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Eight nerds get rich off a game where Oprah sobs into a Lean Cuisine
Gina Charlton is drawing a blank.
“This is the way the world ends!” she reads. “Not with a bang but with… ”
Charlton shuffles through her options. Keanu Reeves? Autocannibalism? A gassy antelope?
“Oh my god,” she cries. “Do I really have to choose?”
Eventually, Charlton settles. The world ends not with a bang, but with a mime having a stroke.
Charlton and her gaming group are huddled around a table in a Bolingbrook Meijer cafe, playing a fill-in-the-blank game called Cards Against Humanity. A slogan on the side of the game’s box proclaims that it’s a “party game for horrible people.”
If so, there are a lot of horrible people, and they’re going to a lot of parties. In the two years since its commercial debut, the game has sold nearly 500,000 copies, according to its owners. That’s made Cards Against Humanity the best-selling game on Amazon. Its three expansion packs occupy the next three spots on the list. Uno is 49th.
At $25 per copy, the original game has likely generated at least $12 million in revenue since 2011 (the company won’t give sales figures). Industry experts estimate the game costs less than $10 to make, sell and distribute. The Chicago-based company behind Cards hasn’t spent a dime on marketing and has no full-time employees. Demand for the game has spawned a resale market where prices reach $100. Customers have downloaded PDFs of the game — available for free on the company’s website — 1.5 million times since the founders began tracking the number last year.
Charlton was one of them. When she went to Staples to print out the cards, a disc loaded with the PDF was already in the store’s hard drive. “[Staples said], we get them every day,” Charlton says.
All of that should make Cards Against Humanity one of the hottest startups in Chicago. Instead, it’s little more than a highly profitable hobby for its co-founders — eight nerdy 20-somethings from Highland Park who have yet to quit their day jobs. The game is “too stupid to do full time,” says Max Temkin, 26, a Cards co-founder who works as a designer in Chicago.
While would-be entrepreneurs chase venture capital funding and dot-com riches at incubators and startup boot camps around the city, the Cards team rejects investors, refuses to sell the game to retailers or license it to other manufacturers, and hasn’t bothered to appoint a CEO, let alone create a management structure. Their business plan has the sophistication of a lemonade stand.
“Every time we sell games, we make more games,” says co-founder Ben Hantoot, 26. The supply chain overseen by Hantoot, who manages Cards’ manufacturing efforts and works as an animator in Los Angeles by day, has precisely three links: factories, Amazon distribution centers and customers.
The Cards founders practically sneer at all the entrepreneurs chasing valuation and scale. “Whenever we hear someone refer to their business as, ‘oh, this is my startup,’ we’re like, ‘oh, you mean your unfunded business,’ ” says Hantoot. “We are beholden to nobody.”
Untethered to investors, the founders enjoy the freedom to run their business as they please. Each of the members functions as point person for a given concern. All major decisions are governed by consensus. “There’s no one in charge of anything,” Temkin says.
The group had no intention of creating a business when the friends cooked up the idea for the game in 2008. They weren’t ambitious entrepreneurs, just a group of socially awkward college kids home on break.
“It was nice for us to have this really simple question-and-answer format to engage with our peers while we were sitting in one of our parents’ basements,” says co-founder Eli Halpern, 26, a freelance writer and interpretive dancer. “No extra talking necessary.”
When break ended, the founders fanned out across the country, taking the cards back to their dorms, where their college friends lapped up the lewd, misanthropic game. In December 2010, the octet decided they’d try to capitalize on the popularity of their creation. They launched a campaign through Kickstarter, the website that lets startups raise money, to fund a professionally printed version. They asked for $4,000, got $15,570 and decided to print 2,000 copies.
Kickstarter check in hand, Hantoot took the lead in finding a manufacturer, which amounted to Googling printers and emailing them to ask for quotes. The team landed on Ad Magic, a Netcong, N.J.-based firm that specializes in personalized playing cards. Ad Magic contracted with a factory in Shenzhen, China, and the first games landed stateside in May 2011.
