Can a Card Game Become the Next Big Media Brand?

late last year. To find out what they're doing with all that money, I've got company founder and CEO Elon Lee with me today. Thanks for coming in. It's a plus here, Thanks for having me. So what what kind of sick bastard names their company or game Exploding Kitten? Where does that come? I know, I know, you know. The original name of the game was Bomb Squad, and

that seems more taking right, right. So the concept of the game was like, let's have a deck of cards, will have a few bad cards in there, the bombs, try to avoid the bombs, and you go through the duck trying to draw as many cards as you can while avoiding the bomb. And my business partner Matthew Inman who writes and draws The Oatmeal, said, the Oatmeal is a comics, an online comic, one of the world's most popular comics. In fact, I know it, I know it.

Shout out to matt over here. Um. He looked at this and he said, hey, you know, being scared of the bomb is so obvious. What if instead you were scared of acute, adorable, fuzzy little kitten. And we called the game Exploding Kittens. And um, when Matthew Inman of the Oatmeal makes a suggestion, uh, the correct answer is yes, let's do that. Um. And sure enough he was right, and the thing caught on like crazy. And now we have a game called Exploding Kittens, and everybody seems to

want it. Well, so to the caught on crazy point. I I full disclosure. I'm not a big as what they call now table top games. I'm going to convert you. This is my goal for the day. I'm going to show you what you're missing. But so because I'm sort of out of touch with that world. What are the signs of success that one achieves that merits a thirty million dollar investment? Right? Yeah, Well, let's be clear, none

of us ever saw that coming. So what happens is, Um, we really thought this whole thing was just going to be a little weekend project, right we I Matt had been working on the Oatmeal. I was the chief design officer at the Xbox. I just thought, like, we all were really good at our jobs. We know what we're doing. Let's try something different, just for a weekend project. Fun. Will make this little game, put it up on Kickstarter,

will print out, I don't know, five hundred copies. We'll try to raise ten thousand dollars, and if we're successful, I'll invite all my friends over. We'll order a bunch of pizza and beers, and we'll just pack boxes cardboard boxes in my garage and and that will be a really fast, super fast. Uh. We spent a few weeks putting the thing together, and uh, in those thirty days,

we raised almost nine million dollars instead. And so that's the first trick, right, Like you get a runaway success like this, something that really strikes a chord, something that's beautiful and funny and interesting, and everyone who looks at it thinks I want to get my hands on that, Like that is a thing I need in my life. Um, and then beyond that, over the last five years, since the end of that Kickstarter campaign, we've sold more than nine million copies of that game. It's in twenty six

different languages right now. And when something hits that level of popularity, Uh, it attracts the attention of a lot of big players. Now, if one were to look at your resume, you mentioned Xbox, You've worked at Industrial Light and Magic. You're I mean a tech Okay, you said it. Um, So how does someone I know it was just a hobby, but how does someone with your background come to something

that seems sort of old fashioned? Um? My whole life has been spent making making things for a screen, putting kids in front of screens basically, And uh, I did that for more than twenty years through the Xbox I've done I've run advertising companies, video game companies. I've run a clothing company that was heavily screen based. Uh. We can talk about what the hell that means sometime. Um. But I finally got to this point where I realized

I am very much part of the problem. Like every time I walk into uh, my my family's house, my cousin's house. Uh, and they're staring at screens instead of having a conversation with each other. With me, I'm the problem there. And so I decided, what if instead we tried as an experiment, the same storytelling, same entertainment, all the things that I learned working at places like the

Xbox and industry, light and magic. What if we applied those to something that lets us celebrate each other, uh, sit around the table, laugh, eat, make fun of each other, form alliances, uh, form betrayals like all that stuff where we become the entertainment. What if I built the tools to facilitate that. And that's what Exploding Kittens is. I mean, you almost describe this, or maybe it's not, almost as an act of penance on behalf of your screen based career.

