He Bought Chess.com for $56,000 at a Bankruptcy Auction

In 2005, Erik Allebest paid $56,000 at a bankruptcy auction for a domain name with almost nothing behind it. Twenty one years later, that domain is closing in on $200 million a year in revenue, and roughly 300 million people have signed up to use it.

The site is Chess.com. Allebest co-founded it with Jay, a chess club president he met in college, and built the whole thing without a cent of venture money, because every VC he pitched turned him down.

This is a story about what happens when you are forced to build slowly, on your own terms, for two decades straight.

When Allebest acquired Chess.com, there was no product to speak of, just a valuable but underused domain name. There was no user base, no infrastructure, no head start. The entire opportunity was a URL and a bet that chess players deserved a better online home.

Most founders in this space would have shipped gameplay first and worried about community later. Allebest and Jay did the opposite.

"People could play on Yahoo or ICC or FICS, and we wanted to be their online home," Allebest has said.

That early choice to build belonging before building features shaped everything that came after. Players did not just come to play a game, they came to a place.

Every venture capitalist Allebest approached called the idea unfundable or too small. Looking back, he counts that rejection as one of the best things that happened to the business.

"I feel incredibly lucky they all rejected my idea, because not having venture money shaped everything we did," Allebest says.

Without investor money to spend, Chess.com grew almost entirely through content, videos, articles, events, and creator partnerships, instead of paid acquisition. That constraint became the strategy.

The platform launched in 2006 on PHP and MySQL. By the mid 2010s, that foundation could not support where the company needed to go, so between 2016 and 2018 the team undertook a complete rewrite.

Allebest is candid about the cost: it meant shipping almost no new features for about three years. Choosing to rebuild the foundation instead of chasing short-term wins is the kind of decision that only looks obviously correct in hindsight.

Cheating detection is, in Allebest's own telling, the company's biggest ongoing operational challenge. Chess.com employs statisticians and has built sophisticated detection systems, but the underlying problem has no clean technical fix.

As Allebest puts it: "You cannot stop someone from opening their phone next to their laptop."

Scale created its own strange problems too. A chat character limit that nobody noticed at a thousand users caused server crashes once the platform reached millions. A pattern invisible in a small user base becomes a full department at ten million.

Revenue grew five times over in six months during 2020, when PogChamps, the release of The Queen's Gambit, and global lockdowns all converged at once. A second surge in 2023 pushed daily signups as high as 400,000, driven by memes, short-form video, and a cheating scandal that put the platform back in public view.

Allebest is honest that timing played a real role in both surges. The platform just happened to be ready when attention arrived.

Allebest describes his approach to the future as a monkey bar method, thinking about the next bar, not twelve bars ahead. Current priorities include making the platform more fun through better bots, building passive, natural-feeling coaching experiences, and growing chess as a spectator sport through shows designed to turn millions of watchers into a bigger audience than the players themselves.

You can follow Erik Allebest and Chess.com directly at chess.com or on LinkedIn.

If this was useful, pass it on to someone sitting on a slow-growing idea they are tempted to rush. Twenty one years is not a typo. Some of the biggest outcomes just take that long.