What Chess.com Teaches US About Superhuman Capabilities, with CEO Erik Allebest

In a world of infinite gaming and entertainment possibilities, how does a centuries-old game stay so popular? Chess.com co-founder and CEO Erik Allebest joins Sarah Guo to explain how the evolution of technology has kept people coming back to chess, even when machines can beat us at the game. Erik talks about how the desire to build a MySpace-like community for chess led to the purchase of a domain name from a bankruptcy sale back in 2005, and scaled into a community with 10 million daily active users and 250 million total registered members. He also discusses the growth of the cultural relevance of chess, how investments from private equity firms General Atlantic and CVC helped grow and strengthen their platform, and how Chess.com is leveraging AI both within the business itself and to make a better product for its community. Sign up for new podcasts every week. Email feedback to [email protected] Follow us on Twitter: @NoPriorsPod | @Saranormous | @EladGil | @chesscom | @erikallebest Chapters: 00:00 – Cold Open Trailer 01:05 – Erik Allebest Introduction 01:48 – Chess.com Today 02:57 – Buying and Scaling Chess.com 06:29 – Competition and Growth 11:52 – Chess and Cultural Relevance 14:32 – Private Equity Investment 19:31 – Playing Games Amid Evolving Tech 25:09 – Tech, Skill Distribution, and Expertise 28:40 – Chess and Cheating 31:20 – What Makes Chess Special 33:17 – Chess.com Future Vision 34:54 – Founder Advice 36:48 – AGI/ASI Predictions 40:02 – AI Investments at Chess.com 42:13 – How AI May Change Product at Chess.com 43:27 – Poker Rating Algorithms 46:07 – Conclusion

• 0:00Speaker 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.

• 0:24Speaker 01

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

• 0:29Speaker 00

  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 and M's and someone's just like all in all the time and they just rebuy more M and 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 innovation for poker.

• 1:05Speaker 01

  Hi, listeners. Welcome back to No Priors. Today I'm here with Eric Alavest, 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.

• 1:47Speaker 00

  Thank you so much for having me.

• 1:49Speaker 01

  So I'd love to just make sure our listeners have a little bit of the backstory of chess.com and how you built this business. But 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?

• 2:05Speaker 00

  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. 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 northern hemisphere out and about. We have more than 250 million registered members and more revenue than I thought we would end up with as a chess company. A little, I think this year we'll do a little over 200 million, which is frankly, again, surprising. We have about 650 people on our team who love chess or passionate about the game and

• 2:46Speaker 00

  are working hard to, you know, make our members happy and to grow the game and to be the best possible place to work. Those are our three, kind of the three areas of our mission.

• 2:55Speaker 01

  Amazing. And you took a, I guess, somewhat unconventional startup path or founder/CEO path to get here. Certainly think of you as founder. What, uh, how did you end up owning the business?

• 3:11Speaker 00

  Well, we didn't start by owning a business. We just started by owning a domain name that we got from a bankruptcy auction in 2005. Someone else owned the domain name. They were building chess software, but they, you know, couldn't pay their debts and the money, they'd raised a little bit of money to try to do that and ended up with a failed business. And so a friend and I bought the chess.com domain name for $56,000.

• 3:40Speaker 00

  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.

• 3:53Speaker 01

  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?

• 4:01Speaker 00

  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, no, 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. Didn't raise any money. Eventually I started putting money in.

• 4:46Speaker 00

  I had money from a, you know, a couple of previous businesses I had sold, borrowed like a little bit of money from my friend's mom 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 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 sys admin, uh, you know, eventually designers. And it just kind of grew as we had money to, you know, for it to grow. And we never then again considered raising money.

• 5:31Speaker 00

  It never crossed our minds. 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, uh, 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 surprise us as to how big 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 pretty big and we see the good that chess does in the world and, and brings people together and gives them confidence and, you know, teaches them

• 6:16Speaker 00

  that you never really lose if you learn. And it's, it's a great game for, for learning 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 quite excited about our mission.

