How Chess.com Became the World’s Biggest Chess Community with CEO Erik Allebest

1. 0:00 – 1:05

   Cold Open Trailer

   1. EAErik Allebest0:00

      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.

   2. SPSpeaker0:24

      How do you think about, like, how to design a rating system for poker?

   3. EAErik Allebest0:29

      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 rebuy more M&M's. As people get used to, like, "Wait, I actually care about my poker rating," people are gonna care about it as much as money because it's a reflection of, like, the value and their skill as a player. I think it's gonna be quite an interesting, uh, i-innovation for, for poker.

   4. SPSpeaker0:58

      [upbeat music]

2. 1:05 – 1:48

   Erik Allebest Introduction

   1. SPSpeaker1:05

      Hi, listeners. Welcome back to No Priors. Today, I'm here with Erik Allebest, 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 thirty 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, Erik. Erik, it's great to have you on No Priors. Welcome.

   2. EAErik Allebest1:47

      Thank you

3. 1:48 – 2:57

   Chess.com Today

   1. EAErik Allebest1:48

      so much for having me.

   2. SPSpeaker1:49

      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?

   3. EAErik Allebest2:05

      Yeah, sure. We are, um, we are s- 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 nor, 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, a, a little over... 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.

   4. SPSpeaker2:55

      Amazing.

4. 2:57 – 6:29

   Buying and Scaling Chess.com

   1. SPSpeaker2:57

      And y-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... H-How did you end up owning the business?

   2. EAErik Allebest3:11

      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, and ended up with a failed business. And so, uh, a, a friend and I bought the Chess.com domain name for $56,000, um, and we were gonna build a chess community. We wanted to be like MySpace-

   3. SPSpeaker3:43

      Mm-hmm

   4. EAErik Allebest3:43

      ... and build a, 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.

   5. SPSpeaker3:53

      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?

   6. EAErik Allebest4:01

      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. Uh, 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."

   7. SPSpeaker4:23

      [laughs]

   8. EAErik Allebest4:23

      "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 gonna 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 pr... you know, a couple of 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 sysadmin, a, 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," we're like, "We're never gonna have more than 50 people on our team." And of course, we blew... "Uh, we're never gonna have more than 100 people on our team." And then we just stopped saying that because, you know, chess just continued to s- to surprise us as to how big it, it, it got, and it still surprises me. But what's interesting is now I'm like, "If 250 million people have said they wanna 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 gonna, we're gonna be, you know, bigger than we are today." So we're, we're quite excited about our mission.

5. 6:29 – 11:52

   Competition and Growth

   1. SPSpeaker6:29

      How did you think about, um, competition and, like, the rate of growth you needed to have?

   2. EAErik Allebest6:37

      Yeah. Um-

   3. SPSpeaker6:37

      Oh, and, and how do you think about it today? 'Cause there, there are, I don't, I don't know if you can say the words, but there are platforms like Lichess out there.

   4. EAErik Allebest6:45

      Yeah.

   5. SPSpeaker6:46

      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, a common driver.

   6. EAErik Allebest7:05

      Yeah, and I think that's fair, and I wanna, 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, a couple of, of players. There was free internet chess server, Fixe. 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 it 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, kinda 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-

   7. SPSpeaker8:20

      [laughs]

   8. EAErik Allebest8:20

      ... 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 gonna 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- and, and 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.

   9. SPSpeaker9:12

      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 ... I, I'm, uh, was it a progressive thing? At what point did you think, like, "Oh, this is actually gonna be a, a, a big business," versus, um, you know, "It's something I'm personally passionate about"?

   10. EAErik Allebest9:40

       Yeah. I think 2024 was when [laughs] we thought this would be a big business.

   11. SPSpeaker9:47

       That was not that long ago.

   12. EAErik Allebest9:48

       [laughs] Not that long ago.

   13. SPSpeaker9:49

       Okay. [laughs]

   14. EAErik Allebest9:49

       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 COVID and Queen's ... 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, COVID," 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.

   15. SPSpeaker10:23

       Mm-hmm.

