Apr 18, 2023

The Crazy Growth Story of Chess.com

Chess.com was founded in 2005 by Erik Allebest and Jay Severson. 18 years later, it has become a $500M company with ~$100M in annual revenue, 280M+ monthly website visits, 250k+ new accounts every day, and 10M games played every day. Learn more about the story behind this incredible success.

BUSINESS INNOVATION ENTREPRENEUR

Joe Speiser ⚡️

Built & scaled 3 startups to $70m+/yr in ad-tech, ecomm & digital media. Now run @HamptonFounders

Member of Business & Startups

A $55k domain turned into a $500M company.

$100M revenue, 100M+ users, and 400+ remote employees.

The crazy growth story of Chess .com 🧵 pic.twitter.com/ySW8bYHyrR
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
Erik Allebest and Jay Severson founded Chess .com in 2005.

18 years later –

• ~$100M in annual revenue
• 280M+ monthly website visits
• 250k+ new accounts every day
• 10M games played every day

How did this all begin 👇
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
Meet Erik Allebest - an Orange County native, and a graduate of both BYU and Stanford Business School.

Before Chess(.)com, Erik's worked on 2 businesses.

Both were about chess. pic.twitter.com/1EIjj81zcW
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
The first was a chess-teaching business where he hired college students to teach kids how to play chess.

The second business was an equipment business - Wholesale Chess.

Erik imported chess equipment from India and China and sold it on the website. pic.twitter.com/ZFS3dvUg5C
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
To acquire customers, they used a combination of SEO and paid search.

They tried to SEO their way to the top, but everyone and their grandma was doing it.

They were decent at it and picked up a few tricks.
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
When Google AdWords came along, they jumped on it like a TikTok trend.

The problem?

Wholesale Chess wasn't alone in the bidding wars.
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
It was a race to the bottom, and all the parties were losing.

Eric was sick of doing this.

The solution?

'The best way to sell equipment was not to sell it at all.'
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
Instead, build an online chess community that prioritizes discussion over equipment.

Then throw in some links to buy equipment when the topic naturally comes up.

And that was it.
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
In 2005, Erik sold the business to an AOL executive for $2.5M

Ripe with cash from the sale, Eric bought https://t.co/QQ5cQnqSbe out of bankruptcy for $55,000
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
He reached out to Jay Severson, his college buddy and chess club chief, with the idea to build Chess(.)com into the world’s best online chess community. pic.twitter.com/e0RMJrLwwm
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
The company initially started just as a community — a place where chess fans could communicate with each other through social profiles.

They basically built MySpace for chess.

Users demanded the ability to play online chess, but existing companies refused to partner up.
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
So, Erik and Jay decided to build the technology themselves.

Erik was in charge of the frontend, and Jay built the backend of the website.

They launched a subscription product that taught people how to play chess online - the business immediately became profitable.
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
What was Chess(.)com secret? 👇

An unfair advantage in owning https://t.co/QQ5cQnqSbe domain name.

This SEO advantage helped it grow significantly.

• By 2010, they had 1M members
• By 2017, they crossed 20M members
• By 2022, they crossed 100M members.
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
Their app reached #2 in the Top Free Games section of the iOS app store in the US. pic.twitter.com/KyilOTYqJF
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
How does it make money?

Chess(.)com operates on a freemium model - the site’s main features are free but supported by advertisements.

But users can pay to remove those advertisements and get some additional features. pic.twitter.com/ftsGeDTWfv
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
What I love about this business model is how undisruptable it is.

AI or well-funded competition can't disrupt it because the rules of chess have been the same for more than 1000 years.

3 Competitive Advantages That Make Chess(.)com Unbeatable 👇
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
1. The Name

True digital scarcity is rare, but a powerful domain name is one of them.

Chess(.)com has it.https://t.co/QQ5cQnqSbe is the obvious choice for beginners looking to play chess online and is the top search result for "chess" even today.
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
2. Distribution

Chess(.)com reigns supreme in online searches for chess, appearing as the top result across most countries when users search for "chess" or "chess online"

It gets 280M+ monthly visits. pic.twitter.com/LfkpYjI0zl
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
Even with such strong organic distribution over 80% of their traffic comes from direct sources

This indicates 2 things:
• Sticky product
• Loyal following
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
3. Network Effects

For amateur players looking to play with friends, Chess(.)com is the go-to platform.

And when asked about your chess rating, it's your Chess(.)com rating that likely comes up in conversation.
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
The platform's player liquidity is unmatched.

With ~10M active members every day, finding a game on Chess(.)com is a breeze, regardless of your rating or preferred time control.
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
And it doesn't hurt to have the biggest streaming platform in the world make a series about chess.

In 2020, Netflix released The Queen’s Gambit, a show that follows an orphaned chess prodigy during the Cold War while she attempts to become the world’s greatest chess player. pic.twitter.com/pPdSsL0AWt
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
62M households watched the show within its first 28 days.

It may seem hard to believe a TV series on a streaming platform could impact a game like chess.

The surge in searches for "chess" starting in October 2020 coincides perfectly with the show's debut. pic.twitter.com/MF6A8Tlzev
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
Another factor that helped Chess(.)com grow is their partnerships with Twitch streamers.

Look at Hikaru Nakamura, chess world number 5 and the biggest chess streamer in the world.

• March 2020: 400,000 subs

• January 2023: 1.6 million subs (+300% since Mar. 2020) pic.twitter.com/kgnnqWfkSL
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
Chess(.)com partnered with Hikaru and many other famous streamers to let them use Chess(.)com when they stream.

The streams are incredibly exciting because chess is exciting.

When people tune in to watch, they see the streamers using Chess(.)com and they want to play chess. pic.twitter.com/dlHNebJdGp
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
All these factors helped Chess(.)com become the #1 chess website in the world.

The business will continue to grow with their focus on building a great product, creating great content and continuing the 1500 year old legacy of chess.
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
PS: When I say they do great content, I mean this 👇

They played an April Fool's joke saying Anish Giri, a top 10 grandmaster has become their CEO. pic.twitter.com/dQYVrLGurH
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023
That's it.

I hope you've found this thread helpful.

Follow me @jspeiser for more.

Like/Retweet the first tweet below if you can: https://t.co/orKflcB4wA
— Joe Speiser ⚡️ (@jspeiser) April 18, 2023