Exploding Kittens: Elan Lee. How cat-themed Russian Roulette changed game night forever

Transcript from https://podmenti.com/t/d07def600e157de1

Hey, just a quick message.
If you're building a business right now
Imagine getting advice from the founder of Tart Cosmetics.
Or Airbnb or Patreon.
or Raising Keynes or even Sir Richard Branson or Mark Cubin.
Some of the greatest entrepreneurs on earth, people who've actually built
billion dollar brands from nothing.
Well, you can get that advice because all of these founders and many more.
have already joined me on the how I built this advice line.
Every Thursday we drop an episode of the How I Built This Advice Line. It's where I bring back a previous founder we featured on a past episode. And together we help real entrepreneurs, people selling skin care, dog toys, pottery, food, whatever.
We help them work through the challenges they're facing right now. And the best part
This kind of advice world class battle tested?
is completely free.
All you have to do is call one eight hundred
four three three one two nine eight
Leave a message, tell us what you're building in under a minute.
And you might be the next guest on the advice line. And your question could be answered by someone who's actually built an empire. So give us a call at one eight hundred.
four three three one two nine eight or send us a voice memo.
to H I B T at ID dot wondery.
dot com
And tell us.
How we can help you.
The first thing you notice when you walk up to this vending machine is you just want to hug it. Like I took an old refrigerator box.
Like eight feet tall, and we covered the whole thing in fur and put googly eyes on the top and giant ears, and so it looks like a cat, but it also has an extra button.
And that extra button says random item, one dollar.
It could have been a burrito, it could have been a plunger, it could have been one of our games, it could have been a watermelon, like this thing could deliver more than two thousand random items, just to make people laugh.
And the crowd grew and they loved it and it was all because like
Again, all we want to do is tell stories that interact with the crowd.
And we're just gonna find new exciting ways to do that.

Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements.
They built.
I'm Guy Roz, and on the show today, how Elon Lee and his partners turned a random card game about cats.
Into a hugely successful game company.
Exploding kittens.
When I was a kid
Game night was pretty simple.
Candyland, Uno, Scrabble.
Eventually Monopoly and Trivial Pursuit. There were a handful of classic that everyone knew and everyone played. But today we are in a very different moment.
Card games and board games aren't just back.
They're actually booming.
Depending on who you ask,
The global board game market sits somewhere between$9 and$17 billion.
Sales of strategic car games like Pokemon and Magic the Gathering have surged more than 200% since 2019.
And it's all happening for a lot of different reasons.
For starters, crowdfunding opened the doors to a bunch of new creators.
Also
The designs got better and the themes got more imaginative. And finally, people just want more ways to connect without having to sit in front of a screen.
Now in the middle of all of this growth is a company that began with a very strange, very funny concept for a game.
It was called Exploding Kittens. Back in 2015, it launched on Kickstarter with a tiny goal.
to raise$10,000. But instead, the campaign blew past every expectation.
Eventually raising almost nine million dollars.
It became one of the most successful Kickstarters ever. And today, Exploding Kittens, the company, has sold around 60 million games around the world.
But the real story here isn't just the sales, it's how it all happened.
Because in tabletop gaming
Making a great game is only half the battle.
The other half is getting people to care.
And that became something of a specialty for today's guest, Ilan Lee, the co-founder of Exploding Kittens.
He treats marketing like
Elaborate storytelling.
And he treats fans like co-conspirators in the fun.
And that instinct goes way back for Elon.
Even as a kid in the suburbs of LA
He had a habit of taking things apart just to see how they worked.
Toys, gadgets, and sometimes whatever belonged to his younger siblings.
So uh it was my brother's birthday, he's two years younger than I am, and he got this amazing electronic airplane and it had buttons on it, and you push one button and it makes a takeoff noise, and one button and it's the pilot's announcement, and one button is the landing gear, and I thought it was the coolest thing ever, and he thought it was the coolest thing ever, and uh one day it disappeared.
And uh nobody knew where it went.
Uh, and everyone accused me and I denied it and denied it and said, No, no, no, I did not steal his airplane, but miraculously the next day our tree house suddenly had a doorbell that sounded a whole lot like an airplane taken off.
You just dismantled it, took the piece out that you wanted and uh
There you go.
Um, let me be clear, I destroyed everything. Like I have very little to show for my tinkering other than pissing off my parents.
So it sounds like you were a a pretty like
sort of smart kid and I mean was school easy for you like b by the time you were in middle school or in high school, like were you
Yeah, kinda.
able to just do well without a lot of effort or what?
I was never a great student, mostly because um
Class was really hard for me.
I actually graduated from high school with mostly Cs and one A plus, and the A plus was in physics.
And um it's all because I had this incredible teacher
uh whose name was Fred Carrington and he
Uh like on one of the very first days of class, he looked at me and he said
You're gonna fail this thing.
Like just a hundred percent you're not paying attention, you're no good at tests, you're not turning in your homework, you're gonna fail this thing.
But
I'm gonna make you a deal.
I think you're smart.
I think we're just trying to figure out where the smart lives. And so here's what we're gonna do.
Next year we're switching textbooks. Brand new physics book. And the problem with the new physics book is it's edition one.
And that means
there's gonna be a ton of mistakes in the thing. And they're eventually gonna re-release edition two and three and so on.
But right now we've got this book with a bunch of mistakes.
Take this book, go home.
Find a mistake and fix it.
And I'll let you pass this class.
And I thought
This is the greatest thing I've ever heard. Like I get it's it felt like a research project. It felt like there's um something broken and nobody knows the answer and I'm gonna go solvent.
And normally I hate homework.
But suddenly I was devouring this book. Every single night I would read it cover to cover. Um
learning just trying to figure out like where are the mistakes.
And uh
As a result of that.
Uh, I got an A plus in physics, even though I got straight Cs and everything else.
I mean that's a cool experience. And and so um so you eventually graduate from Rochester Institute of Technology in New York.
With a
Computer science
computer animation and psychology.
Yeah. Got it. Well, nice. All right. Yeah. So you so I guess w I guess while you were in school
You
Somehow
managed to get an internship at Industrial Light and Magic, right? The the George Lucas
Um it sounds like your
I mean
I mean that that's a very sort of specific kind of thing that somebody wants to do. It's like somebody who's a super Star Wars or
Special effects nerd really wants to.
Be part of.
Yeah, well that was me for sure.
Um I got to work on
So much cool stuff. Now
look, the intern does the stuff that nobody else wants to do. So like
I got to briefly work on Titanic. Um you know the scene at the end of Titanic where they're um on on the the the door, the famous door scene, right? The in the freezing cold water, yeah, when they're talking to each other, you can see their breath.
Um the th the thing is, um that was filmed in a sound stage. So the water's like eighty degrees, you can't see their breath. So uh guess whose job it is to like hand animate every pixel of their breath so that you can see it whenever they exhale.
Wow. Um so it was a lot of work like that. But I was thrilled, thrilled to do it.
Yeah. I mean so that that obviously would have been

great place to work, right? After after you graduated. But uh but instead I guess you got a call from from like a recruiter at Microsoft to interview you for a job there. It
Is that what happened?
Yeah, so when I took that interview, they introduced me to this secret project.
uh which at the time was called the DirectX Box, uh, named after their hardware and software platform called DirectX, and they wanted to build a gaming console around it. And they said we need really smart people to help define the future of the entertainment industry, and are you interested
And within forty eight hours I was like, Oh, this is it. This is what I absolutely have to do.
Alright, so you moved to Seattle to start working on what is gonna become the Xbox. And what was your
role. I mean, w what job were you given?
So they hired me as uh it's called a program manager.
And my job was
Uh
Basically just
Make sure that the trains stay on the rails.
And uh
Yeah, work on schedule and budget and find the right teams to produce the right products. What today is called a project like well, uh you you were a project manager, but that became a real job, you know, uh eventually.
And it seems like a and and correct me if I'm wrong.
You're probably not a great
person for that job. I mean maybe you are, like are you
I I'm just even talking to you here, like
I I I I can identify
The type and your
Not that like and not in a bad way at all. Like you you you're
I I'm similar. Like you're f you're fidgety, you're moving in your chair, like your brain doesn't work that way where you're like, Okay, here's your task, here's your task, here's your task, here's our schedule or
Or am I wrong?
No, you're you're totally right. I'm laughing.
Because that exact observation is is kinda what changed my life at Microsoft.
Um, I was introduced my boss was a guy named Jordan Weissman.
And uh meeting Jordan Weissman really
defined the next two decades of my life.
