Building a $200M Bootstrapped Chess Empire with Chess.com CEO Erik Allebest Transcript, AI Summary & Key Points

COVID happened, Queen's Gambit happened, some news cycles happened, and we're like, "Oh, this might just be a flash in the pan," like treadmills and sourdough bread. But then in 2023, we had another crazy wave where all these kids started playing in schools because of short form content and the mittens bot and the cheating scandal and we just spiked again and then when we came down again, we were so much higher and we maintained this baseline.

>> How do you think about like how to design a rating system for poker? We're bringing the chess playbook, which is like how good are you really? Not just can you buy the most chips or can you use a bot or can you steal the most money, whatever it is, we've all played those games where you're playing for M&M's and someone's just like all in all the time and they just reby more M&M's.

As people get used to like, wait, I actually care about my poker rating, people are going to care about it as much as money because it's a reflection of like the value and their skill as a player. I think this is going to be quite an interesting u innovation for for poker. Hi listeners, welcome back to No Priors. Today I'm here with Eric Alabest who bought the chess.com domain out of bankruptcy auction in 2005 for 55 grand when almost every investor told him it was an uninvestable niche passion project.

Two decades later, he's built the dominant chess platform with more than 250 million members, 200 million a year in revenue, and a mission to get a billion people to play chess. It's a game that's more popular than ever despite computers outclassing humans at it for the last 30 years. We talk about what AI means for games, the future of chess.com, how to build a rating system for poker, and the future of human skills.

Welcome, Eric. Eric, it's great to have you on No Priors. Welcome. >> Thank you so much for having me. So, I'd love to just make sure our listeners have a little bit of the backstory of um Chess.com and how you built this business, but uh could you paint a little bit of a picture of just you know usage and both the company and the user base and product today first?

>> Yeah, sure. We are um we are much larger than I ever thought we would be. So, it's kind of wild to say these numbers for me. Um, we're about 10 million daily active users, about 40 or 50 million monthly active users. It's always a little slower in the summertime as people are, you know, in the in the northern hemisphere out and about. Um, we have more than 250 million registered members and more revenue than I thought we would end up with as a chess company.

Um, at a little I think this year we'll do a little over 200 million. Um, which is frankly again surprising. We have about 650 people on our team who love chess, are passionate about the game, and are working hard to, you know, make our members happy and to grow the game. Um, and to be the best possible place to work. Those are our three kind of the three areas of our mission.

>> Amazing. And you took a I guess somewhat unconventional startup path or founder CEO path to get here. Um, certainly think of you as founder. Um, what uh how did you end up owning the business? Well, we didn't start by owning a business. We just started by owning a domain name uh that we got from a bankruptcy auction in 2005. Someone else owned the domain name.

They were building chess software, but they um you know, couldn't pay their their debts and and the money they'd raised a little bit of money to try to do that. Um it ended up with a failed business. And so, uh a friend and I bought the chess.com domain name for $56,000. Um, and we were going to build a chess community. We wanted to be like MySpace >> and build a chess community where people could kind of come and and and express themselves and learn and share.

We bought the domain name and started building >> and uh well bridge the gap from that to the scale of community you have today like how did you grow? How did you think about fundraising? Yeah. So, we did think about fundraising. Uh, you know, obviously I was at uh I was at Stanford Business School at the time. So, you know, Sand Hill Road was right there and I had access to a lot of venture capitalists.

They were, you know, teachers and were guests in, you know, classrooms I was in. And um, so I had a lot of meetings and basically most of them said this is uninvestable. You should get a real job. Don't waste your time with this. And so, I wasn't able to raise any money. No one believed in the vision. I asked some classmates if they wanted to like join me on this venture and they're like, "Nah, we're going to go like do something serious."

And um so then my friend and I um you know, he was kind of the CTO. I was the product person. Just the two of us started building it together. Um didn't raise any money. Eventually I started putting money in. I had money from a you know, a couple previous businesses I had sold. Um borrowed like a little bit of money from my friend's mom um and then paid it back later.

But um you know, we just really kind of grew at the speed of cash. And after we launched in 2007, right as I graduated um from school and then I think within like 18 months we were starting to charge memberships for like online chess learning and we pretty quickly became profitable and then we just grew you know as we had more revenue we would just hire somebody new whether it was a community manager, a developer, a system a cis admin, you know, eventually designers and it just kind of grew as we had money to to you

know for it to grow. Um, and we never then again considered raising money. It it never crossed our minds. Um, we just thought, hey, we're profitable. Let's just keep let's keep growing. And we always thought like, oh, when we hit like 50 people, like we're never going to have more than 50 people on our team. And of course, we blew and we're never going to have more than 100 people on our team.

