How To Copy Chess.com’s $100M/Year Business Model

we talked about— the background is we talked about Chess.com last episode. I tweeted about it because I was even more—

people love that tweet, dude. That tweet had tons of engagement.

Um, it was good. And the, the summary of this is that I actually— we underestimated it. So Chess.com gets around 200 million monthly uniques. They have 60 million registered users. Their, uh, traffic has grown significantly. If I had to guess, they do at least $100 million in recurring revenue, subscription revenue. potentially is worth $1 billion. Super fascinating company. Um, go ahead. What were you going to say?

We were trying to hype it and we actually were underhyping even, even though we were trying to hype it. Um, and by the way, the guy who started is like an ex-Stanford guy or the guy who owns it. Uh, there's two, I think Stanford guys, uh, which is cool. Like, you know, they didn't go the same track probably as 95% of their classmates and they're going to outperform 99% of them just by, by doing something really simple that the world wanted. So I started thinking about this because we talked about it. You brought it up. Cool topic, cool bit, really cool business. It really fits the, what we call the New Zealand type of business that Andrew Wilkinson kind of coined that phrase, which is it's this independent thing. It has like a cult following. It's profitable, it's simple. It's not, nobody competes with it. It's like New Zealand. Nobody's going to war with chess.com. The biggest competitor I think is called Lichess or something like that. It's basically like an open source free, kind of like alternative, and it's also doing extremely well. And those are like the two, but it seems like people kind of prefer chess.com. So I started thinking, okay, what's the next chess.com? What are the others? Is there a whole slew of these guys? Because I think that's where we didn't talk about last time that we should have. And so I wanted to double-click in a little bit.

And that's a really, really hard question. I've been thinking about it too. I only came up with like Dominoes. I looked into solitaire websites. A lot of them crush. But yeah, that's a hard question to ask.

So I only spent 10, 15 minutes on it, but that was enough to tell me something very interesting. So the first one that came to mind was, because here's the characteristics that you need. You need a game played by tens of millions, if not hundreds of millions of people that is not owned by a brand. Chess works. Checkers also works. But the problem with checkers is it's so simple that it's not as like, uh, there's not as much depth to it, therefore not as much of a like, kind of like, uh, money made and passion around the sport. Sudoku was the second one that came to mind. So I went to sudoku.com and sudoku.com, it's just like chess.com. It's like you, you go to sudoku.com and there's already a Sudoku board waiting for you with the clock going and it's like, oh, play, here it is. You don't need to download, you don't need to sign up, you don't need to do anything. Just play Sudoku. I love that. Then they, you scroll down a little bit and you see like this advertisement for like a mobile app, a mobile Sudoku app. So I click that. I'm like, I bet this app, I bet this is an amazing distribution for this app. App crushes. So this company called EasyBrain behind it. So the Sudoku app that they have has 50 million downloads on just Google Play. Forget about iPhone, that's just Google, that's just Android. So probably 100 million total lifetime downloads. The website itself gets, you know, 10 to 20 million visitors a month. So they're getting free, like basically free traffic to their mobile apps where they're able to monetize. And EasyBrain basically makes, they're like a mobile app developer. That makes these apps. They've had over 750 million downloads lifetime of these little simple number game apps, starting with Sudoku, then like a remix of Sudoku, then like another number game if you like that one. And they just cross-promote them within each other. I bet this company is crushing it. They're based in Europe, it looks like.

I have information on them. I just found some interesting stuff when I Googled them and went to the website. There was something amazing about them that immediately stuck out. And, and, and just this quick Google, it— I'm wrong, but it is based in Cyprus. Anytime a company is based in Cyprus, it's like— it turns out these guys actually are, uh, from like the Belarus— they're actually from this area, but they're based in Cyprus. So I just Googled it real quick. So, uh, do you know that it was— they were acquired, um, 3 months ago?

No, I did not know this. So that's okay. That's another piece.

I have their revenues, I have their profit, and I have all their user numbers, and I have all— Can I guess?

