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

Summary

How I Built This: Exploding Kittens - Elan Lee

Episode Date: December 22, 2025
Host: Guy Raz
Guest: Elan Lee, Co-founder of Exploding Kittens

---

Episode Overview

This episode of "How I Built This" features Elan Lee, co-founder of Exploding Kittens, a wildly successful cat-themed card game that redefined modern game nights. Host Guy Raz dives deep into Elan’s backstory—from a rebellious tinker, to a designer at Xbox, to pioneering interactive entertainment, and finally to co-founding one of the most viral tabletop games ever. The conversation unpacks the art of storytelling, the challenges of scaling a creative business, and how luck, tenacity, and community fueled the rise of Exploding Kittens.

---

Main Themes and Purpose

• The evolution of creativity and storytelling in games
• How Exploding Kittens went from a “weekend project” to a multimillion-dollar company
• The role of community in launching and sustaining a product
• Adapting to setbacks, failures, and changing markets
• Bridging the digital and analog worlds through play

---

Key Discussion Points & Insights

1. Elan Lee's Early Curiosity and Divergent Path

• Childhood marked by curiosity, “breaking everything” to understand how it works.
• Fails at conventional academia except for physics, thanks to a supportive teacher who recognized his learning style.
  • “He looked at me and he said, ‘You’re going to fail this thing… But I’m going to make you a deal…I think you’re smart. I think we’re just trying to figure out where the smart lives.’” — Elan Lee (09:05)

2. The Leap to Game Design: From ILM to Microsoft

[11:10] Lands an internship at Industrial Light & Magic (ILM):

• Works on high-profile visual effects, including the Titanic breath animation.

• Moves to Microsoft, joins the original Xbox team as a project manager, but excels more at creative problem-solving than management.

  • “You’re one of the worst program managers I’ve ever seen, but I think you might be a good designer.”
    — Elan’s boss, Jordan Weisman (13:43)

• Plays a supporting design role in launching iconic games like Halo.

3. Inventing Alternate Reality Games (ARGs)

[15:57] Pioneers ARGs with “The Beast” for Spielberg’s A.I.:

• Scatters narrative clues across the internet for fans to discover.

• Learns about interactive, communal storytelling at massive scale.

  • “This was like interactive theater done on a scale of millions…” (21:24)

• Leaves Microsoft, co-founds 42 Entertainment to create more ARG-focused marketing for major brands and games (e.g., Halo 2).

4. From Burnout Back to Creativity

[27:11] Returns briefly to Microsoft (Xbox One launch), but an existential crisis strikes:

• Sees his young nieces/nephews playing games he designed and recognizes his role in promoting screen addiction.
  • “I am so clearly part of the problem here…something about it feels broken.” (27:27)
• Quits again, committing to find a way to foster in-person, communal experiences.

5. The Birth of Exploding Kittens: A Game, a Comic, a Story

[33:28] Meets Matt Inman (The Oatmeal) and Shane Small in Hawaii:

• Originates as a Russian roulette-style card game scribbled on a regular deck.

• Matt suggests: “What if instead, the thing you were scared of in the deck were cute, adorable, fuzzy little kittens and we'll call the game Exploding Kittens?” (36:36)

• Initial expectations are low—just a fun side project.

  • “…I really thought this was gonna be a fun weekend project… Matt thought it was going to be bigger than I thought it was gonna be…” (37:57/38:16)

6. Kickstarting a Movement

[43:52] The original Kickstarter has a modest $10,000 goal:

• Hits $10,000 in 7 minutes; $1 million in 24 hours; $9 million by campaign's end.
• Breaks Kickstarter records for number of backers (219,000).
  • “We hit that 10 grand in the first 20 minutes…within the first 24 hours, we pass the $1 million mark.” (44:39/45:21)
• Kickstarter campaign features “achievements” that turn backers into active co-creators (e.g., send photos of “taco cats” or “10 Batmans in a hot tub”).
• Stresses community over just funding:
  • “What if we ignore funding entirely? Let's worry about the crowd part of that.” (49:48)

7. Scaling, Manufacturing, and the Power of Community

• Facing scale challenges; original printer can’t produce 700,000 decks.
• Gets advice and assistance from Cards Against Humanity team.
• Fulfills all orders on schedule, proving capability and reliability.

8. Sustaining Success (and Surviving Flops)

• Exploding Kittens becomes a best-seller in retail, staying at ~$20 million per year for a decade.
• Next games (“Bears vs Babies,” “You’ve Got Crabs”) fail to stick.
  • “When I go to game nights with my friends, I'm bringing Exploding Kittens, and I'm not bringing Bears vs Babies… It's a little too complicated.” (64:54)
• The fear of being a “one-hit wonder” drives the company to keep innovating.

9. Reinvention with “Throw Throw Burrito”

[69:45] Discovers a new game concept (Flaming Mangoes → Throw Throw Burrito):

• Half card game, half dodgeball, features throwable foam burritos.
• Packaging drives curiosity and social play—leads to another bestseller (500,000 copies in year one).
  • “A normal game in its first year will sell 30,000 copies. This was just off the charts…” (72:19)

10. Accepting Investment and Expanding IP

• Chernin Group invests $40 million, offering help to expand into media (TV, movies, merchandise).
  • “At this point, the next stage for you is the TV show and the movie and the theme park…and we are the best in the world at building those things.” (74:10)

11. The COVID-19 Boom

[77:37] Pandemic creates huge demand for in-home games:

• 90% revenue increase in 2020; supply-chain struggles met head-on.

12. International Growth, New Demographics, and Pre-K Pivot

• Asmodée’s acquisition (55% stake) helps expand globally, especially in language localization.
• Elan, inspired by fatherhood, develops games with his 4-year-old daughter for the pre-K market:
  • “Let’s fix it.” — Elan’s daughter’s encouragement (83:08)

13. Scale and Strategy

• Company now exceeds $100 million annual revenue, with over 100 games.
• 60% of sales are through brick-and-mortar retailers.
• The marketing team has “final veto” on any new games, ensuring the ability to sell is as critical as gameplay.

---

Notable Quotes & Memorable Moments

• On the real “magic” of Exploding Kittens:
  “Everything we do has to have two components: one, we need to have a really good game…and two, none of that matters unless we know how to sell those games.” — Elan Lee (59:46)
• On company philosophy:
  “We don’t make entertaining games. We make games that make the people you’re playing with entertaining.” — Elan Lee (87:55)
• On luck vs. perseverance:
  “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...good luck comes from not giving up.” — Elan Lee (90:14)
• On the accidental viral sensation:
  “Now you shut it down, right? Then we shut it down. Because who needs more money than that?” — Guy Raz (45:50, joking about $3M in a few days on Kickstarter)
• On parenting, creativity, and game design:
  “Let’s fix it.” — Elan’s four-year-old daughter, inspiring their pre-K game line (83:08)

---

Essential Timestamps

04:20 – The fur-covered cat vending machine: creativity at conventions
08:55 – Supportive high school teacher changes Elan’s trajectory
11:10 – First steps in Hollywood, then on to Microsoft/Xbox
13:43 – Recognition that Elan is a designer, not a project manager
15:57 – “The Beast” alternate reality game for Spielberg’s AI
21:24 – Creation of “interactive theater” for millions
33:28 – Meeting Matt Inman, sparking Exploding Kittens
36:36 – Birth of the name “Exploding Kittens”
43:52 – Launch and rocket-like success of the Kickstarter
49:48 – Refocusing the campaign on “the crowd” rather than funding
59:46 – The dual core of success: great games and great marketing
69:45 – Reinventing success with “Throw Throw Burrito”
77:37 – COVID-19’s massive boost to board game sales
83:08 – Elan’s daughter inspires pre-K game line
87:55 – Company’s ethos: making the people you play with entertaining
90:14 – Elan’s “luck” story and the power of not giving up

---

Episode Flow and Tone

• Conversational, frequently self-deprecating and humorous (both Elan and Guy), sprinkled with insightful asides.
• Full of practical entrepreneur wisdom—failures, pivots, humility, and “bootstrapped” problem solving.
• Candid reflections on personal struggles, existential doubts, and the tension between digital and analog experiences.
• Celebratory of creative risk and the joy of making people laugh and connect.
• Ends on the resounding message that “luck” is not the absence of hardship, but the refusal to give up in the face of it.

