I’ve always been a decent chess player, but recently I’ve started playing a lot more. Like, a lot more. I am happily addicted to the beautiful game once again.
I learned to play when I was really young and have always enjoyed chess despite the fact that I haven’t improved all that much in the past 30 years. Before there was ubiquitous internet, my uncle and I used to play chess by mail. I had a little paper board and we’d mail our chess moves back and forth with little notes.
Then I got an electronic chess board and soon after that I played chess on my Gameboy. Eventually my mom bought a PC for our house and I played chess on that. Then the internet showed up when I was in middle school and I remember playing online chess on Yahoo, amazed that I could be randomly paired up with someone halfway around the world to play a live chess game.
This was the first time I became familiar with chess scoring and I think I peaked in the low 1600s when I was really into playing chess in high school. I joined the chess club and played games during lunch. I remember there was a group of boys who would hang around the classroom where we played and sneer at us. My friends and I dubbed them the “Chess Club Bullies.” We didn’t mind them at all, noting how absurd their focus on us was.
Around this time my uncle introduced me to Chess.com, and I’ve been playing there ever since. I thought I’d get more into it in college at UC Berkeley, but I fell into other interests. My chess playing at Berkeley was primarily with my friend Howard Chong, who was perfectly matched with me. We played some great games. But the most memorable experience I had playing chess at Cal was with Walter.
I never found out what Walter’s deal was. Anybody at Cal in the early 2000s would remember him. He was a funny, friendly Black man with a beret who kept a chess board on display where Telegraph t-bones into Bancroft at one of the major entrances to the Cal campus, just steps from the famous Sather Gate. Walter played speed chess and talked jive. Games cost a dollar and he always won. I still remember his voice.
“Awww here come the pusher man!” he’d exclaim as I sent my pawns down the board.
“You know what they say ‘bout pressure? They say it bust a steel pipe,” he’d tease as he attacked my knights and bishops, plopping his pieces down hard on the board.
“If you not careful Imma take yo bitch,” he’d say whenever he attacked my queen.
We always played with a clock, and as he got to know me he’d set the timer so he had three minutes and I had five, giving me a generous two minute advantage. I’d still often lose on time. And since Walter and his chess board were between my classes and my house, I lost a lot of dollar bills. I gained those memories though, and an appreciation for this style of chess that players call “blitz.” It’s all I’m playing these days: five minutes per side blitz.
When I need to take a quick break from work, instead of going to social media or YouTube, I’ll play a blitz game. Then it’s back to my day job, entrepreneurship, which is a much longer type of game, but there are a lot of similarities.
If you haven’t inferred from the title, I’m going to point out a few of them here.
There are three main strategies that any guide to chess will describe. First, you should try to control the center of the board. The most commonly played chess openings are all variations on this strategy. The four squares in the center of the board are the most important and if you play your pieces up the side of the board, you will probably lose the game.
Second, you need to develop all of your pieces. Your opponent will have an advantage if you leave a knight or bishop in its initial position behind the row of pawns. That piece might as well be off the board. Players who develop all of their pieces early in the game have the best chance of winning.
Finally, the other goal is to protect your king. If you’re unfamiliar with chess, the goal of the game is to “checkmate” your opponent’s king, which means to attack the king and prevent his escape. You’re given one opportunity to “castle” during the game, which allows you to move the king from the center of the board to the side and swing a rook around to protect him. It’s the only chance you have to move two pieces in a single turn. So under most circumstances, your third goal basically is to castle.
As I look at this, and since I’ve recently fallen back in love with the game just as I’m hitting my tenth year in entrepreneurship, I see some loud and clear parallels. Chess parallels real life in many ways, but the startup game is a great analogy. Check this out.
Chess rule #1: Control the center
(Startup rule #1: Be the first mover)
I’ve written about this before. The faster you can get to market, establish your brand, get customer feedback, and cement yourself in position, the better your chances of surviving the rest of the game.
Google rewards seniority and it takes time for customers to familiarize themselves with a new brand. Controlling the center of the board means your brand becomes synonymous with the market (i.e. the brand has become a verb, like “to Uber”, or a noun, like “a Kleenex”).