And then we just stopped saying that because, you know, chess just continued to to surprise us as to how big it it got. And it still surprises me. But what's interesting is now I'm like, if 250 million people have said they want to play chess at some point on chess.com, like why don't we have 50 million daily active users? You know, a billion people should be playing chess.

So now our ambitions are are are pretty big and we see the good that chess does in the world and and uh brings people together and and gives them confidence and you know teaches them that you never really lose if you learn and it's it's a great game for for learning and and spending time. So now our mission is huge and we're like we're going to we're going to be you know bigger than we are today.

So we're we're quite excited about our mission. >> How did you think about um competition and like the rate of growth you needed to have? >> Yeah. >> And and how do you think about it today? Because there there are I don't know if you can say the words but there are platforms like less out there. >> Yeah. >> Amongst the many drivers of people raising a huge amount of capital.

Some businesses are more capex intensive than others, but even when they're not naturally, the desire to like be the dominant player in a market, the way chess.com is, right, is um I think a common driver. >> Yeah. And I think that's fair. And I want to, you know, give the caveat that the chess, you know, the chess industry, as we call it today, didn't exist, you know, 20 years ago.

It was like some some apps and like one kind of, you know, a couple of of players. There was free internet chess server fix, there was ICC chess club. Um, those were the two major players. Uh, there was Yahoo Chess. And, you know, we came on and we just relentlessly focused on what we wanted as players ourselves. We wanted a product that felt great.

We wanted it to be free to play. We wanted to be in the browser. We wanted it to feel great, you know, we wanted it to be a wonderful experience. So, we really just focused on the user experience above all. And, you know, over time, you know, that wins out. And so, you know, most of the others um kind of fell by the wayside. Obviously, Lichess exists today.

They're kind of the I would say the Linux of uh you know, they exist for a really important reason. It's great for the community. It's open source. It does what it does and we coexist here and you know, we drive the growth of the game through what we do and you know, through the investments we're allowed to we we're able to make due to the fact that we do generate revenue.

Um and you know, they serve a different part of it. Um the interesting thing is chess is like not patentable. There's you know thousands if not tens of thousands of chess apps in the app store and chess websites and um you know at the end of the day really product is going to win out and community and content and so it's just really this this relentless focus on creating the best possible experience.

I do think there's other markets and businesses where you need to to raise money um whether to move at speed. Again, we've built this for 20 years. Um, so others need to move faster or more at speed or there's more investment in certain areas or obviously if there's like hardware or inventory. Those are different types of businesses. But for a pure software and content business like ours, um, you know, a one where we didn't have like, you know, no major tech company was bearing down on us.

We were able to kind of take a little bit of the slower a slower road there. Um, which was great. Uh, it developed a great culture and allowed us to, you know, not not need outside capital. So you said that part of why you were able to grow in the way you did was there were not a lot of people who believed that you know the business would be as big as it is or the industry would actually be an industry.

Um at what point was it a progressive thing? At what point did you think like oh this is actually going to be a a a big business versus um you know it's something I'm personally passionate about? Yeah, I think 2024 was when we thought this would be a big business. >> That was not that long ago. >> Not that long ago because before before COVID and Queen's Gambit, we had like a million daily active users and we were shocked at that.

And um but then when CO and Queens COVID happened, Queen's Gambit happened, some news cycles happened and we're like, "Oh, this might just be a flash in the pan like treadmills and sourdough bread and other things that people did during, you know, co um and we might just come back down to where we were." But we actually stayed really high after that, a little bit lower than our peak in 2022.

>> Mhm. But then in 2023, we had another crazy wave where all these kids started playing in schools because of short form content and the Mittensbot and the cheating scandal and all these other things in 2023 and we just spiked again. And then when we came down again, we were so much higher and we maintained this baseline. And so kind of in 2024, we're like, "Oh my gosh, like this thing is actually sticking around.

It's actually growing and compounding over time." Um I think this is a lot bigger than we thought it was going to be which which was you know fascinating. It's also terrifying u in some ways because you know it's always like if your business is shrinking it's scary because how do you make it grow? If your business is flat it's scary because you know how do you make it grow?

