How Chess.com scaled a massive community

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Nobody thought the old game of chess could turn into a real business in a world with internet. Frankly, there was a time when Erik Allebest, Chess.com’s founder, didn’t think it would and even tried turning his attention to a bigger, sexier market.

But through constant cranking away, Chess.com became huge business. This is the shocking story of how that happened.

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Erik Allebest

Erik Allebest

Chess.com

Erik Allebest is the founder of Chess.com., the world’s largest chess community.

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Full Interview Transcript

Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses for an audience of real entrepreneurs. And joining me is, is a guy who created my fricking obsession. The only thing I’m addicted to, uh, Eric alabaster is the founder of chess.com.

I I’ve had a membership for, well over 10 years, I rediscovered it about a year ago. And here’s why I got really addicted. I discovered that after each game, and by the way, the beauty Eric of your site is no matter what my rating is. I can hit, I want to play a game. I want to do five minute game with five minutes, five seconds added for each move or 15 minutes, whatever it is.

I will find someone at my level that I could play with like that within like 30 seconds, 30 seconds is too much within five seconds. Right.

Erik: Yeah.

Andrew: And then here’s the part that got me addicted. That’s a nice to have thing after the game is over. I can go through and have their freaking computer analyze my game.

Tell me which of my moves were critical errors, blunders, the ones that change the game. Right. And then I learn. And then once I got to that, I said, oh, now I can improve. This is great. So sign up to become a member where I pay, I don’t know what six, seven, $10 a month. And then I get all my games analyzed and then they have these lessons that start with like three minute lessons.

Plus after each lesson is an activity. So I understood, I need to take the center of the board, how I can close things out at the end, the whole thing. Freaking phenomenal. And so I’m now addicted. And even if I don’t have enough time Eric, to play your game, Um, if I’m like waiting in line to get a pizza here at era’s Mandy in San Francisco, what I will do is I’ll do puzzles while I wait, because I’ve discovered that I have a problem with the end game and I want to get really good at it.

So you’ve got puzzles and while I’m waiting, I do anyway, phenomenal, phenomenal app, phenomenal community phenomenal experience. I want to know about the business behind it. I want to know how big it could be. And so I invited Eric alabaster here to talk about it. I promise I won’t just yap on about how much I love chess.com throughout the interview.

I will say this. I went to sleep last night. Like I do every night watching Gotham chess on YouTube, play on chess.com. That’s how I did to them. All right. It’s not just me. We’re going to find out a big, the businesses. Thanks to two phenomenal sponsors. The first will host your website, right? It’s called HostGator.

Go sign up at hostgator.com/mixergy. When you want a website and the second one, you’re ready to create a membership site for your own business. Go to member fool.com/mixergy, and they’ll let you set up membership software for free, but first Eric would have you here.

Erik: Thanks for having me here.

And I appreciate all the shout outs on the product. You explaining that product back to me, made me feel super validated that you’re catching the vision of like exactly what we’re trying to do. Um, and that was a really great moment for me. Thank you.

Andrew: It’s phenomenal. And you know what? A lot of people in our world who are. So if I tweeted out people, or if I talk about it, everyone’s gonna want to play. I’m not gonna play with them. I like my anonymity. I like to just be a part of the community, not to play against others. So I have my own little space here, but I highly recommend people sign up and get addicted to it.

Makes you smile, Eric. What’s the revenue in the business.

Erik: It’s twice as much as it was last year. And it twice it’s that year was twice as much as the year before. And that year was twice as much as the year before. So I’m not going to give you a total number,

Andrew: you give me ballpark? Are you over 50 million in revenue at this point?

Erik: Yeah.

Andrew: Okay. Over a hundred. Will you say that? And then I’ll leave it there.

Erik: Not, not quite yet, but we’re trying.

Andrew: Somewhere between 50 and a hundred and you’re getting there. Okay. And here here’s the amazing thing. My brother’s even more addicted that fricking guy’s on the free plan forever.

So there are a lot of people who are playing and not even paying. Then there are people like me who want the analysis, the courses, and all that stuff. We pay monthly fee.

Erik: And that’s great for us. Like, we are just happy to be in the truth is this didn’t start as a business. It started as a passion project and we’re just happy that people like it. And if they want to use it free, if they want to pay, it’s all great. And for us, the revenue that we get, we just want to turn around and make the product better.

We want to put the money into the community, into the content. We’re just super happy about that.

Andrew: Eric, let me challenge. I love you, but let me challenge you on this. I do see, I went back in the internet archive. I saw that there was kind of a business model there. The business model was to create a community, to send traffic to wholesale chest.com where you are selling wholesale. Right. That was essentially it.

Erik: is what started it.

That’s what, before I was in the chess equipment business and I was like, All of my money is going to Google. Ad-words the profits are sucked out of my business. Is there a way we can like build a community? So we don’t have to pay for the ads. Once I got out of the once I got out and I sold that company that was selling equipment and I went to business school and I was like, oh, now I don’t have that business anymore.

Like I, but I had the domain name. Um, and we just started doing it and then we’re like, oh, can we make any money to, to support this? And we started a membership plan and we haven’t raised prices. We haven’t changed our business model. Um, and

Andrew: with one nice addition, the fact that I can buy within the app store. Nice. That’s a nice addition, but let’s go back then. Let’s understand exactly how the whole thing evolved. Wholesale chess.com was you selling chess pieces? Why were you selling chess pieces at all? Why do you think that there was business to be had in selling?

Not just even one, but lots of chess pieces, chess parts.

Erik: Well now you’re like diving back into all of it.

Andrew: Let’s go memory lane. Let’s understand how you got here.

Erik: Okay.

So there’s, there’s the story here, which is, I started teaching chess to kids in college as a business opportunity

Andrew: Okay.

Erik: and not just like me teaching one student, but I was going into schools doing it. Free chess assembly, and then getting hundreds of kids to sign up for chess clubs and then hiring other college kids to teach those clubs for the material I was writing while I was in college, I was, I had chess clubs in dozens, like 50 plus schools.

I was making tens of thousands dollars a year as a kid college kid going full-time to school.

Andrew: I had no idea. Wait, so you would go in, you teach chess, then you would hire people, other students to what lead chess classes, and then the parents would pay for it. That is for now. How’d you get so many schools to bring you in for assembly on chess?