   16. EAErik Allebest10:24

       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 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 gonna be," which w- which was, you know, fascinating. It's also terrifying, um, 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 'cause 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 i- 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's, it's been an interesting last, uh,

6. 11:52 – 14:32

   Chess and Cultural Relevance

   1. EAErik Allebest11:52

      12 months, for sure.

   2. SPSpeaker11:53

      I wanna ask about two more, uh, business-y topics and then talk about AI in the context of chess and sort of your, your reflections-

   3. EAErik Allebest12:00

      Yeah

   4. SPSpeaker12:00

      ... on that. The first would just be, how do you, like, The Queen's Gambit and sort of the, y- you know, increasing cultural relevance of chess, like, what's your, what's your reflection of that?

   5. EAErik Allebest12:14

      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, so 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 kinda, I was kind of like a skater, snowboarder who, like, kept chess as, like, this secret thing I did.

   6. SPSpeaker12:39

      Mm-hmm.

   7. EAErik Allebest12:39

      You know, when I was in high school, it 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, 'cause previously, you know, it was like you weren't really a chess player until you were 2,000 or above, right, rated.

   8. SPSpeaker13:33

      Mm, yeah.

   9. EAErik Allebest13:33

      And if you weren't that-

   10. SPSpeaker13:34

       Bring it to the table

   11. EAErik Allebest13:34

       ... it didn't, you weren't really there.

   12. SPSpeaker13:36

       Yeah.

   13. EAErik Allebest13:36

       And you didn't, you weren't really a chess player. But now, everybody. You know, we, we kinda changed 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.

   14. SPSpeaker14:05

       [laughs]

   15. EAErik Allebest14:06

       So, um, it's, it's been wild.

   16. SPSpeaker14:07

       Yes, yes. I was the, you know, high school nerd that played chess. But my, uh, my kids now, our eight-year-old plays and teaches chess.

   17. EAErik Allebest14:18

       Oh, wow.

   18. SPSpeaker14:18

       And it's, like, very com- I mean, they're in a nerdy town.

   19. EAErik Allebest14:21

       Yeah.

   20. SPSpeaker14:21

       But it's, it's, like, common enough that, you know, I don't know, 20% of the kids do after-school chess.

   21. EAErik Allebest14:27

       Yeah.

   22. SPSpeaker14:27

       Right? Um, which is a totally wild thing to think about. It's like soccer. [laughs]

   23. EAErik Allebest14:30

       Seriously.

7. 14:32 – 19:31

   Private Equity Investment

   1. SPSpeaker14:32

      You had a huge announcement recently, and that's a big change in terms of the CVC 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.

   2. EAErik Allebest14:47

      Yeah. Well, I'll tell you, we're still a bootstrapped business because-

   3. SPSpeaker14:50

      Okay

   4. EAErik Allebest14:50

      ... CVC 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, and, you know, we had another investor. You know, it's kind of interesting, 'cause if you go back in time, like, we were just this privately, entirely privately held. And then, um, you know, someone comes along and is like, "Oh, I love chess. I want to invest." And we're like, "No, no, no." And like, "Oh, we w-"

   5. SPSpeaker15:31

      Okay.

   6. EAErik Allebest15:32

      And finally we said yes, and they bought, like, a little bit. And they're like, "I'll hold onto this forever. I just wanna be a part of this." And then, like, five years later, they're like, "I need to get out of this. I need to sell." You, what? You said you were gonna be here forever. They're like, "Don't worry, I got another guy." So then this other investor came in, and he's like, "No, but I wanna own X percent." 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, three years later, he's like, "I gotta sell." What? You said you were gonna be here ... So then we were at such a scale that, like, we had to, like, find a different scale of investor.

   7. SPSpeaker16:05

      Mm-hmm.

   8. EAErik Allebest16:05

      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 Tanzeem 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 gotta 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 s- we were very, very happy, uh, to be working with CVC. They have such a deep experience at 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 g- you'll build a great business. So, um, they invested in, um, buying out s- different shares from different people, that General Atlantic reinvested as well, so they're, they're still with us, um, in, in the new venture together. And, um, we're as committed as ever to continue to grow the game and to, and to follow our mission. Um, but yeah, we're still, um, no, no, no capital needed to, to grow this business.

