How Chess.com Became a $150M+ ARR Business

This is a big one, folks.

This week on The 4th Quarter Podcast, we sat down with Erik Allebest, co-founder and CEO of Chess.com - the #1 chess gaming app in the world. The company has amassed over 200M members and 280M monthly visits in last December alone, all while scaling past $150M+ in ARR. In our conversation with Erik, we learned about the origin story of Chess.com, buying Magnus Carlsen’s company for $80M, and what the future of the game might look like.

Growing up in Georgia, we were both nationally ranked competitive chess players - long before Netflix’s The Queen’s Gambit made chess cool. As kids, we spent countless hours traveling across the country to play in weeklong chess tournaments. While we eventually burnt out from the competitive grind, we stayed close to the game playing Bughouse and Blitz on Chess.com for fun (think we might’ve been in the first million users on the platform).

It was awesome to learn from Erik & pick his brain. This one is a MUST watch.

We’re so pumped that chess is finally the new wave. Check out our key takeaways here:

#1 Entrepreneurship is Built on Risk, Resilience, and Rejection

  • Erik turned down lucrative offers from early-stage Facebook, Palantir, and other tech giants, trusting his gut to follow his passion for chess:

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“If entrepreneurship feels optional, don't do it—do it only if you absolutely cannot not do it."

  • Embracing rejection as “another person's lack of understanding” is crucial to entrepreneurial resilience

#2 Product-Market Fit: Listen to Your Users!

  • Initially, Chess.com was just a chess forum that didn’t even allow users to play chess. It was user feedback that shifted their focus:

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"People said, ‘You have a chess website and can't play chess?’ That was our wake-up call."

  • This pivot sparked explosive growth - today, Chess.com is now hosting over 30M games daily

#3 You Don’t Always Need Outside Money for a Successful Venture

  • Erik bootstrapped Chess.com with personal funds in the company’s early days:

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"Every VC told me it was silly."

  • By focusing early on subscriptions and building community-driven features, Chess.com grew profitably, rarely needing outside investment until later stages

  • Now, General Atlantic has been a crucial investor into the company

#4 The Future of Chess: Entertainment, Storytelling, and AI

  • Chess.com's growth has been fueled by personalities, creative formats like Blitz and Bullet games, viral bots (shoutout to Mittens!), and AI-powered personalized coaching

  • Erik teased exciting developments ahead - including AI voice coaching from chess legends like Magnus Carlsen, Hikaru Nakamura, and even a "jerk coach" mode voiced by Grandmaster Ben Finegold

#5 Choosing Your Battles

  • Erik emphasized how important it is to show clear, predictable growth, especially for companies eyeing an IPO:

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"Investors love predictability. Wild growth swings—like we had during COVID or from viral events—can be scary."

  • Chess.com strategically united the chess world through acquisitions (like Play Magnus Group), even if the short-term financial consequences were tough:

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“Financially, the acquisition was tough, but strategically it united the chess world."

Sports-Tech Market Activity: Investors & Deals

New Funds

  • Pophouse Entertainment, a Swedish-based music catalog investment company, raised €1.2B ($1.3B) for music rights investments (Mar. 31st)

    • Funds to support music catalog and IP acquisitions

    • Focusing on publishing, recording, and NIL rights with an artist-centric approach

    • Already deployed 30% into artist partnerships, including KISS, Cyndi Lauper, and Avicii among others [Music Business Worldwide]

Venture Capital

  • a16z speedrun returns for its fifth iteration, offering up to $1M per startup (Mar. 31st)

    • Verticals include gaming, streaming platforms, XR, and next-gen entertainment

    • 12-week accelerator starts July 28th in LA, ending with Demo Day on Oct. 7th

    • <1% of applicants secure a spot; over $100M deployed to 120+ startups since 2023 [VentureBeat]

  • FloSports, an OTT subscription sports broadcaster and streaming platform, raised Series D funding, surpassing $100M total raised (Apr. 1st)

  • TOGETHXR, the women’s sports media brand known for its ‘Everyone Watches Women’s Sports’ slogan, secured new round of funding (Apr. 3rd)

    • Funding new customer offerings and producing content across several mediums

    • Company achieves profitability, increasing valuation twofold since previous raise

    • Investment led by Alex Morgan’s Trybe Ventures; other investors include BBG Ventures, Ingeborg Investments, and Present Ventures among others [TOGETHXR]

  • Ultra, a next-gen gaming startup focused on blockchain-based gaming services to redefine gaming experiences, raised $12M in funding (Apr. 3rd)

    • Investment to fuel platform upgrades and talent acquisition

    • Investment led by NOIA Capital’s Digital Assets Fund [FinSMEs]

  • FC Barcelona’s BIHUB invests in ADmefy, a social network for advertising screens, to help expand smart advertising reach (Mar. 28th)

    • Enhances digital advertising efficiency, focusing on engagement and monetization

    • Becoming the 12th startup in BIHUB’s portfolio, which includes Visualfy, OLIVER, Onalabs, and CeleBreak among others [FCB]

  • English soccer star Harry Kane joins investor group backing premium ticketing and hospitality platform Seat Unique (Mar. 31st)

    • Joining investors including Ben Stokes' 4CAST fund and The Players Fund

    • Expanding partnerships across UK football including Premier League and ‘the Championship’ clubs [SportIndustryBiz]

M&A and Investments

  • Ex-Endeavor Chairman Patrick Whitesell’s new fund backs Omaha Productions in first investment, seeks investment in Diamond Baseball Holdings (Mar. 27th)

    • Fund backed by $250M from Silver Lake, taking a minority stake in Omaha

    • Funds to fuel business expansion and future investments, following recent Good Good Golf deal [SBJ]