Erik: Because I’m like, Hey, I’m going to teach every kid in your school, how to play chess for free. And I’m going to donate some chess sets to your school. And it’s a fun, super fun assembly and other, and I was really good on stage and like, Explaining chess and like this crazy fun way with this magical universe and characters and posters and kids would get excited about chess and like sign up for chess club.

You get a free chess set of magnetic. Just said, we do an ice cream party at the end. You take home worksheets every week. And then we’d hire like excited like college students who were making more money teaching one hour of chess. And they were, you know, cleaning four hours of toilets for the university.

And they had a bunch of personality. They’d go in, they teach chest, we had all the curriculum written out and then we were just hitting it. And the schools were like, this is great. It’s good for us. It’s good for the kids. And then principals, we talked to principals and by the end we had like a hundred schools going.

Um,

Andrew: well, you always entrepreneurial

Erik: yeah.

Andrew: you work. Give me a little bit of a, of your backstory.

Erik: I mean, my dad was super entrepreneurial. He was always starting a new thing. He was a lawyer by trade, but like always starting something, he was doing software before his time. He was, he was doing all sorts of stuff. And then me as a kid, I was like, I want money. My parents are like, I was upper-class, but they were like, well, then go earn it.

And so I would like. Go where the kids would drink beers on the weekends. And Monday morning, I’d go collect the cans and recycle them for $20. Uh, I was buying telephone wire and then wholesale, and then selling it at school for people making bracelets. Um, I was selling stationary door to door from the back of boys.

Life magazine. I mean, you name it. I was doing it.

Andrew: Do you ever get in trouble for selling anything as a kid? Like, did the school bust you for selling wires to other kids? No. This was just you who you were, and I heard eight years old. Your mom teaches you chess. You apparently were so good. You beat her. She wanted to back off and say, let’s not play anymore.

Um,

Erik: Yeah, but I’m not, it wasn’t like genius level. It was just like better than my mom. you know what? It was a confidence booster, but like, there was like a 10 year hiatus of like me doing that. And then me even caring about chess again.

Andrew: You know what I introduced chess at our, in mammoth and my family, my kids got the chest.com app. It’s an app that you feel comfortable with your kids getting on it. I’ll have dinners here and I’ll bring up the chess board. It’s amazing how kids will gravitate to it. If you give them a little bit of knowledge and you show them how they could turn ponds into Queens, then they’re freaking out of their mind and they love the game.

So I get it. I get the, I get the entrepreneurial thing. Now. I understand why wholesale chess.com made sense and why also there was a whole section for teachers.

Erik: I got to, yeah, I got to tell you the connecting. I forgot to do that part. So I started teaching all these chesty kids and there was a company that was doing the same thing, but with science clubs and they’re like, Hey man, we love your chest clubs. Do you want to do like a franchise thing where we take what you’re doing?

And like spread it around the country. I’m like, yeah, let’s do it. So I signed a licensing agreement And then I was like, oh, they’re going to be franchising. They’re going to need a lot of chests. Let me be the guy who not only does the franchising, but buys the equipment, imports it, and then resells it.

Then I was buying this equipment and I’m like, oh, I got extra equipment. I got to sell it online. I made a website with my friend, Jay, and we started selling test equipment online. Pretty soon. I’m like, this is way easier than running chess clubs. I sold the club chess club business. We started focusing on selling online.

That was going well, then the whole business school and chess.com thing started. And then my friend, Jay, my buddy who helped me start wholesale. He then helped me start chess.com and we co-founded it together. That’s the top of all the pieces come

Andrew: And you and Jay met up when you were looking for a chess coach and for like five bucks an hour, he was coaching. That’s the

Erik: That’s in my freshman year of college. Yep.

Andrew: By the way, getting a coach for chess is a huge unlock. I I’ve found somebody on chess.com in the coach section. It’s not just that they teach you by going over your game.

It’s also that they, they, frankly, they teach you a little bit about how to learn and about how the software works and stuff like that. My current show, test, coach, believe it or not. James out the truth. The fricking author is amazing at chess. He’s kind of obsessed. He saw me tweet about it. He said, let me work with you.

He’s coaching me. It’s amazing. All right. How did, how did you get these chess pieces? The chess I’m looking at a mini magnetic chess travel set here on your site. If I buy one, $3 25 cents, if I buy 144, it’s a dollar 65. Where were you? What were you buying it from? Alibaba or something. And then reselling it.

Erik: Oh man. Well, first of all, I’m not involved with wholesale chess at all

Andrew: is I’m looking at internet archive back from when you were

Erik: Yeah. Yeah. I mean, I was just a kid barely out of college wiring, tens of thousands of dollars overseas via fax to China, and then hoping the container loads were showing up.

Andrew: and they would show up at your house at your dorm room, I guess you were in college, right?

Erik: I was just out of college. I was in an apartment, newly married with kids and yeah, it was like a storage unit or my garage, my parking garage in my apartment complex, like,

Andrew: So all these chess clocks, chess sets, and books, they were all in storage or at your house. Your

Erik: yeah. And then, then we moved into a warehouse and then just started building from there and then it grew and yeah.

Andrew: All right. So I read the chest.com AU. So chest.com. Originally I went again, back to the archives to see what it was. They, it was this company that had this vision of creating these mentors, software packages for lots of different games. They started with chess. They were selling downloadable. Am I right?

Downloadable software

Erik: CDs.

Andrew: CDs. Oh, CDs. And then they went bankrupt. And you were talking to them, I guess, because you were both in the business. How much did you buy the domain for after they went bankrupt?

Erik: $55,000.

Andrew: Wow. That’s a great deal. Did your heart stop at that time or did the entrepreneurial you did,

Erik: Yeah.

Andrew: this was a big investment.

Erik: I mean, it was a big investment. Yeah.

Andrew: Um, how many kids did you have at the time when you were putting that kind of money up?

Erik: Seven just getting, uh, Two or three.

Andrew: Two or three. All right. So you have two or three kids, right? And you got to take care of a family and you’re putting 55,000. Yeah. But you had a vision. It seems like it’s, if I could, if I can get traffic without being dependent on Google, it’s helpful. I can monetize it. You also seem to have gone for, um, a community, right?

