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When Chess.com launched back in 2007, its co-founders had a few starting advantages: a lifelong love of the game, two prior companies they’d exited a year before, and one very good domain name that cost them $56,000, purchased with the money they got from their exits.
In business, as in chess itself, you can’t always predict what’s going to happen. But you can learn to spot opportunities as they arise. That’s why, after several years of cultural shifts—paired with feature launches that capitalized on changing attitudes toward a very old game—Chess.com came out on top in 2023 with a billion-dollar valuation. Its valuation today is even higher.
It’s something of a 20-year overnight success story. Through its early years, Chess.com focused on making it easy and fun for people to play chess, co-founder and CEO Erik Allebest says. But co-founder Danny Rensch—the company’s “chief chess master”—had a bigger goal. “Danny’s vision was, ‘We’re gonna revolutionize how chess is perceived,’” Allebest says. “And it took time to get there, but we grew in that way.”
One key early gambit: The team was early to streaming, long before the platform Twitch became so popular that even presidential candidates started to appear on it. In 2012, Chess.com hosted its first-ever “death match,” in which two master players competed to see who could win the most rapid-fire games, played on laptops, with $1,000 cash in prize money at stake. The company has seriously upped its game since that low-res approach: today, Chess.com has 1.2 million followers on its Twitch account and 2.6 million on YouTube.
“That took us in a different direction,” Allebest says. “A whole bunch of purists are like, ‘chess has been ruined,’ but it’s grown the game and the appeal massively.” With its domain name as straightforward as possible, Chess.com has not spent any money on traditional marketing channels, such as social media advertising. Instead, it’s focused on promoting the game itself, Allebest explains. Significant tailwinds in 2020 helped the company with that task.
First there was the Covid-19 pandemic, which spiked users of Chess.com as people in quarantine looked for new ways to stay busy. In June of that year, the company launched PogChamps, a two-week competition in which 16 of Twitch’s biggest streamers—intentionally not those who are known for being particularly good at chess—competed for $50,000 worth of prizes. Chess grandmaster Hikaru Nakamura, the most-followed player on Twitch, coached participants in livestreamed lessons ahead of the event. PogChamps drew more than 155,000 concurrent viewers and drove a 57 percent jump in hours of gaming watched on Chess.com compared to the prior month. The company has continued the annual competition since.
Checkmate: the Netflix effect
Then in October of 2020 came the cultural win the company couldn’t have predicted. Netflix’s The Queen’s Gambit, the chess-focused limited series starring actor Anya Taylor-Joy, became a massive hit: 62 million households streamed the show in its first 28 days on the platform, according to Netflix. By early 2021, new registrations on Chess.com hit more than 500 percent year-over-year growth.
The Queen’s Gambit and its cultural cache poised the company well to roll out its first character bot later that year, allowing users to “play against” Beth Harmon, the protagonist of Netflix’s chess success story. Since then, the company has expanded that roster and introduce bots personifying real chess players like Nakamura, as well as fan favorites like Mittens, a snarky cat that users played nearly 40 million times the month it debuted in 2023. The bot—which performed deceptively well even against professional players—went so viral that it earned multiple press mentions, including from The Wall Street Journal, which called it “the chess world’s new villain.”
“It blew up the internet,” Allebest says. “It was hilarious.”
Chess.com has offered tiered premium subscriptions since 2009, ranging in price from $29 to $99 per year and giving users access to ad-free experience, as well as features including unlimited puzzles, daily lessons, instructional videos, and full game analysis.
In 2022, for the first time in more than a decade, it revamped its premium experience and increased its pricing to range from $50 to $120 annually. Roughly five percent of Chess.com’s active users have premium subscriptions, and the number of premium subscribers has surged more than 8x since the start of 2020. Today, annual revenue from subscriptions exceeds $150 million.
The premium revamp involved rolling out a more comprehensive, AI-powered game review. Post gameplay, a coach-bot walks users through their performance. “What we found is most people actually don’t want to know what they did wrong. They want to know what they did right,” Allebest says. He points to research about the “optimal win to lose ratio for learning,” which leans heavily toward winning. Plus, he adds, “chess is punishing—you’re expected to lose half your games or more, so you’re already getting the negative feedback of losing games.”
That insight led the company to find new opportunities to “gamify” its features and pepper in moments of positive reinforcement. “There’s a special symbol, a teal exclamation mark, that’s called ‘brilliant move.’ Finding those is very hard, and you only get to see them if you do a game review,” Allebest says. “It’s kind of a badge of honor.”
The same year, Chess.com also closed on a star-powered deal, acquiring Magnus Carlsen’s Play Magnus Group—then a publicly traded company on the Oslo Stock Exchange—for $82.9 million. The company self-financed the deal through a combination of debt, internal financing, and equity, Allebest says. Carlson, a five-time World Chess Champion with 2 million followers on Instagram and 1.5 million on YouTube, was a big draw. But so was its educational platform, Chessable, which featured proprietary technology for spaced repetition learning.
As Chess.com has invested in its core functions, it’s also continued to promote the game through innovative partnerships—like its BlitzChamps tournament series with the NFL, which it’s held annually since 2022, pitting NFL players past and present against one another for games of rapidfire chess.
“Chess is just a game”
Now, with 225 million registered users, Chess.com is quite the institution: the company has about 580 full-time employees, with about 40 percent devoted to engineering, and 10 percent in customer support. The platform is currently undergoing localization in 60 languages, Allebest adds, which adds to the organization’s complexity. “We answer everybody’s support tickets,” he says. “Some big companies are like, ‘Go look in the forums.’ We actually do care about every single inquiry that comes in.”
Going forward, Allebest hopes that the platform can help users better connect with each other, too. The company plans to upgrade its social media features, most of which date back to 2009. The potential he sees is great. “Chess.com is a huge social network, but we don’t have a good user profile and feed. Like, when I win a game, why doesn’t it show up on my feed? What are my friends up to? What famous chess celebrity posted a cool video?”
While Chess.com’s success has an exceptionally long arc, Allebest isn’t one to look in the rearview mirror. The company could have invested in its data infrastructure sooner, he says, but it was largely guided by “heart and intuition.” Now, with the numbers to inform the way it moves forward, it’s operating strategically.
It’s not unlike playing the game itself. “You just have to make the first move and then react to what happens. And I think people get paralyzed by feeling like they need to see to the end,” Allebest says. “But you know, chess is just a game. You can only play one move at a time and do your best at that moment, and then react to what happens. And I think that is exactly what good entrepreneurship can look like.”
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Rebecca Deczynski
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