   9. SPSpeaker17:34

      How does it change? Has it changed the way you run the business to have these increasingly at scale outside investors?

   10. EAErik Allebest17:41

       Yeah, it re- it actually has, but in a, in a wonderful way.

   11. SPSpeaker17:44

       Okay, this is, like, you know, uh, against the conventional wisdom of, like, private equity be involved, so say more.

   12. EAErik Allebest17:51

       Yeah. [laughs] That, I, I can recognize that. Like, a lot ... You know, you kinda hear the tropes about private equity and, you know, where they, where they give you money and then just say, "Work harder," or, or whatever, "Do better." Um, it hasn't been like that at all with General Atlantic or any of our, uh, uh, with, 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, uh, you know-

   13. SPSpeaker18:43

       Yeah

   14. EAErik Allebest18:43

       ... 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 General Atlantic. 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, uh, 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.

   15. SPSpeaker19:30

       Super cool.

8. 19:31 – 25:09

   Playing Games Amid Evolving Tech

   1. SPSpeaker19:31

      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 in what happens to a human activity after the machines become, like, superhuman at it.

   2. EAErik Allebest19:47

      Yeah.

   3. SPSpeaker19:47

      'Cause it's been, like, what? Deep Blue was 30 years ago.

   4. EAErik Allebest19:50

      Yeah.

   5. SPSpeaker19:51

      Right? You know, we were just talking about how, you know, there are different drivers. And it could be cultural orientation of the community, it 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?

   6. EAErik Allebest20:20

      Yeah. It's, it's so, it's so interesting. Um, you know, fundamentally, humans wanna 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 th- 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 comp- uh, p- you know, grandmasters 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. It was this kind of chess engine-

   7. SPSpeaker21:06

      Mm-hmm

   8. EAErik Allebest21:06

      ... it was called. And that chess computer, like, actually made chess pretty boring for a little while 'cause it was so perfect.

   9. SPSpeaker21:14

      Mm-hmm.

   10. EAErik Allebest21:14

       And all these players tried to play, like, the best computer. And they were, like, grinding out these boring end games, and it, like, kinda 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 l- 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 gonna 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, hand-in-hand 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 s- optimistic about the future, honestly.

   11. SPSpeaker22:58

       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.

   12. EAErik Allebest23:08

       Yeah.

   13. SPSpeaker23:08

       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 2,000 or master or something?

   14. EAErik Allebest23:18

       I mean, we're seeing it already. Like, um, there's just younger and younger players. There's seven-year-olds who are giving a, you know, a run to grandmasters. And, you know-

   15. SPSpeaker23:27

       Mm-hmm

   16. EAErik Allebest23:27

       ... 10-year-old, I'm gonna butcher her name, so I'm not even gonna say it, but from India, uh, 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, uh, a better video game creator than, you know, I ever would've been because he self-learned everything on YouTube and with, um, you know, different AI tools and wi- 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 gonna 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, X, Y, Z 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 guardrails. We're gonna have to figure out what works and what doesn't. But, um, again, I, I think it's gonna, it's gonna push people further in, into learning and, and creating better things.

9. 25:09 – 28:40

   Tech, Skill Distribution, and Expertise

   1. SPSpeaker25:09

      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 is having access to this do to the skill distribution in your data or in your experience?

   2. EAErik Allebest25:24

      I mean, like anything, um, you know, you've gotta do the repetitions to put it in your brain. Um, you know, just because-

   3. SPSpeaker25:31

      Yeah. You can't, you can't learn it for you

   4. EAErik Allebest25:31

      ... we have access to it on a computer.

   5. SPSpeaker25:33

      Yeah.

   6. EAErik Allebest25:33

      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 1,000, that's kind of what your life looks like. So if you do five chess puzzles a day-

   7. SPSpeaker25:53

      [laughs]

   8. EAErik Allebest25:53

      ... multiply that by 1,000, you've done 5,000 chess puzzles, you're gonna be m- much better, right? Now, if you wanna do 100 puzzles a day, multiply that by 1,000, right? Or play 10 chess games a day, or do yoga every day for 10,000 years. It's n- uh, 10,000 days. It's, or 1,000 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... And 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 wanna 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.