If your business is going up it's scary because like how do you maintain that growth or how do you deal with it? you know, we were like literally just like, you know, we had issues with scalability across the product and the tech and all those things. And so, it's been pretty white knuckle. Um, I think for the last year, it's actually been more calm than it ever has been just because we've had the team in place and, you know, our growth is more predictable.

Um, and we finally kind of gotten our hands around organizationally what it means to be a 650 person fully remote company. Um, so it's been pretty it's been pretty smooth and we're now focused on a lot of experimentation and product improvements and you know infrastructure and tech and obviously the integration of AI and what that's meaning and um so it it's been an interesting last uh 12 months for sure.

>> I want to ask about two more uh businessy topics and then talk about AI in the context of chess and sort of your your reflections on that. The first would just be how do you like the Queen's Gambit and sort of the you know increasing cultural relevance of chess? Like what's your what's your reflection of that? >> Yeah, honestly it's like it's incredible because when I was um you know I got into chess a little bit late in life.

I was 18 um you know still going to college and getting into the game and I'm like nobody plays chess. No one talks about chess. Like it's almost like a secret hobby, you know. I was kind of I was kind of like a skater snowboarder who like kept chess as like the secret thing I did. >> You know, when I was in high school was like for nerds. No one would talk about it.

Like why would you why would you spend time on that? Um so that's what I grew up with. And then now to have my own kids where, you know, all their friends are playing chess and like chess is cool and like the jocks play chess and the nerds play chess and like everybody plays chess and then you've got like, you know, Louis Vuitton centers their whole, you know, fashion shoot around chess and like it just blows my mind.

It's like how, you know, and I do feel partly just along for that ride. But I also feel that we've been partly responsible for that. That we've kind of revolutionized what it means to be a chess player. Chess can be in your pocket. You can do it any time. The content is funny and relevant and interesting. And we also just redefined what it meant to be a chess player.

Cuz previously, you know, it was like you weren't really a chess player until you were 2,000 or above, right? Rated. and if you weren't that you weren't really there and you didn't you weren't really a chess player. But now everybody, you know, we we kind of change the narrative and we celebrate your mistakes and when you hang your queen and when you you know, if you're rated 500, that's fine.

You're still a chess player. You're still part of the community and you're on your journey. So, I think that like it's been like honestly one of the great honors of my life to be a part of that and to see that we kind of culturally changed what what it means. And you know, when you see pictures of like Lewis Hamilton like flying in his private jet playing chess on his phone, it's just like it blow it blows my mind.

So, um it's it's been wild. >> Yes. Yes. I was the, you know, high school nerd that played chess, but my uh my kids now are eight-year-old plays and teaches chess. And it's like very I mean they're in a nerdy town but it's it's like common enough that you know >> I don't know 20% of the kids do after school chess >> right um which is a totally wild thing to think about soccer >> seriously >> you had a huge announcement recently that's a big change in terms of the CBC investment um tell us about that what it means for

the business how you thought about working with a private equity firm after so many years of just you know being a bootstrapped business. Yeah. Well, I'll tell you, we're still a bootstrap business because CBC came in, but they still, you know, um they they uh they came in and bought secondary. Um that was part of the fundraising cycle. Obviously, General Atlantic was the really the first private equity to believe in us.

Um you know, back in 2020 or 2021. um you know they saw our growing business and they had conviction that we you know were were a strong player in an interesting market and and they came in and you know we had another investor you know it's kind of interesting because if you go back in time like we were just this privately entirely privately held and then um you know someone comes along and it's like oh I love chess I want to invest and we're like no no no and they're like oh we and finally we said yes and they bought

like a little bit and they're like I'll hold on to this forever I just want to be a part of this. And then like 5 years later, like I need to get out of this. I need to sell. Like you what? You said you were going to be here forever. Like don't worry. I got another guy. So then this other investor came in. He's like, no, but I want to own X%. And like we're like reluctantly let him a little bit more in.

And he's like, but I love chess. I'll be here forever. And then, you know, 3 years later, he's like, I got to sell. What? You said you were going to be here. So then we were at such a scale that like we had to like find a different scale of investor. And so we did the rounds with all the private equity and you know really just did not enjoy that process and really didn't enjoy most of the people that I that I met during that time.