From the very start you hired people from India to do this. This is back before outsourcing was a thing and communicating in general, remotely with channel. And you hired an American team. Why did all those teams not work? What was it about your vision, which I read you laid out in Microsoft word, but what was it that they weren’t able to implement?

Erik: Well, first of all, let me say that there was back in when I bought chess.com the browser bar in your internet, Explorer, or Firefox, if you just put chess into it, it would add the.com and go there. There was no search at the time. So you were getting a lot of people just coming, cause they would just type in chest into the browser bar and go to our site.

I just wanted to clarify that there was some value there and we, and we knew that, um, when we first started look, man, I, I didn’t know how to do this. I’d never started a remote software company before. So we had a couple of false starts along the way. Where are we going to go with an off the shelf package for a community that was already existing?

Were we going to build on Drupal? Were we going to build on Joomla? If anyone remembers what that was, uh, you know, we’re going to do that. Are we going to custom build and we kind of Got into it.

And finally like my, my co-founder, my friend, Jay, he’s like all these pre conformed software. That’s not going to work.

We got to build from scratch. And then he and I were like, all right, are we going to do this? All right, let’s do this. And we just. I didn’t take a job after business school. I had job offers at Facebook, Palentier, mids, all these young, YouTube, all these different places. I’m like, I’m just going to go all in on this.

My wife’s like, oh, okay. You’ve done it before I think, okay. She trusted me and my friend, Jay, quit his job. His wife was like, why are you doing this? And then. Up every night, till 3:00 AM coding away building stuff. I was doing front end code, even though I was an English major in college. So I’m building the front end, he’s building the backend, you know, we’re doing wireframes and Microsoft word.

It was a crazy time. Um, but we had to just do that because the other teams, they didn’t have the passion. They didn’t understand what we were trying to do. And they had limitations that their software wouldn’t build the chess vision that we had.

Andrew: What was that? What was that vision? It was definitely. And you could have used some forms offer for that. Definitely blogging. What else were you thinking?

Erik: Like just a simple thing of like, if you want to a forum. Sure. There was off the shelf forum software, but how do you get a chess game inside of that that would like move and be able to post that chess software to

Andrew: You, you wanted people to be able to play against each other, right? From the very beginning.

Erik: Nope. We wanted people to be able to talk about chess from the beat.

Andrew: Ah, that’s why one of your old blog posts said, I want chess boards everywhere. You want people to be able to put in the board to show here’s my game. Not necessarily play against each other.

Erik: Right. We thought that people would keep playing on the many sites that they were playing on at the beginning, building, building, just serving software sounded insane to me at the time. So there was like ICC and, um, fixed and Yahoo chess. And we’re like, ah, you can play there, but then you can’t talk about it there.

So come here were the MySpace of chess. This is your profile. This is your rating. Share your games, build your profile, add your friends. Talk about it in the forums. That was the initial. But then people came and everyone’s like, Hey man, we also just want to play chess. Can you make that for us? And we’re like, Okay. fine.

And then,

Andrew: pause on that for a second, because the MySpace, I was wondering if that was just a put on, like, you saw that everyone’s talking about social networks and you’ll create your, I thought if I was wondering, are you just pretending to create the MySpace of chess because every reporter seemed to be looking for niche my spaces, or were you really thinking that way?

And you were, this was you saying I want to create a community, not my space on Facebook for everyone. But a smaller version. Got it. And, and money would come from advertising and a product sales. That was the original, original vision.

Erik: Yeah.

Andrew: Okay. One other thing in the chess, uh, in the tech crunch article about you, it said you had 10,000 members, which was not huge, but it also said something that I saw over and over again, it said they have this community blog, whatever.

And even on the early version of your, your site in a blog post, you talked about how you had this vision, I guess for giving people email addresses. Is that a thing where you thought it would be andrew@chess.com?

Erik: Yeah.

Andrew: Because

Erik: Yahoo was doing it. You know, Gmail actually Gmail wasn’t even necessarily out at the time, but like Yahoo, Hotmail, and email was like the thing you had to MySpace that email that was the internet. And we’re like, people are chess players, like who wouldn’t want a vanity email, you know?

Andrew: And they would pay for chess.com vanity email. Right? Right. Because it was a business of doing it by the way, one small correction Gmail was around. Here’s how I know it was around. You commented on that tech crunch post and you put in your g-mail email address because the chest.com email wasn’t there.

Erik: Oh, okay. He was there then. Yeah.

Andrew: I’m not going to reveal what that is, but, but you put it in there and dude was there. Hey, and like here’s here’s uh, the second comment on that post July 8th, 2007, Shaundra B said yet another social network, yawn, no slam on chess.com, but when are we going to see some real web innovation? So far? All I see is rehash of the same stuff over and over and over worse is the tech crunch gives them coverage.

It’s like it went back and forth. There’s some people who felt exactly like Shondra and then other people who we thought the exact opposite. This is amazing because I want to talk about chess with other people, but I guess everyone was thinking that small. Alright, let me take a moment. Talk about my first sponsor.

And then we’ll talk about how you address this demand for playing games. Uh, first sponsor is hostgator.com. Let me ask you this. In fact, our, if you were starting today, not that Eric who have today, who’s got a successful business, not even the Eric of high school or college. Let’s go back to elementary school.

I give Eric a brand new site hosted on hostgator.com. Andrew Warner pays for what’s the innovation that you put on. What would you today put on? What would the Erik have then in the world of today, put on, let’s give people some ideas of what they could launch.

Erik: Oh, man, there are so many opportunities still to make amazing sites. Um, and for all the people who say like web is dead, like it’s all mobile. That’s not totally true. Like just a constant 80% web. But anyway, ideas, I mean, I think there’s still room for niche communities. I think. A lot of room for like a public benefit type stuff that like mixes business and an aunt and a good Goodwill and charity.

Um, and you’re putting me on the spot here.

Andrew: Do you think that anything that there’s a new game that pops up people could do a web version of it? Not mobile app first and let people pair up.

Erik: You can do both. In fact, I mean, I’ve been, I’ve talked to several companies that mobile apps only, and they’re like, dude, your web strategy, we’ve been building what? Mobile apps, but like your web strategy, crushes it and like, yeah, it does.