---

Summary

This episode is a rich tapestry of stories spanning tech, gaming, art, and business. It captures how Exploding Kittens became so much more than a game: it is a masterclass in storytelling, community-building, and the business of fun. Elan Lee’s journey—from digital pioneer to analog game kingpin—shows that curiosity, resilience, and improvisational joy can lead to enduring success, provided you never stop asking, “What if we did it differently?” Above all, Exploding Kittens stands as a testament to the human need for connection and play.

---

Listen to this episode for a deep dive into creativity, grit, and the playful side of entrepreneurship.

Transcript

[Guy Raz]

Wondery subscribers can listen to How I Built this early and ad free right now. Join Wondery in the Wondery app or on Apple Podcasts. Listening on Audible helps your imagination soar. Whether you listen to stories, motivation, expert advice, any genre you love, you can be inspired to imagine new worlds, new possibilities, new ways of thinking. Audible has an incredible selection with over 1 million audiobooks, podcasts and Audible originals all all in one easy app. Find the genres you love and discover new ones. Explore best sellers, new releases, plus thousands of included audiobooks, podcasts and originals that members can listen to all they want with more added all the time. Enjoy Audible anytime while doing other things household chores, exercising on the road, commuting, you name it. Audible makes it easy to be inspired and entertained as part of your everyday routine without needing to set aside extra time. There's more to imagine when you listen. Sign up for a free 30 day Audible trial and your first audiobook is free. Visit audible.combilt I've stayed in awesome homes on Airbnb, in places like Athens and Berlin and Rome. And each time these places have given our family a chance to feel like locals. It's the best way to travel. Picture this. You're spending a cozy evening out of town in a home you booked on Airbnb. Space is thoughtfully designed and you think, I bet I could host my own home on Airbnb. Your home might be worth more than you think. Find out how [e-mail] host if you run a small business, you know there's nothing small about it. Every day there's a new decision to make, and even the smallest decisions feel massive. When all of these decisions feel daunting, it helps to have the right platform with all all of the tools you need to be successful. Shopify Shopify's Point of Sale System is a unified command center for your retail business. It brings together in store and online operations across up to 1000 locations. Get all the big stuff for your small business right with Shopify. Sign up for your $1 per month trial and start selling today at shopify.com built go to shopify.com bilt shopify.com build hey, just a quick message. If you're building a business right now, imagine getting advice from the founder of Tarte Cosmetics or Airbnb or Patreon or Raising Cane's or even Sir Richard Branson or Mark Cuban. 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 skincare, dog toys, pottery, food, whatever. We help them work through the challenges they're facing right now. And the best part they this kind of advice, world class battle tested is completely free. All you have to do is call 1-800-433-1298, 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 1-800-433-1298 or send us a voice memo to Hibt d.wondery.com and tell us how we can help you.

[Elan Lee]

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 8ft tall and 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 $1. 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 2,000 random items just to make people laugh. And the crowd grew and they loved it. And it was all because, again, all we want to do is tell stories that interact with the crow. And we're just gonna find new exciting ways to do that.

[Guy Raz]

Welcome to How I Built this, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on the show today, how Elon Lee and his partners turned a random card game about cats into a hugely successful game, Exploding Kittens. When I was a kid, game night was pretty simple. Candy Land, Uno, Scrabble, eventually Monopoly, and Trivial Pursuit. There were a handful of classics 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 card 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 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 $9 million. It became one of the most successful kickst 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, Elan 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.

[Elan Lee]

So 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. 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 one day it disappeared and nobody knew where it went. 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 treehouse suddenly had a doorbell that sounded a whole lot like an airplane taking off.

[Guy Raz]

You just dismantled it, took the piece out that you wanted, and there you go.

[Elan Lee]

Let me be clear. I destroyed everything. Like, I have very little to show for my tinkering other than pissing off my parents.

[Guy Raz]

So it sounds like you were a pretty, like, sort of smart kid. And I mean, was school easy for you? Like, but by the time you were in middle school or high school, like, were you, you know, kind of able to just do well without a lot of effort or what?

[Elan Lee]

I was never a great student, mostly because class was really hard for me. I actually graduated from high school with mostly Cs and one A and the A was in physics. And it's all because I had this incredible teacher whose name was Fred Carrington. And he like on one of the very first days of class, he looked at me and he said, you're going to fail this thing, like just 100%. You're not paying attention, you're no good at tests, you're not turning in your homework. You're going to fail this thing. But I'm going to 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 going to do. Next year we're switching textbooks. Brand new physics book. And the problem with a new physics book is it's edition one. And that means there's going to be a ton of mistakes in the thing. And they're eventually going to re release edition 2 and 3 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. It felt like a research project. It felt like there's something broken and nobody knows the answer and I'm going to go solve it. And normally I hate homework. But suddenly I was devouring this book. Every single night I would read it cover to cover learning, just trying to figure out where are the mistakes. And as a result of that, I got an A plus in physics, even though I got straight Cs and everything else.

[Guy Raz]

I mean, that's a cool experience. So you eventually graduate from Rochester Institute of Technology in New York with a degree in computer science and physics. Or computer science.

[Elan Lee]

Or computer science. Computer animation and psychology.

[Guy Raz]

Yeah, got it. Wow. Nice. All right, so I guess while you were in school, you somehow managed to get an internship at Industrial Light and Magic, right? The George Lucas, one of his companies. And it sounds like you're. 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.

[Elan Lee]

Yeah, well, that was me for sure. 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. You know the scene at the end of Titanic where they're on the door, the famous door scene, right in the freezing cold water when they're talking to each other. You can see their breath. The thing is, that was filmed in a soundstage, so the water's, like 80 degrees. You can't see their breath. So guess whose job it is to, like, hand animate every pixel of their breath so that you can see it whenever they exhale.

[Guy Raz]

Wow.

[Elan Lee]

So it was a lot of work like that, but I was thrilled. Thrilled to do it.

[Guy Raz]

Yeah. So that obviously would have been a great place to work right after you graduated, but instead, I guess you got a call from, like, a recruiter at Microsoft to interview for a job there. Is that what happened?

[Elan Lee]

Yeah. So when I took that interview, they introduced me to this secret project, which at the time was called the DirectX Box, 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 48 hours, I was like, oh, this is it. This is what I absolutely have to do.

[Guy Raz]

All right, so you moved to Seattle to start working on what is going to become the Xbox. And what was your role? I mean, what job were you given?

