Sramana Mitra: What about the business model?
Erik Allebest: We didn’t know. At first, we thought we’d be selling ads against it. We quickly realized that it wasn’t going to pay for itself. Also, we didn’t love ads as users. But we had this content that we had bought along with the domain name called Chess Mentor. It was a teaching product. You would get a chessboard and you’d make a move. It’d tell you if it was good or bad, and why.
We took that content. It was on a CD and we put it in web format. We created virtual chess lessons online. We put up a subscription for that. It was maybe $10 a month for having access to this content online. Two years into this, we launched subscriptions for lessons. It did pretty well. We weren’t spending a lot of money. We didn’t have high expenses, but I was investing money for servers. It was a low burn. We became profitable almost immediately.
Sramana Mitra: What were the metrics? How many free users? How many paid subscribers?
Erik Allebest: From the very beginning, we had an unfair advantage in that we owned the Chess.com domain name. Back then when you were on Internet Explorer or Firefox, if you put the word “chess” in browser bar and hit enter, it would put the .com on there and take you to the site. Every day, we were getting thousands of free visits. We were signing up people at essentially no cost. Because we were doing a lot of content and people liked the site, we just became number one for chess. We just started to grow pretty fast. We hit a million users pretty quickly. I had already graduated from business school. I had offers at a bunch of places, but I wanted to do this first.
Sramana Mitra: Do you remember your conversion rate from free to subscription?
Erik Allebest: I don’t. We’ve never been a super metrics-driven company. It’s not our main lens. As a CEO, it’s never been my strong suit. It has always been, “What do I want to build next?”
Sramana Mitra: You didn’t have investors, so you didn’t have to report metrics to anybody.
Erik Allebest: That’s right.
Sramana Mitra: What’s the next inflection point or milestone that you want to discuss?
Sramana Mitra: I run a virtual company too.
Erik Allebest: That’s how we built it. That’s how we grew. We always hired people from the chess community. We also found good talent on Upwork. At that time, it was oDesk. We always were profitable. It’s hard to say that there was an inflection point. It’s more of a long 15-year compounded growth. COVID was a huge inflection point. So many things went online.
We were already a pretty big company. We were profitable and doing well. COVID hit. That was big. Chess blew up on Twitch. That was huge. Then the media took notice and said, “Chess is blowing up.” That made chess blow up even further. Netflix created the show The Queen Gambit. Suddenly our servers are almost on fire.
We had weeks during this where we had a million new users a week. We were hiring and growing and handling growth. Then that has calmed down. What I used to do as CEO three years ago looks nothing like what I do today. I’ve had to learn a whole new job. It’s been really different.