Dec 27, 2024 · 1h 12m · neon-show
How Chess.com Founder Built A $150 Million ARR Empire With Zero VC Funding | Erik Allebest | Neon
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this in-depth interview, Chess.com founder and CEO Erik Allebest shares how he bootstrapped a modest side project into a profitable global empire generating over $100 million in ARR. He discusses the power of organic growth, product-focused leadership, capital discipline, and the ongoing cultural resurgence of chess worldwide.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
Siddhartha as informed peer 1.5 Guest teaching 3.7 Guest disagreement 1.6 Siddhartha pushing back 0.1
speaking balance: gold is Siddhartha, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 48:27 Direct rejection of preparedness premise
Erik directly challenges the host's assertion that Chess.com was prepared for the pandemic boom, flatly stating they were not ready and scrambled to survive server crashes.
Hardest push from Siddhartha ▶ 12:04 Host probes stagnation in pre-COVID revenueThe host pushes the guest on whether 15 years of operating before reaching ten million in revenue felt disappointing compared to high-flying tech peers.
Biggest teaching moment ▶ 43:33 Redefining strategic thinkingErik breaks down the misconception of strategy as a rigid preconceived plan, educating the host on how true strategy requires dynamic situational adaptation.
Siddhartha holds their own ▶ 1:11:44 Host articulates chess vs life reversibilityThe host synthesizes the philosophical discussion with a sharp insight contrasting chess as a reversible game with life's irreversible consequences.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Siddhartha as informed peer | Guest teaching | Guest disagreement | Siddhartha pushing back | Why |
|---|---|---|---|---|---|---|
| Episode Trailer and Highlights | 1 | 1 | 1 | 0 | Introductory teaser and biographical framing. The host sets up Erik's journey and achievements in a warm, welcoming tone. | |
| Parental Influence, Resilience, and Lessons from Failure | 2 | 2 | 1 | 0 | Both host and guest share personal stories regarding their fathers' entrepreneurial ventures and learning resilience from failure. | |
| Early Ventures: After-School Programs and E-Commerce | 1 | 3 | 1 | 0 | The guest explains his early trajectory from college chess clubs to launching an e-commerce venture and getting accepted into Stanford. | |
| Founding Chess.com and Early Revenue Expectations | 1 | 3 | 1 | 0 | The guest clarifies the origins of Chess.com, noting how low his initial revenue expectations were when launching out of business school. | |
| Reinvesting Capital and Bootstrapped Revenue Trajectory | 2 | 5 | 2 | 1 | The guest gently corrects the host's mistaken assumptions about the e-commerce sale multiples, margins, and bootstrapped revenue growth curve. | |
| Resisting Silicon Valley Hype and the Fitness Venture | 1 | 3 | 1 | 0 | Erik explains his lack of envy for Silicon Valley unicorns and reflects on the failure of Exercise.com as a vital learning experience. | |
| Operational Growing Pains and Bizarre Legal Battles | 2 | 4 | 1 | 0 | The guest shares bizarre legal battle anecdotes, including settling a frivolous shakedown lawsuit with cases of vodka. | |
| Venture Capital Pitfalls and the General Atlantic Partnership | 2 | 5 | 3 | 1 | Erik clarifies that he did not fundraise for five years straight, and articulates why misaligned venture capital can become toxic for mission-driven businesses. | |
| Scaling Leadership from Micromanagement to Team Empowerment | 1 | 5 | 2 | 0 | The guest describes moving from a micromanaging founder answering hundreds of weekly emails to an organizational coach fostering autonomous teams. | |
| Product Design Philosophy and User Empathy | 1 | 3 | 0 | 0 | Erik walks through his product development process, wireframing habits, and building empathy with everyday chess players. | |
| Organic Growth, SEO Mastery, and Mainstream Media Catalysts | 2 | 4 | 1 | 0 | The guest unpacks why low ARPU makes paid user acquisition unviable, highlighting the compounding impact of organic SEO and The Queen's Gambit. | |
| Platform Dominance and the Stewardship of Community Trust | 1 | 4 | 1 | 0 | Erik emphasizes that being market leader is a fragile stewardship rather than permanent victory, warning against monetizing at the expense of user trust. | |
| Defining Strategic Thinking in Chess and Business | 2 | 5 | 3 | 0 | Erik redefines 'strategy' after the host brings it up, explaining that real strategy is continuously adapting to the board rather than bringing a rigid external formula. | |
| The Power of Day-One Monetization and Capital Discipline | 1 | 4 | 1 | 0 | Erik explains how day-one monetization forced capital discipline and prevented premature scaling mistakes common among VC-backed competitors. | |
| Weathering the Pandemic Surge and Upgrading Infrastructure | 2 | 6 | 6 | 1 | When the host asserts the company was completely ready for pandemic tailwinds, Erik bluntly dismisses the premise, explaining their chaotic infrastructure near-meltdowns. | |
| Staying Focused on Chess and Evaluating Public Markets | 1 | 4 | 2 | 0 | Erik explains his reluctance to expand into other board games prematurely and outlines the burdensome governance trade-offs of public markets. | |
| Capital Allocation, Conversion Funnels, and Media Partnerships | 1 | 3 | 2 | 0 | Erik clarifies that they grow at the speed of cash flow rather than sitting on a massive war chest, highlighting their media partnership strategy. | |
| Global User Demographics and India's Chess Renaissance | 2 | 4 | 1 | 0 | Erik details regional engagement disparities, contrasting the massive Norwegian subscriber density against Indonesia and India's rapid organic growth. | |
| Navigating Online Backlash, Public Scrutiny, and Death Threats | 1 | 3 | 1 | 0 | Erik discusses receiving death threats and online abuse, explaining how he reframes vitriolic online feedback as misdirected passion for the game. | |
| Emotional Burdens of Leadership: Controversies and Team Reductions | 1 | 4 | 1 | 0 | The guest reflects on the emotional toll of letting people go, why he avoids family tropes in business, and his philosophy on sustainable compensation. | |
| Fostering Mission-Driven Culture and Overcoming Fear of Failure | 3 | 3 | 1 | 0 | Erik dismisses fear of failure as a viable executive motivator. The host concludes with a poignant distinction between reversible chess moves and irreversible life decisions. |
Statements from this episode (26)
Allebest: Early chess e-commerce store reached millions in annual revenue
“Selling equipment online grew to a medium sized business of a few million dollars in revenue per year, which was great and surpassed our expectations.”