[Elan Lee]

So they hired me as. It's called a program manager. And my job was basically just make sure that the trains stay on the rails and. Yeah. Work on schedule and budget and find the right teams to produce the right products. What today is called a project.

[Guy Raz]

Well, you were a project manager, but that became a real job, you know, eventually. And it seems like. 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 just even talking to you here? Like, I can identify that type. And you're not that. Like. And not in a bad way at all. Like, you're. I'm similar. Like, 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. Here's your task. Here's your task. Here's our schedule. Or where am I wrong?

[Elan Lee]

No, you're totally right. I'm laughing because that exact observation is kind of what changed my life. At Microsoft, I was introduced. My boss was a guy named Jordan Weissman. And 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. 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 Going to 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 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 out. Absolute AAA hits. 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.

[Guy Raz]

And what was the first game that you were sort of assigned to work on or you got involved with?

[Elan Lee]

The first one was Halo, which I want to 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. But starting there and, you know, that game, like, defined that game, really changed the history of video games and being associated with that. We knew right away, like right away that this was going to be special. And it kind of set the bar for the other five games and what we needed them to be. And so I was just working with this incredible rockstar team and. And we all worked for years to just get those things out the door.

[Guy Raz]

And I guess one of the projects you end up working on is with Steven Spielberg. 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 some. Some thing for the movie.

[Elan Lee]

Yeah, Jordan brought Steven Spielberg into my office and said, he's got this new movie coming out called AI and we're going to do a collection of Xbox games. I think there were either four or five Xbox games that we were going to do based on AI So one was going to be an adventure game where you get to play as certain characters in the movie. And one was going to be a racing game, and one was going to be a gladiatorial combat game. And so we started working on all of those. And then Jordan said, 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 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 text 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 we built it. It was 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 bed in my office because 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 yeah, two things happened. One is we went to see a screening of the movie, the premiere 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. It's just the wrong match.

[Guy Raz]

Because the movie was actually kind of.

[Elan Lee]

Depressing 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.

[Guy Raz]

But you hadn't seen it, you hadn't seen it before or you didn't know.

[Elan Lee]

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.

[Guy Raz]

This was the game that was known as the Beast.

[Elan Lee]

The Beast, yeah. The first time we did an inventory count on how many assets we had built, the number came out to 666. And so the project got its name.

[Guy Raz]

And this was a video game that you could get on Xbox. Right.

[Elan Lee]

It was a video game ish thing that you could get by visiting a website. There was no physical launch.

[Guy Raz]

Right. And this was just, in a sense, it was like a promotional thing connected to the film.

[Elan Lee]

That's right.

[Guy Raz]

But in fact, the movie really was not successful, if I remember correctly. Yeah, the movie did okay by his standards. By Spielberg's standard.

[Elan Lee]

By Spielberg, yeah, but that's true. By any other director's standards, this would be a hit. But by Spielberg's standards, it was on the lower tier of the stuff that he had produced. So.

[Guy Raz]

All right, this must have just been like a crazy experience because I think you, not that long after you decide to leave Microsoft, that you're just like, wiped out what was going on.

[Elan Lee]

One is, I was still very fascinated by this, the Beast, and where we could take it, but I knew that Microsoft was certainly not the right place. It couldn't live there. It had no place there. And two is Microsoft immediately wanted us to get started on the Xbox 360, the second Xbox. And I was just so burnt out, I could not think about another console. I could not think about more game development. And so I told Jordan that I was going to resign. And very luckily, Jordan said, hey, me too. Let's go start something together.

[Guy Raz]

Wow.

[Elan Lee]

And you got to keep in mind we'd also just come off of a lot of money earned by delivering the Xbox, but a lot of kind of next generation storytelling done through the Beast. And the money part seemed much less interesting to me than the next generation of storytelling. And that's what I wanted to pursue.

[Guy Raz]

Yeah, I mean, this will 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 going to different websites and listening to recorded phone messages and all kinds of like these just rabbit holes, basically. That was what you were doing. You were creating rabbit holes.

[Elan Lee]

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 going to 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.

[Guy Raz]

So you leave Microsoft, but I think you actually stay on as a contractor because they actually ask you to stay on to help with them with Halo 2. But meantime, you and Jordan decide to start your own, your own company and tell me what that company was going to be, was going to be like make these kinds of campaigns that you did with the Beast. It was going to be a video game company because it was called 42 Entertainment. What did you. Yeah, tell me what it was going to be.

[Elan Lee]

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.

[Guy Raz]

And that was what the Beast was, basically. That's what they called it.

[Elan Lee]

Yeah, it was. Think of it as a game that used your life as the platform.

[Guy Raz]

Okay.

[Elan Lee]

So we really wanted to build more of these. We raised a little bit of money from friends and family and, and almost immediately got this call from Microsoft saying, will you work on Halo 2? And we said, what if we did the marketing for Halo 2? They said, okay, 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, you don't have to worry about that. Halo 1 was the biggest thing ever. Halo 2. Everyone's just going to be totally excited about it. You have nothing to worry about. And they said, yeah, but we want the marketing for HAL to be a cultural phenomenon. And I thought, oh, now we're talking. If you're giving me permission and budget to build a cultural phenomenon, sign me up. And so 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 Orson Welles, War of the Worlds. So 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 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, because 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 going to ring on Tuesday and slowly millions of people reconstructed it.

[Guy Raz]

And you would just pick payphones in major cities like LA and New York.

[Elan Lee]

Yeah, exactly. Yeah. We'd send out scouts of teams to actually find the payphones.

[Guy Raz]

It wouldn't be like a payphone on a rural highway in the middle of Texas.

[Elan Lee]

Well, we screwed that up a few times and accidentally did that. But, yeah, we tried not to. Okay.

[Guy Raz]

Yeah. So 42 Entertainment really begins as kind of a. I mean, you may not like this term, and I don't think it's bad, but like a marketing company.

[Elan Lee]

Oh, yeah, for sure.

[Guy Raz]

To create campaigns. Right. And it was. By the way, does this still happen? Like, do these things still happen when, you know, I don't know, Grand Theft Auto is going to be released and stuff? Do they?

[Elan Lee]

I don't really. I mean, certainly not to this scale anymore.

[Guy Raz]

It must have been expensive to do this.

[Elan Lee]

Really, really expensive. And 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.

[Guy Raz]

Did.

[Elan Lee]

And so that got really hard after a few years.

[Guy Raz]

Did it make money? Was 42 Entertainment like, doing well enough to sustain, you know, to be sustainable?

[Elan Lee]

Yes, but it was a service business. Right. So.

[Guy Raz]

Right. You're constantly hustling for new. Yeah, yeah.

[Elan Lee]

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 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 just. 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.

[Guy Raz]

Yeah. And I guess pretty soon you came to the conclusion that this just wasn't gonna be sustainable. I know you had thought about trying a couple other things and even did, but you eventually wound up going back to Microsoft for a while. I think it was like 10 years after you left. And I guess from what I read, they. You went back to work on a new product, like the latest Xbox. Xbox One was it?

[Elan Lee]

Yeah. So I agreed to take this job. They're throwing a lot of money at building content for this Xbox. Games and TV shows and a whole entertainment platform. And I could do that. 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 will be cool. And I went and did that for about a year and a half and 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 remember I went to my brother's house who has 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 within about two weeks, I resigned and knew I had to go do something else.

