Sam and Shaan revisit chess.com after a previous episode and go deeper on the “New Zealand business” model — simple, cult-following, no real competition. They explore sudoku.com and Easy Brain (acquired for $640M), poker.com (wasted potential), and crosswoodpuzzle.com (a mystery holdout who won’t sell and last updated in 2007).
Speakers: Sam Parr (host), Shaan Puri (host)
Revisiting Chess.com — We Underestimated It [00:00:00]
Shaan: So the background is we talked about chess.com last episode. I tweeted about it because even more people loved that tweet — it had tons of engagement. And the summary is: we actually underestimated it. Chess.com gets around 200 million monthly uniques, they have 60 million registered users, traffic has grown significantly, and if I had to guess, they do at least $100 million in recurring subscription revenue. Potentially worth a billion dollars. Super fascinating company.
Sam: Go ahead, what were you going to say?
Shaan: We were trying to hype it and we were actually under-hyping it even while trying to hype it. And by the way, the guy who started it — he’s an ex-Stanford guy, or the guy who owns it — it’s two Stanford guys, I think, which is cool. They didn’t go the same track as probably 95% of their classmates, and they’re going to outperform 99% of them just by doing something really simple that the world wanted.
The “New Zealand Business” Model [00:02:00]
Shaan: So I started thinking about this because you brought it up — cool topic, cool bit, really cool business. It really fits what we call the New Zealand type of business, the phrase Andrew Wilkinson kind of coined. It’s this independent thing, it has a cult following, it’s profitable, it’s simple, 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 an open-source, free alternative, and it’s also doing extremely well. Those are like the two. But it seems like people prefer chess.com.
So I started thinking: what’s the next chess.com? What are the others? Is there a whole slew of these guys? I think that’s what we didn’t talk about last time that we should have. I wanted to double-click on that.
Sam: That’s a really, really hard question. I’ve been thinking about it too. I only came up with dominoes. I looked into solitaire websites — a lot of them crush. But yeah, that’s a hard question.
Finding the Next Chess.com [00:04:30]
Shaan: So I spent 10-15 minutes on it, but that was enough to tell me something very interesting.
The first one that came to mind — here’s the characteristics 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 there’s not as much depth to it, therefore not as much passion around the sport.
Sudoku was the second one that came to mind. So I went to sudoku.com, and sudoku.com is just like chess.com. You go to sudoku.com and there’s already a sudoku board waiting for you with a clock going. 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 you scroll down a little bit and you see an advertisement for a mobile sudoku app. So I click that and I’m thinking: I bet this app crushes.
Easy Brain: The Sudoku Empire [00:07:00]
Shaan: The app crushes. The company behind it is called Easy Brain. The sudoku app they have has 50 million downloads on just Google Play — forget about iPhone, that’s just Android. Probably 100 million total lifetime downloads. The website itself gets 10 to 20 million visitors a month.
So they’re getting basically free traffic to their mobile apps where they’re able to monetize. Easy Brain basically makes these simple number game apps. They’ve had over 750 million downloads lifetime across all their games — starting with sudoku, then a remix of sudoku, then another number game — and they just cross-promote them within each other.
I bet this company is crushing it. They’re based in Europe.
Sam: I have information on them. I found some interesting stuff when I Googled them. There was something amazing that immediately stuck out. Just from a quick Google: they’re based in Cyprus. Any time a company is based in Cyprus, it’s like… and it turns out these guys are actually from Belarus, from that area, but they’re based in Cyprus.
So I just Googled it real quick — did you know they were acquired three months ago?
Shaan: No, I did not know that.
Guessing Easy Brain’s Numbers [00:10:00]
Sam: Okay, that’s not the piece I have. I have their revenues, their profit, all their user numbers. Can I guess? I’m going to be totally wrong, but I like to guess. By the way, a little tip: always guess before you hear any number. That’s how you get good at knowing numbers. You guess, and when you’re wrong, your brain remembers it, and you start to hone that gut instinct.
Shaan: Okay, here’s my guess.
Sam: How much is their revenue?
Shaan: I’m going to guess their revenue is $400 million a year.
Sam: What’s their profit?
Shaan: $90 million a year.
Sam: Alright. How much were they acquired for?
Shaan: I’m going to guess $852 million.
Sam: And how many daily active users do they have across their 15 games?
Shaan: I’m going to say 25 million DAU.
Sam: Okay, you didn’t do horrible. Easy Brain was acquired last February. They were acquired for $640 million in stock and up to $120 million of additional consideration if they hit their targets.
Shaan: So $640… that isn’t exactly $850?
Sam: What’s 640 plus 120? That’s $760M. You guessed $852. Great job, you’re almost there. Their revenue in 2020 was $210 million — you were off by half, you guessed $400 million. But their profit was $70 million, you guessed $90. Pretty close. They’ve had 750 million installs lifetime across all their games. They have 15 live games with 12 million daily active users — you guessed 25 million. Not bad, not bad. What a company.
Domain Strategy: Owning the Top-Level Game Domains [00:14:30]
Shaan: So that was the first one I thought of. And by the way, I think there are other versions of that too. Go look at sudokuonline.com — I don’t know what’s on there. All the things people are going to Google search, if you can get the top-level domain for those, that’s really interesting.
Poker.com: Wasted Potential [00:15:30]
Shaan: So then I started looking at others. Poker.com.
Sam: What does it look like when you go there?
Shaan: Let me look at this. It’s not even a game you can play. It’s just reviews. It’s like an affiliate site — here’s a place to play poker, here’s where you can go — because they get big kickbacks for sending a player to PokerStars or wherever when they deposit.
This is a horrible website. Crappy affiliate and reviews site. Dude, you could do so much more with this. If somebody had a good mobile poker app, I would pay ungodly amounts of money for poker.com. And look at their traffic — it’s nothing. They should be getting a lot more traffic with poker.com.
Crossword Puzzle Domains: A Mystery Holdout [00:17:30]
Shaan: Okay, so then there’s crosswordpuzzle.com, crossword.com. I went to one of them — it doesn’t even render, there are asterisks on the screen.
Sam: Yeah, what’s going on there?
Shaan: Because crossword is the other game that’s like sudoku, like chess — people play it religiously, they love it. We talked about how much the New York Times makes off their mini crossword game. The number was $90 million in subscription revenue from crossword puzzles. So I am surprised that crosswordpuzzle.com, crossword.com — I can’t believe these sites are not being leveraged.
Sam: So you go to crosswordpuzzle.com and it says, “Please email suggestions to dkw99999@yahoo.com.” And at the very bottom: “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.”
Shaan: Right.
Sam: So I emailed the guy. 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 leverage this? What do you want this to be? Why do you believe it should be done this way? I’m just super curious about your thought process.
Shaan: We’ll see if he replies.