BUILD, RACE, Fight . . . AND CHAT
Discord’s communications service for gamers has already outgrown messaging giant slack. As it nears unicorn status, the two-year-old startup aims to cash in on its success.
Discord’s communications service for gamers has outgrown messaging giant Slack. As it nears unicorn status, the startup aims to cash in.
Six days a week, a 26-year-old videogaming celebrity who goes by the name “Lirik” regales his 1.7 million followers on the streaming service Twitch as he broadcasts himself playing Destiny (a shoot-’em-up contest), Colony Survival (a city-building simulation) and other popular online titles. As he plays—from an undisclosed location in Massachusetts, lest he be mobbed by fans—another app called Discord floats on his screen. Lirik uses it to chat in real time via voice or text with teammates and to message with thousands of fans in channels dedicated to popular games like League of Legends and Mario Kart. Lirik, who refuses to publicly reveal his real name, became an avid user of Discord two years ago. He has since been chosen by the San Francisco-based startup as one of about 200 influencers it pays to promote the service. He says Discord fosters a sense of community among his fans, who chat, mingle and form friendships with each other. “I have Discord open 24-7,” Lirik says.
Discord’s embrace by famous Twitch and YouTube gamers like Lirik helped turn the free desktop and mobile chat service into one of the biggest app breakout hits in recent memory. Growing virally since its May 2015 launch, it has more than 45 million registered users, who send some 200 million messages daily. Every day 9 million people across the globe use Discord. By compari- son, the corporate messaging phenom Slack had just 2.3 million daily users two years after its launch and has since grown to 5 million. Discord, which has been called “the Slack for gamers,” is adding 1.1 million new users every week. “I haven’t seen a product that has grown this quickly, with this daily usage, in a long time,” says Josh Elman of Greylock Partners, an investor in Discord. “If you’re a gamer, Discord speaks to you.” Cofounder and CEO Jason Citron says, “Discord was just something that was missing from the world. It needed to exist.”
Discord has quickly overtaken incumbents like Teamspeak, Mumble, Ventrilo and, in some cases, Skype with a simple formula: an all-in-one service that combines text and voice communications— and, soon, video chat and screen sharing—and integrates easily with online games during playtime. The bulk of Discord users are 18-to-34-year-old
gamers who connect with a core group of friends for hours on end to discuss strategies for slaying a dragon or chat about work or their romantic lives. Discord’s mobile app shows users when friends are playing and makes it easy to set up future play sessions. Richard Hordijk, an analyst at the gaming-focused research firm Newzoo, says features like these “set Discord apart from longrunning applications” and have turned it into the market leader.
The tantalizing prospect of becoming a leading pick-and-shovel vendor to the gaming gold rush has helped Citron, 32, and cofounder and CTO Stanislav Vishnevskiy, 28, raise nearly $100 million from a list of marquee venture investors that also includes Spark Capital and Index Ventures. The company won’t disclose revenue, which comes mostly from $4.99 monthly subscriptions for extra features like animated avatars, custom emojis and larger file-upload limits. But a $50 million cash infusion in June valued Discord, which has just 65 employees, at about $770 million. Investors know gaming fans are a lucrative audience. Industry revenue, which includes PC and mobile games, will top $94 billion this year, according to Newzoo. The firm estimates that growth will continue as PC gamers, already at 1.2 billion globally, reach 1.4 billion in 2020.
Citron and Vishnevskiy began their gaming careers as 5-year-olds playing Nintendo on Long Island and in Los Angeles, respectively. They were programming for money by their teenage years and further honed their computer skills in college—citron at Full Sail University in Florida and Vishnevskiy at Cal State Northridge. After graduating, Citron worked for gaming studios for a few years before launching his own Tetris-like game on the day Apple’s App Store opened. When he couldn’t monetize the game, he took the social features he had built and turned them into a service for game developers. He expanded the company, Openfeint, to 100 employees and sold it to the Japanese media company GREE for $104 million in 2011. Citron left a few months later and, after unwinding through three straight weeks of playing Final Fantasy IV, decided his work wasn’t done. “I had this itch, and still have the itch, to build something enduring and important,” Citron says.
