Strange Success

How 'Exploding Kittens' blew up into a fortune

How 'Exploding Kittens' blew up into a fortune
How 'Exploding Kittens' blew up into a fortune
The creators of "Exploding Kittens," Elan Lee and Matt Inman.
Jeniece Pettitt | CNBC

Elan Lee helped pioneer the video game industry with the Xbox. Matt Inman has nearly 4 million Facebook fans of his highly successful digital cartoon site 

Together, their latest hit isn't a video game or a website. 

It's a card game. 

Called "Exploding Kittens."  

"It's basically Russian roulette with a deck of cards," said Lee. Why are two men with deep experience in digital making a physical card game? "Table- top gaming is big now," said Inman.  

The point of the game is to avoid drawing an exploding kitten card.
Jeniece Pettitt | CNBC

Lee loved playing table games growing up, though he and his brothers would always change the rules to make it more fun. He has a crazy resume: "I went to seven different colleges because I'm a horrible student."

That doesn't mean he isn't smart. As a teenager, Lee was published in a scientific journal for accidentally photographing a soundwave. In college, he managed to land an internship at Industrial Light & Magic, where he worked in computer special effects for "Star Wars: Episode 1 — The Phantom Menace." One of his jobs was creating the neck of Jar Jar Binks, the least-likable character in "Star Wars" history. 

"I feel I spend most of my life apologizing for that," he said. 

Then Microsoft hired Lee to be lead game designer for its then-new Xbox project. After launching the first Xbox and "Halo," he eventually left to start a series of companies, most of them related to digital gaming.  

A couple years ago, he began feeling bad about it all. 

"I have nieces and nephews that play 'Halo' a lot," he said. "They're just staring at the TV, and they're not talking and they're not laughing, and their siblings are sitting right next to them, and it started to feel like this very lonely experience. I started to feel responsible for that, because I was the one who put those pixels on the screen."

That's when Lee decided to make a good old-fashioned card game that lets people interact and have fun together around the table. He partnered with a friend named Shane Small, and they developed a game called "Bomb Squad." Draw the card with a bomb on it and you blow up. You're out of the game. They showed it to Inman of The Oatmeal. 

"I thought: 'This is a really fun game, it's got a terrible theme, it's got no soul, and I think I can make it funny,'" said Inman. He told Lee and Small that everyone is afraid of bombs, there's no fun in that. "What if instead of a bomb, everybody was stressing and worrying about a kitten? A kitten would kill you, a kitten would blow you up."

They named it "Exploding Kittens." 

Inman created the characters and did the artwork, everything from the palindromic Taco Cat to the anatomically correct bikini wearing mother cat with four swimsuit tops. "We had 17 cats growing up in my house when I was a kid," he said of his childhood in northern Idaho.

"Exploding Kittens" is part chance, part skill. The one card you don't want to pick is an exploding kitten, because then you're out of the game, unless you have a special card that can mitigate it. 

"This game was not designed to be entertaining," said Lee. "Every card in the game is designed to make someone you're playing with entertaining, they're just mechanisms to unlock the entertainment value in the people you're sitting down with." 

Once they got the game down, they needed to produce and sell it, and they decided to use other people's money. A Kickstarter campaign was launched in January 2015 with a hilarious video

They hoped to raise enough money to print 500 decks, maybe $10,000. "In the course of 30 days we raised almost $9 million," said Lee. It broke the record for a crowdfunded game, and attracted the most backers of any project in any category, at 290,000. 

That wasn't good enough. As the Kickstarter numbers began to plateau, Lee and Inman and their team decided to rejuvenate interest by doing something they thought was crazy. "What if we turn Kickstarter itself into a game?" That's exactly what they did, creating a daily point system with rewards, a time consuming task. "We stopped asking for money," Lee said. "What we started to see was extraordinary." People were playing the game and sharing it, and soon more orders poured in. 

That still wasn't good enough. The company decided to create an expansion pack, and talked to about featuring it on the internet retailer's wildly popular Prime Day. "We broke the record for preorders," Lee said. To save money on marketing at Comic-Con, they distributed cheap urinal cakes with "Exploding Kittens" characters in all the men's rooms. It was another hit. 

"We're trying to find things to get ahead of the crowd by being more creative than spending more money," said Lee.  

Over 2.5 million decks of "Exploding Kittens" have been ordered in one year at $20 apiece, meaning revenues are an estimated $50 million. "If you take the internet and add cats to it, it's, like, success!" said Inman. Lee said the company is "very" profitable. 

Elan Lee and Matt Inman at the office in Los Angeles.
Jeniece Pettitt | CNBC

These days, the company employs seven people, but uses 800 contractors at six warehouses around the world. 

There have been some big mistakes in making a physical game versus a digital one. "There was a typo we missed," said Inman, a grammarian. "Yeah, and then everybody points that out for the rest of your life." Lee said their very first shipment of boxes arrived empty, because they forgot to use packing tape to keep all the cards inside. "That was a really tough day." 

Then there was the fun idea to make every box "meow" when you open it, which Lee said ended up costing $1 million for "the world's most expensive joke." 

The game has also gotten some pushback from cat lovers. The company contributes to animal causes and sells orange cat collars at a loss called "Kitty Convict Collars." Lee said the collars alert people that if a cat is seen outside wearing one, the pet has escaped and needs to be reunited with its owner. 

Finally, Inman — who admits he likes cats but not cat owners — tried to explain that "Exploding Kittens" is actually pro-cat. "The kittens themselves are sort of accidentally blowing themselves up, they're sort of passively suicidal, and the object of the game isn't to get them to blow up, it's to save them," he said with a somewhat straight face. "We're really philanthropists when it comes down to it."

So what's next? Another game. "It involves bears this time," said Lee.