But it all started with him sitting down with me and making that exact observation. Uh
He essentially said
You're one of the worst program managers I've ever seen.
But
I think you might be a good designer, so we're gonna give that a try instead.
And he put me on the design team to develop the first six titles for the Xbox, the very first six.
And um yeah, so my job was literally running around from team to team.
Helping wherever I could. So that when this thing goes out the door, those first six titles are
Absolute triple A hits. Mm-hmm.
Um it was uh I was there for about six years and it was
Just constant.
Here's a problem, come up with a solution. Here's another one, come up with a solution.
And what was the first game that you
You were
A sort of assigned work on or you got involved with?
Uh the first one was Halo.
Um
Which
Uh I wanna be careful not to make it sound like I was the lead game designer on Halo. I was on the design team for Halo. There was hundreds of people working on that game.
But starting there.
And um, you know, that that game like defined the that game really changed the history of video games and being associated with that
Uh
We knew
right away. Like right away that this was gonna be special. And it kinda set the bar for the other five games and and what we needed them to be. And so
Uh
I was just working with this incredible rock star team.
And we all worked for years to just get those things out the door.
A and I guess one of the projects you end up working on is with Steven Spielberg.
He he he had a movie that came out called AI.
And I guess you were
assigned to kind of turn that into a video game or or or some
Some
Yeah. Jordan brought Steven Spielberg into my office and said
He's got this new movie coming out called AI.
And we're gonna do a collection of Xbox games. I think there were either four or five Xbox games that we were gonna do based on AI. So one was gonna be an adventure game where you uh get to play as certain characters in the movie, and one was gonna be a racing game, and one's one was gonna be a c a gladiatorial combat game. And so we started working on all of those and
Then
Jordan said, uh, you know what we really need is the glue.
What is the story that like holds all of these other games together?
And
I remember we went out to lunch one day.
And we were just tinkering around with what is this glue thing? What does it mean? How do we deliver the glue?
And
Uh, we were sitting at lunch and Jordan's phone rang and he looked at me and he said
What if that was the game calling us right now?
And my brain just
fell out of my ears. Like what a crazy statement.
And so we rushed back to the office and started designing a brand new thing, which was, what if we wrote this whole story? This this this thing with these characters and all these different plot points and it ties all of these stories together.
And then we broke it up into little tiny pieces, a two-minute video clip and a tech snippet, and a piece of audio, and we scatter all of those all over the internet. And it's like a scavenger hunt. You're going to search around and hunt for all of these little pieces, pull them in, reconstruct the narrative in order to experience the story.
And um we built it.
It was uh really difficult. Like this was maybe the hardest I've ever worked in my life. I was in the office.
at all hours. I eventually installed a uh a bed in my office'cause I was like I'm never going home anyway, so I might as well just make this official. And I lived there for months as we were building this thing.
And eventually we launched it.
And um
Yeah, it w two things happened. One is
Uh
We went to see a screening of the the movie The Premier of AI
And we realized
Oh man, we gotta cancel.
Every one of these games.
We can't launch the gladiatorial combat game and we can't launch the adventure game. Like it's just the wrong match.
Yeah.
Because the movie was like this gut wrenching narrative and this drama that didn't it wasn't a fighting movie and it wasn't a racing movie. And that was where we had seen it. You hadn't seen it before, or you didn't know the story before. We read the script and that was well parts of the script. And it's just the final edit was totally different than what we expected.
And
So we did two things. One is we had to cancel all those games.
But the second was we thought, let's launch the glue anyway.
Because
It is a beautiful sweeping
saga and you can experience real emotion through this thing.
And so we put it out there. And we set up all the phone lines and the websites and This was the game that was known as the Beast. The Beast. Yeah. The first time we did an inventory count on how many assets we had built, the number came out to six hundred and sixty six. And so the
Project got its name.
And and this was a video game.
That you could get on Xbox, right?
It was a video
Game ish thing that you could get by visiting a website. There was no physical launch.
Right. And this was just p it was in a sense it was like a promotional
Thing connected to the film.
That's right.
But in fact the movie really was not successful, if I remember correctly. Yeah, the movie did okay. By his standards. By Spielberg's Spielberg Yeah, but that's true. By any other director's standards this would be a a hit. But by Spielberg's standard standards, it was on the lower tier of the stuff that he had produced.
Um
So, all right, this must have just been like a crazy
Experience.
Not that long after you decide to leave.
Microsoft that you're just like wiped out. What was going on?

Um one is I was still very fascinated by this the beast and and where we could take it, but I knew that Microsoft was certainly not the right place. Like it just it it couldn't live there. It had no place there. And two is Microsoft immediately wanted us to get started.
On
uh the Xbox three sixty the second Xbox
And I was just so burnt out. I I I could not think about another console. I could not think about more game development.
And so
Uh I told Jordan that I was gonna resign.
And uh very luckily Jordan said, Hey, me too. Let's go start something together. Wow.
And and gotta keep in mind, we'd also just come off of um

Earned.
By delivering the Xbox. But a lot of
kinda next generation storytelling done through the beast.
And uh the money part seemed much less interesting to me than the next generation of storytelling. And that's what I wanted to pursue. Yeah, I mean this this will p play into what you would eventually do in your life, but that experience was about.
creating these rabbit holes for hardcore fans and for people who really were committed to like solving this mystery and and going to different websites and
And ew.
listening to recorded phone messages and all kinds of like these d just rabbit holes basically. That's that was what you were doing. You were creating rabbit holes. That's right. This was like interactive theater done on a scale of like millions of people at a time. So I would write a piece and I would put it out there and then the players, the millions of them, would
grab it and dissect it and switch it around and make hypotheses about where it was gonna go next, and that's like you know hitting the ball back onto my side of the court. Okay, now it's my turn. And I just thought, this is the coolest thing ever. I just, I want to do stuff like this.
So you leave Microsoft, but I think you actually stay on as a contractor'cause they actually ask you to stay on to help with them with Halo Two. Yeah. But in meantime you and Jordan decide to start your own
your own company. And and tell me what that company was going to be. Was gonna be uh
A st uh
like, make these kinds of campaigns that you did with the Beasts. It was gonna be a video game company,'cause it was called Forty Two Entertainment. What did you

Yo, tell me what it was gonna be.
So we really wanted to build at first the idea was let's build more of these things. They were called alternate reality games. The fans actually named it that. And we thought, All right, that's cool. And that was what the beast was, basically, that's what they called it. Yeah.
It was think of it as a game that used your life as the platform.
Okay.
So
We really wanted to build more of these. We raised a little bit of money from friends and family.
And
Almost immediately got
uh this call from Microsoft saying will you work on Halo Two?
And we said, What if we did the marketing for Halo Two?
And they said, Okay, um, well
Here's the thing about the marketing for Halo 2. We want it to be really, really, really big, like really significant. And I remember I said, Well, you don't have to worry about that. Like Halo One was the biggest thing ever. Halo 2, everyone's just gonna be totally excited about it. You have nothing to worry about. And they said, Yeah, but we want the marketing for Halo 2.
To be a cultural phenomenon.
And I thought
Oh, now we're talking. Like
If you're giving me permission and budget to build a cultural phenomenon, like sign me up.
And so uh I teamed up with
The lead writer from The Beast, a science fiction writer named Sean Stewart, and he wrote
this story that was based on um Orson Wells War of the Worlds.
So like
That's the story of Halo 2, right? It's aliens invading the earth. And what would it be like to actually tell the story of being in your apartment when that happened, or walking down the street and you see a bright light in the sky, and what happens next? And then
Just like for the beast, we cut it up into little pieces. In this case, all audio, these little two minute snippets of audio.
And we said instead of delivering these over the radio.
What if we delivered them over something new?
Rather very old, which was
Uh payphones.
Hundreds of thousands of ringing payphones.
all over the world.
You're walking down the street, you hear a payphone ring, you walk up to the payphone, you pick it up,'cause what the hell is happening there? And you hear this two minute audio clip.
And it tells you
Where to go next?
Where to hear the next piece. But also by doing that, you're unlocking it for everybody else on the website who's also trying to put those pieces together.
So
All of our payphones would ring on a certain day of the week. I think it was a Tuesday. So all the payphones are gonna ring on Tuesday.
And slowly
Millions of people reconstructed it.
And and you would just pick payphones in like major cities like LA, New York?
Yeah, exactly. Yeah. Uh we'd send out scouts of teams to actually find the payphones'cause it wouldn't be like a payphone on a rural highway in the middle of Texas. Well we we screwed that up a few times and accidentally did that, but yeah, we tried not to. Okay.