Um you know really were focused on on I thought the wrong things. But when I met you know General Atlantic and and Tanzine there um you know they really believed in our mission and they believed that if we focused on our mission that we would we would build a wonderful business. Um and that was that aligned with with what we felt and so they made an investment bought again secondary buying shares from existing investors no no infusion of capital and then eventually they came to their fundraising cycle times you know

they've got to return you know make returns to to partners and and and do their do their thing and so then we again had to now look for another person to come in um and we found CVC and we were we were very very happy uh to be working with CVC they have such a deep experience experience in gaming, in sports, in community businesses, and we really just felt like a bond and an alignment that like when you take care of your community and your product, um that you'll you'll build a great business.

So, um they invested in um buying out different shares from different people. The General Atlantic reinvested as well, so they're they're still with us um in in this new venture together. And um we're as committed as ever to continue to grow the game and and to follow our mission. Um but yeah, we're still um no no no capital needed to to grow this business.

>> How does it change? Has it changed the way you run the business to have these increasingly at scale outside investors? >> Yeah, it actually has, but in a in a wonderful way. >> Okay, this is like you know uh against the conventional wisdom of like private equity being involved. So say more. Yeah, that I I can recognize that like a lot. You know, you kind of hear the tropes about private equity and, you know, where they where they give you money and then just say work harder or whatever, do better.

Um, it hasn't been like that at all with General Atlantic or any of our with CVC at all. Really, it's it's great um knowledge sharing across what they've seen in the industry and what we do. They're in the weeds on the product and the community and they've really been great at pushing us to be our best. Not just saying, you know, do do better, but like here's some areas, have you looked at this?

And it's all it's just made us stronger. And then all the operational stuff, all the forecasting and all the kind of um operational excellence that that we've really brought to bear that we've needed to do to kind of grow up and do this. It's been wonderful um and has made us better and stronger. And as our reporting gets better, we learn more about things and you know we experiment and we learn and all those things like really matter not just for reporting to investors but actually operating the business.

So um yeah I I actually have really enjoyed our time with Generalic made made us great. I've learned so much as a CEO, you know, being a being an entrepreneur, you know, with with two to five other people on your team or 10, that's that's one thing, but being the CEO of like a, you know, you know, many hundreds of people and and and you know, many billions of valuations or whatever, like it changes the landscape of what I do.

and and um I I'm just grateful that they've been there to help kind of help me learn to grow into these different roles and you know that that has kind of progressed along along my own path as as we you know as I lead this company and and so um we've matured a lot and it's been great. >> Super cool. Um, one of the reasons I was excited to talk to you, um, besides being excited about chess was that, uh, chess is probably our longest running experiment and what happens to a human activity after the machines become like

superhuman at it because it's been like what Deep Blue was 30 years ago, right? You know, we were just talking about how, you know, there are different drivers and it could be cultural orientation of the community, could be tools, it could be moments, uh, um, and content like Queen's Gambit, but the answer is humans definitely care more about chess than they did 30 years ago, right?

I think there were a lot of predictions when Deep Blue beat Kasparov that like chess was over, right? Like what did what did people misunderstand about why humans play games or what do you think happened instead? Yeah, it's it's so it's so interesting. Um, you know, fundamentally, humans want to do human stuff. That's, you know, humans competing against other humans.

It's humans making things. It's humans solving problems. And there's certain areas where, you know, machines have gotten better than humans at things. But it really, in the case of chess, has m has pushed humans to be better and to do better in their field. And it's really interesting because you know grand masters and world champions were using early versions of computers to kind of help them with ideas that they would then take into the human versus human realm.

And then at some point the computers got so much better and there was like Stockfish as this kind of chess engine it was called. And that chess computer like actually made chess pretty boring for a little while cuz it was so perfect and all these players tried to play like the best computer. They were like >> grinding out these boring end games and it like kind of just got boring.

But then neural nets came along and so that was the next iteration of AI which is like you know where you know early in the game of go with you know um you know Leela and these neural nets came along and they started training chess on different chess positions and they let this self-reinforcing learning come out and they ended up with Leela Chess Zero the chess engine and that started beating Stockfish in ways that was like unexpected and it was actually aggressive and it did like unconventional things and like really

pushed the game forward. And so what was interesting is that like computers at first made chess a little bit more boring, but then made it so much more exciting. And we're seeing more exciting chess than we ever have. And and the players have gotten better. And really computers are now able to help us unlock the game in ways that like make our enjoyment of the game better.

whether it's the AI kind of coach on game review that reviews your game and and helps you learn from it. Um or playing against the computer or generating puzzles that are, you know, specific for you. So AI has just really helped, you know, humans enjoy chess more. I don't know exactly how that's going to play out. I know that right now like AI and mathematics is a big deal.

