve written a check and the company was in the toilet within 90 days,” Erickson says. “I think it’s fair to say that, of all the investments I’ve made over the years, that the Double Down investment had the most significant return.”

The story of how Erickson wound up working with the founders is a pretty twisted tale. It sprang from the ashes of Blue Frog Mobile, a Seattle company that sold ringtones, wallpaper images, and games to cell-phone users. It later shifted to providing a text-message-based interactive TV service, but eventually flamed out in a messy court fight that included conflicting boards of directors, an attempted bankruptcy filing, and plenty of lost jobs.

“The carriers were allowing us access to use their billing infrastructure, so you could download ringtones, wallpapers, and games. But, the carriers being the carriers, they can easily shut you down, and actually that’s what happened,” says Erickson, who was one of the company’s founders and once served as its CEO.

Two veterans of Blue Frog Mobile—Cooper DuBois and Scott Wilburn—would later join the founding team at a startup called PickJam, which ran online trivia games. And although PickJam co-founder DuBois says on his LinkedIn profile that Blue Frog was “by far the worst company I ever worked for,” he called on Erickson when it was time to seek seed funding.

“I’m a big fan of Cooper’s,” Erickson says. “So I sat down and had coffee with them, and they told me what they were thinking about. And I’m an intuitive investor—I don’t need to look at business plans or analytics. It doesn’t interest me really.

“They told me what they were thinking about doing, and I said, `That sounds cool.’ And so I wrote them a check,” Erickson says with a laugh.

PickJam turned a profit, but the founders hit upon another idea and poured those earnings into what would become Double Down. Its first blackjack game for Facebook entered the world in the spring of 2010. Double Down started earning money on it immediately, and poured … Next Page »

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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