Chess, China and More

In this week’s newsletter, we discuss how chess has cracked the algorithm, the fall of Nokia, China’s biggest mistake, and more.

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The Big Story – Chess has cracked the algorithm

Around 1,500 years ago, a young prince of the Gupta empire was killed in battle. Naturally, his mother was distraught. And maybe it was a way to show how valiantly he’d fought, but the brother wanted to represent the scene of the battlefield to their grieving mother.

He picked up an 8×8 board, loaded it up with pieces depicting various army positions, and replayed the death.

Now you’d think that the story ends here. That after this display, they would’ve simply gone back to mourning the lost prince. But this tragic event actually gave rise to something else. It spawned a battlefield game on the same board. People called it Chaturanga— a Sanskrit name for a battle formation mentioned in the Mahabharata.

But why are we talking about this now?

Well, this is probably how the game of Chess actually began. Many historians believe Chaturanga was the precursor to Chess. And over the years, the game travelled to Persia. Then to China. And finally to Europe where it evolved into its current form with a new set of rules.

And the country’s love affair with chess is still going strong. In fact, it’s rising everyday. The media is gushing about Praggnanandhaa and his peers. Heck, even we’re talking about it. And all of this is happening because India is storming the chess gates — an article in Business Standard breaks the numbers down: Today, we have 83 Grandmasters — the highest title in chess — including two women. And there are 2 Indians in the world’s Top 10.

But what if we told you that Chess isn’t just having its moment in the sun in India? It’s actually become a hip, cool game all over the world. And the money is pouring in.

It all kind of started a few years ago.

First, there was the pandemic. Yup, when people were locked in at home and had to pass time in 2020, many turned to stuff like puzzles and board games. Mostly online because we’re all addicted to our phones by now. And chess became a hot favourite too. Google searches picked up slowly.

Then came Netflix with its limited series Queen’s Gambit. If you haven’t watched it, just know it’s about a young woman’s journey to the top of the chess world. And it was a super success. Back then, a record 62 million households watched the series in its first 28 days. People’s interest perked up.

And as a consequence, people who live streamed chess matches gained eyeballs too. Games were interlaced with laughter, loud commentary, and colour! It wasn’t the staid and boring chess people were used to seeing on TV. It was chess on steroids. Especially when it came to variations of the game. Such as a version called Bullet—where players have just three minutes to make all their moves. It was made for the easily distracted online age. Some people called it “popcorn stuff”.

And youngsters flocked to watch these games.

On the gaming platform Twitch, users began to rise. At the start of the pandemic, the average chess streamer got just 3,500 concurrent viewers. But by the end of 2020, that number had jumped to 16,000. We’re not even talking about the top streamers here. Just the average, mind you. And the streamers began to rake in the money. The good ones saw the cash register go ka-ching pretty quickly. They made upwards of $100,000 easily — through ads, sponsorships, and even merch. You didn’t have to be a top rated chess player anymore.

And the hype hasn’t stopped. YouTube’s culture trends report revealed that in just the first 7 months of this year, chess-related videos have seen a whopping 4 billion views.

Everyone wants to be part of the rise of chess.

But there is one big winner in all of this…a website called Chess.com.

In January 2020, the monthly active users were roughly 10 million. And just 3 years later, that number shot up to about 60 million. The company found its way into the coveted Times list of ‘The 100 Most Influential Companies’. It raised money from the PE firm General Atlantic. And it even acquired a chess company owned by the current numero uno of chess, Magnus Carlsen.

Didn’t imagine that such a deal happened in the chess world, no?

So how did the company reach the top of the chess world, you ask?

Well, it started in 2005 when two friends purchased the perfect domain name ‘Chess.com’ for $55,000. They wanted it to be the MySpace (a pre-Facebook era social network) for chess players. And the traffic came naturally.

You see, as one of the founders put it: “Back then when you were on Internet Explorer or Firefox, if you put the word “chess” in the browser bar and hit enter, it would put the .com on there and take you to the site. Every day, we were getting thousands of free visits. We were signing up people at essentially no cost. Because we were doing a lot of content and people liked the site, we just became number one for chess.”

Then came the network effect. With 7 in 10 online chess players flocking to this website, it just improved matchmaking. It attracted more users. Plus, it doubled down on chess engines — ones that could give post-game analysis, reveal player mistakes, show moves of previous chess legends, and it even worked with Netflix to simulate the gameplay from its hit show Queen’s Gambit.

Users soared and along with it came advertisers and sponsorships. The money pot rose. And the end result?

It might just have a sweet valuation of $500 million now.

From Chaturanga to a global e-sport, Chess has come a long way. It’s now even part of the Olympics e-sports series. And the cash in the game is only going to rise even further.


Today’s Discussion💡: The Real Reasons Why Nokia Failed

2007: Nokia had a 51% global market share in the smartphone industry

2013: Sold to Microsoft for $7.2 billion – only a fraction of its former value.

2022: Market share of  just ~3.2%!

So, what exactly went down?

1/ Solely Concentrating on Hardware – Creating a physical device like a mobile phone is undoubtedly an impressive achievement. Nevertheless, without robust software, its success was uncertain.

By the time Nokia realized this – Android & Apple had already established a pioneering presence in the app-centric software realm!

2/ Resistance to Change – In 2008, when Google entered the market, numerous competitors embraced the Android operating system, including Samsung. However, Nokia remained steadfast in its reluctance to transition..

And in 2011, they opted to partner with Microsoft to implement Windows Phone as their primary operating system – which proved to be a disaster for the company!

Finally, in 2014, Nokia saw the error of its ways and transitioned to Android, but by then, it was too little, too late.

3/ Internal Conflicts – Until the early 2000s, Nokia adhered to a traditional hierarchical organizational model. However, in 2004, the company’s leadership made a strategic shift by adopting a matrix structure (where different teams report to multiple leaders), aiming to foster greater innovation.

This restructuring gave rise to conflicts within the organization resulting in the departure of crucial members of the executive team.

4/ Failure to Innovate – During the mid-2000s, while the market was quickly shifting focus to sleek smartphones, Nokia, unfortunately, opted to concentrate on manufacturing robust, budget-friendly, and traditional cell phones.

And before long, Apple and its iPhones quickly ascended to dominance, dethroning Nokia from its pinnacle in the mobile phone industry.

Today Nokia’s legacy lives on in our nostalgia, but its fall serves as a cautionary tale. Because it’s not just about creating great products; it’s also about staying agile, embracing change, and constantly innovating!

What do you think?  


Video explainer ⏯️: China’s Real Estate Market Crisis 2023

The real estate sector contributes a staggering 25-30% of China’s GDP. But why does China continue building new cities when over 90% of households already have a home? 🤔

In this eye-opening video, we delve deep into China’s Real Estate Crisis of 2023, exploring how it went from driving China’s economy to the brink of disaster. Brace yourselves, it’s way worse than you might think!

Watch it here: https://bit.ly/45Zk6Qt


Infographic of the Week

And that’s all for today folks! If you learned something new, make sure to subscribe to Finshots for our daily newsletter 🙂

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