So forty two entertainment really begins as kind of a mar I mean, I n you may not like this term and I don't think it's bad, but like a marketing company. Oh yeah, for sure, campaigns, right?
And and it was a and by the way, does this still happen? Like d d do these things still happen when, you know, I don't know, Grand Theft Auto is gonna be released and stuff like
Do they
I don't I don't really I mean certainly not to the scale anymore. Um
Really, really expensive. And um every time we did another one, we had to
raise the bar, right? You have to at least do better than the last campaign you did.
And so that got really hard after a few years.
Did did w did it make money where it was
Was forty two entertainment like
doing well enough to sustain you know, to to be sustainable.
Um yes, but
Um
It's it was a service business, right? So
Hush new, yeah.
Yeah, so we would make money as long as we were working. And every night I would go to sleep.
And think.
I'm about to go to sleep for eight hours and during those eight hours I'm not making a penny.
And that started to really weigh on me after a few years. And it gets really
It starts to really get tiring to to have to think like, okay, we just did something cool and world changing and everyone's talking about it.
And I'm not making any money off of that. Like I'm struggling to pay rent because
I I just I I I got paid for that one thing.
And that's it. And now I gotta find the next thing, otherwise I'm not gonna eat.
Yeah, and I I guess uh pretty soon you uh you came to the conclusion that this just wasn't
I know you you you had thought about trying a couple other things and and and even did but but it's not a little bit more than a
You eventually
wound up.
going back to Microsoft for a while. It was like like ten years after you left. And I I guess
From what I read they
You went back to work on a
New product like it's like the latest Xbox, Xbox One was it?
Yeah, so I I agreed to uh
To take this job. Like they're throwing a lot of money at building content for this Xbox, uh, games and TV shows and a whole entertainment platform. And
I I could do that. Like I know how to
build all those parts, I've got experience in all those parts and
I don't have to worry about the revenue model. They've already got that baked in, so maybe this'll be cool.
And I went and and did that for about a year and a half.
And uh launched the thing, got the Xbox out the door, got the studio up and running, released all this content and
It was
Mostly good.
And then I had kind of an existential crisis.
I uh
I remember I went to my brother's house.
Who has uh two small kids. And I'm so excited to see my niece and nephew. And I walk in.
And
I'm like, Hey, how's everybody doing? And they
Don't even look up.
Because they're staring at the TV screen and they're playing the Xbox, and to add insult to injury, they're playing a game that I designed. And I just thought like.
Oh I am
so clearly part of the problem here.
Like something about it feels broken.
And uh within about two weeks I resigned and knew I had to go do something else.
While we come back in just a moment, Elon and his friends launch a record setting Kickstarter campaign around a box of cards that actually meows when you open it.
Stay with us, I'm Guy Raz, and you're listening to how I built this.
Hey, welcome back to How I Built This. I'm Guy Raz.
So it's around twenty fourteen.
Elon is almost forty years old.
And about to leave Microsoft for the second time in his career.
As for what's next?
He's not sure.
No.
Five.
I know it's gonna be storytelling somehow.
Got it. Okay.
And and were you living were you living in Seattle at the time or were you living in LA? Um I was living in LA and um what was I doing at the time? I was doing nothing. I like I spent a week just saying like
Don't know what I'm gonna do. I'm not gonna do anything, I'm not gonna make any plans, let me just
Let me just try to relax for a week.
And then I got an invitation from a friend of mine, uh, Matt Harding.
Who said
Uh come to Hawaii with me.
We're we're gonna set up a a group little Hawaii trip. Some of my favorite people were all I'm gonna rent an Airbnb. We're all gonna go hang out. And one of the people that Matt Harding invited was this guy, Matt Inman, who is the creator of the online comic The Oatmeal.
Okay, this is a different mat.
This is a uh this is a very popular
comic with like just weird animals and
I don't know, it was a cult comic, basically, right? Yeah. Well, very popular is an understatement. Like Matt has books on the New York Times bestseller list of his of his comics. He he w Matt's specialty.
Is he can figure out
how to take a very relatable thing, find the humor in it, and illustrate it in a single panel.
And uh people have just absolutely become obsessed with him as a result of this unique beautiful skill.
All right, so this is where where we finally are gonna get into exploding kittens because
Yes, I
Understand it. You
You brought a deck of cards with you to Hawaii.
in and what you've been tinkering with with an idea for a game that
that a friend of yours kinda suggested to you is that right? What what's the story?
Yeah.
Another friend of mine, Shane Small, had come up with this idea for an app and he said
What if we do Russian roulette with a deck of cards and it'll be an app and you like you're trying to draw cards, but don't draw the bad card and we'll I don't know, we'll we'll somehow convert this into
Uh something that you can play on your iPhone. And I said, Look, I don't understand what most of that means
But
Let's do that for real. Like to test if any of this makes any sense at all. What if we did all of that for real? And we'll take a real deck of cards and I'll just scribble on some of them with a Sharpie and we'll play this game using a real deck of cards. And so I I literally took a Sharpie and uh poker deck and I started scribbling on it. And I still have the deck over there on my shelf. And all it was
was Russian roulette. There was one bad card in the deck. Draw take turns drawing cards. Don't draw the bad card.
Every other card that you draw, maybe will help you somehow. Maybe one will let you peek at a card before you draw. Maybe one will let you force somebody else to draw instead of you. That's the whole game.
And you were playing this in Hawaii.
That's right. We were all playing this game. And Matt Inman said
Hey.
I've always wanted to make a game. I've always wanted to make an oatmeal game. And I don't know anything about game design, but this seems really fun. What do you call it?
And I said, Oh, uh it's called Bomb Squad.
At the time it was called Bomb Squad.
And uh he said, Okay, I have two questions for you. One
Can I join your team and I'll illustrate all the cards.
And two, can we change the name to anything other than Bomb Squad?
And I said, why do you want to change the name? And he said, Well, it's so obvious to be scared of a bomb. Bombs are scary and they they hurt people and it's so on the nose that like who cares? He said, What if instead the thing that you were scared of in the deck were cute, adorable, fuzzy little kittens, and we'll call the game exploding kittens instead.
Uh that was literally what he said to you, he was like that sentence. Okay, this is a guy who had like a
He had like books coming up, he had like a business.
And it's you and and the other guy was Shane.
Shane Small, yeah. Shame Small, okay. And you guys are like, Yeah, let's we wanna make a card game
J just put this in perspective for me, right? You had just come out of a
multi-billion dollar company, Microsoft, right?
already one of the biggest companies on the planet at that point.
and had a good salary and you were looking for your next thing.
And
In your mind were you thinking?
This is it. Cause I'm thinking...
If I if I knew you, I'd be like
That's cool, I totally s you know, go have fun. But it it
were you thinking like this is the thing I've been waiting for? This is the way I want to tell stories. No, not even remotely. I really thought this was gonna be a fun weekend project. I thought like I got nothing else going on. And did Matt too, like, did he think this is gonna be just a fun
thing just just to just for fun, like just to just so people could have some joy, but not
necessarily like a business.
Matt thought
it was going to be bigger than I thought it was gonna be. Like I remember we had this conversation, we we had to open a bank account to start this thing, right? And
Uh so we we go in and we meet with the banker and
She's like, okay, so you're gonna open this this this thing and how much money do you think you're gonna deposit into the account? And I said, well, we're gonna put this thing up on Kickstarter, we're gonna try to raise$10,000.
And she said, Okay, I get that.
But like
How much do you think is actually going to be deposited into this account so we can set up the right kind of account for you, we can, you know, put all the right fraud detection things in place and the whole bit. And I said
Ten thousand dollars. That seems about that's how much we'll earn off of it. And Matt immediately said
Five million dollars.
Right. So like his thinking on this thing was totally different than mine.
Um but
He also never thought it was gonna be a company. He thought it would just be a quick Kickstarter campaign. Right. Okay. So when you guys decide to form a business, he did did he initially think let's just do it under the oatmeal
brand or did you all agree let's just create something totally new?
We we all agreed to do something new. We all knew we were gonna be um all equal owners in this thing. We're just gonna start it, but again
This is just gonna be a weekend project. There's nothing here. This is just gonna be fast. We'll all earn a little bit of money based on which of the three of us you ask.
And then we're gonna move on and go get real jobs.
And and so did you even bother to talk about like, you know, uh let's figure out uh
you know, our equity splits and let's p set up a uh uh an L C and you know
Get a a a an IP lawyer.
No, we should have done all that stuff. Instead we'd said, Let's all own a third of this thing and shake hands and move forward. And that was it.
Which actually is perfectly fine.
Yeah.