I'm not gonna say no to that. Um it's it was a lot of years of thinking really hard about what are the right tools for storytelling? And now how do I make that much much more social so that instead of the stories that I tell bringing you away from reality, what if they very very much root you in reality with the people that are in the room with you. And you know, you'll have to forgive me for my condescension towards these this tabletop game category. I

used to call them board games. But the interesting thing is, unbeknownst to me, this whole category is quite a growth story. I mean, what am I missing? So I think we're just watching the pendulum swing quite a bit. Um. We have gone so far into the digital realm that there's been a bit of backlash, right people shutting down their Facebook accounts and trying to get off of social media. And what we're watching now is the pendulum swing the

other way. What can we do, even if it's just once a week, What can we do with our friends, with our family? What how do we how do we enjoy each other's company a little bit more? And games are the easiest possible. Think they're great ice breakers. It's sort of that social lubricant um. It'll make you laugh, they'll make you creative. Uh, they'll make you form teams with other people. And it is kind of the shortest route from point A to point B where your goal is,

let's let's celebrate each other, let's enjoy each other. And games have really, really in the last five years ppped up to become the tool by which that is achieved. And is there something with the way you guys approached this space that made Exploding Kittens resonate the way it has, because I wonder if it's the very irreverence of the name, which is so different than when I think back to my candy Land Monopoly, so, you know, stayed and formal.

This feels like brand wise, maybe that's why you broke out. Yeah, I think that has a lot to do with it. I think, Um, traditionally classic board games and card games, Monopoly and Uno and all those, we all were raised on those. We know how to play them, we understand, but but they don't make you laugh. They don't. It feels like they are thirty years old, fifty years old. And the reason for that is because they are thirty

years old and fifty years old. And we really wanted to step out and say, um, not that we expect this to be successful, but that there is an opportunity here to build the kind of game that we would like, a modern take on a car game, and we're gonna name it something funny, and the art on every single card is going to make you laugh, and the rule set is going to be unlike anything you've ever seen before, and the instructions are going to be fast, and they're

going to make you laugh at well as well. The very first line of the instructions I'm so proud to say is stop, don't read these Reading is the worst way to learn how to play a game. Instead, go to this website, watch our four minute video, and you will become an expert that quickly. Everything about the game is kind of like, we don't need to think so hard about the past and pull all that baggage forward with us. Why don't we start fresh because the stakes are so low, let's just give it a try. So

Exploding Kittens is really only where this has started. You have since expanded this into multiple game. Yeah, we have six games out on the market right now. Um. The latest one is called Throw Throw Burrito, and um it's our take on what happens if you mix a card game with dodgeball. So such an intuitive right, why did I come? But nobody, especially in the in the sort of heritage of games, nobody's looking at areas like that. And this game is played. It's a fast, crazy game.

You've got a deck of cards. Everyone's moving cards around the table really fast. You're trying to collect a set of three cards faster than everybody else. But at the same time, there are these cute, squishy foam burritos being hurled across the table. So while you're collecting cards, you have to duck and dodge and pick them up and throw them back and worry about way more things at a time than your brain is capable of worrying about.

And that chaos is where the fun lives. For that game, Throw Throw a Burrito has now become the number one best selling game in Canada. It is hot on the heels of Exploding Kittens, which holds the number one spot in the US. And it's really exciting for us to see that when we engage our audience, when we challenge them to think about games differently and to have fun around a table in a new way, they put their money behind those things. And so where does the churning

group come into this? At what point do you say, hey, we need more money if we're going to grow, which I presume is what brought you to Yeah, so we have been in a very fortunate position. Um, we've turned down multiple investors over the last five years because we haven't needed money. We've frankly making games as cheap. You just have to come up with the right ideas and

have the right marketing tools in place. UM, for me, the game design, my partner Matt, who does all the art and has a huge marketing push through the oatmeal, we really haven't needed very much else. We have an incredible team, and so we thought, let's just keep doing this. We don't need investors. And then the Churning group showed up and they said they had a really interesting pitch. They said, you guys have built this thing as big as you can. You are the biggest gaming company in

the world. Uh, card game company in the world, and you've grown this through hit after hit after hit, and that's You're going to keep doing that, but you're not going to see exponential growth. The next phase is is to turn this from a product into a brand, and that means movies and TV shows and theme parks and all the stuff that you have no idea how to do and we are very very good at And I kind of scratch my head and thought, you know, that's

a really strong argument. I don't know how to do any of that stuff, and clearly it's the next step. So uh, we started talking with them and got her worked our way into some negotiations, and uh, they wanted to put thirty million dollars in in order to help us turn this thing into a brand. You know. For those who don't know Turning Group, the investments that they put out there tend to end up at the hottest companies.