   9. SPSpeaker27:13

      You, um, have this incredible data set with Chess.com of humans, like, learning, millions of people at every rating, making mistakes and improving.

   10. EAErik Allebest27:22

       Yep.

   11. SPSpeaker27:22

       What can you tell us about how humans acquire expertise or, you know, how to, how to get them up that ramp faster?

   12. EAErik Allebest27:30

       Fortunately and unfortunately, it's actually quite, again, quite an easy answer.

   13. SPSpeaker27:35

       Oh, no. [laughs]

   14. EAErik Allebest27:36

       Yeah. It's just repetition of, like, the small building blocks.

   15. SPSpeaker27:42

       Okay.

   16. EAErik Allebest27:42

       And so it is doing puzzles. It is reviewing your mistakes. It is, you know, if you wanna, if you wanna play certain openings, just training. And so there's really not shortcuts to the process. There are 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 s- of tools coming later this year, which is gonna 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 immediacy of, uh, of our lives in general, kind of forget that, like, practice is, you know... Y- you can't really shortcut practice. Uh, you have to put in the time.

10. 28:40 – 31:20

    Chess and Cheating

    1. SPSpeaker28:40

       I'm gonna ask kind of a, a f- a funny question. Feel free to not answer. Like, how do you guys think about cheating at Chess.com? Because y- y- 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?

    2. EAErik Allebest29:04

       It's tough, right? I, I, I wish humans didn't have this drive that, like-

    3. SPSpeaker29:10

       [laughs]

    4. EAErik Allebest29:10

       ... 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 onto online chess and use, you know, lo- 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 ... A- 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 r- it would end the game. But, you know, fortunately, 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, uh, anti-cheating, basically. And we have a whole set of tools which I'm not gonna get into 'cause I don't like to give ideas to people on how we do it.

    5. SPSpeaker30:19

       About the defense. Okay.

    6. EAErik Allebest30:19

       But 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 in 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.

11. 31:20 – 33:17

    What Makes Chess Special

    1. SPSpeaker31:20

       Because you are super passionate about it and, uh, uh, uh, 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?

    2. EAErik Allebest31:34

       There's something special about chess, especially in a world where a- 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-

    3. SPSpeaker32:07

       [laughs]

    4. EAErik Allebest32:07

       ... 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.

    5. SPSpeaker32:22

       Hmm.

    6. EAErik Allebest32:22

       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, uh, 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 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 k- the king of games we c- 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 onto, um, in, in a world of, like, increasing, exploding proliferation of everything.

12. 33:17 – 34:54

    Chess.com Future Vision

    1. SPSpeaker33:17

       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?

    2. EAErik Allebest33:35

       Well, we're just definitely a chess company, I'll say that. Um, the, the, the easy answer is we all love chess. We love playing it.

    3. SPSpeaker33:41

       Okay.

    4. EAErik Allebest33:41

       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?

    5. SPSpeaker34:29

       Yeah, let's know. Yeah.

    6. EAErik Allebest34:30

       And we're gonna roll out other games as well, uh, 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 gonna 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.

13. 34:54 – 36:48

    Founder Advice

    1. EAErik Allebest34:54

       Um, but we are, we are branching out.

    2. SPSpeaker34:55

       Okay. I have two more questions for you about the future.

    3. EAErik Allebest34:59

       Yeah.

    4. SPSpeaker34:59

       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... W- 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.

    5. EAErik Allebest35:26

       I think one of the curses of being a founder today is just how much, like, founder advice there is out there.

    6. SPSpeaker35:33

       Okay.

    7. EAErik Allebest35:34

       You know, at the time when I was, you know, getting into to 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 wanna do, and they should think of what do they wanna see exist out there in the world, and then they should just relentlessly go after that more than, you know, what is the market saying, what are these different things. Now, of course, if, you've gotta listen to your customer, right? And you've gotta 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 wanna 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. [laughs]

14. 36:48 – 40:02

    AGI/ASI Predictions

    1. SPSpeaker36:48

       Okay, last question for you. Um, uh, do you, do you believe in AGI? Do you believe in its, like... or ASI in its i- its imminent arrival? And, um, what's one thing you believe about the world if that is true?