Andrew: You mean chess dot coms, web strategy. Okay. People, whether it’s one of these ideas or maybe new community using just plain community software or something else, if you need a website hosted for anything, frankly, even if you have a local store and you need website hosted for go to hostgator.com/mixergy, when use that slash Mixergy, you’ll get the lowest possible price.

They’ve got great service already. Low price. Yes. You’ll get a lower price when you use my URL, but it’s dependable. And that’s the amazing thing I’ve been hosting on them for years. And I urge you to go host with hostgator.com/mixergy. All right. I saw the first version of the game. It wasn’t immediate real time.

It was multi-day games was that you were letting people match up for it. That’s the thing that you did.

Erik: Yeah. Ms. Turn-based like little lower pressure, um, easier technology as well.

Andrew: easier for you to create and you created it.

Erik: Well, Jay created it. I made the front end code. And by that time we had a guy named Mathias who was working with us building a chess board you could use. Um, so it.

Andrew: Who is Peter? Is it Peter? P I O T R. It

Erik: Okay.

Andrew: like. W how is it pronounced?

Erik: dunno, it’s pronounced?

like guilt. Uh, but I call him Piotr just because it’s easy English and I’m lazy that way. Um, he was someone we reached out to very early on.

Once we decided to start doing a real-time chest server, he had already built it and back then it was like, everyone was like, oh, download this thing on your computer and then play chess on the server. And it was like, it was such a bummer. And then, but Yahoo chess was doing Java applets, which was like already going out of style.

And like, can you just do this with like HTML and CSS? And JavaScript. And then I found this, this guy who had this website and I just like emailed him, like, Hey, I start in test.com. Like, you know, you built a web server, Uh,

a game-playing server just on the browser. Do you want to work together? He’s like, okay, then

Andrew: And you hired him to create what he created for himself.

Erik: Yeah. And put it inside of our engine.

Andrew: Okay. And then how did that help? I know the, the domain helped you get to 10,000 and it grew from there being on tech crunch. Surprise, not surprisingly, I guess, within the tech community are people who freaking love chess. And so I understand that that helped you grow a lot too.

When you added re when you added turn by turn multi-day games, how did that, um, how did that impact your growth?

Erik: I’m so old and that was so long. I don’t

Andrew: Was that significant? So it wasn’t

Erik: but it was significant. Yeah, because It just made it when, when we, the people came in and there was traffic, like it wasn’t just come in and look and leave. It was coming. Yeah. Definitely, you know, it was one of the features that really got people to stick around.

Um, but again, it was only web and it was turn-based and if you didn’t remember, you know, then we’d like. send you an email. Well, of like real-time push notification is a multi-platform play, but.

Andrew: that. Yeah. That didn’t exist then. But today, yes. All right. So that was the next level of growth charging. You, you promise people in the beginning, we’ll do advertising, but I promise it’s not going to be annoying. And for some reason you singled out mortgage ads, it must’ve been like annoying mortgage ads when you were started, when you started, because you said I’m not going to get those annoying mortgage ads.

What, what was your, uh, the first step into membership?

Erik: The first step into membership was taking. Out of bankruptcy, product chess, mentor making a web version of it and letting people do a subscription every month to get that content from the CD to the thing. Cause it

Andrew: was chasse mentor. It was always content

Erik: It was, it was the CD of the teaching software that was owned by chess.com.

Andrew: Oh, so it wasn’t software that teaches you how to do it. It was videos. Teaching people how to play. Am I right? No. Okay.

Erik: it was texts and chess moves together and like an interactive and interactive UI to kind of help you improve your chess. It’s similar to what we have now on lessons that you talked about, you watch a video and then you do the interactive challenges after it was no video, all challenges with lots of texts and it was a bit unwieldy, but we took that product and put it in the web version and then start a membership. Yeah.

Andrew: Good revenue back then. I think this was a time when people weren’t comfortable paying for membership.

Erik: Yeah, It works. Yeah. But I was also, I had sold, so I had sold my. Teaching business for some amount of money, I sold the chess equipment business for a fair amount, more money. I also, made a lot of money while I was in business school, doing domain name, arbitrage, and other kinds of things, which is a whole other story.

Um, I had another, I had a bunch of SEO sites that were pumping out money and doing weird stuff anyway, very anyway. So I was also investing a lot of money into chess.com. So we were burning. You know, a lot of money each month through the hires and all of that was coming out of my pocket directly. Um, and every single VC I talked to, you know, I, I won’t name names, but every single one I talked to was like, this is there’s no way chess will ever be like large enough to be investible.

Okay.

Andrew: And meanwhile, you did say in an early blog post, we might need to take on debt or equity, which was kind of weird for startup entrepreneurs that we might take equity. It’s not like a debt to me, debt. It’s not like there are people throwing

Erik: We did,

Andrew: Oh, you did. From who? Who lend you

Erik: from my friend’s mom’s $70,000 three-year balloon

Andrew: That’s phenomenal. Why didn’t you take it away?

Erik: because no one would give me money.

Andrew: She just wanted to make sure you she’d get her money back. And she said, this guy, Eric is, is good for it. He’ll figure it out.

Erik: Yeah. I gave her like a 15% return. it. was great.

Andrew: Wow. I can’t believe it. Meanwhile, there was a competitor that did take equity. I forget how much from like true ventures or something. Right. You ended up acquiring the domain, nothing else.

Erik: And their user list. which was ended up being meaningless. I mean, it was a deal I regret, but we didn’t know what the con, well, we eventually got all their users anyway. Like it wasn’t that helpful. it was a bad deal for

Andrew: seemed like also created a little bit of frustration because you couldn’t keep their software, which meant that people had accounts there couldn’t use it with you. They’d have to create new accounts. And some people were pissed at that.

Erik: Yeah,

Andrew: All right. By the way, I feel weird saying the word pissed with you.

I, I feel like you’re like, you’re not somebody who uses that kind of line.

Erik: I am somebody who uses that kind of thing.

Andrew: I’m trying to get a sense of, alright. So then that, that helped the business grow. It seemed like you were always remote, right? Oh, team. Y

Erik: I mean, do you know how much money it costs to pay somebody to build software for you and Silicon valley? I mean,

Andrew: but you could still build outside of Silicon valley and not have an office. How people show up, have a place for you to show up.