Look what just happened with Barstool Sports. Uh. The question is, though, is how soon are we going to see sort of the impact of this investment? UM you know, is is an Exploding Kitten's animated show coming on next week somewhere or what we are We're exploding nothing next week, but we are exploring all kinds of stuff. We are exploring television and movies. A much easier way to think about this and the reason that we are attractive to churnon

is UM. Brand creation is usually done through something small, accelerated and then grown into something very very big. Marvel, for me, is the perfect example of that. Right, very cheap, easy to make comic books years and years and years ago, which now is one of the biggest media empires there is, right, But it's because they create very compelling characters, they tell really good stories. You fall in love with those characters and stories, and so when they are able to bring

them to life on a much larger scale. The audience comes right along for that ride. The investment came to us because Churnon thinks as as we do, the games might be an interesting opportunity for that same formula, very

cheap to make its ink on cardboard. Uh, really amazing characters. Um, were those characters come into your home, they come to life, You fall in love with them, you laugh, You have this incredible time, and what if we use that as the seed to start growing that forest and start planting these things that could grow into the next amazing TV show, the next amazing movie. Um. The good news is these are so much easier to make than starting a movie

or a TV show from scratch. So we're going to be trying a bunch of them, and we're gonna be going in a whole bunch of different directions. None of them will be that surprising, but they will all be based on a very cheap, very easy bet that we made five years ago, which is, here's a card game that we love and we think you'll love it too. Have to note some irony here, a company that was rooted in your effort to get away from screen seems

to becoming full circle. I know, Um, the way I look at it is we all our games are uh anti screen, and and the reason is again because we want people to come together with their friends and family

and have fun. But we get to a certain point where we've hit as many people as we can, and in order to broaden that audience, we have to go where those eyeballs are, and so we've done things like we made an app for the iPhone and Android, even though we thought we never want to touch screens, but we made this really really beautiful app that it requires you to play with your friends, and so, uh, your friend that's out traveling, you're we We actually got so

many requests from people, um in the military who wanted to play the card game, but you know, they were stationed somewhere remote and didn't have the cards with them, and so initially we made that app to help them and to let them play with their family back at home and connect and have a good time even though they were remote. So we're less anti screen than we

used to be. I agree it's very ironic upcoming full circle on it, but ultimately it is all it is all to lend a hand to that effort of let's bring people together, let's celebrate each other. I wonder, though, if not even a few years from now, your company will be known more for I P on screens than the coreboard product. Does that trouble you? Um? I think that is inevitably true. It's just the world we live in.

What we can do uh through gaining that popularity, though, is constantly push people back to our roots, to the fundamentals of why we're here and why we started this company. UM. A question I get asked a lot is why are our games good? What? What is the secret to making a good game? And the secret to making a good game is the same secret to building this whole whole company, which is, don't make games that are entertaining, make games

that make the people you're playing with entertaining. And if we can remind people of that that the people around them are the entertainment. Uh. And these are just the tools be at a card game, be at a TV show. If we can constantly push people to those things, then I think we've still succeeded, even though we're starting to involve screens. Another extension to the brand that you had coming up was an actual fan convention based on your I p based on the whole gaming world. I understand

has been some changes now, but tell us about it. Yeah, it's a tricky world out there right now. So we decided that, um, if we were going to constantly promote these games and constant promote people coming together, why not throw and host the World's Best Game Night A a festival of games. See new games that you've never seen before. Everybody come together, show off your prototypes, show off your artwork,

form new companies, make your own new stuff. We are going to fill a room with the most amazing, crazy stuff that you've ever seen. It's the convention that we've always wished existed, and we rented out the Portland's Convention Center. We called it Burning Cat, of course, and of course, as one does, and we were very excited. This was going to launch in just a few months. Um. Of course, with the current climate, we decided it would be pretty responsible for us to ask so many people to travel

and gather in the same room. So, uh, we are officially announcing that, Unfortunately, we're going to postpone it for one year. Burning Cat will exist in We have spent so much money building the props and the events and the and the games for this thing. Uh, so we're going to invest a little bit more, put them in storage for a few months, and then put them back out. Can you give us a just a sneak preview of what a proper two might be, because my guess is

this is going to be as whimsical as the game itself. Um. Yeah, we're doing all kinds of crazy stuff. So uh, right in the center of the convention, we're building an arena, literally stadium seating, a stage, this giant arena that will host every hour some insane event. We're One of the things we're starting to build is a dump tank, but it's filled with uh sitting on the pedestal are celebrities

and it's filled with lacrosse, drinking water, sparkling water. We're building sumo wrestling, but the suits are these giant furry cat costumes. Were building uh an entire golf course, but it's all uh whimsical basketball instead. Um everything we we We've got a climbing wall totally covered in fur. We've got like just we kind of took all these classic things that we've seen at other conventions and carnivals, uh, and kind of applied our own little spin on them,

