20VC: The Chess.com Memo: The Most Untold Story in Startups; Scaling to $100M Revenue, 150M Members and 700 People, All with Zero Venture Funding | Erik Allebest, CEO @ Chess.com
Feb 7, 2024
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Erik Allebest, CEO of Chess.com, shares his journey from being unemployable to leading the largest online chess platform with over 150 million members and $100 million in revenue—all without venture funding. He reflects on the challenges of scaling a startup without external investment and reveals creative strategies for user acquisition, including leveraging trends like COVID and popular media. Erik also delves into personal themes of parenting and marriage, highlighting how his values have shifted beyond money and capitalism.
Chess.com scaled to over $100M in revenue and 150M+ members without any venture funding, highlighting the importance of creative thinking and monetizing early.
Chess.com focused on creating valuable content, building a strong community, and leveraging platforms like YouTube, Twitch, and TikTok for user acquisition instead of relying on paid methods.
The Queen's Gambit and the COVID-19 pandemic provided significant growth opportunities, but Chess.com's mission-driven approach and commitment to serving their community remained unchanged.
Deep dives
Building Chess.com without Venture Funding
Chess.com was built without any venture funding, which forced them to think creatively and monetize early. They focused on creating valuable content and building a strong community. Instead of relying on paid customer acquisition, they invested in content and leveraged platforms like YouTube, Twitch, and TikTok. The Queen's Gambit and the COVID-19 pandemic provided significant growth opportunities, but their mission-driven approach and commitment to serving their community remained unchanged.
Lessons from Early Entrepreneurial Activities
Chess.com CEO, Eric Alabest, developed an entrepreneurial mindset from a young age. He hustled to make money, selling items in school and collecting and recycling cans. He also discovered that his motivation and dedication were highest when he pursued his own ideas and passions, rather than working on something someone else wanted. This understanding of his own entrepreneurial drive and the influence of his family shapes his approach to business.
The Importance of Domain Name and Content
Securing the domain name chess.com played a crucial role in the success of the company. It provided a strong online presence and positioned them as a leading platform for chess enthusiasts. Chess.com's focus on creating valuable content, such as tutorials, puzzles, and engaging with influencers, helped drive user engagement, increase traffic, and attract new members. Their strategic approach to content distribution on platforms like YouTube, Twitch, and social media channels boosted their visibility and user acquisition.
The Impact of Remote Work and Company Culture
Chess.com has embraced remote work from day one, enabling them to tap into a global talent pool and build a diverse team. Remote work also fosters a culture of trust, flexibility, and independence, allowing employees to focus on their work and personal lives. The company's mission-driven approach and shared passion for chess create a strong sense of community and collaboration among team members. They prioritize lifestyle and a fulfilling work environment over financial incentives, which helps maintain a dedicated and passionate team.
Valuing People Over Assets
The speaker emphasizes the importance of treating people as teammates on a mission rather than solely focusing on their job duties and productivity. They believe that when individuals feel respected and that their work has meaning, they are more motivated to show up and contribute. The speaker also discusses compensation planning for a global company, highlighting the challenges of benchmarking salaries to national averages. Instead, the speaker adopts a personalized approach, asking employees how much money they need to do their job and striving to meet those needs.
Challenging Capitalism and Ownership Structures
The speaker expresses concerns about the distribution of wealth and value within the finance industry and suggests that there is a driving human greed that hinders the equitable flow of money. They discuss the concept of capitalism 2.0, which aims to address these issues. The speaker also explores the challenges of sharing ownership across teams and implementing vesting schedules. They propose that ownership structure needs to be reformed, but acknowledges the legal and regulatory barriers that currently exist. The speaker mentions the potential of blockchain technology to enable decentralized ownership structures in the future.
Erik Allebest is the CEO @ Chess.com, the #1 online chess service on the planet with more than 150+ million members and 15+ million games played each day. Erik has scaled the company to over 700 people and $100M+ in revenue with no venture funding.
In Today's Episode with Erik Allebest:
1. From Unemployable to $100M+ Revenue Founder:
How did Erik make his way into the world of tech and startups?
Was his MBA worth it? How does he advise others on whether to get one or not?
What does Erik know now that he wishes he had known when he started?
2. Scaling to $100M Revenue with No Venture Funding:
Why did no one want to invest in Chess.com in the early days?
What did Erik do differently as a result of not raising any venture funding?
What would Erik have done if he had money from the start?
What are Erik's biggest pieces of advice to founders with funding today?
3. Hard Lessons Scaling to 150M Members:
What are 1-2 of Erik's biggest lessons on how to scale users with zero budget?
What customer acquisition worked? What did not work?
How important was COVID and The Queen's Gambit to memberships and sign-ups?
What are the single biggest mistakes Erik sees founders make on customer acquisition today?
4. Parenting, Marriage, Metrics and Money:
Why does Erik not care about money or capitalism today?
How has Erik's style of parenting changed over the years? What works? What does not?
What does Erik believe is the secret to marriage? What have been his biggest lessons?
Why does Erik hate metrics? If so, how does he run the business towards goals and output?
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