[Guy Raz]

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. This past summer, I took my family to Athens, and it was unforgettable. We wandered through Plaka's winding streets, hiked up to the Hill of the Muses at sunset, and spent hours exploring the National Archaeological Museum, standing inches away from artifacts that have shaped the world. But one of the things that made the trip truly special was the place we booked on Airbnb. It was tucked just off a quiet street in Koukaki with a terrace that looked out over the Acropolis. Every morning, we'd sit outside with Greek coffee and fresh Bugattza from the bakery downstairs, watching the city wake up. If you ever get a chance to go, I cannot recommend it enough. It's one of those cities that stays with you long after you leave your own vacations can be the perfect opportunity to host your home on Airbnb. The character of your space, your art, your kitchen gear, the details that make it uniquely yours, could help another traveler feel instantly grounded. And with the earnings from hosting, you gain an additional stream of income that can lighten or even cover the cost of your future trips. Your home might be worth more than you think. Find out how [e-mail] host this show is brought to you by American Express. Running a business means making countless choices every day, some small and some that can change everything. The business owners who thrive are the ones who are ready for whatever comes next, and having the right support behind those decisions can make all the difference. That's why so many business owners I talk to choose the American Express Business Platinum card. It's built to help them move quickly and take their business further. And with five times membership rewards points on flights and prepaid hotels booked through amextravel.com, you can turn any business trip into a chance to earn more and invest in your business's future. Plus, you get a flexible spending limit that changes as your business does, adapting to where you are and where you're headed next. Because when it comes to growing your business, there's truly nothing like Business Platinum. Not all purchases will be approved. Terms apply. Learn more at Go Amex bplat. You know one of the most surprising things about How I Built this is just how many pitches we get. Every year, tens of thousands of businesses reach out, hoping to tell their story. Now, while we do try to read most of those pitches, we can't possibly read all. But we choose most of our guests through our own deep research. And that means my team and I spend hundreds of hours digging into companies, what they make, who's behind them, and whether their journey can inspire you. And that's exactly where Claude has become such an incredible thinking partner in my creative process. Claude is the AI for minds that don't stop at good enough. The thinking partner that works with you to explore the things that fascinate you. Whether you're researching late night curiosity spirals or working through complex creative challenges, Claude extends your thinking to tackle the problems together. For example, imagine I'm about to sit down with the founder of a snack company. I'll want to know what products they've released, how they've evolved, and which competitors they're up against. In the past, it could take hours to track down reliable details. We'd search articles, databases, reports. Now Claude can give me a clear answer in seconds, and then I can decide what to dig into further. It doesn't replace my process, but it sharpens it. And that means I can spend more time doing what I love most, focusing on the human stories, the lessons, the decisions, and the struggles behind the businesses you hear on this show. Experience what collaborative thinking feels like at Claude AI HIBT and see why the world's best problem solvers choose Claude as their thinking partner. Hey, welcome back to How I Built this I'm Guy Raz. So it's around 2014. Elon is almost 40 years old and about to leave Microsoft for the second time in his career. As for what's next, he's not sure.

[Elan Lee]

No, I don't know what it's going to be, but I know it's going to be storytelling somehow.

[Guy Raz]

Got it. Okay. And were you living in Seattle at the time or were you living in la?

[Elan Lee]

I was living in la. And what was I doing at the time? I was doing nothing. I spent a week just saying, like, I don't know what I'm going to do. I'm not going to do anything. I'm not going to make any plans. Let me just try to relax for a week. And then I got an invitation from a friend of mine, Matt Harding, who said, come to Hawaii with me. We're going to set up a group little Hawaii trip. Some of my favorite people. I'm going to rent an Airbnb. We're all going to go hang out. And one of the people that Matt Harding invited was this guy, Matt Inman, who is the creator comic the Oatmeal.

[Guy Raz]

Okay. This is a different Matt. This is a very popular comic with, like, just weird animals and, I don't know, it was a cult comic, basically. Right?

[Elan Lee]

Yeah, well, very popular is an understatement. Like, Matt has books on the New York Times bestseller list of his comics. 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 people have just absolutely become obsessed with him as a result of this unique, beautiful skill.

[Guy Raz]

All right, so this is where we finally are going to get into exploding kittens, because as I understand it, you brought a deck of cards with you to Hawaii, and what, you'd been tinkering with an idea for a game that a friend of yours had kind of suggested to you. Is that right? What's a story? Yeah.

[Elan Lee]

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're like, you're trying to draw cards, but don't draw the bad card, and, I don't know, we'll somehow convert this into 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 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 a 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.

[Guy Raz]

Draw.

[Elan Lee]

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.

[Guy Raz]

And you were playing this in Hawaii?

[Elan Lee]

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, it's called Bomb Squad. At the time it was called Bomb Squad. And 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.

[Guy Raz]

And 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 the other guy was Shane.

[Elan Lee]

Shane Small.

[Guy Raz]

Yeah, Shane Small. Okay. And you guys are like, yeah, let's, we want to make a card game. Just, just put this into 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? Because I'm thinking if I, if I knew you, I'd be like, that's cool. I totally, 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.

[Elan Lee]

No, not. But even remotely, I really thought this was gonna be a fun weekend project. I thought, look, I got nothing else going on.

[Guy Raz]

And did Matt, too, like, did he think this is gonna be just a fun thing, just. Just. Just for fun? Like, just to. Just so people could have some joy, but not necessarily like a business.

[Elan Lee]

Matt thought it was going to be bigger than I thought it was gonna be. Like, I remember we had this conversation. We had to open a bank account to start this thing, right? And so we. We go in and we meet with the banker, and she's like, okay, so you're going to open this, this. This thing, and how much money do you think you're going to deposit into the account? And I said, well, we're going to put this thing up on Kickstarter. We're going to 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 put all the right fraud detection things in place and the whole bit? And I said, $10,000. That seems about. That's how much we'll earn off of it. And Matt immediately said, $5 million. Right. So, like, his thinking on this thing was totally different than mine, but he also never thought it was going to be a company. He thought it would just be a quick Kickstarter campaign.

[Guy Raz]

Right. Okay, so when you guys decide to form a business, 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?

[Elan Lee]

We all agreed to do something new. We all knew we were going to be all equal owners in this thing. We were just going to start it. But again, this is just going to be a weekend project. There's nothing here. This is just going to 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 going to move on and go get real jobs.

[Guy Raz]

And so did you even bother to talk about, like, you know, let's figure out, you know, our equity splits and let's set up an LLC and, you know, get an IP lawyer?

[Elan Lee]

No, we should have done all that stuff. Instead we said, let's all own a third of this thing and shake hands and move forward, and that was it.

[Guy Raz]

Yep. Which actually is perfectly fine.

[Elan Lee]

Yeah, it was fine. Then we. Then we launched the thing. I Mean literally within, I would say like four weeks of that meeting of meeting Matt, we had the thing up on Kickstarter.

[Guy Raz]

Okay. Before we get there. So 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 creating the artwork for these cards.

[Elan Lee]

Yeah. So every card in the deck, there's 56 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 going to need a whole lot of cards. Everyone has to feel special and unique. 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 art. Over the course of just a few weeks, we put this package together that was the very first version of exploding kittens.

[Guy Raz]

And were you. I mean, I remember there were games like there was a whole. I mean, Pictionary has been around and you know, like there were games for definitely for adults. Right. Was this conceived as a. There was cards against humanity. I don't know if that's still around.