At the time, ipads were booming in popularity, and Citron thought Apple’s tablet could become the next blockbuster device for gamers. He founded his next company, Hammer & Chisel, in 2012, to develop a multiplayer ipad game, recruiting Vishnevskiy, who had worked at GREE. The game won accolades for its design, but when it struggled to gain an audience, Vishnevskiy pushed Citron to consider an idea he had shelved: a text and voice chat service for gamers. Citron was intrigued and assigned half his 18-person staff to work on what would become Discord. Eventually, Citron made the wrenching
decision to stop development of his ipad game— and lay off about half the workers—to focus on Discord. “It wasn’t even clear Discord was going to work, but I knew we couldn’t do two things at once,” he says.
(Interestingly, Slack, which is worth an estimated $9 billion, also emerged from a failed gaming experiment: It was developed as an incidental internal tool for a team of coders building a computer game that was later scrapped.)
Discord launched two years ago into a market dominated by a handful of rival services. But most had failed to innovate or adapt to rapidly changing gaming behavior, leaving them vulnerable to an upstart with a better mousetrap, says Lauren Foye, an analyst at Juniper Research. Discord seized the opportunity with a more seamless experience. While most rival apps have to be installed, Discord can run inside a Web browser, meaning users need only click an invite link and create a user name to get started. (Players who stick with Discord typically install the desktop version later for better performance.) Discord also caused fewer game-play delays than competitors, eliminated the typical monthly usage fee and removed the need for gamers to toggle between programs. “The social group moves from a fragmented messaging experience with Teamspeak and maybe Whatsapp or Messenger, and then they just all use Discord,” Citron says. “There’s no waiting to call into chats. It’s like an alwayson conference call.” Gamers also appreciate its security, which protects their IP addresses and prevents them from getting kicked offline. Meanwhile, Millennials are drawn to Discord’s visual messaging, which supports GIFS and graphics tied to internet memes.
Discord’s first spurt of users followed a fan’s rave review on Reddit. Citron and Vishnevskiy shared links to invite users to the ensuing discussion thread, and usage took off. The founders still message with users every day, and Citron, who is more extroverted than Vishnevskiy, is known to spend hours at gaming events like Twitchcon handing out swag. Meanwhile, a customer-care team of 15 employees and 20 contractors works to prevent abuse and assist—and banter with— users. “It’s a lot of little subtle things that make a big difference,” Citron says.
For now, Discord’s moneymaking potential is hemmed in by the founders’ promises to users: The core service will remain free, and they won’t run ads or sell user data. And as the company grows, the monthly subscriptions for extra services aren’t likely to pay the bills. But Nabeel Hyatt, a partner at Spark Capital, says Discord’s user base should lend itself to plenty of monetization opportunities over time. Selling games and merchandise could be an option, analysts say. The company may also sell tools and services to developers who create games with Discord’s chat features and come up with bots for the service.
Discord is already being used by nongamers inside some businesses, and some analysts see another potential opportunity there. “Discord very much has its roots in gaming, but you could see it branch out more broadly,” Juniper’s Foye says.
Citron and Vishnevskiy say they prefer to remain firmly grounded in the fantasy world of games. They’ve built Discord’s headquarters into a child’s idea of what a workplace should be. There’s a handful of arcade games lining the entrance and meeting rooms equipped with comfy recliners, antiquated televisions and gaming consoles, which could easily double as playrooms. Groups of couches offer seating for monthly game nights. Plushies, particularly Pokémon, decorate desks. “That’s why Stan and I wake up every day and do this,” Citron says. “Bringing people together around games is really the lightning rod we connect to.” And who’s to say fun and games can’t turn into real profits?
Stanislav Vishnevskiy (left) and Jason Citron turned a passion for gaming into a blockbuster communications app.