Erik: yeah. but it’s hard to find people all together who loved chess and love doing that stuff all in the same place. Like we have the whole, we get to choose from the whole world. We get people who are great at they’re great at what they do. They love chess and we can afford them. And they’re loyal to us. Our turnover@chess.com is like 1% a year of people leave our company.

Andrew: Meanwhile, you’re at like 200 5300 people.

Erik: Yeah,

Andrew: Well, all right. And so you’re remote. Did you, did you do a lot of hiring from Upwork?

Erik: I did.

Andrew: did. How did that work out for you?

Erik: I’d love Upwork. This is not sponsored by Upwork. I love Upwork. Um, There’s they, they were awesome. They used to be called oDesk. I had a hard time changing. They getting used to the name change, but, um, Yeah.

I mean, content people we’d find developers to do special projects. A lot of, you know, full-time hires.

Um, it was awesome.

Andrew: Yeah, I saw a video. You did. And you also said, I guess at the time it was also hard to pay people internationally. And the fact that they made that easy was a big win for you.

Erik: Oh, absolutely. Still does.

Andrew: All right. So you’re playing, you’re continuing the whole business. How do you and Jason, you and Jay friends still you are, how do you guys stay friends with all that’s going on?

Erik: Well, he actually left the business. I left the company years ago. We did a separate, we did a separate side venture like nine years ago. We’re like, I don’t know if chess is ever going to get big enough. Cause we heard that story and we’re like, we should probably do something just to make money. And so we bought exercise.com and we’re like, we’ll make money on that and just do chest as a pack.

Andrew: Oh, wow. Okay.

Erik: And that we raise money and like fell on our faces. Um, and I’m like, I’m just going to go back and do chess. And Jay’s like, I’m going to go do something else. And that was that,

Andrew: Oh, wow. So I, I didn’t realize it was a period which has.com was not successful. I know you’re profitable from day one. Right. But.

Erik: it wasn’t like it wasn’t successful and it wasn’t profit. We’re profitable always, but it was. The growth curve, man, if you, you know, someone said like overnight success, 15 years in the making absolutely true. Like we’ve been grinding at this for so long and we just, you know, when you’re growing 30% a year, starting from nothing.

It just didn’t have the, like, we also got a little bit excited by the Silicon valley. Like raise money, go big, make a bunch of money at once. And like business, school, friends doing it and people talking about it. There’s like a pressure to like, do something big. So like chess, maybe isn’t big. Like, we’ll go do a big market chest of the tiny market.

We’ll do, we’ll do all the stuff came out of work. But instead of getting a small reward for doing here, we’ll make a bunch right. It didn’t work out. It turned out we were passionate about it. We weren’t really dislike, sell our souls about fitness and it didn’t work.

Andrew: Can you tell me about that? What was, I didn’t see. exercise.com. What was exercise.com? What was it?

Erik: was an SEO play into a community with content.

Andrew: Oh, this is like around the time that bodybuilding.com was doing phenomenal and I forgot what it sold for. And you said community for people who are working out with SEO and then revenue would come from where,

Erik: Paying, we would get content producers to put their programs on our program, on our car platform. And we would handle the community, the payments that the videos we would handle, like all the kind of, so if you were, if you were a fitness person who like could get a video shot, but you didn’t have all like the back office to

Andrew: okay. I see it. I see it. Now reach your goals. Simple online exercise programs, people find their program and then they pay for it. And you split the revenue with the creator.

Erik: Yeah.

Andrew: Why didn’t that work out? That seems like a pretty solid model.

Erik: How many more hours do you have? Just kidding. Um, it didn’t work out because we didn’t feel that we didn’t feel the passion for it. And it’s, we just didn’t discover what it was. And the other thing is that. Chess and games get excited or exciting for people. And fitness is like a chore for people. Um, so some communities like Strava work because they have passionate people who want to do it, but like selling fitness to people who don’t love fitness is really tough to do.

And frankly, the people who are successful at it, I’m not sure I like their tactics.

Andrew: Uh, it’s more of the info marketing world that was going on. Right. And got it. Maybe it was also a little bit too early because at some point there were you tubers who are great at teaching fitness and then maybe upselling, but didn’t have a platform maybe Skillshare. No, I don’t know if Skillshare ended up being their platform.

All right. And so you continue with chess.com. Why, why didn’t you go and get a job and say chess.com will be my side.

Erik: I mean, it’s so fun.

Andrew: Is this really? It are you this addicted to chess still?

Erik: I’m this addicted to chess, but I’m also this addicted to like this team. Like I, we have the world’s best company. I’ll just straight up say it like working. There is an absolute treat every day. It can be hard and grinding. And it’s like, not my favorite sometimes when it’s like, oh, you closed my son’s chest account.

I’m going to Sue you. And I’m like, that’s the days that suck. But the days that are great is like working with the team building product. I use the product. Our team is just such an energy. It just doesn’t feel like work. And so, yeah, I love it.

Andrew: Tell me more about what it is that you like about the team. I’ve heard you talk about the community and your love of it. I’ve obviously seen a lot of like anger from people. If someone just thinks that they lost to someone who was cheating because they had another app going they’re angry. And I could see that that would be frustrating, but I’ve seen both of that.

I haven’t seen. What is it about the way that you, that you, that you run your team? What is it about your culture that makes it so fun?

Erik: Yeah, you should probably ask some other people who work with me, uh, to get a better opinion, but we have a very balanced view in that light. This job, like we don’t track people’s time and we’re not like slate. It’s free. You want to take time off in the middle of the day and go walk your dog. You can, as long as you’re getting your job done, no one’s checking on you.

Um, so it’s like a very real it’s it’s we work hard, but in an unstructured, like not. You know, coercive way. The other thing is, is that we’re kind of all bonded around something we love and enjoy. And even if it’s like a hard part of the job, which is like closing accounts for abuse or reviewing avatars, or, you know, doing some of the part, that’s less exciting, you’re still doing it in a chest environment.

Um, and it’s really fun that way. And then, you know, I got to say like a little bit, it embodies kind of what a lot of the stuff I learned at Stanford business school, um, which is a lot of like servant leadership and a lot of like radical candor and a lot of honesty and like, you know, good values, I would say of like really just building and caring about the people who were there.