[Elan Lee]

Yeah, yeah.

[Guy Raz]

Were you conceiving of this as an adult game or as a kid game or what?

[Elan Lee]

Yeah, we mostly thought about it as a game for Matts fans. So it was going to be funny, it was going to be fast. It was be super easy to learn.

[Guy Raz]

Right. And so some of the cards, like, for example, like you could defuse an explosion by getting a card where you, like, you could rub the kitten's belly or you could distract the kitten with.

[Elan Lee]

A laser pointer, give it a catnip sandwich or, you know, just funny quick laughs on each card. Just aside. My favorite card in the whole game is called Taco Cat, which is half taco, half cat and a palindrome, which just makes me so very happy. Right. Okay.

[Guy Raz]

So, all right, so you have the concept down and you guys decide to do this as a Kickstarter, which we'll get to in a second. But the idea was you'd raise the money and then you'd find. Did you identify like a contract manufacturer to make them? Like, is that. Is that easy to do? Are they in China? Like, who did you find to help you?

[Elan Lee]

I found someone local.

[Guy Raz]

I really Thought and local la or local la.

[Elan Lee]

Yeah, yeah. My theory was, okay, if I contact a local card manufacturer, I was like, what's the minimum order? And he said, 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, somewhere around $10. We'll just round it if you include shipping and everything. $10. I was like, cool. All right, so we need $10,000. That's our goal in order to hit our minimum $10,000. We'll set our campaign for $10,000. And all the idea was at that point was we have a very funny deck of cards. We have Matt, who's going to do the marketing, and we've got this guy who can print 1000 decks of cards for us. Okay.

[Guy Raz]

It was going to cost you about 10 grand. So you needed to raise 10 grand to do this, Probably a little bit more. Because you want to make some money off of this, right?

[Elan Lee]

Ideally.

[Guy Raz]

Right. Okay. And you went to Kickstarter because. I'm assuming, because it was a way to get attention. Right. I mean, because you guys could have probably financed this with 10 grand between the three of you. Yeah.

[Elan Lee]

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. There's no harm, no foul.

[Guy Raz]

This goes up In January of 2015, the three of you and Matt. And I've seen it. You can still see the video. He makes a little one and a half minute promotional video about this thing with his really funny drawings about this game. And Matt also announces this on his website, the Oatmeal.

[Elan Lee]

That's right, yeah.

[Guy Raz]

Okay, what happens?

[Elan Lee]

So we hit that 10 grand in the first 20 minutes.

[Guy Raz]

Nice.

[Elan Lee]

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 10 grand, which was incredible.

[Guy Raz]

And you were asking people for $10 or $20.

[Elan Lee]

$25 for two games. I think it was like $20 or 15 or 20 for one game. 25 for the bundle of two games.

[Guy Raz]

And two games of the same game.

[Elan Lee]

Just two same game. One regular version, one not safe for work version.

[Guy Raz]

I See? Okay.

[Elan Lee]

Yeah.

[Guy Raz]

Okay. And 20 minutes you hit. Wow. Amazing. Okay.

[Elan Lee]

Incredible.

[Guy Raz]

Then what happens?

[Elan Lee]

Then what happens? Then the Matt fire hose just continues. And all of his fans flooded into the site, watched the video, and within the first 24 hours, we pass the 1 million mark.

[Guy Raz]

That's ridiculous.

[Elan Lee]

I mean, it's beyond ridiculous.

[Guy Raz]

It's totally ridiculous. It's a card game that you need ten grand to produce a million dollars. Okay. It's okay. Okay, then what happens?

[Elan Lee]

Then you shut it down, Right? Then we shut it down. Because who needs more money than that? In the next 24 hours we hit.

[Guy Raz]

But you didn't start 2 million.

[Elan Lee]

Yeah. No, in the next 24 hours we hit the $2 million mark.

[Guy Raz]

Okay.

[Elan Lee]

And then. And then in the next 24 hours, we hit the 3 million dollar mark.

[Guy Raz]

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, like virality. Like everybody's like, 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 want to be part of this thing.

[Elan Lee]

There was definitely a bunch of that going on. But then something really interesting happened. On day four, 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.

[Guy Raz]

Yeah.

[Elan Lee]

And so on day the next day, we made even less, and the day after that even less. And what we realized is that 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 going to convert. And that's it. There's our total. And it was at the time we were at about three and a half million dollars. And Matt and I sat down and said, okay, well now what? And we kind of realized we had two choices. Option number one is just shut it down. Just say we're done. I don't even know how we're going to produce this many copies of the game, let alone what might happen at the end of 30 days. 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 back of my head saying, or 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? I said, well, look, normally a Kickstarter campaign has these things called stretch goals, right?

[Guy Raz]

Yeah.

[Elan Lee]

We're trying to raise $10,000, but if we raise 20,000, everybody gets a fancy carrying case. And if we raise 50,000, you get more cards added to the game. Whatever. Yeah.

[Guy Raz]

They borrowed that from radio, by the way.

[Elan Lee]

Oh, did they?

[Guy Raz]

Stretch goals? Yeah. It is. Such a good station would say we're trying to reach our stretch goal here. Yeah, keep going.

[Elan Lee]

That's perfect.

[Guy Raz]

So you. You're like, okay, because you had 30 days, right? The campaign was going to be live for 30 days.

[Elan Lee]

Yeah. That was 30 days. Okay. Yeah.

[Guy Raz]

And you could have shut it down because you way exceeded your goal. You're in 3 million now.

[Elan Lee]

Yeah.

[Guy Raz]

But now you're saying, let's create these stretch goals that will incentivize more people to join.

[Elan Lee]

Yeah. Except a new twist on them. So instead of saying let's tie our stretch goals to money, which is what everybody was doing, what if we have those same stretch goals? 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 going to 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 100 pictures of a real taco Cat. And if you do, we're going to 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. How about, I don't know, 10 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?

[Guy Raz]

Yeah.

[Elan Lee]

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 going to ask you for more money.

[Guy Raz]

But you have this going on for 30 days. And after 30 days, you raise how much?

[Elan Lee]

It was just shy of $9 million at the end of it.

[Guy Raz]

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 Contributed.

[Elan Lee]

Yeah. We're 10 years later, and it is still holds the record for the most number of backers of any campaign.

[Guy Raz]

How many people?

[Elan Lee]

It was 219,000 backers.

[Guy Raz]

That's crazy.

[Elan Lee]

It's crazy. It makes no sense.

[Guy Raz]

Crazy. All right, so you. You guys all of a sudden have almost 9 million or just under or over $9 million. And now, by the way, how many packs of cards did you have to make?

[Elan Lee]

So 219,000 backers means that because most people wanted more than one deck, we had to produce 700,000 decks of cards for our very first print run.

[Guy Raz]

Okay. And now you can upgrade them. And so one of the things was that when you open the pack. 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 opened it?

[Elan Lee]

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. We thought, oh, this will be fun. This will be cute and easy. And I think we ended up spending an extra million dollars just to protect that chip. It was a very expensive, cute little toy.

[Guy Raz]

So how did you get. I mean, you were gonna have this guy make you a thousand decks. You have to make 700,000 now. So what did. Yeah, did you call the guy and say, hey, we got like, tell me what happened.