It was fine. Um
Then
We
Uh then we launch the thing. I mean literally within
I would say like four weeks of that meeting.
Uh of meeting Matt. We had the thing up on Kickstarter. Okay, let's before we get there, so you've g it's a card game, you have the concept down, which is basically Russian roulette, but
What happens then when you get back after this Hawaii trip? He just goes to town on on making the creating the artwork for these cards? Yeah. So every card in the deck, there's fifty six cards. Every card in the deck is going to be a one panel comic.
My job is figure out what the hell those cards are. Like we're gonna need a whole lot of cards. Everyone has to feel special and unique. Um, my whole principle behind the thing was.
Every card in this game should invite an interaction between you and another player.
So
I really wanted this thing to feel like
you are playing against players. You're not playing against the game.
Everybody is playing against each other.
And that's just that interactive training that I had walked in the door with.
And that partnered with Matt's Arts.
Uh, over the course of just a few weeks we put this package together that was the very first version of Exploding Kittens.
And and were you I mean I I rem I mean there's there were games, like there was a whole right I mean Pictionary's been around and you know, but like there were there were games for
Definitely for adults, right?
Was this conceived as a there's cards against humanity. I don't know if that's still around. Yeah, yeah.
Were you w were you conceiving of this as an adult?
game or as a kid game or what? Yeah, we mostly thought about it as a game for Maths fans. So it was gonna be funny, it was gonna be fast, it was gonna be super easy to learn.
Right. And and so some of the cars like for example like
You could
diffuse uh uh a uh an explosion by
getting a card where you like you could rub the kitten's belly or you could um um distract the kitten with a laser pointer or give it a catnip sandwich or you know just funny quick laughs on each card.
Um, just as a side, my favorite card in the whole game is called Taco Cat.
which is half taco, half cat, and a palindrome, uh, which just makes me so very happy.
Right, okay, so Alright, so you you have the concept down and
And
You guys decide to
Do this as a Kickstarter.
Which I'll get we'll get to in a second, but um the idea was you'd raise the money and then you'd f did you did you I
identify like a contract manufacturer to make them? Like is that is that e easy to do? Are they in China? Like who did you find to help you? I found someone local. I really thought
And local LA or Local LA, yeah, yeah.
Okay.
If I contact a local
uh card manufacturer. I was like, what's the minimum order?
And he said.
Uh you have to produce a thousand decks of cards. Like that's the minimum here. I was like, Cool. Okay, fine. And I was like, How much does that cost? And he said, Oh, you know, somewhere around ten dollars. We'll just round if you include shipping and everything, ten dollars. I was like, Cool, all right. So we need$10,000.
That's our goal.
In order to hit our minimum, ten thousand dollars, we'll set our campaign for ten thousand dollars and
All the idea was at that point.
was we have a very funny deck of cards. We have Matt who's gonna do the marketing.
And we've got this guy who can print a thousand decks of cards for us. Okay, it was gonna cost you about ten grand. So you needed to raise
Ten grand.
to do this um probably a little bit more because
You wanna make some money off of this, right? Right, okay.
And um
You went to Kickstarter
because I'm assuming because it was a way to get attention, right? I mean,'cause you guys could have probably financed this with ten grand between the three of you.
Yeah. No, Kickstarter is a really good place for marketing, essentially, right? Like we need
People to show up saying, I'm excited about this thing. I told my friends about it, and now my friends have somewhere to go. So Kickstarter was a really nice place for us to just launch this thing for the very first time. And
If we found that there was no interest.
We just sort of ride off into the sunset. Like it doesn't matter. It's there's no harm, no foul.
Um
This goes up in January of twenty fifteen.
The three of you and Matt, um and I've seen it, you can still see the video, he makes a little like one and a half minute promotional video.
About this thing.
With this really
funny drawings about this game.
And Matt also announces this on his website, The Oatmeal.
That's right.
Yeah.
Okay.
What happens.
So uh we hit that ten grand in the first twenty minutes.
Nice.
It was only seven minutes after Matt posted. So we were live. We did nothing. Then Matt posted, and seven minutes later.
We hit our ten grand, which was incredible. And you were asking people for ten dollars or twenty dollars? Uh twenty uh twenty five dollars for two games. So you could buy I think it was like twenty dollars or fifteen or twenty for one game, twenty five for the bundle of two games.
And two games of the same game, just two versions? Same game, one regular version, one not safe for work version. I see, okay. Yeah. Okay.
And uh twenty minutes you hit Wow. Amazing. Okay. Incredible. Then what happens? Then what happens? Then
The mat fire hose just continues.
And uh all of his fans flooded into the site, watched the video, and within the first 24 hours, we passed the 1 million mark. That's
Ridiculous. I mean it's just ridiculous. It's it's a it's a c it's a
a car game.
That i you need ten grand to produce
A million dollars, okay? So million dollars. It's okay, okay.
Then what happens? Then
Then you shut it down, right? Then we shut it down because who needs more money than that? Uh in the next twenty four hours we hit the two million. In the next twenty four hours we hit the two million dollar mark.
Okay.
And then and then in the next 24 hours we hit the three million dollar mark.
It it's totally insane. I mean so
And this was all kind of it's now it seems like it's almost like
a vi like virality. Like everybody's like it's it's sort of half interest but half joke. Like oh this is this is a kind of a joke. Let's just add on. Let's just I'll I want to be part of this thing.
There was definitely a bunch of that going on.
But then something really interesting happened.
On day four
Uh we made only about
$200,000, which is huge. Like, that's incredible for any campaign.
But we're now accustomed to making a million dollars a day. Every day. Yeah.
And so uh on day the next day, uh we made even less, and the day after that, even less. And what we realized is that
Uh we've tapped out. Like all of the people that Matt through the oatmeal can reach, he has reached.
and they've converted as much as they're gonna convert, and that's it. There's our total.
And it was we're at the time we were at about three and a half million dollars. And uh Matt and I sat down and said, oh okay, well
Now what?
And we kinda realized we had two choices.
What option number one is just shut it down. It's just say we're done. Like
We I don't even know how we're gonna produce this many copies of the game, let alone what might happen at the end of thirty days.
Uh so let's just say we're done. No more promotion, no more talking about this thing. And the other option
was this little voice in the s in the back of my head saying
Yeah.
What about storytelling?
And
I said look
What if
we change the way the Kickstarter works. What if instead of a regular page, what if we convert our entire page into a game that tells stories?
And Matt said, What the hell does that mean? And I said, Well look
Normally.
A Kickstarter campaign has these things called stretch goals.
Right. Yeah. We're trying to raise ten thousand dollars. But if we raise twenty thousand, everybody gets a fancy carrying case. And if we raise fifty thousand, you get uh uh more cards added to the game. Whatever. They borrowed that from from public radio, by the way. Oh, did they stretch goals, yeah. It is such a good idea.
We're trying to reach our stretch goal here. Yeah, keep going. That's perfect.
So you you're like, okay.
'Cause you had thirty days, right? You the campaign was gonna be live for thirty days. Yeah. That was thirty days. Okay, yeah. And you could have shut it down'cause you way exceeded your goal. You're in three million now. Yeah. But now you're saying let's
create these stretch goals that will
Incentivise more people to join.
Yeah, except uh a new twist on them.
So
Instead of saying stret's tie our stretch goals to money, which is what everybody was doing. Right.
What if we have those same stretch goals, right? We'll still add cards to the game, we'll still do the fancy carrying case the whole bit, but
What if instead we tie our stretch goals?
to storytelling.
And we're gonna create these things called achievements. And the achievements were insane things. It was like
Look, there's this character in the game called Taco Cat.
Show us a hundred pictures of a real taco cat.
And if you do, we're gonna upgrade the game for free.
And
People went out and they took photographs, they dressed up their cats as tacos and they took pictures and they sent them to us. And
Then we said, Okay, cool. Um, how about
I don't know, ten Batmans in a hot tub. Show us that.
And they went out and they got Batman costumes and they got in a hot tub and they took pictures and they sent those to us. And we converted our entire Kickstarter page into a shrine.
For these achievements. We just put the spotlight right back on the audience and said, look how incredible you are. And like when you think of crowdfunding,
Everyone thinks about the funding part of that word, right? Yeah. And they focus on it. And we made the opposite decision. We're like, what if we ignore funding entirely? We don't need to worry about money again. Let's worry about the crowd part of that.
And we're never gonna ask you for more money.
But you you have this uh going on for
Thirty days.
Yeah and after thirty days
You raise how much?
It was
Just shy of nine million dollars at the end of it.