Yeah, yeah, yeah. I'm gonna be totally wrong, but I like to guess. By the way, little tip, always guess before you hear any number. That's how you get good at knowing numbers, because you guess, and then when you're wrong, your brain remembers that shit, and you start to hone that gut instinct. Okay, so here's my guesses.

I'm gonna guess— Okay, well, how much were they? What's their revenue?

I'm gonna guess that their revenue was $400 million a year.

Okay. What's their profit?

$90 million a year.

Pretty good. All right. How much were they acquired for?

I'm gonna guess that they were acquired for $852 million.

Okay. And how many, how many daily active users do they have across their 15 games?

I'm gonna say they have 25 million DAU.

Okay, so you didn't do— you didn't do horrible. Okay, so EasyBrain was acquired, uh, last— this most recent February, uh, they were, uh, acquired for $640 million in stock and up to $125 million of additional consideration if they hit it. So 640—

yeah, what is that? That isn't that exactly $850?

No, what's 6, uh, what's 640 plus 100 is 740 plus 25 is 765. So great job, you guessed $850. Great job, you're almost there. Um, they— their revenue is, uh, in 2020 revenues were $210 million. Okay, so you were off there by half, you guessed $400 million, but their profit was $70 million. You guessed $90 million, right? Pretty good. Um, they've had 750 installs over the course of their, the lifetime of all their, all their things, all their, uh, games. They have, uh, 15 live games with 12 million daily active users. You guessed 25 million. Okay, not bad, not bad.

Um, what a company. So, okay, so that was the first one I thought of. And by the way, I think that there's other versions of that, like, you know, I don't know, go look at like, you know, sudokuonline.com. I don't know, what's that? Like, you know, all the things people are going to Google search, if you can get the top-level domain for those, that's really interesting. So then I started looking at some others. Poker.com. So I went to poker.com and poker.com is like kind of like this crappy, like just describe what you're looking at when you go to it.

Let me look at this. But you can't, this isn't actual poker, right? This, you're not betting?

It's not even a, you can't play there. It's just like, reviews. Here's— it's like an affiliate site. So it's like, oh, here's a place to play poker, here's where you can go, because they get big kickbacks for basically sending a player to PokerStars or wherever if they deposit. And so this is horrible website, um, crappy kind of like affiliate and reviews site. Dude, you could do so much more with this website. Like, if somebody was like, dude, I'm gonna— I have a— if you have a mobile poker app that's like good, I would pay like ungodly amounts of money for poker.com. I think that that's a— and they also, if you like do their traffic search, see what they get, it's nothing. So they should be getting a lot more traffic having poker.com. Um, okay, so then there's some other ones. Crosswordpuzzle.com, crossword.com, go to those. Like, they don't even— like, crossword.com or something doesn't even like render. It's like a— there's like 5 asterisks on the screen. Yeah, like, what's going on here? Because crossword is the other game that's like Sudoku, It's Like Chess that people played religiously and they love. We talked about how much the New York Times makes off their mini crossword game. I can't believe—

the number was, uh, $90 million in subscription revenue from crossword puzzles for the New York Times.

So, so I am surprised that crossword puzzle, crosswordpuzzles.com, crossword.com— I can't believe that these sites are not being like leveraged. So I was very surprised to see this. And, uh, yeah, that was my follow-up from this.

So you go to crosswoodpuzzle.com. It says, please email suggestions to dkw999@yahoo.com. Right.

So I emailed the guy. So, so, so you see this, the website is basically like a white page with a bunch of text. And it's basically just the very bottom things.

The very bottom, it says, this don't know, this domain is not for sale. Please do not inquire about purchasing it. All emails from anonymous or unknown companies asking me a price will be ignored. Sorry, last updated July 2007.

Right. So I emailed this guy and I was like, hey, saw your website. I think it's awesome that you're not trying to sell this, but I'm curious, why aren't you trying to sell this? And what do you want this to be? Why do you believe that it should be done this way? I'm just super curious, what's your thought process? So we'll see if he replies.