[Elan Lee]

Yeah, I called him up and I explained what we needed. We needed 700,000 copies. And he just started. Started screaming. Like, just absolute chaos. I later learned that that would be higher capacity than the entirety of the number of decks of cards he's printed in the 10 years he had been in business. So he was just out. He was just like, I don't know how to help you. Then we called up a casual friend at Cards Against Humanity. And they do really, especially at the time, they did just so many decks. And I said, look, here's our problem. Here's what we got to do. I have no experience in this thing. And they were really nice. They said, look, you're going to call our distributor, you're going to call our manufacturer, you're going to call our agents, and we're going to make sure we hold your hand through this whole process, because we've printed even more than that in a year. So we Got you. And it was incredible. They took such good care of us. And. And we promised our backers, having no idea how many decks we were going to have to produce, we promised them that we would deliver this thing in seven months. So the campaign launched in January, we promised it would ship in July. And because of Cards Against Humanity and their help, we shipped every single copy by July 30th of that year.

[Guy Raz]

Wow. So they helped connect you to a manufacturer, presumably in China.

[Elan Lee]

Yes, exactly.

[Guy Raz]

And they were able to embed the meow in those cards.

[Elan Lee]

Invent, produce, and then embed the meow chip.

[Guy Raz]

And now this is where the story typically ends for most Kickstarter campaigns. Now, they're not all, We've done ooni pizzas on this show, Ooni pizza oven, stardust, 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. But I have to imagine that you're thinking, wow, maybe we are onto something here. So once you send them all out, I imagine you're thinking, all right, let's get these into game stores and turn this into a product. What was the. Because you guys had all informally made this agreement to start a company and now you've got a company sitting on $8 billion. Yeah, this is non equity funding.

[Elan Lee]

Yeah. This was insane. Like, what a crazy way to start a company. We had no investors. We had the largest Kickstarter in history at the time. And yeah, we were just off to the races. So we contacted a bunch of retailers, 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, 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 just moving through.

[Guy Raz]

Retail and the retail was targeted and Walmart and like, where. Where?

[Elan Lee]

Amazon.

[Guy Raz]

Yeah, and Amazon.

[Elan Lee]

Yeah.

[Guy Raz]

And just putting it on the shelves.

[Elan Lee]

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 some pretty creative things at conventions to get more word of mouth going. But we could coast both on Kickstarter and then a whole bunch of, like, guerrilla marketing tactics to get through that first year.

[Guy Raz]

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 getting people engaged, you had to come up with some ideas to do the same thing at these conventions.

[Elan Lee]

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.

[Guy Raz]

And who are the big players is like the Hasbro.

[Elan Lee]

Hasbro's Mattel spin master. The giant ones. Yeah. 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. You go up, you put in money, you push a button, you get your thing, 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 kind of what we did. I took an old refrigerator box at, like, 8ft 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. 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 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 $1. 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 been a burrito. It could have been a plunger. It could have been one of our games. It could have been a watermelon. This thing could deliver more than 2,000 random items through this vending machine just to make people laugh. And at this point, you should be scratching your head a little bit, because how is that possible? How can you build a vending machine that does that? And the answer is, 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 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 20 minute line and then eventually like an hour long line that was blocking all those multimillion dollar 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.

[Guy Raz]

So, I mean, you remember this, right? Which was at the time there was all, and this is normal, this is the way the world is. There were 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 way to drive pre orders and they could actually afford to do this on their own. And Kickstarter is for people, you know, who are really like diy. But I guess your response to that was yep, exactly. That's why we did it that way.

[Elan Lee]

Yeah, 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. It has the side effect of raising funds, but you're really raising a community and that's the place to do, do it.

[Guy Raz]

Do you think that you were able to 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.

[Elan Lee]

Yeah. I think what I 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 again. I'm going to go 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 going to say, oh my God, I've really want. I've wanted this thing for years. Like.

[Guy Raz]

Yeah, right. Because in year two, as you say, I mean, the first full year or the second year of 2016, you still, I mean, you're doing 20 million in sales, at least. Something like that.

[Elan Lee]

Yeah, yeah. Every year, like for the first few years. Honestly, for the first, like 10 years, exploding kittens is very consistent at hitting.

[Guy Raz]

It was just driving the business. So it was 20 million every year driving the business. And you had. It was like a recurring revenue stream, basically.

[Elan Lee]

Yeah. And an incredible place to be.

[Guy Raz]

And we should just sort of add that, that this is a very efficient 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 making and printing the cards and getting them shipped in a container. How much does that cost per deck?

[Elan Lee]

Yeah. To make cards, put them in a box. This comes out to like between one and two dollars based on the product. Right. And we're selling it for 20. So that's a really good business.

[Guy Raz]

Incred.

[Elan Lee]

But you as a person who has built products, you know, so much more has to be spent to market that thing. And I think that's every time I say that statistic, like, yeah, we're building things for a dollar and selling them for 20. Everyone has that reaction. Until you realize, like, this is a complicated business and there are so many parts that require cash infusions constantly 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. It's expensive in all the ways that you don't normally write down on paper.

[Guy Raz]

All right, so you get this out into the world and you've got a real business. But again, at that point I'm thinking, well, what's the lifespan of this thing? Because building a generational product is very, very hard, especially in games. You've got Settlers of Catan and Connect4and Pictionary and Trivial Pursuit. I don't even know if that's a still play. I have no idea this is dating me. But you know, checkers, chess. Right. I mean, 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. So 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 what.

[Elan Lee]

Yeah, I mean, really, the very next year it was, well, let's assume this whole thing is gonna fail and all sales are gonna stop. We've got to get another game out the door. And we got to work almost immediately trying to do our second game, which was called Bears vs Babies.

[Guy Raz]

Remind me, what was the premise of that game?

[Elan Lee]

The premise there was Matt. Once again, we went back to Matt, and Matt wanted to make body parts. He's like, I'm going to make out 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 together to make incredible creatures that 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 we raised. We raised like $5 million on Kickstarter for that campaign.

[Guy Raz]

You did another Kickstarter?

[Elan Lee]

Another Kickstarter and raised a ton of money. But we put it out in retail, and within a year, sales just fell off a cliff. 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 12 months, completely disappeared.

[Guy Raz]

Why? You must have sort of sat back and said, well, why this one, not that one? Did you ever come up with any answers?

[Elan Lee]

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 probably not quite worthwhile.

[Guy Raz]

All right, so the next game you come up with, you've got Crabs.

[Elan Lee]

Yeah, yeah. This was 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 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. The game involves a lot of people sitting in silence, right? 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 or you're tugging on your ear or you're creating all these secret signals which sound really good on paper, but then when you're sitting around the table and everyone's just sitting there in silence tugging on their ears, 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.

[Guy Raz]

So what I'm curious is you've got two years of pretty good sales with exploding kittens, but not growing necessarily all that much, 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 gotta figure this out because we cannot survive on exploding kittens alone.

[Elan Lee]

Yeah, yeah, we really couldn't. That was just. I mean, that was the thing that was keeping me up at night. That was. I 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.