And
And
I think to this day it's
one of the largest Kickstarter campaigns, or not in terms of overall money, but in terms of overall number of people who who contributed. Yeah, we're ten years later and it is still holds the record for the most number of backers of any campaign. How many people
I was two hundred and nineteen thousand backers.
That's crazy.
It's crazy.
It makes crazy.
All right, so you you guys all of a sudden have almost nine million or just under or over nine million dollars.
And
Uh now, how by the way, how many
Packs of cards did that.
Did you have to make?
So two hundred and nineteen thousand backers made
means that because most people wanted more than one deck.
Uh we had to produce seven hundred thousand decks of cards for our very first print run.
Okay, and
Now you can upgrade them and so
One of the things was that and when you'd open the pack of cards it would meow, like when you open like a greeting card and it plays happy birthday. Yeah.
So you had to embed like a
chip in there to meow when you open it up. Yeah, we had to embed a chip and a speaker and a light sensor so that it could detect when the lid was actually opened.
Um, we thought, oh, this will be fun. This'll be cute and easy.
And uh I think we ended up spending an extra million dollars just to produce that chip. It was um a very expensive cute little toy. So how did you get, I mean, you were gonna have this guy make you a thousand.
Decks.
W you have to make seven hundred thousand now, so what it
Yeah.
We get like tell me what happened.
Yeah, I called him up and I I explained uh what we needed. We needed seven hundred thousand copies and he just started screaming, like just
Absolute chaos.
Um
I later learned that that would be higher capacity than the
Entirety.
of the number of decks of cards he's printed in the ten years he had been in business. So
Uh he was just out. He was just like I I don't know how to help you.
Um
Then we called up a casual friend.
at uh Cards Against Humanity. And they do really at the especially at the time, they did just so many decks. And I said, look, here's our problem, here's what we gotta do. I don't I I have no experience in this thing.
And they were really nice. They said look
You're going to uh call our distributor, you're gonna call our manufacturer, you're gonna call our agents, and we're gonna we're gonna make sure we hold your hand through this whole process because we've printed even more than that in a year.
Uh so we got you.
And it was incredible. Like they took such good care of us and
We promised
Th our backers having no idea how many decks we're gonna have to produce, we promised them that we would deliver this thing in seven months.
And uh so the campaign launched in January, we promised it would ship in July, and because of Cards Against Humanity and their help, uh, we shipped every single copy.
Uh by July thirtieth of that year. Wow. So they helped connect you to a manufacturer.
Yeah, I'm presumably in China.
Yes, exactly. And they were able to fed the meow in those cards. Invent
Produce
And then embed the Meow Chip.
And now this is where
The story typically ends for most Kickstarter campaigns. Now they're not all. We've done Uni Pizzas on this show, Uni Pizza Evenstarters Kickstarter.
But even successful
Kickstarters.
They raise all this money, there's a lot of hype, they send the thing out, and then that's it. It's done.
Yeah. Um but I have to imagine that you're thinking, Wow, maybe we are on to something here.
So once you send them all out.
I imagine you're thinking, all right, let's get these into
you know, game stores and and and turn this into a product. Like what what was the
I mean'cause you you guys are all
Informally made this agreement to start a company. And now you've got a company sitting on eight billion dollars.
Yeah. This is not this is non equity funding.
Yeah. It this was um
This was insane. Like what a crazy way to start a company. We had no investors.
Uh we had
uh the largest Kickstarter in history at the time.
And
Uh yeah, we're just off to the races. So we
Um contacted
A bunch of retailers.
uh the targets and the Walmarts and the Amazons of the world and said like, look, we've got this thing.
We think more people want it than just the people who backed it. Are you interested?
And luckily
Uh most of them said yes.
And so we just continued working with that first manufacturer to just produce as many games as possible. And the first year, like after Kickstarter, the first year we pulled in about 20 million in sales.
Uh just moving through retail.
And and the retail was target.
And Walmart and like where where we'll sell. Yeah. And Amazon. Yeah. And and just putting it on the shelves.
Yeah, exactly right. And the game had enough hype
Because of the Kickstarter that we didn't
Have to do
too much marketing. We had to do
Uh some pretty creative things uh at conventions to get uh more word of mouth going, but uh we could coast both on Kickstarter and then a whole bunch of like guerrilla marketing tactics to get through that first year. But the the idea was let's go to gaming conventions because that's where you're gonna
Find buyers.
I mean given that you came from this background of like storytelling and just wild kind of
Ways of of
getting people engaged, you had to come up with some ideas to do the same thing at these conventions. Yeah, yeah. So what we what we finally figured out for conventions is we have to compete
With these guys who are spending millions of dollars on their booths. And we don't have millions of dollars to spend because we've spent all our money producing the games. And who are the big players? It's like the Hasbro, Hasbro's Mattel, Spinmaster, the the the giant ones. Yeah. Yep. And so
what we tried to do like I started thinking about all right, what is your interaction
At a convention.
It's mostly
Just like interacting with a vending machine, right? You go up, you put in money, you push a button, you get your thing, and you walk away. And I thought, like, okay, if all this is is a vending machine, what if we built
the coolest vending machine anybody's ever seen.
And that's kinda what we did. We like I took an old refrigerator box.
it like eight feet tall and we covered the whole thing in fur and put googly eyes on the top and giant ears and so it looks like a cat. And the first thing you notice when you walk up to this vending machine is you just want to hug it. I mean it's just so beautiful and lovely and it's this eight foot tall smiling cat.
And it's got all the things that a vending machine needs. It's got buttons to push and pick your game and it's got a big screen to tell you what's going on. And it's got uh a little a little slot where you can put in your credit card or cash.
But it also has an extra button.
And that extra button says random item, one dollar.
And if you push that button and you put in your dollar.
When I say random item will come out of this machine, I mean a truly random item came out the bottom of this thing. It could have been
a burrito, it could have been a plunger, it could have been one of our games, it could have been a watermelon. Like this thing could deliver more than two thousand random items through this vending machine just to make people laugh.
And at this point
Like you should be scratching your head a little bit because like how is that possible? How can you build a vending machine that does that?
And the answer is like we didn't build a vending machine. We built a vending machine costume.
And eight hours a day our little team would sit inside this horribly cramped space.
pushing watermelons and cantaloupes and hot burritos out the front of this vending machine uh to this crowd. And the crowd grew and they loved it and they wanted to see what would happen next. And our little vending machine started to have a 10 minute line and then a twenty minute line. And then eventually
like an hour long line that was blocking all those multi-million dollar uh booths. And it was all because like
Again, all we want to do is tell stories that interact with the crowd. And we're just gonna find new exciting ways to do that.
So
w I mean you remember this, right? Which was at the time there was all and this is normal, there's this is the way the world is. There were
like bloggers and other people who criticized you guys for doing it through Kickstarter.
initially'cause they were like, Hey
they're just using that as a m as a as a way to drive pre orders and and and they could actually
afford to do do this on their own and Kickstarters for people, you know, who are really like DIY, but I guess
Your response that was
Yep, exactly. That's why we did it that way.
Yeah.
I'm I mean that's the best use I can think of for Kickstarter is like
Go to Kickstarter to build a community. It's not there to raise funds.
has the side effect of raising funds, but you're really raising a community, and that's the place to do it.
Do you think that you were able to can c sort of keep this going
Because of the nature of the game or the nature of your fans
versus like the brilliance of your your marketing campaigns because
Again, so I mean the odds are still stacked against you, even after you raise a lot on Kickstarter. Like there's tons of Kickstarter, successful Kickstarters that are no longer in business. Yeah. I think
What I've figured out about our company is that
Everything we do has to have two components.
Component one is we need to have a really good game.
because I need you to buy something, take it home, have a shared experience with your family, and then everybody spreads out.
And says, Oh, I want to have that experience, I'm gonna go buy buy my own copy. And the game, the quality of the game has to facilitate that. But the second part,
is none of that matters unless we know how to sell those games.
Which is where all the marketing comes in, which is where the vending machine comes in, which is where all these, you know, wacky idea after wacky idea comes in, because we have to be able to say
This is the thing you want to bring to your next gathering. This is the thing that when you give it as a gift at a birthday party, everyone's gonna say, Oh my God, I've really w I've wanted this thing for years. Like Yeah, right. Because uh in year two, as you say, I mean, well the the first full year or the second year of twenty sixteen
You still I mean you're doing twenty million in sales, at least. Some something like that. So Yeah, yeah. Every year it like for the first few years, uh honestly, for the first like ten years, exploding kittens was very consistent at hitting. So it's twenty million every year is driving the business and you had it was like a recurring revenue stream, basically.