Um, and it goes all the way down through our whole team. And we hired people who embody those values and, you know, probably more of a family feel than it is company feels right.

Andrew: How do you do that? How do you do it remotely? Is it a slack thing that you do? Is it, is it slack? What do you do on slack that allows you guys to stay connected in a way that most people, even in an office don’t feel.

Erik: Tons of memes. No, it’s, it’s it’s, you know, there’s a lot of good communication when you run. When you run a remote company, you have to get good at writing. You have to be able to clearly put out your ideas very economically. Um, and also you learn to emote more through What you write. Some people have a hard time putting their emotions into writing, and then you’re like, not sure if they’re mad or if they’re joking or whatever, but like there’s a skill there.

That writing helps you be clear in your thinking because you have, you can’t just like, say whatever words you have to like, write it out. So there’s clarity of thinking, and then you have to be intentional about what your emotion is that you’re putting out there. And so I just put a lot of positivity into all my communication and that radiates out.

Um, and we can talk a lot more about that, but, you know, we also, um, you know, I write a lot of emails to the team. Um, Here’s something people would probably find interesting is that every week, every single person in our company is invited to write a weekly report of what they did and what they’re going to do next and how they’re doing personally.

They send that to their manager and to me, so every week I am reading 200 plus emails from every single person on our team and trying to respond to those and understand them. So it’s a very flat structure and I’m very personally involved with almost every single person on our team.

Andrew: What do you use to do that? What software to have everyone tell you they have to, oh, email. Wow. You’re not news using know your company or anything like. Wow. Wow. All right. This is, and you can do radical candor with text.

Erik: I do.

Andrew: Wow. What about politics? Do you allow politics in the, I don’t want to get too deep into politics, but do you allow that kind of conversation in slack?

Erik: Okay. People don’t really do it because there’s just a whole lot of other great stuff to talk about. Chess is interesting. We’re not doing car insurance software, we’re doing chess. And so people are, there’s a lot to talk about already. Um, we have our own events and so, so we have a diversity of thought in politics, but like it’s not a, not a thing that comes up.

Andrew: No, I would never have thought that talking chess would be interesting. My brother and I didn’t want to talk politics with him, but I said, fine. If we talk any politics, let’s do it in signal and I’m going to set it to delete so that I don’t leave any of this trace behind. Cause I don’t care about it and I don’t want it.

our, our, our signal now is a screenshot of how I lost the other day, because I had, I was way ahead, but because of time sure. I lost, I take a screenshot and I sent it to him. I don’t know why, but it’s cathartic to just yell like that. I will, I don’t get wrapped up in sports. If you watch football with me, I’m basically yawned and I’m tuned out.

But if you’re in my house and I’m playing chess, you’ll hear, oh, I can’t believe I did that really out loud. I get, so it’s such a good guy. Let me talk

Erik: me give you one tip.

Andrew: Go ahead.

Erik: You never lose when you learn.

Andrew: No, it’s it’s great. It hurts. It hurts. I will say this. Well, look, we’ll get into the software in a minute. Let me talk about my second sponsor. It’s called member full anyone out there who wants to charge a membership fee for when I started with membership on my side, people were angry. How dare you charge for content?

Right? Information wants to be free. Whatever the world has changed. Now there’s not only people who are willing to pay for it and eager to pay for it. There’s also that makes it easy for you to do that. So if you’re out there and you want to sell email content, membership, like a community, you want to sell access to a part of your site, whatever it is, member full we’ll help you do it.

Go to dot com slash Mixergy to use their software for free it’s owned by Patrion it’s member, full.com/mixergy. To use it for free. Here’s here’s my, my challenge with chess.com. A lot of your features are not super obvious. I got back into it about a year ago. I was looking for something to do, I think because I was stuck at home with COVID and I needed to just connect.

I went back to the message board and I put a message on your message board saying, can I hire a teacher? Who’s going to teach me how to use chess.com. And I swear, I swear to the best of my memory. I looked at my past message from 10 years before it was the exact same request. And it wasn’t until my brother did a screen share on zoom with me, that he showed me that I could at the end of a game, hit this little button and then have your software analyze it and give me feedback so I could improve.

It’s it’s not super obvious. Don’t you agree?

Erik: I agree. And I’ll tell you why. First of all, A lot of markets or businesses cater to one, one segment of the market we’re into hardcore athletes or we’re just beginners or whatever. We’re trying to serve everybody. We want world champions using our software. We want people who, you know, are 70 years old and learning chess for the first time to use it.

It’s very hard to make something that works well for everybody. It’s a challenge. And so if we don’t get it right, we don’t get it right for everyone, but we get it right enough for most people. And that, and it’s hard to admit that, but it’s true. Um, the, the other thing is, is that chess is inherently. A complicated game.

Like there’s buttons, there’s features, there’s things you can do. And if you take those things away, then the people who like those things and use them are like, well, how do I do this? How do I do this? How do I do this? And so we just, every part of the site interacts and moves and has all these different pieces and holes to drill down into.

Um, you know, it’s, it’s almost more like playing league of legends than it is playing, you know, solitary, right. Because there’s because of the depth and complexity of it. We are doing some things right now, we’re in kind of a big UX rethink. We’re trying to organize and structure things a little better.

We’re trying to make clearer menus and we’re going to try and make it simpler without pissing off all of our hardcore players who love all the features as well in the depth. So we’re

Andrew: wouldn’t even say this, Eric, if you could, even, if you see that I’m not using the site or I’m not using the, uh, feature and, um, Pinging me with an email and saying here’s a YouTube video where someone shows you how you can analyze your game, or here’s a whatever do videos teaching, how to, that would be so helpful.

That would be so

Erik: Okay. We do that, but people don’t know that we do that because anyway, the problem is real, uh, and in a daily struggle.

Andrew: And I think that because of that, so I was listening to, uh, the, my first million podcast and they like to count everyone’s money from a distance, you know, that podcast. It’s now owned by HubSpot. Anyway, they said, oh, chess.com is making a bunch of money because it owns the domain chest.com people have to play.