• 6:29Speaker 01

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

• 6:37Speaker 00

  Yeah.

• 6:37Speaker 01

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

• 6:45Speaker 00

  Yeah.

• 6:46Speaker 01

  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.

• 7:05Speaker 00

  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 players. There was Free Internet Chess Server Fix. There was ICC Chess Club. Those were the two major players. There's 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.

• 7:47Speaker 00

  And so, you know, most of the others, um, kind of fell by the wayside. Obviously Leeches 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 were able to make due to the fact that we do generate revenue. And, you know, they serve a different part of it. 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.

• 8:29Speaker 00

  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, whether to move at speed. Again, we've built this for 20 years. 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, 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. Developed a great culture and allowed us to, you know, not, not need outside capital.

• 9:12Speaker 01

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

• 9:40Speaker 00

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

• 9:47Speaker 01

  That was not that long ago.

• 9:48Speaker 00

  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 COVID 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, 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. 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

• 10:33Speaker 00

  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. I think this is a lot bigger than we thought it was gonna be, which, which was, you know, fascinating. It's also terrifying 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?

• 11:12Speaker 00

  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. 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. And we finally kind of got in our hands around organizationally, what it means to be a 650 person, fully remote company. 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's, it's been an interesting last 12 months for sure.

• 11:53Speaker 01

  I want to ask about two more business-y topics and then talk about AI in the context of chess and sort of your, your reflections on that. And 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?

• 12:14Speaker 00

  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 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, it was like for nerds, no one would talk about it. Like, why would you, why would you spend time on that? 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.

• 12:57Speaker 00

  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, 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 anytime. The content is funny and relevant and interesting. And we also just redefined what it meant to be a chess player because 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, it didn't, 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 changed the narrative and we celebrate your mistakes.

• 13:42Speaker 00

  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 blows, it blows my mind. So, um, it's, it's been wild.

• 14:07Speaker 01

  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. It's like soccer.

• 14:30Speaker 00

  Seriously.

• 14:32Speaker 01

  You had a huge announcement recently and that's a big change in terms of the CBC investment. Tell us about that, what it means to the business, how you thought about working with a private equity firm after so many years of just, you know, being a bootstrap business.

• 14:47Speaker 00

  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. 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 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 is like, oh, I love chess. I want to invest.

• 15:29Speaker 00

  And we're like, no, no, no. And 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 five years later, like I need to get out of this. I need to sell. 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 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. 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.

• 16:14Speaker 00

  You know, really were focused on, I thought the wrong things, but when I met, you know, General Atlantic and Tanzin 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. 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 do their, do their thing. And so then we again, had to now look for another person to come in. Um, and we found CBC and we were, we were very, very happy, uh, to be working with CBC.

• 16:57Speaker 00

  They have such a deep 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 buying out different shares from different people. The 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. But yeah, we're still, um, no, no, no capital needed to, to grow this business.

• 17:34Speaker 01

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

• 17:41Speaker 00

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

• 17:44Speaker 01

  Okay. This is like, you know, uh, against the conventional wisdom of like private equity being involved. So say more.

• 17:51Speaker 00

  Yeah, I, I can recognize that. Like a lot, you know, you kind of hear the trips about private equity and, you know, where they, where they give you money and then just say, work harder or whatever, do better. It hasn't been like that at all with General Atlantic or any of our, with CBC 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.

• 18:35Speaker 00

  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, 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 it, 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, uh, you know, uh, you know, many hundreds of people 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.

• 19:17Speaker 00

  Help me learn to grow into these different roles and you know, that has kind of progressed along, along my own path as we, you know, as I lead this company and, and so we've matured a lot and it's been great.

• 19:30Speaker 01

  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.

• 19:47Speaker 00

  Yeah.

• 19:47Speaker 01

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

• 19:50Speaker 00

  Yeah.