Like is it solving too many problems, but then you've got AI that's like unfolding proteins and solving for cancer, but you know, humans are doing the research too. So, it's really this kind of like handinhand partnership where like the best of human creativity, the best of AI can help move humans further. Um, so I don't know. I'm pretty I'm pretty optimistic about the future.

Honestly, >> I'm very inspired by the idea that AI can help humans get better at things much faster than they used to, or technology in general. Like if you took a talented 10-year-old today versus 30 years ago, like how much faster do you think they could reach ELO 2000 or master or something? >> I mean, we're seeing it already like um there's just younger and younger players.

There's sevenyear-olds who were giving a you know a run to Grand Masters and you know 10-year-old I'm going to butcher her name so I'm not even going to say it but from India from England. She's crushing everybody. She's incredible. Um, and to your point, like take the 10-year-old and give them the tools and see where they come out. Like when my son was, you know, younger than 10, um, you know, he obviously had access to YouTube and he had access to different things.

And now he's 18 years old and, you know, he is is a better video game creator than, you know, I ever would have been because he self-learned everything on YouTube and with um, you know, different AI tools and with, you know, he doesn't use AI in the creative side, but he but he uses it for research on how to solve problems. And so this access to information, this access to, you know, you know, superhuman intelligence really is making people learn faster and better.

And so to your point, like who knows what's going to be coming next in the in the next generation for those who, you know, are are young now as they learn faster, what what can what will they create? I think the downside and the scare that everybody has is like, well, when there's a super intelligent, you know, AI that knows everything, like why would anyone ever write an essay ever again?

Like, why would they ever think? Why would they ever do anything? If you can just AI say, you know, draw me a picture of, you know, XYZ thing, why would a human ever do it? And I I understand that point of view. I have my worries. I think there's research that shows that people who use AI like in certain areas like do stop thinking and engaging their brain.

Um but so we have to set up guard rails. We're going to have to figure out what works and what doesn't. But um again I I think it's going to it's going to push people further into into learning and and creating better things. >> If everyone has this information access that you describe, like why aren't we all equally good at chess, right? like you know what is what does having access to this due to the skill distribution in your data or in your experience?

>> I mean like anything um you know you've got to do the repetitions to put it in your brain um you know just because we have access to it on the >> computer. Yeah. >> Yeah. So, it's really about people putting in a little bit of work. And one thing that I really love is the concept that if you just take any given day in your life and multiply that by a thousand, that's kind of what your life looks like.

So, if you do five chess puzzles a day, multiply that by a thousand, you've done 5,000 chess puzzles. You're going to be much better. Right now, if you want to do a 100 puzzles a day, multiply that by a thousand, right? Or play 10 chess games a day or do yoga every day for 10,000 years. It's not 10,000 days. It or a thousand days. It's not the actual individual one thing that you do on one day, but it's your habits that really compound over time.

You can put that into any field, right? Whether you know you do one sketch a day or you, you know, go for one small run every day. And it's the same in in in any field, right? if you if you do research into any topic. Um, and that's one thing that I do think AI is so great at is like you can literally get into, you know, whatever AI program you're using and you can start researching something and it can walk you through and it can help you get exposure to ideas, refine ideas, um, you know, get it can you can walk

through and have these conversations and access to like walking into a professor's office and, you know, starting to ask questions, but you get it in your pocket all the time. And of course there's issues with biases and with like it tells you what you want to hear and it like overinflates your ego and there's all these problems with it. But honestly for people who use it well like you can deep dive into subjects and learn and train like at a tremendous pace.

>> You um have this incredible data set with chess.com of humans like learning millions of people at every rating making mistakes and improving. Y >> what can you tell us about how humans acquire expertise or you know how to how to get them up that ramp faster? >> Fortunately and unfortunately it's actually quite again quite an easy answer. >> Oh no.

>> Yeah. It's just repetition of like the small building blocks >> and so it is doing puzzles, it is reviewing your mistakes. It is you know if you want to if you want to play certain openings just training. And so there's really not shortcuts to the process. There's shortcuts in the tools. You know, it's we've made it tried to make it as easy as possible to, you know, do your puzzles and to train on your different elements and and we have a whole set of of tools coming later this year which is going to make it even

easier. But you have to put in the repetitions into your brain. You have to store that. It's the same as when you train a neural net, right? like you give it a bunch of data and of course it can train it in parallel where it can do like you know all these different memory channels at once training on these things. Our brains don't work quite that way but we have to put in the repetitions and I think a lot of people these days because of the immediacy of social media and the immediiacy of of our lives in general kind of