    • DBH: Endeavor previously backed DBH, but sold to Silver Lake for $280M in 2022 due to MLBPA concerns and conflicts of interest [SBJ]

  • David Blitzer reportedly in ‘advanced talks’ for sale of MLS’ Real Salt Lake, NWLS’ Utah Royals to the Miller Family, former Utah Jazz owners (Mar. 31st)

    • Blitzer purchased RSL for $400M in 2022; Royals for $2M in 2023

    • RSL now worth up to $525M, Royals at $70M according to Sportico [SportsPro]

  • Krafton, the South Korean gaming company behind ‘PUBG: Battlegrounds’ and ‘Battlegrounds Mobile India’ (BGMI), acquired a majority stake in Nautilus Mobile for $14M (Apr. 1st)

    • Granting Krafton over 75% ownership of the ‘Real Cricket’ developer

    • Nautilus retains autonomy, with all 45 employees remaining post-acquisition

    • Krafton eyes expansion in India and global cricket-gaming markets [TechCrunch]

  • Serena Williams & Alexis Ohanian submit bid for NFL’s pro flag football league investment (Apr. 2nd)

    • Investors seeking to capitalize on the sport’s 2028 Olympic debut

    • Bid for league has drawn interest from ten companies, according to SBJ [SportsPro]

  • DAZN finalizes Australian-based pay-tv company Foxtel acquisition for A$3.4B ($2.1B) from News Corp (Apr. 2nd)

    • A$3.4B ($2.1B) acquisition, including A$706M in shareholder loan repayments

    • Foxtel to keep brand identity while benefiting from DAZN’s global reach

    • News Corp and Telstra retain minority stakes in DAZN, holding 6% and 3%, respectively [Sportcal]

  • Lore & Rodriguez ownership group advanced 100% stake acquisition of T’Wolves, Lynx ownership for $1.5B, following Glen Taylor approval (Apr. 2nd)

    • Glen Taylor finalized the sale after arbitration ruled in favor of Lore & Rodriguez

    • Michael Bloomberg’s backing enabled duo to acquire 100% instead of the initial 80%

    • NBA approval is pending, with potential front-office and arena changes ahead [SBJ]

  • PlayOn, a youth athletics streaming platform, acquires high school sports MaxPreps from CBS Sports to expand high school sports portfolio (Apr. 2nd)

    • CBS Sports originally bought MaxPreps for $43M in 2007

    • Joining PlayOn’s HS sports-focused VidSwap, GoFan, and NFHS Network brands [Sportico]

Photo Creds: a16z speedrun will host this year’s demo day in SF on October 7th, 2025. Register to attend here.

Strategic Ventures

  • Nike partners with sports lifestyle apparel brand TOGETHXR for new women’s sports collection (Mar. 28th)

    • Promoting visibility and investment in women’s sports through apparel

    • The collection includes ‘Everyone Watches Women’s Sports’ t-shirts, hoodies, and caps in Off Noir and Sail colorways [Nike]

  • Meta named 'official fan technology partner’ of UFC in multi-year global fan engagement partnership (Apr. 2nd)

    • Meta branding to appear inside the octagon and across UFC broadcasts

    • Aims to enhance global fan engagement via AI, VR, and social media integrations; Meta named ‘official AI glasses partner’; Threads ‘official social media platform’ [Sportcal]

  • Immersive Gamebox, an interactive gaming experience company, partners with Warner Bros. for AR ‘Batman at Immersive Gamebox’ experience (Apr. 1st)

    • Secured $65M in total funding to date to expand venues

    • Partnership enhances group-based gaming, merging storytelling with motion tracking without the need for headsets or controllers [VentureBeat]

  • Diamond Baseball Holdings expands multiyear partnership with digital fan engagement company FanCompass to monetize data via ticket sales (Apr. 2nd)

    • FanCompass has generated over 100K leads with half linked to ticket sales

    • The partnership enhances digital fan engagement with 24+ interactive tools [SBJ]

  • Volleyball World and media experience company Dizplai partner to enhance fan viewing experience at VW flagship events (Apr. 2nd)

    • Integrating live data, dynamic graphics, and social media engagement

    • Aims to boost VW’s viewership, sponsorship value, and digital subscriptions [Volleyball World]

  • PFL enters multi-year partnership with cryptocurrency intelligence platform Arkham for blockchain-analytics insights (Apr. 1st)

    • Arkham’s Intel Platform to provide real-time cryptocurrency, transaction tracking, and market insights

    • Arkham’s backers include Bedrock Capital, Wintermute, GSR Markets, and an OpenAI co-founder among others [PFL]

Job Board & Opportunities: Week of April 4th, 2025

Here are some cool roles we found and personally curated this week - enjoy!

1. Stripes (Consumer Growth Equity Fund) - Analyst, Research & Growth Strategy: $125K

2. Fay - Product Manager (Series B, Nutrition-Tech), 1+ Year of Experience

3. Construct Capital (Defense, Logistics, Energy) - Investment Team: 4-6+ Years of Experience

4. Spotify - Manager, Commercial Label Partnerships: 5+ Years of Experience / $132K

5. Stanford Athletics - Assistant Director of Recruiting Ops, Football: 6+ Years of Exp / $78K

6. Baller League - Sr. Partnerships Marketing Manager - Football: 5+ Years of Experience

7. Sony Music - Manager, Strategy & Initiatives: 4-6 Years of Experience / $125K

8. Pari Passu Venture Partners - Investment Team

9. Deep Blue Sports + Entertainment - Strategy Director: 12+ Years of Experience / $200K

10. The Picklr (Pickleball Real Estate Startup) - Chief Operating Officer - Franchise Ops

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