And because they play going to go on it, even though it’s an ugly, ugly site to them, you want to just shake them and go, you don’t see the beauty of it because you’re looking at it from a distance. And then I realize I don’t see it sometimes either because I’m looking at it from yeah. Distance, uh, or I don’t know.

I feel like there’s just so much in here. That is helpful. All right. So that is, that is an issue. What about.

Erik: Yeah.

Andrew: Here’s the part that’s brilliant that I didn’t know, you do make it easy for people to teach, to like mark up the screen without arrows. So you could teach remotely and then Twitch streamers have taken this fricking thing on and YouTube is right.

Erik: Oh, yeah. Oh, and it’s about to get even crazier because in addition to arrows and markings, whereabouts in a couple of days, weeks, we’re going to, you’re going to be having stars, bombs, skulls, and crossbones. Emotes hearts, all sorts of different things. You can use coins, you can gather the chessboard is about to come alive on

Andrew: What do you mean? What’s the deal with that? So here’s the part that’s helpful. I mean, so people who don’t understand when someone is teaching you chess or playing it and talking it through out loud, you want to not hear them, give the coordinates. You want to see the arrow and say, We’re going to move the night here and then another hour on the other person, because we think that they’re going to move the queen here and then you see what’s in their head.

And when you see Eric, what a real chess player does, how they think through you realize why chess is an important game. It’s not because it’s just another game. It’s a game. Forces you to think, what is he going to do? What is she going to do next? What am I going to? It’s constantly all that. And so that’s the beauty of it.

And by creating a system that allows people to mark up the screen with arrows, you make it easy. So what do we need the coins for? And what do we need? All that.

Erik: That’s going to help it. So when someone says, don’t go on this square instead of just marking it, you can put a skull and crossbones on there and be like, don’t do this

Andrew: Ah, okay.

Erik: all this is that where you want to put your piece, put a star on it. And then when they’re literally playing, they can put a star on it.

And then when they move on it, there’s a little effect that the star goes away. So we’re gonna be able to accentuate, like do this. Don’t do this focus on this square and then also have fun with it. Make a crying face. If someone captures your queen. You know, you can emote with like a funny crying face on it.

So anyway, there’s a whole bunch of things coming there, but I agree like unlocking this game, which is complicated through arrows and markings, um, and, and then having great personalities teaching you, that is part of what just makes chess awesome.

Andrew: So when, when this took off on Twitch, there were a lot of articles about how it’s weird, that chess is taking off on Twitch. Right. I agreed until I started watching and there’s some people who’ve got good personalities. They’re teaching you how they think and showing you on the screen. How much of it was you, Eric and your team working with content creators on Twitch and.

Erik: Full credit to Danny. He’s our chief chess officer, full credit to him for both the vision of where the, of what this could be and then the relationships to make it happen. And then the example of doing it himself a lot, um,

Andrew: Yeah.

Erik: He, he really believed in the viewership of chess and making it, making it something awesome.

And then we brought on just amazing creators. I mean, Hikaru, obviously just like the big name in there as one of the first, the chess bras are awesome. I went and met, uh, Alexandra botez at Stanford, had some coffee and said, why don’t you come like do some commentary and like, start, start being a personality on chest.

She’s like, ah, I don’t know. And then she did. And then now she’s enormous. And like you said, Gotham, chess, levy. Danya. There’s just like, I could just go on and on and on and say all the awesome chess stars that are out there, um, that, that really have helped the whole world fall in love with chess again.

Um,

Andrew: you kind of courting also showing what’s working. Are you also, and creating software that makes it easy for them to show on their screen? So if they need to show a game, I will even watch Gotham chess. That’s the name? Le what’s Levy’s last name?

Erik: Roslyn.

Andrew: Leslie levy. Rozman. Watch them all the time. I will even watch him.

He’ll get it. The coordinates from a game that happened 50 a hundred years ago, put it into chess.com because chess.com helps him explain here’s how they were playing. Here’s what was going on. So your software does it when he plays, you use your board, but unlike other people, he also shows chess.com at the top.

Are you you’ve, uh, like a relationship where you’re paying content creators to use you and promote you.

Erik: We do we have relationships with these with, with creators and influencers, sometimes it’s, um, an affiliate agreement with them. Sometimes it’s a contract with them. Sometimes it’s per piece. Sometimes it’s we have a lot of different relationships with them. Sometimes it’s co-promotion so they, we promote them, they promote us.

Um, it looks a little different and all the things, but that’s kind of. You know, a part of our, a part of our strategy for a very long time.

Andrew: How’d you realize that? How did you know that was it that you saw somebody do well with videos, um, and you, and that’s what helped you grow?

Erik: How did we decide

Andrew: know that in

Erik: influencer strategy?

Andrew: exactly. For chess, a thing that most people would have thought was just too boring to make interesting.

Erik: Well, it never felt boring to, to us. Um, but we started to see and recognize the value in, in that and that, that kind of, you know, those influencers would do it. I mean, I, again, I have some classmates from business school who use some of the strategy effectively to kind of grow their businesses, but, but you know, really the other big thing is chess.

Doesn’t monetize well enough for us to compete. In general advertising. So you’ll never see really chest.com doing like PPC ads or, you know, install ads in an app because we don’t monetize like some of those games do so we can’t compete there. We’re like, okay, well, you know, trying to, trying to do Facebook ads and Google ads is like flushing money down the toilet.

Instead of doing that, let’s just build content and build our community and events. And then the money that we’re spending. It does help us market, but it’s also an investment in the community to give to the community it’s value creation versus value destruction. Um, so that’s been a long stated policy for us,

Andrew: All right. Let’s take a step away from chess.com for a moment. Why didn’t you pay for the first date that you had with your wife? You make.

Erik: uh, because I wanted her to like me, like I wanted to have an authentic experience. Of like, this is who I am. And like, we’re two people getting to know each other. And this is really who I am. Like if I’m just paying for you and wooing you and flowers, that’s like magic hands over here, trying to distract you from who I really am.

Like, I’m who I am. You are, who you are. We’re eating. We’re two equal people. Like let’s just meet and see if this works.

Andrew: Did you have anyone who. Excited or were you at a period in your life just really spendy to get people interested in you?

Erik: No, I just, I have certain beliefs and frameworks

Andrew: What are those beliefs and frameworks, especially around relationships I’d like to learn from you. You guys have, how long have you been married?