    2. EAErik Allebest37:01

       I do believe in, um, superhuman intelligence and that it will move at a faster and faster pace. I think it will be s- a little bit scary if we don't put guard rules, guardrails 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, uh, biggest problems around even politics and education, and create a more equitable world. I worry that it can t- have the opposite effect. I think we're already seeing, uh, uh, 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 a- 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 that 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, an AGI/ASI can be used for good or for evil. It's gonna 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 gonna get out of that, but, um, we, we are where we are, so I, I'm hopeful we can make some cultural changes and, and, and put some things in place to protect us.

    3. SPSpeaker38:58

       I think the interest and growth of chess is actually a, um, uh, it's not 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?

    4. EAErik Allebest39:23

       Yep.

    5. SPSpeaker39:24

       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 gonna 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 guardrails and, um, distribution of the fruits of that technology still.

15. 40:02 – 42:13

    AI Investments at Chess.com

    1. EAErik Allebest40:02

       Yeah.

    2. SPSpeaker40:02

       What are you investing in at Chess.com from an AI perspective? Like, if it's tools or, or, um, how the product changes.

    3. EAErik Allebest40:10

       Yeah. We use AI extensively across, um, you know, as a, as a business, as an organization, um, all, all across, you know, many different facets. It, it powers a bunch of our, um, support team t- 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 human-to-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, and an- ask and answer really interesting things. Um, we've built ... Our, our CTO Josh is, is, you know, sees the future, and he a lo- 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 MarTech 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 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. 'Cause 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

16. 42:13 – 43:27

    How AI May Change Product at Chess.com

    1. EAErik Allebest42:13

       what we're here to do.

    2. SPSpeaker42:14

       What do you think is the biggest way AI could change the, the product at Chess.com?

    3. EAErik Allebest42:19

       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, uh, 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?

    4. SPSpeaker42:39

       Yeah.

    5. EAErik Allebest42:39

       We do a lot of that analysis through a lot of different research methodologies, including, including using LLMs and, 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 wanna 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 on-demand 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, kinda looks at your games over the last week and gives you some feedback and some recommendations, even if you wanna 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 a, in a positive way to kind of help you on your chess journey.

17. 43:27 – 46:07

    Poker Rating Algorithms

    1. SPSpeaker43:27

       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, 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.

    2. EAErik Allebest43:41

       Yeah.

    3. SPSpeaker43:41

       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?

    4. EAErik Allebest43:56

       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 vers- when there's, like, you know, playing a $100 game of poker versus $1,000 game of poker, like, things change a lot. Or if you're playing for-

    5. SPSpeaker44:23

       Right

    6. EAErik Allebest44:24

       ... you know, peanuts or M&Ms on the table. We've all played those games where you're playing for M&Ms, and someone's just, like, all in all the time, and they just rebuy more M&Ms. 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 gonna care about it as much as money because it's a reflection of, like, the value and their skill-

    7. SPSpeaker44:49

       Yeah

    8. EAErik Allebest44:49

       ... 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 gonna care a lot about their poker rating. Um, I certainly do. Um, you know, lo- losing 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 po- on poker, that just, like, really bothers me. [laughs] So, um, I think that's gonna be quite an interesting, uh, i- innovation for, for poker.

    9. SPSpeaker45:15

       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, "Huh, well, is Erik better than I am, or does he just have more M&Ms, and is he a bully?" [laughs]

    10. EAErik Allebest45:34

        [laughs] That's a very good way of putting it.

    11. SPSpeaker45:36

        Erik, 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.

    12. EAErik Allebest45:43

        Thank you so much for having me and for, uh, this great conversation. [upbeat music]

    13. SPSpeaker45:49

        Find us on Twitter at @NoPriorsPod. Subscribe to our YouTube channel if you wanna 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-priors.com.

Episode duration: 46:07