forget that like practice is you know you can't really shortcut practice. Uh you have to put in the time. >> I'm gonna ask kind of a a funny question. feel free to not answer like how do you guys think about cheating at chess.com because you you um you have also dealt with an issue that I think a lot of the world is dealing with now maybe they will call it cheating or not but it is machines can create superhuman output and it can pass off as human performance right >> it's tough right I I I wish humans didn't have this

drive that like to take advantage of someone else or you know put themselves above somebody or steal from them. But there's some segment of the population where you know either for you know financial gain where they're using AI tools and and and technology to steal from people or even if they're just getting on to online chess and use you know loading up a computer and to steal rating points or boost their ego or whatever it is.

It is sad, you know, it's um and it bums me out that that humans can't just, you know, get in there and and and be honest and full of integrity at all times. Um that said, like chess has been dealing with cheating uh for for a very long time. Um much much longer than than AI. Um as we've had these chess computers and so, you know, a lot of people thought it was an existential, you know, threat to the game and that it would it would end the game.

But, you know, unfortunately, we also have technology to fight the cheating. Um, and so, you know, we spend a lot of time, a lot of money, uh, a lot of resources on anti-cheing basically. And we have a whole set of tools, which I'm not going to get into because I don't like to give ideas to people on how we do it >> about the we track a lot of stuff.

We have more data. We have more statistical models, machine learning models, and that really kind of track how people play chess. And again, we have access to all this data. We know what it's like when humans play chess. We know what it's like when computers play chess. Um, and we just get better and better all the time. So, it's definitely an incredibly important thing that we think about often is to protect the integrity of the game both at the casual level and at the professional level.

And we kind of actually have two different work streams that do that. Like, you know, how do we just detect it in general? And then how when we have prize money on the line and professional events, how do we deal with that? So, um it's it's something we spend a lot of time on and we feel really great about our role to to protect the game and we feel very confident that we're doing a great job.

Um cheating it can't be prevented because you can't, you know, you can't put a webcam in every single person's home. Um but we do do a really good job at catching it and and banning people who do that and trying to educate them as well. So, um definitely something I'm very passionate about >> because you are super passionate about it and you know the craft of chess.

What do you think makes chess special as a game? Like, why should a billion people play chess versus the many other games that are out there? >> There's something special about chess, especially in a world where anything is possible these days. I mean, you could give an AI a prompt and you could have 10,000 new board games tomorrow. Um, you know, we've seen this with the explosion of music, right?

Like over the last, you know, several decades that like there's infinite music. And when there's infinite music, sometimes people go back to like the Beatles and Led Zeppelin because it's like the classics that everyone can kind of rally around and have a shared experience. Um, and I think that's the same about chess is like, you know, there's no loot boxes, there's no new skins that dropped, there's no like changes to the rules, there's no new heroes to learn.

It's like the simplest set of rules. Um, it's a full, you know, information game and, you know, there's no luck involved and you just can load up a a a game on your on your device or or get your chessboard out of the drawer and set it up and you're having the same shared experience um, forever. And it has enough complexity that can just like blow your mind, but enough simplicity that you can like learn it.

Um, and so it's just kind of fits that sweet spot between complex and basic and you know um timeless and so I don't know it's it's you know evolutionarily it just became the the you know the the king of games we we can say because of its its many attributes and I think a lot of people in today's world are looking for you know things that they can hold on to um in in a world of like increasing exploding proliferation of everything.

Do you think of like when you look forward do you think of chess.com as like a game company or an education company or a social network or you know you have like creators and influencers like a media company like how do you how do you frame the business besides the mission of get everyone to play chess? >> Well, we're just definitely a chess company.

I'll say that. Um that the easy answer is we all love chess. We love playing it. So we're we're a chess company but that does have many facets to it. Um, you know, we have said like we're a gaming company, we're a content company, we're a social network. We are all of those things because chess, the game encompasses all of those things. Um, more recently, we have branched out.

Not that we're like, oh, we're now a games company, but a lot of us do love a lot of different games. Um, so even though chess is like, you know, 99.99% of what we do, uh, we recently launched Gambit at gambit.com, which is our poker um site, and you can play Gambit on your phone as well. But we're doing poker in a different way, too. We're bringing the chess playbook, which is like poker for ratings.