[Guy Raz]

When we come back in just a moment, how the business bounces back with a new game that blends dark dodgeball with burritos. Stay with us. I'm Guy Raz and you're listening to How I Built this. And now a quick vital break. A little more from our sponsor, Vital Proteins. You might be familiar with Vital Proteins, the number one brand of collagen peptides in the US. By taking collagen peptides daily, you can help support your hair, skin, nail, bone and joint health. And now Vital Proteins is shaking it up and introducing a brand new way to get your collagen. A new collagen and protein shake. All the benefits of collagen now in a ready to drink shake with a light chocolatey smooth taste. And it's made with no added sugar, artificial sweeteners or carrageenan. I find them perfect for after workouts because they taste great, they're super convenient, and. And it's 30 grams of protein. Go to www.vitalproteins.com to learn more and where to buy. Get 20% off your next order by entering promo code BILT at checkout. Startups move fast. And with AI, they're shipping even faster and attracting enterprise buyers sooner. But big deals bring even bigger security and compliance requirements. A SOC 2 isn't always enough. The right kind of security can make a deal or break it. But what founder or engineer can afford to take time away from building their company? Vanta's AI and automation make it easy to get big deal ready in days. And Vanta continuously monitors your compliance, so future deals are never blocked. Plus, Vanta scales with you backed by support. That's there when you need it every step of the way. My listeners can get $1,000 [e-mail] built that's V A N T A dot com bilt for $1,000 off. Hey, welcome back to How I Built this. I'm Guy Raz. So it's around 2018 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.

[Elan Lee]

And then a guy showed up named Brian Spence. And Brian Spence is a game inventor. And he showed up with a game called Flaming Mangoes. And Flaming Mangoes was half card game, half dodgeball. 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 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 got to 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 approached 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 going to 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 going to 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 throwing burritos at each other. And here's how we're going to market this thing. We're going to put a box that says the world's first dodgeball card game. And there's going to 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.

[Guy Raz]

But why would somebody say, oh, that's the game that I want and not the previous ones? Like, what was it about? Were you able to tell the story better? Like, why would people pick that off the shelf?

[Elan Lee]

So it really stands out on the 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 500,000 copies. A normal game, its first year will sell 30,000 copies. This was just off the charts for a game. And every year since then, it's grown because it keeps spreading.

[Guy Raz]

But how did you market it? I mean, just.

[Elan Lee]

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, $3 million. Again, huge success. Oh, my goodness. Amazing, right? But this is a bad trend, right? We started at 9 million and then to 5, and now we're at 3. But this game, once it hit retail, it jumped absolutely to the top of the charts, and it has stayed there. It has stayed on the top 10 list ever since it launched.

[Guy Raz]

All right, so you put this game out, and it is. And finally now. Not finally, but now.

[Elan Lee]

No, let's say finally. Yeah, we were a lot of years.

[Guy Raz]

You got three years in, now four years in. You gotta hit. And now you're feeling like, okay, we've got some momentum here.

[Elan Lee]

Yeah. Now people are starting to take us seriously. Now retailers are saying, okay, what else you got? Like, pitch us more games. We're really interested to see what else you've got. And now investors start knocking on our door.

[Guy Raz]

You got Peter Chernin coming in, for example.

[Elan Lee]

Yeah, yeah. So Peter Chernin of the Chernin Group 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 we turned down most investors because, like, you know, it just, it never really felt like the right match. And we were so proud of ourselves for saying, like, we have no investors. We've done this completely through crowdfunding. But when the Chernin Group showed up, it was just instant chemistry. Like, these are really good guys.

[Guy Raz]

But what was he. What did he think you guys could be? I mean, you're selling games. I mean, these guys invested in barstool and, you know, things like that. What. What was his pitch to you guys for what you could be?

[Elan Lee]

Yeah. So Peter Chernin showed up with one of his partners, Jesse Jacobs, and their pitch was so good. 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 40 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, gigantic expansions. And we are the best in the world at building those things basically to.

[Guy Raz]

Become an IP brand.

[Elan Lee]

Exactly, exactly. And I looked at Matt and Matt looked at me and we're just like, yeah, that's a really strong pitch. And so it took a few months of negotiation, but we finally took an investment from them. They invested 40 million in the company, and 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?

[Guy Raz]

I mean, the whole idea initially started out because you were feeling like, oh. Or in part like you were responsible partially in a small way for kids being addicted to screens. Video games.

[Elan Lee]

Yeah.

[Guy Raz]

Now here you are, 2019, 2020, and. And that's going to be part of what you're going to have to think about doing.

[Elan Lee]

I know there's no way around that. It really came back to haunt me. And we started very quickly working on the Netflix show, which is now out. But when it was in development, I had this exact dilemma just thinking about this over and over again, and we started building an app, and I had the same dilemma just over and over again. And the Deal I kind of made with myself was because 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 additional exposure to this source of joy through face to face interaction. And maybe that's a little bit of me trying to justify it to myself, but it felt at least like, okay, I can at least sleep at night again.

[Guy Raz]

So with the Chernin group's sort of infusion of cash was there and they were saying, look, you know, it's. It's video, it's ip, it's, it's mo. It's video, movies, products, you know, theme parks. Like what? What? I mean, okay, you get the Netflix thing happens. I mean, those are big ambitions. What did you guys. I can't imagine that you were able to do all of those things, but what did you start to build out beyond card games?

[Elan Lee]

Yeah, we started to. At first it was just design. At first it was okay. If we wanted to do jigsaw puzzles, 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 10 years for the company. And then we started hiring people to implement little tiny parts of those. And that got us through most of 2019. And then everything changed in 2020, of course.

[Guy Raz]

With COVID With COVID And that probably was an unexpected boom for your business.

[Elan Lee]

Yeah. Suddenly there was the most dramatic increase in game demand that I have ever seen.

[Guy Raz]

And it was families, mainly.

[Elan Lee]

All families. Right. Everyone's at home. Your options are put everyone on a screen or do something together. And we saw a 90% increase in revenue that year, just in 2020.

[Guy Raz]

Wow.

[Elan Lee]

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. It was just impossible to get spots. A lot of our plants shut down because of COVID Anytime there was an outbreak, suddenly we can't use that plant anymore. 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 a Mole. 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 just like, whatever it takes to be the only game on the store shelves, everyone else is going to Fail at this. Ours is going to. Our game is going to be there no matter what.

[Guy Raz]

What was the. I mean, was there still in the back of your mind, there's still. Maybe now, right? Like, were there moments where you're like, wow, this is, you know, we're like, we're. We're just on a lucky streak here. But at some point something's going to topple it or people are going to move on or I don't know. Or now are you at the point where you're like, nope, this is like Connect 4 or like Uno. Like, it is an enduring game.

[Elan Lee]

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. Exploding Kitten sails 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.

[Guy Raz]

Yeah. So I know you got another investor that came aboard in 2021, a French publisher that made an investment and I think they took a majority stake in the company, right?

[Elan Lee]

They did, yeah. So they're called Asmoday and they purchased 55% of exploding kittens.

[Guy Raz]

And what does that. I mean, was that in your. From your point of view, a chance to expand into Europe or what?

[Elan Lee]

Yeah, I realized that we. Well, one, Matt and I have really never taken anything out of the company. So one was.

[Guy Raz]

And Shane left early, right?

[Elan Lee]

He left early. Shane left in. Shane actually left in 2015. The very first year. Yeah.

[Guy Raz]

Okay.

[Elan Lee]

But Matt and I really, everything we make, we pour right back into the company. And so this was the first time where someone came along and said, look, we can help you expand internationally. The reason that things like Throw Throw burrito are in 29 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 that was the first time we sold enough of the company that we no longer have the majority.