The founders set the price at $25, the lowest price that qualifies for free customer shipping from Amazon. The June 2011 shipment sold out in a month. Things took off from there. “The next shipment took about a week [to sell out], then three days, and finally about 24 hours,” says Hantoot.
In December, the demand reached fever pitch when the founders offered a holiday expansion pack — 30 additional cards — with unique terms: Pay whatever you want. Cards donated the profits to the Wikimedia Foundation, the nonprofit that operates Wikipedia. The promotion quintupled traffic to Cards’ website, resulted in about 85,000 orders and raised more than $70,000 (enough cash to buy 341 partridges in 341 pear trees, or one condom for every resident of El Paso, according to an infographic the team produced).
Hantoot pushed the factory in Shenzhen to ratchet up production, but the facility as it stood wasn’t efficient enough to keep up. The resulting scarcity drove up prices in the secondary market, with resellers peddling the game for more than triple its Amazon price.
It’s at this point that most businesses, faced with more demand than they can fulfill, seek out investors or take out loans to fund increased production. They want to grab the revenue dangling before their eyes and worry that if they don’t, a competitor will.
Indeed, the Cards founders say they’ve been approached by venture capital firms, licensing companies and corporate game manufacturers, all offering capital to fund expansion in exchange for a percentage of Cards’ equity or sales. All those suitors have been turned away by the game’s creators. “It’s always so clear that [potential investors] are trying to get their buck out of us,” Hantoot says. “We never were in a position where compromising our business by bringing in outside influence was something we seriously considered.”
The shortage doesn’t seem to have alienated consumers, who continue to buy the game in droves. And no competitors stepped in with a knockoff product, perhaps because big players like Hasbro and Mattel don’t want to go anywhere near phrases like “Oprah sobbing into a Lean Cuisine.” “It would be hard to convince a [traditional] publisher to market that game,” says Scott Alden, who runs the website Board Game Geek.
Jim Schrager, a clinical professor of entrepreneurship and strategy at the University of Chicago Booth School of Business, thinks Cards’ gamble on scarcity paid off as the added buzz created a consumer frenzy. “You can’t buy publicity like that,” he says. “With [resellers] scalping your product, that’s the best thing you could possibly ever dream about.”
For the time being, Cards should be able to meet demand. The firm began using a domestic production facility that produced 40 percent of a March batch of more than 100,000 copies. “We have so [many copies] coming in that I don’t think we’re going to sell out again,” Hantoot says.
Having courted customers rather than investors, the eight kids from the North Shore still own 100 percent of what’s become a lucrative franchise. Outside of Ad Magic and Amazon, they don’t share proceeds with anybody. And it’s dawning on them that they’re doing something impressive. “We’re doing a lot of stuff that no one has done before,” Hantoot reflects. “I do think we’re sort of proof that if you streamlined your business enough, you could do a big thing with a few people.”
Their next task will be to sort out who gets what. So far, the founders have been assigning salaries based on how much work each puts in. Those who answer the hundreds of customer service emails and Facebook posts they receive each week earn more than those who pitch in with brainstorms.
But even as their bank accounts fill up, the founders maintain they’re not in it for the payout. “We care about the integrity of the game, and we care about our friendships — at least so far — more than the money,” Temkin says.
Of course, that was easy when there wasn’t much money. Raman Chadha, clinical professor of entrepreneurship at DePaul University, says the point at which the money gets big is often also the point at which an informal managerial structure begins to unravel.
“When companies become successful, in what I’ve seen, that’s where these conflicts often arise,” Chadha says.
Richard Bliss, a gaming industry expert who runs the popular Game Whisperer blog, agrees. “The thing I’m watching is how long they can hold on to this idea that they’re not in it for the money.”
Difficult questions surely lie ahead. For instance, what if one of them wants out? There’s an operating agreement that governs the scenario, but at least some of the founders aren’t sure how it works. They’d likely seek outside advice.
“We’d probably ask our parents,” Halpern says.
Find out how many Chicagoans play games on dates in the index.
Photos by Sara Mays