How good are you really? Not just can you buy the most chips or can you use a bot or, you know, can you steal the most money, whatever it is, but like how good are you really? >> And we're going to roll out other games as well. U because we like the playbook of what we've done. So, we're cooking up a bunch of other classic games. Um, and we're going to be launching those out there.

We have our take on how we feel like gaming should be done and can be done in like a pure and wholesome and great learning and educational way. So you'll see us rolling out more games in the future, but it doesn't it's a small team that's doing it. It doesn't really take away from our mission of chess. Um but we are we are branching out. >> Okay. I have two more questions for you about the future.

>> Yeah. one for founders who are trying to figure out if they're like in the right market, in a niche market, too early or just, you know, wrong, right? Like how do you what what what wisdom do you have for folks thinking about those questions? Because you were um you know, when you did this, a lot of people told you it was uh it was too small. I think one of the curses of being a founder today is just how much like founder advice there is out there.

>> Okay. >> You know, at the time when I was, you know, getting into doing this 20 20 years ago, the the playbook was like, you know, hire a technical founder from Stanford, raise a bunch of money, get an office, go after a big market, spend a bunch of money on customer acquisition. And we literally just did like all the opposite of that. like I hired my friend from San Jose State.

We worked remotely. We didn't raise any money. We didn't pay any money for customer acquisition. We picked a tiny market. So, I don't know. Like, I think people should listen to their heart and listen to like what they want to do and they should think of what do they want to see exist out there in the world and then they just relentlessly go after that more than, you know, what does the market saying, what are these different things.

Of course, if you've got to listen to your customer, right? And you've got to pivot if it's not working. But like what's your vision for the world? What is the minimum amount of resources you need to go prove that out? Who are the great people you want to work with? None of the rest of it matters. Just go execute and put something beautiful into the world that's unique and like creates value for people and you'll figure the rest of it out.

Um, and stop listening to people just giving you advice on what to do. Just go do it. Okay, last question for you. Um, uh, do you do you believe in AGI? Do you believe in its like or ASI and its in its imminent arrival? And what's one thing you believe about the world if that is true? >> I do believe in um, superhuman intelligence and that it will move at a faster and faster pace.

I think it will be a little bit scary if we don't put guard rules, guard rails around that and rules for how it should engage with humans. Um, I hope we can do that. I would say I'm more optimistic than pessimistic about the impact of that though. I would hope that it can help us help us solve some of the biggest problems around climate, biggest problems around even politics and education and create a more equitable world.

I worry that it can have the opposite effect. I think we're already seeing the economic impact of just big tech and that just too much money is flowing into the hands of too few and we're not doing enough as as humans to share what we're creating. Um, so I I think this is less a technology problem and more a cultural problem. Um, and I hope that we can solve that by, you know, loving one another, by sharing with one another, by connecting and feeling that we have a greater stewardship and responsibility to this world.

I think the technology is somewhat irrelevant to that. Meaning we've had, you know, nuclear technology and we've had guns and we've had, you know, an economic system for a long time and it's really what we do with that as a culture more than what the tool is itself. Um, so a superhuman intelligence and AGI ASI can be used for good or for evil. It's going to depend on the people who are in charge.

Um, I wish I felt more confidence around the people who are in charge of this world right now. whether that's the, you know, super billionaires or politicians. Um, I don't know how we got into a place where the people who should probably not be in charge of the world are in charge of the world and the people who should be are not. Um, I don't know if we're going to get out of that, but um, we we are where we are.

So, I'm hopeful we can make some cultural changes and and and put some things in place to protect us. I think the interest and growth of chess is actually a um I it's not a solution to all the world's problems but it's it's incredibly optimistic to me because it is so clear that people they want to acquire human skills even when the machine can outperform them and they want to watch they appreciate exceptional human skill even when the machine could do much better.

Right. Yeah, >> maybe you limit that to gaming though. I think you know in a world where you believe there is um more capability and more abundance. I do think like people are going to spend a lot of time playing games. Um but I I I just I think the idea that human skill is no longer relevant in the world of superhuman AI just as a a product of the technology itself is nonsense.

Right. So there I think we're we're we're we're super aligned and and there's a bunch of complexity around the uh the guard rails and um distribution of the fruits of that technology still. >> Yeah. >> What are you investing in at chess.com from an AI perspective? Like if it's tools or or um how the product changes? Yeah, we use AI extensively across um you know as a as a business, as an organization um all across you know many different facets.