Yeah.
And an incredible place to be.
And and I I should we should just
sort of add that
The this is a very efficient
the thing to sell, right? Because I can't imagine it's that expensive.
I mean, first of all, you didn't have to pay an artist or license there because he's a co owner.
Right.
And
m making and printing the cards and getting them shipped in the container
How much does that cost per deck?
Yeah, it's to to make cards, put'em in a
Put'em in a box.
This comes out to like between one and two dollars based on the product, right? And we're selling it for twenty. So that's a really good business.
But
You as a person who has built products, you know like so much more has to be spent to market that thing.
Yes. And um I think that's every time I say that statistic, like, yeah, we're building things for a dollar and selling them for twenty, everyone has that reaction until you realize like, this is a complicated business. And there are so many parts that require
Cash infusions constantly.
uh in order to stay above the competition, in order to stay relevant, in order to make sure that next year you do as well as the previous year. It's
expensive in all the ways that you don't normally write down on paper.
Alright, so you get this
out into the world and you are
You've got a real business, but
Again, like
At that point, you know.
I'm thinking
Well
You know, what's the lifespan of this thing, right? Like
Because
Building a generational product.
Is
very, very hard, especially in games, right? You've got settlers of Catan and
And Connect Four and Pictionary and Trivial Pursuit. I don't even know if that's a still played. I have no idea. This is dating me. But you know, checkers, chess, right? I mean there are there are certain games that just endure
But
I mean out of the millions and millions of games out there, just a tiny number.
Stick.
Was any part of you thinking even with the
great success of year one and year two, like, okay, this is just gonna peter out eventually. We gotta think about
The next thing or how to keep this going or or or or or what?
Yeah, uh I mean really the the very next year.
It was well let's assume this th this whole thing is gonna fail.
And all sales are gonna stop before
Got to get another game out the door.
And
Uh we got to work almost immediately trying to do our second game, which was called Bears versus Babies. R remind me, what was the premise of that game? The premise there was Matt um once again, we went back to Matt and Matt uh wanted to make
body parts. He's like, I'm gonna make a one card with a head and one card with a torso and one with legs and one with arms, and we'll do a whole deck of like a hundred of those. And you mix and match these characters to make incredible creatures.
uh the do battle against this oncoming horde of raging infants who are trying to destroy the monsters all the time. And so we called the monsters all the bears and against the babies, and that was the premise of the game. And it was lovely. I mean it was just such beautiful art.
And uh we raise uh
Uh we raised like five million dollars on Kickstarter for that kill. We did another Kickstarter. Another Kickstarter and raised a ton of money.
But
We put it out in retail and within a year.
Sails just fell off a cliff.
Like
It was really
Eye opening for us to see like
This isn't
magic. It's not like anything you put out there is going to be as big as exploding kittens.
Because we were staring at one evergreen product, exploding kittens, and our second one after just twelve months.
Completely disappeared. What why? What did you I mean, you must have sort of sat back and said, Well why this one and not that one? Did you ever
I don't have a great answer, but I do know that like
When I go to game nights with my friends
I'm bringing exploding kittens and I'm not bringing bears versus babies. It's a little too complicated. It's a little bit harder to explain to people the rules. It takes a little bit longer.
And I think it's just all those little, little, little, little just added up to uh probably not.
quite worthwhile.
Alright, so the next game you come up with
You've got crabs.
Yeah.
Yeah. This was uh Matt's uh Matt named You've Got Crabs and he wanted to launch it on Valentine's Day.
And this one only survived about eight months in retail.
Uh before it completely disappeared.
And you know, a lot of that was just it was the wrong game. Like it was probably of the three that we had released to date, it was probably the weakest.
On the game design front.
Um the game involves a lot of people sitting in silence, right? It's it's you're you're sending secret messages to your teammate, hoping that they notice the message.
And nobody else at the table does.
And so that's things like you're scratching your nose, you're tugging on your ear, or you're creating all these secret um signals, which sound really good on paper, but then
Uh, when you're sitting around the table and everyone's just sitting there in silence, tugging on their ears, like it's everyone knows something's going on. Yeah. Yeah. Yeah.
And nobody's laughing and nobody's cheering and there's yeah, it just it really fell flat.
So I'm what I'm curious is you've got
two years of pretty good sales with exploding kittens, but not not growing necessarily all that much, but but staying
pretty constant, but you're investing money in these new games which are losing
Money.
I mean, were you guys just like we we we gotta figure this out because we cannot survive on exploding kittens alone.
Yeah. Yeah, we really couldn't.
That was just I mean, that was the thing that was keeping me up at night. That was the th I was stopped eating. It was just awful. Awful, awful, awful.
And and you know that title was looming over us of like one hit wonder.
What if that's the only good thing you ever do?
Well we come back in just a moment.
how the business bounces back with a new game that blends dodgeball with burritos.
Stay with us, I'm Guy Raz, and you're listening to how I built this.
Hey, welcome back to how I built this. I'm Guy Raz. So it's around twenty eighteen.
And Elon and his team have created one hit card game and two confirmed flops. And so they're casting about for another good idea.
And then
A guy showed up.
Name Brian Spence.
And Brian Spence is a game inventor, and he showed up with a game called Flaming Mangos.
And Flaming Mangoes was
Half card game, half dodgeball.
Uh
He was like, look, I've got this idea. You're gonna play cards. Everyone's gonna move cards around the table as fast as you can. You're trying to collect sets of cards. Every time you collect a set of cards you earn a point.
But
Every time you get hit by these burritos, which everyone is throwing around the table constantly, you lose a point. So you gotta do these two things at once, and it's really fun and really funny.
And I looked at this game and I thought
This feels exactly
Like when I approach Matt with exploding kittens.
And so
I took that and I sat down with Matt and I said, Here's a really good game.
I think I'm gonna make a few little tiny tweaks to it to make it an even better game.
But it's called flaming mangoes and that's not gonna work. What should it be called instead?
And Matt, because he is Matt and brilliant, said
This game is going to be called Throw Throw Burrito.
And we're going to it's basically a food fight. We're going to be f throwing burritos at each other. And here's how we're gonna market this thing. We're gonna put a box
That says
the world's first dodgeball card game, and there's gonna be a big window in the box where you can see the squishy burritos and a giant arrow pointing at them that says, just you throw these.
Every single line that I just said.
Is brilliant.
Like it was so smart. And when we put that thing together and put that in retail, this beautiful box with these two squishy burritos, even though it says it's a card game.
And you throw these
All of a sudden.
beautifully we had another hit on our hands.
But why would somebody say, Oh, that's the game that I want and not the previous ones? Like what it what was it about
Were you able to tell the story better? Like why would people p pick that off the shelf?
So
It really stands out on a shelf. Like it's got this little nice sense of mystery and storytelling right on the box. Like you told me this was a card game, but what the hell is this dodgeball thing? Why are these burritos here? And you take that game home. That's just enough to get enough people to take it home. And then they go and they play it with their friends and
Every one of their friends leaves that party thinking
I gotta buy this game.
And that thing, I think its first year it sold five hundred thousand copies. A normal game, its first year will sell thirty thousand copies. Like this was just off the charts for a game.
And every year since then it's grown.
Because it keeps spreading.
And how did you but how did you market it? I mean just so
Yeah. So once again, okay, so this is a little confusing. Once again, we did a Kickstarter.
But
This one raised even less. This one raised only like three million dollars. Again, huge success. Oh my goodness, amazing, right? But
This is a bad trend, right? We started at nine million and then to five and now we're at three.
But
This game
Uh once it hit retail.
It jumped.
Absolutely to the top of the charts.
And it has stayed there. It has stayed on the top ten list ever since it launched.
Alright, so you
Put this game out and it is and finally now. Not finally, but
Now let's say finally. Yeah, we were finished for a lot of years. You got three years in now or four years in, you got a hit.
And now
You're feeling like okay, we've got some momentum here.
Yeah, now people are starting to take us seriously. Now retailers are saying, Okay
w what else you got? Like pitch us more games. We're really interested to see what else you've got. And now uh investors start knocking on our door.
You got Peter Chernen coming in.
For example.
Yeah, yeah. So Peter Chernen of the Chernan group uh showed up at our studio and basically said, We really believe what you're doing what you're doing. We love the community you've built, and can we invest?
And um we turn down most investors because
Like
You know, it just it never really felt like the right match. And and we were so proud of ourselves for saying, like, we have no investors, we've done this completely through crowdfunding.
But when uh the Ternin group showed up
It was just instant chemistry. Like these are really good guys. But what was he
What does he think you're you guys could be? I mean you're selling games.