Allebest: Chess.com was initially built to support his e-commerce store
“Started chess.com in many ways to support the e-commerce business.”
Allebest: Chess.com generated around $10M in revenue in 2017 or 2018
“I mean, I remember maybe in 2017 or 20 18 doing you know, ten million dollars in revenue or something like that.”
Allebest: Chess.com has been profitable since the very beginning
“We have been profitable basically since the very beginning.”
Allebest: Seeded Chess.com with $700k leftover from prior e-commerce sale
“I think I sold the business for a little under two million dollars, something like that. It was actually less than that. It was like one and a half million, if I remember correctly. And then I paid, so after I paid taxes, I had about a million dollars. And the…”
Allebest: Running Chess.com today is much more stressful than his earlier ventures
“I, you know, in, in many ways I was happier than I am today because the stress of chess.com today is so much more than it was back then. So, you know, I don't wish a huge success on anyone. It can be quite a burden at times to be totally honest.”
Allebest: Chess.com settled an early lawsuit for two cases of vodka
“And we ended up we ended up settling that lawsuit in exchange for two cases of vodka. That's what he wanted. And so no money, just had to ship two cases of vodka. And then he settled the lawsuit.”
Allebest: Founders are naive about the friction of forced VC exits
“I think people are a little bit Naive about the downsides of raising money. Ultimately your investors will want an exit and it may not be at the same time as you. And for a business that's as mission driven as chess.com is, it's, it has at times been irritatin…”
Allebest: Most PE and VC Firms Passed Before General Atlantic Buyout
“Met with a lot of private equity and venture firms. And, you know, most of them passed. They still couldn't see the vision of where chess could go. They still thought they said the same things, you know, the market isn't big enough, et cetera. But, you know, G…”
Allebest: Chess.com maintained a flat reporting structure until reaching 400 employees
“Up until about 400 people on our team, We had a kind of everybody was reporting to me in some ways. It was extremely flat company. You know, everybody was emailing me their weekly reports. I was responding to, you know, two, three, 400 emails every weekend.”
Allebest: Pure executive leadership makes no sense for startups under 20 people
“There's not really a role for a leader in a startup that's, you know, you got to get your hands dirty. You got to roll up your sleeves. You have to have vision. You have to be directive. You know, and so I think, you know, being a CEO leader at an, you know, a…”
Allebest: 2025 will see a massive surge in chess shows, movies, and books
“Next year is going to be huge for chess media. There's going to be many different shows. There's many different movies coming out. There are books coming out. There's going to be so much chess in the media next year. It's going to be crazy.”
Allebest: Multiple VC-funded chess startups raised millions and flamed out
“I mean, we've seen many businesses come into chess, having raised millions of dollars and seen them flame out.”
Allebest: Chess.com has 5M DAUs and 40M to 50M MAUs
“We're at five million daily active users now, you know, 40, fifty million monthly active users.”
Allebest: Chess.com is ready to reach 20M DAUs and 100M MAUs
“I think we're ready for twenty million daily active users and a hundred million monthly active users. I think we're ready for that. And I think it's coming.”
Allebest: Chess.com will have single-digit revenue growth in 2024
“I think a lot of people would look at, you know, single digit growth, like we're going to have this year and say, ah, well, you're not ready to be a public company.”
Allebest: Chess.com will eventually become a public company
“But I do think we'll be there one day.”
Allebest: Chess.com does not maintain massive excess cash reserves
“We've been growing at the speed of cash. And so we don't have just tons and tons of excess cash.”
Allebest: Chess.com took primary and secondary funding from WME and Endeavor
“That's why we recently did you know take money, a little bit of cash, and then some secondary from WME and Endeavor which is a large media company, and we're working with them to, you know, look at different ways we can grow the game.”
Allebest: Chess.com relies on media partnerships for top-of-funnel growth
“We're only really looking for media partnerships at this time, because we believe that while we work on our core business, our top of funnel And new, new users are going to come through media partnerships. And luckily we have some amazing great media partnersh…”
Allebest: India is not a top monetizing market for Chess.com
“Interestingly, India is not a top monetizing country for chess.”
Allebest: Nearly half of Norway's population has Chess.com on their phones
“A some ridiculously large number percentage of people in Norway have chess.com on their phone. It's like, it's massive. I don't want to say it's half, but it feels like it's close just because of Magnus Carlsen. And probably 10% of them are paying subscribers”
Allebest: I have received death threats as the CEO of Chess.com
“Yeah, I mean, I've had death threats.”
Allebest: Severe online criticism reflects deep community passion for chess
“And, you know, I take all the criticism, including death threats, I take it as a sign of how much people love chess and how passionate they are.”