• 19:51Speaker 01

  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?

• 20:20Speaker 00

  Yeah, 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, has pushed humans to be better and to do better in their field. And it's really interesting because, 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

• 21:05Speaker 00

  is this kind of chess engine, it was called. And that chess computer like actually made chess pretty boring for a little while because 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, Leila 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 Leila Chess Zero, the chess engine. And that

• 21:47Speaker 00

  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 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

• 22:30Speaker 00

  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 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 optimistic about the future, honestly.

• 22:58Speaker 01

  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?

• 23:18Speaker 00

  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, 10 year old, I'm going to butcher her name. So I'm not even going to 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 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

• 24:00Speaker 00

  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?

• 24:41Speaker 00

  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 guardrails. We're going to 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 into, into learning and creating better things.

• 25:09Speaker 01

  If everyone has this information access that you described, like, why aren't we all equally good at chess? Right? Like, you know, what is, what is having access to this due to this skill distribution in your data or in your experience?

• 25:24Speaker 00

  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.

• 25:33Speaker 01

  Yeah.

• 25:33Speaker 00

  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 hundred 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 10,000 days. It's, or a thousand days. It's not the actual individual one thing

• 26:14Speaker 00

  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

• 26:59Speaker 00

  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.

• 27:12Speaker 01

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

• 27:22Speaker 00

  Yep.

• 27:22Speaker 01

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

• 27:30Speaker 00

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

• 27:35Speaker 01

  Oh no.

• 27:36Speaker 00

  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 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, 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

• 28:18Speaker 00

  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, of our lives in general, kind of forget that like practice is, you know, you, you can't really shortcut practice. Uh, you have to put in the time.

• 28:40Speaker 01

  I'm going to 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, 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?

• 29:04Speaker 00

  It's tough, right? 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, and it bums me out that, that humans can't just, you know, get in there and, and be honest and full of integrity at all times. That said, like chess has been dealing with cheating for, for a very long time.

• 29:49Speaker 00

  Much, much longer than, than AI 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, fortunately, we also have technology to fight the cheating. And so, you know, we spend a lot of time, a lot of money, a lot of resources on anti-cheating, 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.

• 30:19Speaker 01

  About the

• 30:19Speaker 00

  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 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 to 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 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.

• 31:02Speaker 00

  And we feel very confident that we're doing a great job. Cheating, it can't be prevented because you can't, you know, you can't put a webcam in every single person's home. 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 definitely something I'm very passionate about.

• 31:20Speaker 01

  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?

• 31:34Speaker 00

  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.

• 31:53Speaker 00

  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.

• 32:13Speaker 00

  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. It's a full, you know, information game and, you know, there's no luck involved. And you just can load up 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 forever. And it has enough complexity that can just like blow your mind, but enough simplicity that you can like learn it. And so it's just kind of fits that sweet spot between complex and basic and, you know, timeless.

• 32:57Speaker 00

  And so, I don't know, it's, it's, you know, evolutionarily, it just became the, you know, the, the king of games, we can, 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 in, in a world of like increasing, exploding proliferation of everything.

• 33:17Speaker 01

  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?

• 33:35Speaker 00

  Well, we're just definitely a chess company. I'll say that. The, 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. 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. 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. So even though chess is like, you know, 99.99% of what we do, we recently launched Gambit at gambit.com, which is our poker 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?

• 34:20Speaker 00

  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 because we like the playbook of what we've done. So we're cooking up a bunch of other classic games 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, but we are, we are branching out.

• 34:55Speaker 01

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

• 34:59Speaker 00

  Yeah.

• 34:59Speaker 01

  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 wisdom do you have for folks thinking about those questions? Because you were, you know, when you did this, a lot of people told you it was, it was too small.

• 35:26Speaker 00

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

• 35:33Speaker 01

  Okay.