I mean these guys invested in barstool and
You know, uh things like that. Wha what was his pitch to you guys for
What you can do.
Yeah, so Peter Ternan showed up with one of his partners, Jesse Jacobs, and their pitch was so good.
Um they basically said, look.
You have built this thing from a very small company of three people to a very medium sized company. I think at the time we had like forty people. And you've got two huge hits on your hand, and we're sure that more are coming, but
Realistically speaking, this is probably as big as you're ever gonna get.
you'll have another hit or two, but you're gonna stay right at this point. The next stage for you is
the TV show and the movie and the theme park and all of these huge gigantic expansions.
And
We are the best in the world at building those things.
Basically become an IP brand a couple of years. Exactly.
And uh I looked at Matt and Matt looked at me and were just like
Yeah, that's a really strong pitch. And so it took
A few months of negotiation, but we finally uh took
an investment from them. They invested uh forty million in the company.
And uh immediately they got to work.
at helping us expand, figuring out like all right, how do we build a TV show and how do we build a movie and what are all the other things we need to start working on immediately to grow this thing.
I mean the whole idea initially
started out because you were
feeling like ooh or in part like you you were
Responsible partially in a small way for
kids being addicted to screens, video games. Yeah. Now, um, here you are twenty nineteen, twenty twenty, and
That's gonna be part of what you're gonna have to think about doing.
I know, there's no way around that. Um, it really came back to haunt me and
You know, we started very quickly working on uh the Netflix show, which is now out, but
When it was
In development, I had this exact dilemma, just like thinking about this over and over again. And and we started building an app and I had the same dilemma just over and over again. And the deal I kinda made with myself was
Uh.
As long as the core of this company is
Always.
board games, tabletop games, things that inspire face to face interaction.
I am okay exploring expansions in these other realms that feel like they are serving uh
Additional exposure.
to the source of joy.
through face to face interaction. And you know, maybe that's a little bit of me trying to justify it to myself, but it it it felt at least like, okay, I can at least sleep at night again.
So with the Churin groups sort of
infusion of cash was there and they were saying, look
You know, it's it's video, it's IP, it it's it's moo it's video, movies.
uh producs um
you know, theme parks. Like what what I mean, okay, you get the Netflix thing happens.
W I mean those are big ambitions. What did you guys I can't imagine that you were g able to do all of those things, but what did you
start to build out beyond
Card games.
Yeah, we started to at first it was just design. At first it was
Okay.
If we want to do jigsaw puzzles.
What what art do we need? What team members do we need? A lot of it was just building
a roadmap for the next five to ten years for the company.
And then we started hiring people to implement little tiny parts of those.
Um, and that got us through most of twenty nineteen.
And then
Uh everything changed in twenty twenty, of course, with Covid. With Covid. And that probably
was an un unexpected boom.
For your business. Yeah. Suddenly.
there was the most dramatic increase in game demand that I have
ever seen.
And it was families, m mainly, all families, right? Everyone's at home. Uh
Your options are
Uh put everyone on a screen or do something together.
And we saw a ninety percent
increase in revenue that year.
Just in twenty twenty.
Wow.
We could not print games fast enough.
anything we tried to bring new production facilities online would immediately sell out and we'd have to find new ones.
It became very expensive to ship things because all the container ships were taken. Um, it was just impossible to get spots. Uh a lot of our plants shut down.
uh because of Covid. Anytime there was an outbreak, suddenly uh we can't use that plant anymore. Uh our distribution warehouses would shut down because of Covid. So it was it was
Absolutely like for a full two years it was just playing whack-amole.
Every day some new catastrophe would come up and we'd have to find a solution for it. Luckily
All of our competitors were having the same problem. And so really our guiding mantra was was just like whatever it takes to be the only game on the store shelves. Everyone else is gonna fail at this.
What was the I mean, was there still in the back of your mind, there still may be now, right?
Like, were there moments where you're like, w
just this is you know, we're luck we're we're just on a l a lucky streak here, but at some point
something's gonna topple it or people are gonna move on or I don't know, or or or or now are you at the point where you're like
Nope, this is like
connect for or like
Uno, like it is an enduring game.
Um
I live in constant fear that this whole thing is going to topple. Like I don't think there's been a day that's gone by where I've thought, oh well, I don't need to worry about that anymore.
Um
Exploding kitten sales go up and down.
All of these things
are constantly competing with all of the other shining shiny things in the universe, and I never know what is going to endure. So
It's it's my only solace is
I think we're really good at making games, so we will continue to make a whole bunch of games every year.
And hopefully every year enough of them will go viral and become evergreen hits that I can worry a little bit less.
Approaching zero worry, but never quite arriving at zero.
Yeah.
So
I know you got another investor that came aboard in twenty twenty one, a French publisher, um, that that made a an an investment.
Um and I think they took a majority stake in the company, right? They did, yeah. So they're called Asmodee and they
purchased fifty five percent of exploding kittens.
And what is that I mean, was that in in your
from your point of view a chance to expand into Europe or
Or what? Yeah. Um I realized that
Uh
We
Well one.
Mm-hmm.
Really never.
taken anything out of the company. So one was And Shane left early right Shane left in uh Shane actually left in twenty fifteen, the very first year.
Yeah. Okay.
Um
But Matt and I uh really

Everything we make, we pour right back into the company.
And so
Uh, this was the first time where someone came along and said look
We can help you expand.
uh internationally. The reason that things like Throw Throw Burrito are in twenty nine different languages is because of our partnership with Asmoday. So when this opportunity came up, we thought this could be win-win for everybody.
And uh that was the first time
We
uh sold enough of the company that we no longer have the majority.
And so what w one of the
I I guess things that that sort of has emerged over the last few years and and I
Imagine it's in part'cause you
Start a family.
Right. Now you've got you've got one child you've got two kids?
Uh have two kids, yeah.
Um, is when you have kids, oftentimes, as many people know
It opens up a whole world that you just didn't know about. Right. You just start to see things and learn about things in a different way.
And I guess part of I have to imagine,'cause you you've gone into sort of the pre K world,'cause many of your games are
easy for a six and seven year old to understand. Sure. Yeah. But um I guess you were like, hey, there's a chance to get
To get in with like
Three, four, five year olds. Yeah. When my daughter turned four.
I was so excited because I thought, Oh, well, first I'm gonna play Exploding Kittens with her and all of our other games, and I realized that like she's just too young for them. Like really the sweet spot for Exploding Kittens is like six, seven, eight.
Yeah.
Um, so I thought, Okay, no problem. Let's go to the store, we're gonna buy
all the games for pre-K, all the games for like Ages three and up. And we did that. And I took him home and we played all these games and I had the worst time ever. Like it was just these games are so bad and they're so mundane. And if I want her to win I have to let her win or if we're playing
Oh God, if we're playing Candyland, like neither of us have any facility in this game. It's just
It it was horrible and I hated it. And I like Candyland. There's candy. Oh no, Candyland's delicious. Okay, fine. Delicious. I'll give you delicious. I will not give you good game though.
Um
But
Afterwards, she looked at me and she said, You know, Daddy, let's play again. And I thought, I don't want to. Like I hate this. And
Um, and she asked me why, and I said, Well, it's just not fun. I'm not having any fun at all. Let's go do something else instead.
And she said well
Let's fix it.
Yeah.
Love that phrase so much. Like I couldn't believe my my adorable four year old was telling me, like, let's
Build something.
And
So for the next few months, we got out the construction paper and the markers and the crayons, and I would design games and she would scribble all over cards and we would test things out, and we designed like 12 games together. And eight of them were terrible, like totally unplayable.
Four of them though were like good enough that I wanted to develop them more. And so I worked with more designers and we brought them into the studio and um we developed those four games and all four of them got bought at retail.
And
It is one of the most beautiful experiences I've ever had in my life. Like I get to walk down the aisles of Target holding my daughter's hand, and she can point at her signature on every single one of those boxes. And it's just, ah, it's just the greatest feeling in the world.
And now I mean
I know you're a privately owned company, so we can't independently verify it, but I mean
You know.
What is your w like w I mean, are you guys
In terms of sales, are you o over
Seventy, eighty, a hundred million a year.
Uh, we're over a hundred at this point.
Um
I you're right, I can't say the exact number, but we have we've now published more than a hundred games.
Wow.
The first one, even exploding kittens, continues to pull in just huge amounts of money every year. It just it continues to to be on the in that top ten list every single year.
And you you've got uh uh cards and games and collect collectibles.
But I imagine that that
probably eighty percent of your revenue, maybe more, still is from the games.