It it powers a bunch of our um support team through automations to get people faster answers but then obviously we have a bunch of great humans who work in our support team who help create those and who help who help with like the humanto human needs that are there. So, we've seen like a great symbiosis in in the support department. Um, we use it for data and for analysts and they're able to ask questions and use, you know, um, you know, LLM technology to kind of get in and ask and answer really interesting things.

Um, we've built our our CTO Josh is is you know sees the future and he you know long ago started building kind of what everyone else is like wait a minute we need this which is we have our own internal system called GNS which is like a like an authentication and knowledge layer that goes across our whole organization um with all the right permissions and things and stores it um you know we're building our own martekch technology um so that we can more deeply integrate with our users and our data and then of course

we're also using it in our development velment and product life cycle. Um, as we build specs, as we, you know, do more agentic development where, you know, as I like to say, like have an idea or see a problem, fix a problem. Um, and we're just trying to shorten the timeline between uh when something is is either an an opportunity or a problem and and we push code live to our to our users because ultimately that's really what matters.

Um, and you know, software development cycles can can get really long by the time you oh, let's do an in-depth product scope. Let's get it on the road map. Let's let's, you know, build it. Let's build it again. Let's test it. Let's QA. Like, you know, all those different handoffs and all those different pieces make it sometimes very long to get something out to users.

And so, we're really trying to shorten that down. Um, and you know, we're seeing great success with that. And that's ultimately what we're here to do. What do you think is the biggest way AI could change the the product at chess.com? >> Well, we're also using it in our product research and in the output of what users are getting as they, you know, on their chess uh journey.

So, we're working on things like, you know, getting all of your aggregated stats into your advanced stats and then comparing those to other users like you or users right above you. What do you need to improve on to get to the next level? We do a lot of that analysis through a lot of different research methodologies including including using LLMs and and AI.

Um we're working on um AI technology for doing, you know, so you can have a chess coach in your pocket. Obviously, it's not a replacement for a human. If you really want to have a sit down with a human, you should go hire a great chess coach near you or online. But if you want a little bit more of a casual experience or an ondemand coach, you have your AI coach in your pocket.

Um we're working on future products. Also, right now we're prototyping having more of a interactive experience where your coach, your AI coach kind of looks at your games over the last week and gives you some feedback and some recommendations, even if you want to have a chat with that coach. Um, so there's a lot of areas we're exploring right now where AI can be infused into the product in in a positive way to kind of help you on your chess journey.

>> Um, I'm gonna ask one more question. I don't know if there's a good answer, but I'm just curious because I um my two game my three games are chess, go, and poker, right? And poker's very different from the other two and I play them very differently as I think most humans would. >> Yeah. >> How do you think about like how to design a rating system for poker when so much of it is interpersonal and uh also if you play poker for money?

It depends on like how you think about financial risk. >> This is a great question. We're still evolving this uh as to how we're doing ratings in poker. Um, it does have to do with again the rating of the other people at the table and how many chips you win and how many hands you've played. And so we do have a rating algorithm that I'm sure we will adjust over time.

Um, as to like how people play versus when there's like, you know, playing a $100 game of poker versus a $1,000 game of poker. Like things change a lot. Or if you're playing for, you know, peanuts or M&M's on the table. We've all played those games where you're playing for M&M's and someone's just like all in all the time and they just reby more M&M's.

So, it it does matter. But I think that um as people get used to like, wait, I actually care about my poker rating and I treat this as like something important um I think people are going to care about it as much as money because it's a reflection of like the value and their skill as a player. And of course, even in chess, your rating goes up and it goes down and you have your wins and your losses.

Um, but we think that people are going to care a lot about their poker rating. Um, I certainly do. Um, you know, lo losing a 100 bucks at a table, it's not my favorite thing, but I don't care that much. But honestly, losing, you know, 100 rating points on my on poker, that just like really bothers me. So, um, I think this is going to be quite an interesting u innovation for for poker.

>> Yeah, I think it's super exciting. Um, I am excited to start trying to uh work on my rating here. Uh, because I think it it will be a very equalizing thing for people who play poker um to say like, h well, is Eric better than I am or does he just have more M&M's and is he a bully? >> That's a very good way of putting it. >> Eric, thank you so much for doing this.

Super interesting and congratulations on the business that you have uh passionately built. It's great to talk. >> Thank you so much for having me and for this great conversation. Find us on Twitter at no prior pod. Subscribe to our YouTube channel if you want to see our faces. Follow the show on Apple Podcasts, Spotify, or wherever you listen. That way, you get a new episode every week. And sign up for emails or find transcripts for every episode at no-bers.com.