• 35:34Speaker 00

  You know, at the time when I was, you know, getting into, to doing this 20, 20 years ago, 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 should just relentlessly go after that more than, you know, what does the market saying?

• 36:19Speaker 00

  What are these different things? Now, 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.

• 36:43Speaker 00

  And stop listening to people just giving you advice on what to do. Just go do it.

• 36:48Speaker 01

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

• 37:01Speaker 00

  I do believe in 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, guardrails around that and rules for how it should engage with humans. 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.

• 37:44Speaker 00

  And we're not doing enough as, as humans to share what we're creating. So I, I think this is less a technology problem and more a cultural problem.

• 37:55Speaker 00

  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. 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. 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.

• 38:39Speaker 00

  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 or not.

• 38:49Speaker 00

  I don't know if we're going to get out of that, but we are, 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 this.

• 38:58Speaker 01

  I think the interest and growth of chess is actually a

• 39:05Speaker 01

  So not solution to all the world's problems, but it's incredibly optimistic to me because it is so clear that people, they want to acquire human skills, even when the machine cannot perform them. And they want to watch, they appreciate exceptional human skill, even when the machine could do much better. Right?

• 39:23Speaker 00

  Yep.

• 39:23Speaker 01

  Maybe you limit that to gaming, though I think, you know, in a world where you believe there is more capability and more abundance, I do think like people are going to spend a lot of time playing games. 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, the guardrails and distribution of the fruits of that technology still.

• 40:01Speaker 00

  Yeah.

• 40:02Speaker 01

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

• 40:10Speaker 00

  Yeah, we use AI extensively across, you know, as, as a business, as an organization, all, all across, you know, many different facets. It, it powers a bunch of our 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 human to human needs that are there. So we've seen like a great symbiosis in, in the support department. We use it for data and for analysts and they're able to ask questions and use, you know, you know, LLM technology to kind of get in and, and ask and answer really interesting things. We've built, our, our CTO Josh is, is, you

• 40:54Speaker 00

  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 with all the right permissions and things and stores it. We're, we're building our own martech technology 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 lifecycle 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. And we're just trying to shorten

• 41:34Speaker 00

  the timeline between 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. 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 roadmap. 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. And, you know, we're seeing great success with that. And that's ultimately what we're here to do.

• 42:14Speaker 01

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

• 42:19Speaker 00

  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 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. We're working on AI technology for doing, you know, as 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

• 43:00Speaker 00

  of a casual experience or an on-demand coach, you have your AI coach in your pocket. We're working on future products also right now. We're prototyping, having more of an 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. 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.

• 43:27Speaker 01

  I'm going to ask one more question. I don't know if there's a good answer, but I'm just curious because I, 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.

• 43:41Speaker 00

  Yeah.

• 43:41Speaker 01

  How do you think about like how to design a rating system for poker when so much of it is interpersonal? And also if you play poker for money, it depends on like how you think about financial risk?

• 43:56Speaker 00

  This is a great question. We're still evolving this as to how we're doing ratings in poker. 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. As to like how people play versus when there's like, you know, playing a hundred dollar game of poker versus a thousand dollar game of poker, like things change a lot. Or if you're playing for, you know, peanuts or M and M's on the table. We've all played those games where you're playing for M and M's and someone's just like all in all the time and they just rebuy more M and M's. So it, it does matter, but I think that as people get used to like, wait, I actually care about

• 44:38Speaker 00

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

• 45:15Speaker 01

  Yeah, I think it's super exciting. I am excited to start trying to work on my rating here because I think it, it will be a very equalizing thing for people who play poker to say like, huh, well, is Eric better than I am? Or does he just have more M and M's and is he a bully?

• 45:35Speaker 00

  That's a good way of putting it.

• 45:36Speaker 01

  Eric, thank you so much for doing this. Super interesting and congratulations on the business that you have passionately built. It's great to talk.

• 45:43Speaker 00

  Thank you so much for having me and for this great conversation.

• 45:49Speaker 01

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