Oh yeah. I would say ninety percent. Yeah. Yeah.
And where's the biggest sales channel? Is it Amazon? Is it is it brick and mortar stores? Is it your is it direct to consumer from your website?
Um, brick and mortar is still about sixty percent of our business. Wow.
Yeah.
It's And that's everything from Target and Walmart to small, like all of them. Yeah. Game stores. Yeah. Yeah, you'd think online would be the the line share, but it's not.
Um, and how do you think about making new games? I mean, you've got a team I think you've got about seventy people on your team roughly now. Yeah.
Yeah, that's right.
And so how do you guys decide what to pursue? Like I'm sure you've got you have to have a lot of ideas in order to
to like decide to
Land on one and pursue it.
Yeah.
We have these design retreats and we do them, you know, let's say two to four times a year. And the whole team, uh sorry, the whole design team, which is like five or six people. We
Rent an Airbnb, we all go to this house, we spend three or four days just tinkering with ideas. And we've got a a table full of raw materials, like weird toys and inflatables and and and just anything we can get our hands on to just tinker and just play and say, Well, what if this and what if that?
But on the last day.
The marketing team.
comes to the house.
And we have to pitch them.
And teach them how to play all twenty of those games.
And the reason that we're doing that is because they have ultimate veto power over
Anything.
So we could think it's the best game in the world, but if the marketing team cannot figure out how they're going to sell that thing, that game dies that moment.
So yeah, I mean it's um it's interesting because what you what you're you've come from, you came from such a digital world, and you really made your mark in a very analogue world.
Right. Like and
And it's awesome. I mean it it just it it sort of
It sort of uh you know underscores this idea, and I I hear this so much more now.
Every time I meet entrepreneurs or
When I'm at an event, it's people are
looking for in person experiences they're looking to connect. There's a there's a crisis. I mean this is I'm not saying anything people don't know. There's a crisis of community in

You know.
just social media's kinda create these disaggregated
you know, environments where where people are just living in their in their phones and their digital devices and
This
It seems like you you kind of have an opportunity to have been.
riding this wave of people wanting something more.
Yeah, when we passed like the forty person mark.
Matt and I realized we need a a mantra for the company. Like we need a a tagline for the whole company. Something that unifies everything we do. And the thing we came up with was
We don't make entertaining games.
We make games that make the people you're playing with entertaining.
Like I think that speaks perfectly to what you're describing is let's connect. Let's sit around a table and let's laugh and let's eat food together and let's let's exchange ideas and let's play this silly game or kick each other under the table to cheat or whatever it is. Like to be able to facilitate that and say, all of the stuff we make.
is just to help you get away from your screens and enjoy each other. It's just, I I feel so lucky. I I can't believe I get to work on this. I can't believe this is the thing I get paid to do.
So when you think about
how that happened and and how it turned into this.
From a very digital world that you were really immersed in your entire career to a
Very analog.
You know, world.
Which I love. Um
It it I mean it's kind of it's t it's kind of unlikely, right? Like it's sort of unlikely how it just happened this way. But I wonder how much you
you attribute to the work you put in and how much you think just had to do with
But
Luck, the luck of of of meeting these people at the right time, the game that
The fact that it was it just resonated.
Um
Can I tell you a story?
Please.
Because I listened to your show and I
I still I struggle.
So
When I f moved back to Los Angeles
Um, one of the things I like to do is take the bus to work. So I'm riding on the bus
Uh every day and one day I go to get on the bus. I've got my dollar seventy five and I walk onto the bus and the bus driver puts his hand over the little money machine. So I can't put my money inside.
And I said,
What are you doing? He said, Well, the money machine's broken.
I said, Well
What do I do?
And he said, Well
You know what, just get on the bus. It's fine. Just get on
Pay me back next time. I was like, Okay, cool.
Great.
How lucky. I sit down.
And another guy gets on and he's got his money in his hand and the bus driver p again puts his hand over the thing and says, The money isn't working, I can't take money.
And the guy freaks out.
And he just starts screaming and he's like
I can't believe this keeps happening to me. I'm gonna be late for my meeting now. Everything's always against me, and he storms off the bus.
And I watched this happen and I thought like
Oh
What a bad day he's had. What terrible luck this guy's had. And he was one question away.
From having a really good day.
Which is like what do I do? Or can you help? Or please just help me.
And instead he gave up and he stormed off and he had a miserable day.
And so like
I don't exactly know what luck is.
But I do know
The
Every time I'm confronted with a problem.
And it has the opportunity to go really, really wrong.
Giving up is always the wrong answer.
And that's like
All I've figured out about this whole luck question is like
Yeah.
Good luck comes from not giving up. Not all the time.
But it is certainly the most important ingredient I've ever found.
Bet Elon Lee, co founder.
Of exploding kittens.
So I I I have a I have a slightly different take on Candyland. I think Candyland lost it when they changed the the what's the the M magic mustache king? Like they changed the look of it. I th I think Land in the eighties was amazing. Like I used to just look at the gum drops and I just wanted to eat the board.
Guy, you might be the first person in history to defend Candyland.
I mean but the candy on a board.
Worst game in history.
Well.
A computer could play the exact same game.
As you
at Candyland. And so why are we bothering with this thing other than yes the candy looks delicious.
Yeah, fair enough.
Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, sign up for my newsletter at guyros.com or on Substack.
This episode was produced by Sam Paulson with music composed by Rampina Rablui. It was edited by Neva Grant with research help from Nor Gill. Our engineers were Maggie Luthar and Quasey Lee.
Our production staff also includes Andrea Bruce, Alex Chung, Casey Herman, JC Howard, Catherine Seifer, Chris Massini, Carrie Thomson, Ramel Wood, and Elaine Coates.
I'm Guy Raz, and you've been listening to How I Built This, and don't stop the podcast just yet.
Пиказ райна
you're about to hear an amazing small business story that you
don't want to miss.
This segment is presented by American Express, with a business platinum membership, the best just got even better.
So today we're revisiting Stemple Creek Ranch in Tamales, California. Back in 2021, we had him on the show to talk to us about how they were adapting to the pandemic. But before we get an update, let's go back 128 years ago when a young man came to the United States with a dream.
My great grandfather immigrated from Garzano, Italy in 1897.
with the sole purpose of producing food for the Bay Area. So it's pretty amazing back then. How would you even know about
the Bay Area when you lived in Garzano, Italy in eighteen ninety seven.

This is Lauren Poncha. Lauren grew up in Tamales, California, on the cattle ranch that his great grandfather started.
For a while he thought about going into the family business, but he saw how hard it was for his parents to make a living, so instead
He got a corporate job. I was selling veterinary pharmaceuticals all over the country.
And while I was doing that, I could not stop thinking about the ranch and how I could figure out a way to come back and kind of reinvent it.
Sometime around his 30th birthday, Lauren realized he'd always regret it if he didn't try. So he and his wife Lisa asked his parents if they could buy their cattle and lease their land. And his parents said, great. So Lauren and Lisa got to work rebuilding the ranch the way they thought it should be run.
I wanted to mimic or replicate Mother Nature and have larger herds of animals that would move throughout the landscape. And that was a big mindset change because nobody else was doing that in our area.
They also flipped the business model on its head.
The way I grew up is we would sell all of our calves on one day of the year and that's what we got paid. And we didn't know what that number was going to be until the end of the day. So instead,
Lauren decided to sell his beef directly to customers, and that way he could set the price himself. We put up a five-page website and within five days we started getting orders from people we'd never met before.
Within just three years, they hit a million dollars in sales, but Lauren was still working his day job as well, which kept him on the road, sometimes six days a week.
I'd fly home, I'd do farmers market.
I do the cattle work.
And then I'd fly out again and I had a wife at home and a newborn child and I was like, man, something is gonna give.
So finally, he quit his company job and went all in on the ranch.
And it's paid off.
Stepple Creek is thriving.
Today, they harvest about 2,000 cattle a year, and they've built a bunch of other income streams as well.
We do farm to table dinner.
And there's a wedding venue and three little farm stays.
People would come visit us for the weekend and they're just like, whoa, this is 55 miles from the Golden Gate Bridge. This is unbelievable.
They've also been expanding. The original ranch was 269 acres, but today Stemple Creek has over 8,000 acres, and they're not slowing down.
As long as we can keep honesty, transparency, quality, and keep those three things going, then we'll keep growing.
It's not about money, this is about making people feel good and making nutrient dense food and authenticity.
That's Lauren Poncha of Stemple Creek Ranch. His story was presented by American Express. To build a business like no other, you need a card like no other. There's nothing
like business platinum.