Cards Against Humanity: A party game for horrible people

For those unaware, Cards Against Humanity (CAH) is a beautifully simple card game where each player draws 10 white cards, each containing a word or phrase. Each round, the card “Czar” pulls a single black card that contains an innocuous prompt such as “_______? There’s an App for that”. The person who makes the “Czar” laugh the most wins the round. The only kicker is that the white cards cover a very colorful spectrum of content, from “Puppies!” through to statements I’d rather not have associated with an academic paper with my name on it. The end result is a series of entirely offside statements guaranteed to have the group laughing about “out of bounds” topics.

So, on to discussing why the game is genius. CAH, whether by intent or sheer luck, has created a fully self-sustaining ecosystem that creates a lot of fun and a metric ton of money. First, the product economics are tough to beat. It is a paper box and a cheap deck of cards, with each set costing about $1 to make and $2 to ship. Retailing at $25 for the main pack and $10 per expansion pack, 70-85%+ gross margins are a good start.

Second, they’ve chosen to use Amazon in addition to online DTC to ship the product, more on that later.

Third, in order to stay relevant, they solicit feedback, game testing, and card ideas online. Again, we’ll come back to this.

And finally, they’ve hit the cultural nail on the head so to speak. The game was created by 8 high school friends who self-describe as misfits. The game comes from a very authentic, sarcastic, and notably not financially driven past. The founders have stuck close to their anti-consumerism roots, making the game free to download, offering “pay what you want” black Friday sales, while simultaneously giving nearly $4m to charity since 2012.

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Now, putting it all together. What makes this game so special is how everything works together seamlessly to structurally maintain critical mass with little to no external effort. They don’t have to spend a dime on marketing as the game actively markets itself – it is best played in large groups (exposing it to new people), and it has built in obsolescence for those that own it (you start to see the same cards after a while, hence the expansion packs). This pull strategy word of mouth marketing creates its own push marketing – it is the number one demanded toy on Amazon. What’s a good marketing campaign to all of North America you don’t pay for? A best seller spot on Amazon. In addition, the press loves to cover them. Every year they run a ridiculous anti-consumerism black Friday sale which garners national coverage, such as selling nothing for $5 in 2015, and 30,000 boxes of literal bulls**t in 2013.

So, how effective is it? To quote Max Temkin “None of us has to have a job for a very long time”. On the cost side, there likely isn’t too much behind the scenes. Sure, you need 1-2 people on top of your manufacturer, likely 1 analyst, 1 spokesperson, likely another 3-4 people selecting and improving the library of cards (doing custom versions etc), a web developer, a few customer support staff, and 2-3 people promoting the game internationally…so that gets us to somewhere in the 10-15 people needed to run this business.

There are 22 cartoon faces listed on the website, and only 1 of the 8 founders actually has an active role in the business, so it is likely in that order of magnitude. Pay them each $100K, Spend $100K on a thousand square feet of office space, maybe a bit of warehouse space… you’re looking at overhead costs likely somewhere in the $1.5-2M range.

Now gauging demand is a bit trickier, and from what I can tell, their average daily sales are in the 10-30K range given some of their indexed figures released on black Friday sales. That puts their annual revenue somewhere between $4-11M a year. A 2013 estimate put their cumulative sales at about $12M over 2-3 years, and they have grown substantially since then. That leaves about $1.5-7M to be split 8 ways. Remember, only 1 of the founding 8 members actually works on the business. The rest just collect the pay check. I’ve been told 2 of them live in Hawaii. I hate my life.

Sources:

• Why is Cards Against Humanity Such a Big Deal? 5 Facts About the Politically Incorrect Game
• http://stylecaster.com/cards-against-humanity/

• Cards Against Humanity, the Most Offensive—and Lucrative—Game on Earth
• http://www.bloomberg.com/bw/articles/2014-04-24/cards-against-humanity-the-most-offensive-and-lucrative-game-on-earth

• Cards Against Humanity: Pay-what-you-want holiday pack
• http://www.cardsagainsthumanity.com/holidaystats/

• Results of Cards Against Humanity’s Dumb Promotions for Black Friday
• http://blog.maxistentialism.com/post/105481561063/black-friday-bullshit-this-year-for-black