Incumbent positions are very hard to move. There are examples where it has happened (Facebook taking over MySpace and Friendster, Google taking over Yahoo and AltaVista) but those are cases where, to use my next chess analogy, the upstarts developed their pieces faster and essentially castled with a superior product. The other guys didn’t see the threat, so they didn’t castle and didn’t develop all of their pieces.
Chess rule #2: Develop your pieces
(Startup rule #2: Develop multiple channels)
The single most important thing I’ve learned as entrepreneur recently is the importance of developing multiple channels of customer acquisition. The best way to remain competitive in a dynamic market is to have SEO, PPC, sales, and customer referrals all working simultaneously for your business. If the PPC industry changes, it’s okay, you don’t need it. If Google changes its algorithm again and your organic traffic drops, it’s okay, you’re not depending on it. You have multiple products, multiple approaches to your customers. You’re resilient.
Building a chess attack is the same way. If you see a vulnerability in your opponent’s pawn structure, don’t just put your queen right in front of it. Point your bishop at it, get a knight or two close by. Start pushing pawns in that direction. The combined impact will be greater than the sum of its parts. Even if you don’t know exactly how these pieces will work in unison, it doesn’t matter. Their presence will change the dynamic of the game.
Your business funnel works the same way. Reach out to customers via sales reps and cold email marketing. Make them see you on social media using pay-per-click (PPC) ads. When they search for a solution like yours, make them see you in the search results. Be relentless in this strategy and you will see results.
Chess rule #3: Castle early
(Startup rule #3: Build a moat)
If you try to sell all or part of your business (selling a part = fundraising) then you will inevitably be asked how “defensible” your business is. A defensible business is one that is difficult to replicate. It’s the billion active users that Facebook has. It’s the billions of dollars that Google invested in perfecting its search algorithm. It’s the secret formula that makes Coke. It’s the Nike swoosh and their athlete endorsements.
Moats come a lot of different forms, but the common thread is that they are difficult, if not impossible, to replicate. The moat makes your core product impenetrable. No one else can have the Nike swoosh logo. No one else can have Tiger Woods and Michael Jordan endorsements. For Facebook it’s users, for Google it’s algorithms. These are trade secrets, company assets, specific R&D that an upstart will need to climb mountains to overcome.
The castle in chess is similar. It’s a unique opportunity to protect your most valuable asset: the king. It’s what makes your opponent have to work harder, smarter, and be more clever to gain the upper hand. If you don’t castle, your king remains in the center of the board. He’s protected by a line of pawns, but he’s vulnerable. Leave him exposed at your peril. Your opponent will thank you. The best chess players will castle except in the rare circumstances where an attack is so timely that it cannot afford the loss of tempo to protect the king. These games are highly unusual and result from an opponent failing to adhere to the previous two rules.
Beyond these three chess rules and their startup analogies, which mostly apply to openings, I have a few more general parallels that are most analogous to middle and end games in both chess and entrepreneurship.
Chess strategy: Study openings
(Startup strategy: Use a playbook)
Chess openings and marketing playbooks are very similar. They prescribe a set of moves that are designed and tested to maximize the likelihood of a win. There are countless variations of chess openings (go ahead and search YouTube for Kings Pawn, Queen’s Pawn, Queen’s Gambit, Sicilian Defense). Likewise, there are many variations of startup launch and funnel optimization playbooks.
Startup playbooks will contain things like tools to use, analytics to track, pages to create, and experiments to run. They usually start with a single landing page and go through the development of multiple channels (see the second rule above) and suggestions about when to make hires and fundraise. Playbooks are just like chess openings: they suggest a route forward and give you variations to try, depending on how your opponent (or the market) reacts.
Even if you don’t follow a playbook to its letter, they’re still good study, because your competitors will likely use the same techniques. I don’t see a downside to being prepared and understanding the cultural zeitgeist. You may dismiss the playbooks, but it’s better to make that decision consciously.
Chess strategy: Wait for mistakes
(Startup strategy: Look for market openings)
At my current chess level (a bit above average), my opponents still make mistakes. Chess.com actually does a great job of analyzing games that I’ve completed and coaching me through my own mistakes. It scores my every move! This is one of the reasons why I’m so addicted.