Erik: uh, a little over 20, like 21 years.

Andrew: Impressive. I’d like to learn. What, what are some of the frameworks? Honestly, I’m not, I’m not be

Erik: gosh, I didn’t know. We already talked about this. I’m like, this is an easy one. It’s just being honest and being authentic. I think a lot of people start relationships on the wrong foot. Like you don’t really know who that person is. Someone’s putting their best face forward or who they, not who they, you know, they’re not really that person.

And then you get into a relationship and it’s like, everyday life happens. If you.

don’t love that person every day at their best and at their worst. That’s not going to work out well. So being authentic is a huge part of that. And it Wasn’t like a stated value. I’m like, well, if I am not authentic, then I’ll not find the right person.

It’s just, that’s just who I am. Like. That’s just how you experience me is, is exactly how I

Andrew: authentic. I feel like I’m authentic, but I feel like it it’s frustrating, like authentic meaning I should hold back a little bit.

Erik: I don’t know. Um, the other thing is like being a great, being a great listener and validator. Um, a lot of people will say something and then the other person will just say that exact same thing about their own life versus listening and understanding and being good. Validated. Let’s be honest. My wife did an amazing job training.

Early on, not in like a bad way, but like, Hey, this is what I need in our life. This is what I need in a relationship. This is what works well for me, these are my love languages. When I tell you this, like, don’t solve my problem. Just like be a good validator. And I learned a lot of those, those things. Um, and my frameworks are very much humanist.

Like what’s positive, you know, what’s good. I re you know, I like to read books and. You know, w learn what positive values are in the world and try to be the best person I can.

Andrew: What books are you reading that inform who you are today? What’s a good book for us to read.

Erik: mean, sapiens is an amazing book. If you haven’t read it. Um, the art of possibility is a fantasy. It’s one.

of my very favorite books. And I think in many ways it encapsulates a lot of the frameworks that I believe in just believing the best in people, giving everybody the benefit of the doubt. Um, you know, Everything’s invented.

So make the best invention you can. Um, anyway.

Andrew: All right. I’m going to finish off with just requests from you. I think you’ve got a really good company there. I think you’ve got a great team. You used to write a lot more about your vision for the business. I’d love to see you get out and say, here’s how we think about managing remote team. I think you did it back in 2017 or so, but when everyone went into COVID I know your traffic jumped in and it’s because people were at home.

Right. And then you also had, what was it? It was, it was a bunch of things that came together. It was also a, that movie on Netflix. Uh, Queens gambit, but you weren’t out there saying we’ve done this now for 15 years. Let me tell you what we learned. Let me pass it on. Let me be the guru. Here’s where you, where the guru.

Well, why aren’t you doing that publicly more?

Erik: I’m, uh, I’m kind of a private person. Like I don’t do this very often. I did it cause you asked, I, I just, I’m not, I like to invest in my team and spend all my time in there. Um, I mean, I probably do have a bunch to say just from my experiences, but I’m kind of private and I like to work on my

Andrew: I know, I didn’t think you’d say yes to me. And I said, all right, I don’t see anything. He only said yes to his wife, her podcast, and his friend’s wife for her podcast, from like business school. I was glad that you did. Um, and so I’d love for you. I’d love for you to do, to do more of that stuff. But it seems like that you’re saying that’s just not who you are right now.

Erik: Not not Right?

now. I’m so busy. I mean, we’re super understaffed. I mean, we’re 300 people. We should probably be 400 people. We have a huge opportunity ahead of us to grow chess, even further. We’re in a huge growth phase right now. We’re trying to add to the team, we’re trying to hire as many people as we can.

We’re trying to transform from hobby, chess company, into like, you know, a different type of company right now that really is globally guiding and getting more and more people into the game of chess. So.

Andrew: What about Bonobos? You do help personal friends. You created the first Bonobos website, right? You didn’t, you have another friend from college or from business school, you were helping them out. You built up the site. I heard I read from his blog post years ago. I forget the founder’s name. What is it?

And he done. Yes. He did a, like a medium post two years ago. And he said that you basically in like your driveway or something helped him build his first site. Why, why did you help him with that? What’s the connection there.

Erik: I just get super excited about new ventures. Um, I liked it. I liked What they were doing. I was in, you know, in business school and right out of it. And I just want to be helpful. I really love entrepreneurship. I love starting an idea and taking it?

and going with it. And I’ll just say this isn’t a plug cause it’s not like that.

But my friend, Andy Dunn, who started Bonobos and a classmate of mine, he and I are working on a new business together. I’m an advisor to his company investor. It’s called pumpkin pie. That’s all I’m going to say for now.

Andrew: Oh, wow. All

Erik: You can’t even find it. Yes.

Andrew: That is phenomenal. I do feel I’m going to, I’m going to suggest to you at some point, you’re going to have this crisis of like, where am I going in this world? What does it matter? I’ve done all this thing. What’s the future. I hope at that moment, you’re going to hear my voice. You’re going to say, you know, I really do know how to guide people.

I have a team here that’s fun to work with and we’re doing it remotely. There are other people who need this and I’m going to get fired up. Just like you have all these friends from business school will fire you up and they’re like, your thoughts are influenced by them. You’re going to influence other people.

And I bet you that they’re going to influence you. And I think the world is going to be a better place.

Erik: Okay.

Andrew: I’m just planting that seed in your head until then. Thank you so much for doing this interview.

Erik: Thanks for having me and thanks for being a great fan.

Andrew: All right. And everyone else really go check out chess.com. Do not ask me to play with you because I like my anonymity, but I promise you you’re gonna find people from all over the world.

It’s so cool. I played a dude from around. We were just chatting while, while we were playing, it was phenomenal. I always played people from all over the world, depending on the time. A different group of people. And it really is the best. I’m going to say the best social network, because it’s just social enough for me.

All right. And I want to thank two sponsors made this interview happen. The first, if your hosting website, you know, go to hostgator.com/mixergy and the second one, you’re ready to charge a membership fee. The way that Eric does, you need software to do it right for you. Go to members dot com slash Mixergy and sign up Eric again.

Thank you.

Erik: Thank you.

Andrew: Thanks, bye everyone.

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