[Guy Raz]

And so one of the, I guess things that sort of has emerged over the last few years and I imagine it's in part because you start a family right now. You've got one child, you've got two kids.

[Elan Lee]

I have two kids. Yeah.

[Guy Raz]

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 because you've gone into sort of the pre K world because many of your games are easy for a 6 and 7 year old to understand.

[Elan Lee]

Sure. Yeah.

[Guy Raz]

But I guess you were like, hey, there's a chance to get in with like 3, 4, 5 year olds.

[Elan Lee]

Yeah. When my daughter turned 4, I was so excited because I thought, oh, well, first I'm going to play exploding kittens with her and all of our other games. And I realized that she's just too young for them. Really, the sweet spot for exploding kittens is like 6, 7, 8. And so I thought, okay, no problem, let's go to the store. We're going to buy all the games for Pre K. All the games for like ages 3 and up. And we did that and I took them 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 Candy Land, like neither of us have any facility in this game. It's just, it was horrible and I hated it.

[Guy Raz]

And I like Candy Land. There's candy in there.

[Elan Lee]

Oh no. Candyland's the best.

[Guy Raz]

Delicious.

[Elan Lee]

Okay, fine, delicious. I'll give you delicious. I will not give you good game though. 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 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. And I love that phrase so much. Like I couldn't believe my adorable 4 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 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. It's just the greatest feeling in the world.

[Guy Raz]

And now, I mean, I know you're a privately owned company, so we can't independently verify it, but I mean, I mean, you know, what is your, like, I mean, are you guys, in terms of sales, are you over 70, 80, 100 million a year?

[Elan Lee]

We're over 100 at this point. You're right. I can't say the exact number, but we have. We have now published more than 100 games. Yeah. And even the first one, even Exploding Kittens, continues to pull in just huge amounts of money every year. It just. It continues to be on the. In that top 10 list every single year.

[Guy Raz]

And you've got cards and games and collectibles, but I imagine that probably 80% of your revenue, maybe more still is from the games.

[Elan Lee]

Oh, yeah, I would say 90%. Yeah.

[Guy Raz]

Yeah. And where's the biggest sales channel? Is it Amazon? Is it brick and mortar stores? Is it direct to consumer from your website?

[Elan Lee]

Brick and mortar is still about 60% of our business.

[Guy Raz]

Wow.

[Elan Lee]

Yeah.

[Guy Raz]

And that's everything from Target and Walmart to small, like, all of them game stores.

[Elan Lee]

Yeah. Yeah. You'd think online would be the lion's share, but it's not.

[Guy Raz]

And how do you think about making new games? I mean, you've got a team. I think you've got about 70 people on your team roughly now.

[Elan Lee]

Yeah, yeah, that's right.

[Guy Raz]

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 decide to land on one and pursue it. Yeah.

[Elan Lee]

We have these design retreats and we do them, let's say, two to four times a year. And the whole team, 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 table full of raw materials, like weird toys and inflatables and just anything we can get our hands on, on to just tinker and just play and say, ooh, 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 20 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.

[Guy Raz]

So, yeah, I mean, it's interesting because what you've come from, you came from such a digital world and you really made your mark in a very analog world. Right. And it's awesome. I mean, it just sort of underscores this idea. And 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 crisis. I mean, this is, I'm not saying anything. People don't know. There's a crisis of community in the United States and many western countries where, you know, just social media has kind of created these disaggregated, you know, environments where people are just living in their phones and their digital devices and, and this. It seems like you kind of have an opportunity and have been riding this wave of people wanting something more.

[Elan Lee]

Yeah. When we passed like the 40 person mark, Matt and I realized we need a mantra for the company. Like we need 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 feel so lucky. I can't believe I get to work on this. I can't believe this is the thing I get paid to do.

[Guy Raz]

So when you think about how that happened and how it turned into this, from a very digital world that you were really immersed in your entire career to a very analog world, which I love. I mean, it's kind of unlikely, like it's sort of unlikely how it just happened this way. But I wonder how much you attribute to the work you put in and how much you think just had to do with luck. The luck of meeting these people at the right time, the game, the fact that it just resonated.

[Elan Lee]

Can I tell you a story?

[Guy Raz]

Please.

[Elan Lee]

I knew this question was coming because I listened to your show, and I still struggle with this answer so much. So I. When I moved back to Los Angeles, one of the things I like to do is take the bus to work. So I'm riding on the bus every day, and one day I go to get on the bus. I've got my $1.75, 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. And I said, well. 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. He's got his money in his hand, and the bus driver again puts his hand over the thing and says, the money machine 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 that 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 figured out about this whole luck question is, like, good luck comes from not giving up. Not all the time, but it is certainly the most important ingredient I've ever found.

[Guy Raz]

That's Elan Lee, co founder of Exploding Kittens. So I have a slightly different take on Candyland. I think Candyland lost it when they changed the what's the Magic Mustache King? Like, they changed the look of it. Candid in the 80s is amazing. I used to just look at the Gumdrops, and I just wanted to eat the bowl.

[Elan Lee]

Guy, you might be the first person in history to defend Candyland.

[Guy Raz]

I mean, but there's candy on a board.

[Elan Lee]

Worst game in history.

[Guy Raz]

Wow.

[Elan Lee]

A computer could play the exact same game as you at Candy Land. And so why are we bothering with this thing other than yes, the candy looks delicious.

[Guy Raz]

Yep. 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 [e-mail] or on substack. This episode was produced by Sam Paulson with music composed by Ramtina Rabloui. It was edited by Neva Grant with research help from Noor Gill. Our engineers were Maggie Luthar and Khwesi Lee. Our production staff also includes Andrea Bruce, Alex chung, Casey Herman, J.C. howard, Katherine Cipher, Chris Masini, Kerry Thompson, Rommel 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, because right now 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 Tomales, California. Back in 2021, we had them 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.

[Loren Poncha]

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 1897?

[Guy Raz]

This is Loren Pancha. Loren grew up in Tomales, 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.

[Loren Poncha]

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.

[Guy Raz]

Sometime around his 30th birthday, Loren 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 rebuild building the ranch the way they thought it should be run.

[Loren Poncha]

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.

[Guy Raz]

They also flipped the business model on its head.

[Loren Poncha]

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.

[Guy Raz]

So instead, Lauren decided to sell his beef directly to customers and that way he could set the price himself.

[Loren Poncha]

We put up a five page website and within five days we started getting orders from people we'd never met before.

[Guy Raz]

Within just three years, they hit a million dollars in sales. But Loren was still working his day job as well, which kept him on the road sometimes six days a week.

[Loren Poncha]

I'd fly home, I'd do five farmer's market, I'd 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 going to give.

[Guy Raz]

So finally he quit his company job and went all in on the ranch and it's paid off. Stemple Creek is thriving today. They harvest about 2,000 cattle a year and they've built a bunch of other income streams as well.

[Loren Poncha]

Do farm to table dinners and there's a wedding venue and three little farm stays. People come visit us for the weekend and they're just like, Whoa, this is 55 miles from the Golden Gate Bridge. This is unbelievable.

[Guy Raz]

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.

[Loren Poncha]

As long as we can keep honesty, transparency, quality and 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.

[Guy Raz]

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. If you like how I built this, you can listen early and ad free right now by joining Wondery plus in the Wondery app or on Apple podcasts. Prime members can listen ad free on Amazon Music. Before you go, tell us about yourself by filling out a short [e-mail] survey.