Some games I’ve played have been simply to avoid making a mistake like dropping a piece or leaving a vulnerable pawn. Playing a tough defense can force my opponents to make brash moves, leaving open an opportunity to fork a valuable piece. If I’m patient, I can capitalize on my opponent’s mistakes.
The same can be said for startups, except it’s usually not a single competitor that opens a line of attack. Sometimes it’s an entire market or industry that moves its aggregate demand towards your product. In the span of just a few months, like a flock of sheep, customers can suddenly start knocking down your door, asking for demos and pricing sheets. Sometimes this takes years. You have to be patient.
The most successful businesses in the world sometimes just have to wait for their time to come. Salesforce in its movement away from box software and onto online “software-as-a-service” business modeling comes to mind. Amazon started selling books before all of America realized it wanted to have the world’s largest retailer offer free two-day shipping. The business world swung toward Salesforce. The consumer market swung toward Netflix and Amazon. It happened over many years.
Chess strategy: Balance attacks and defense
(Startup strategy: Don’t over-invest in sales or engineering)
Building out a sales team is an offensive strategy. Building out product is a defensive one. The best companies are able to do both, but most companies don’t have the resources or time to do that effectively.
Chess is the same way. If you go all-in on offense, you inevitably leave your king vulnerable to attack. If you go all-in on defense, you fail to develop your pieces and in the long-run are likely to succumb to your opponent’s offensive attack. In chess, as in startups, a balanced approach is best.
The common tendency in tech startups is to over-invest in product and under-invest in marketing. Usually this happens because the founding team is rarely made up of marketers; rather, the founders tend to be engineers. Engineers typically don’t enjoy sales and marketing, so those bits get less focus early on. There’s a sense that the product should market and sell itself. While this is true in some lightning-in-a-bottle cases, it’s not true most of the time. Even a brilliant product needs help to see daylight, and in today’s saturated business environment, that’s a difficult feat.
The perspective I’ve gained recently as a general manager at a private equity firm shows that many companies stall in their growth, despite raising millions of dollars in venture financing. If all that money is spent on product development, when the investors pull back and ask for profitability, the company is suddenly extremely vulnerable. In those cases, they sell for far less than what they raised.
When private equity firms purchase these companies, they take the opposite approach: invest much more into sales and marketing than product and engineering. Even though we all feel the magnetic pull of boosting our engineering budget, we’re intentionally constrained. Hiring an engineer requires extensive justification from my board; hiring a marketer basically gets rubber stamped. The thinking is basically, “If over-investing in engineering got the company into this position, why would be continue doing the same thing?”
I say, like a good chess player, you should balance offense and defense. Make offensive moves (sales and marketing) when there’s an opening to capture pieces. Make defensive moves (product and engineering) when the marketing needs aren’t so clear.
Chess strategy: Watch the clock
(Startup strategy: Don’t agonize over decisions)
This is how Walter was so good and why I gave him so much of my lunch money. He moved fast.
These days, I continue to lose and win a lot of games on the clock. If I take too long to make moves early on, I’m likely to lose on time later in the game. On the other hand, if I can see that my opponent is taking a long time on each move, it gives me confidence. I know he’s going to feel the pressure and I can play my game differently and take fewer risks because the clock becomes my weapon.
Similarly, I’ve been in many business situations where I’ve watched my colleagues agonize over decisions. Sometimes we’d make a decision and re-litigate it a week later. It was demoralizing; it felt like we could never move forward because decisions were never final.
In business, as in chess, you need to have a strategy (for example, to balance marketing and product investments) and stick to it long enough to gather data and then adjust the approach. There’s no benefit to circuitously rehashing old ideas. Pick a tact and go for it. If it turns out to be the wrong approach, then adjust.
Adjustments happen in chess all the time. You may assume your opponent has a sequence of moves in mind and set your strategy accordingly, only to discover that he had a completely line of attack. With this new info, your original idea was flawed, so you change it. If you spend too much time thinking through every possible outcome you’ll lose. The clock will run out.
In business, the clock is cash. Whether you move left, right, or straight, the cash clock keeps running. Use that time to learn something.
Make a move.
2 thoughts on “How chess and entrepreneurship are the same”
You lost me at “decent”. 🙂
Lovely piece of writing Mr Ryan.! I’m a chess player looking to go into entrepreneurship and your work here has just given me some courage. Thank you.!