and UH. The end effect is this just glorious gathering of people who want to again have fun, enjoy each other. UH, and we serve as sort of the matchmaker for that process. So when I show up a who am I going to see there? Who is exactly the target demo for the brand. So the target demo is this. We have two core groups. Um. Mostly our audience is UH and you even split males and females ages eighteen to thirty four. Um, they love our games. They're the ones who are, you know,

buying pizza and beer and hosting game night. And there's millions and millions and millions of them out there, and that's who you're going to see there. We have a second audience, which we are delighted with, which is their kids, the five to sixteen year olds who play games with their parents now and we build the games that allow them to do that. So UH, we're devoting all of

the second day of the convention to kids. And that's where we're bringing out some of the craziest lower barrier to entry activities so that you can go there with your kids and still have an incredible time. So what is the next big release for you guys. Um. It's very exciting when when Throw Throw Burrito was up on Kickstarter, we had an elite reward tire, like the highest possible rewards.

Here was this thing that we called the Extreme Edition and it was instead of little foam burritos and a deck of cards, will give you a deck of cards and these giant, like three or four ft tall, inflatable burritos, two of them, uh, and you throw those around instead. So another interesting thing I've learned about what you guys did is kickstarters where it all began. But you also haven't really left Kickstarter behind either, So what's that about.

So crowdfunding in general is a really attractive notion for us. UM. When you start a new game, your options are self self funded, uh, self publish. It tends to be pretty small games, or go to one of the big guys, Hasbro Mattel. Uh. You know, they pay you a little bit of money, they take the lion's share of the ownership because they're taking on all the risk. And more importantly, very few games go out that way and it's not

has Browne Matell's fault. They have a small team of buyers who have to make some very very focused it's every year and I can't possibly get it right, and there's three or four people. Crowdfunding is such a beautiful invention in the world of tabletop because suddenly, instead of trying to convince one or two people that your game is great, you get to actually show it to the audience. You get to say, hey, four million people out there who are in this market, here's my game, here's my

best idea. If you like it, give me the money to help me make this thing, and then we will all get to develop it together. And that model is so glorious because it changes everything. It makes it so the actual best games get made instead of someone's guests on what the best games are. And we love that. We love the idea that we can put out a game and people will look at it and get attracted to it and say, I want to help you build that.

We love the idea that we can put out a game and someone can scratch their head and say, I don't get this, this doesn't seem good enough yet, and then we can work to make it better that has never existed before. And because it builds that community, like again, I know I sound like a broken record here, but because everything we do is based on celebrating the people that you're with, crowdfunding is a way that we get to apply those same principles to the actual development of

a game. And what could be better than that? So I'm getting a better sense of the world of this game. Who would appeals to? I want to now understand Exploding Kittens as a company. Uh, you know, obviously it started with just a few of you, but what has it grown into? My My guess is your offices are probably distinctive in some nature uniquely. So yeah, up until about a year and a half ago, the office was actually in my backyard and here in Los Angeles. Yeah, here

in Los Angeles. I tried to keep it really small, and once we hired our sixteen person, my wife finally said, I'm not waiting in line to use my kitchen anymore. Get them out of here. So we rented a space here in Los Angeles. We're out up to twenty nine people. Uh, moving fast. We hired one more at the end of last week, so I had to reduce some math there. Um and the office space in general is um. There's

there's three main areas to our office. One is a giant open workspace, lots of yelling, lots of I need help with this, who's who's who stole my pencil? You know that sort of thing where the goal is all of us are wearing so many different hats. None of us quite know what we're doing, because we invented as we go UM, so there are no private offices and

everybody has to work with each other UM. The second part of the office is our fabrication studio, working with UM card games, where you have to make boxes or make cards. The process is really slow actually, because you have an idea, you send it to China or some prototyping facility locally, They build it and they send it back. It takes forever. Something's wrong you you go through this whole process again, it could take you four or five, maybe six months to look at the thing that you

had in your head. So instead we invested in UH three D printers, some scene smals, a glow forge, which is a three D laser printer UM and now we make our own prototypes in this facility in ten minutes and that allows us. Hanging above that is this giant neon sign that just has fail fast, and the idea is make as much stuff as you can, knowing that all of it is going to suck, and that's okay. Get through that process because it is at the end of that that failing process that you're going to make

