Betfair is looking to hire about twenty more people...

[Betfair]

Betfair is looking to hire about twenty more people, particularly mobile app designers, at its San Francisco office.

What does it take to build a $2 billion consumer Internet company in the UK? For starters, center it around a market that’s illegal in the US. Betfair, a marketplace that matches and executes some five million wagers everyday, went public earlier this year and is valued at more than $2 billion.

It has a few things in common with the other $2 billion-plus Internet win out of Europe, Skype. While Skype’s business wasn’t illegal in the US, it was tricky for its founders Niklas Zennstrom and Janus Friis to travel here after the exploits of its illegal filesharing company Kazaa. There’s another similarity: Both Betfair and Skype utterly failed to raise venture capital in the early days. In the case of Skype, investors like Bessemer Ventures, Draper Fisher Jurvetson and Index certainly wised up quickly. In the case of Betfair, 5 million pounds from friends and family was the only venture investment the company ever took– or ever needed.

Betfair’s CEO David Yu was in Silicon Valley for the Web 2.0 conference, and he stopped by our studio to talk about the recent IPO, and the newly launched spin off of Betfair, LMAX, which uses the same technology to run a financial trading business. That same technology already handles more “trades” in terms of wagers than all European stock exchanges combined, with 99.9% of them completed in under one second.
We also talked about the company’s plans for Silicon Valley and the United States. About a year ago, Betfair bought a company called TVG, which operates legal horserace betting in 16 states. It was a trojan (racing) horse into the US market and since being here, the company has been finding small ways to expand. For instance, in September California passed a law allowing people to bet on horse races via an online exchange, which disrupts the broker middleman. New Jersey is looking at similar legislation.

Yu emphasized that the company had a long term view, which it kinda has to. The four largest markets for gambling are the US, China, India and Japan– all of which have strict legal restrictions. Of the four, Yu sees the United States opening up the most. He’s not holding his breath, but he is carefully positioning Betfair to be a big beneficiary as it happens slowly, bit-by-bit, state-by-state.

Meanwhile, the foothold in the US also allows the company greater access to coding talent. The company already has development office in San Francisco and they are looking to hire about twenty more people– particularly mobile app designers. Betfair is one of the first online betting exchanges to have an iPad and iPhone app. You can’t actually use it in this country, but you can use in the UK.

It’s worth noting that Betfair only has about 3 million users, and yet its annual revenues are $550 million and it’s market cap is $2.2 billion. In the Valley we get so consumed with sites putting up gaudy user numbers in hope of some elusive advertising business that for most Web 2.0 companies just hasn’t materialized. Betfair is a good reminder that sometimes people actually paying you for a service is a better way to build a billion dollar platform.