something amazing. Get through the failure as quickly as you can, and so we encourage everybody to use that facility as often as possible, make all the things, and eventually, hopefully, luckily, something beautiful will come out the other end. The third space is our gameplay space. Um this started out with just my private collection of games and board games and card games, and now because of Kickstarter, so many people send us their games because they want us to review them,

they want us to post about them. We get three to four games a week at this point, and every Friday we order in lunch for the whole team. We sit in front of our wall of games, and when I say well, I mean fifteen feet tall fifty ft wide amounted like so many games you cannot possibly get through them all. But we order in lunch and we do our best to get through two or three games a week because, like everything that I've been saying, if if we can work together, if we can celebrate each other.

If we can understand why this is so much fun, then we can create more products like that. And so you've got this unique culture it sounds like, and you I believe your title is Lord Commander of Fun. Correct, everyone happened? That is not actually my title. That is a title that a bunch of people have been thrown around that I'm doing my best to squash. My title is game designer. Okay. Uh. Nevertheless, I assume we're going to go from twenty nine employees to maybe three or

four times that in the coming years. Are you sure you could sort of keep that sort of sense of culture in place as the growth occur. Yeah, I think that is certainly the goal. It is so important to me that we all get to hang out in a place build things together, because they get better that way. And the more I can encourage people to the more I can encourage our accounting team to try game design, the more I can encourage our art team to learn

how the manufacturing process works. The more we can all get really good at each other's jobs, or at least understand really well how they work, the better games we can make as a company, because all the parts know what all the other parts are doing well. It sounds like you're taking a lot of the manufacturing process creative

processes in house as possible. But I'm curious. We talked earlier about you know, burning cat being postponed, the current climate, coronavirus being as crazy as it is, does it disrupt your business in other ways so much? Unfortunately, most of our products are manufactured in China, and here's the perfect story. So we're we're figuring out how to print in other places now that China is quite problematic. But our new game, uh, Throw Throw Burrito has these two foam squishy burritos in

them that you throw at each other and they're amazing. Um. But when China stopped being able to produce anything, we suddenly we had to order five thousand copies of that game, and we just couldn't know what nowhere. So I sent out, uh, some interns to every toy store in Los Angeles, and every pool supply store in Los Angeles, and every dollar store in Los Angeles and said, get all the foam things, all of them, and not only bring them in, but

let's figure out where the all manufactured. And then we're going to cold call every single manufacturer on the planet to figure out a solution to this thing. And the horribly depressing answer is from China. From China, and that's that's devastating for us on a business level because we

now have a single point of failure. And I didn't ever think of a country as a single point of failure, but here we are, um but devastating from kind of a global manufacturing community where we have lost the ability to compete in the toy manufacturing space, we being anyone other than China, And that's been hidden for a long

time and now suddenly we're seeing it. What we're going to see in the next few months is you walk into Target or Walmart and a certain kind of toy is just going to be gone, a certain kind of toy that requires Chinese manufacturing because they have the monopoly on that. Those shelves are just going to be empty. And uh, that supply chain is depleted. Right now, we haven't seen the effects of it, but we're going to.

And I hope that means we can kind of find we can sit down and maybe collectively come up with some better, more long term solutions, uh, in terms of getting the manufacturing out of China, correct, Yeah, or at least getting components of it out of China. This is something we're exploring heavily right now, is how do we make it so that there is no longer such thing as a single point of failure. That's not to say things will not be made in China, it's to say

the dependency will not lie on China. This is the new reality I think for any and all businesses. But you know, bottom line this for me, could your company be facing an existential threat here due to this situation? Um, there are some games that we will simply not be able to produce this year, just at all. And that's a shame. And well, we have an enough excess inventory

that we're okay for a few months. Um. We I have also sent out agents to every other manufacturer I can think of in Mexico and Taiwan and Poland in the UK, and we found solutions. We we have ways to to put ink on cardboard and so there's a lot of games we can make which will save our company. Um. But it makes growth through more creative games very very limited this year. Well, I wish you the best of luck facing that challenge. Certainly, lots of businesses facing their

own challenges in this time. But um Elan thanks for coming in and talking to us about exploding him. It's my pleasure. It's so much fun to be here. This has been another episode of Strictly Business. Tune in next week for another helping of scintillating conversation with media movers and shakers, and please make sure you subscribe to the podcast to hear future episodes. Also leave a review in Apple Podcast let us know how we're doing