their boss, with the idea of creating a spinoff company to develop the new product. The spin-off company would be known as New Horizon Interactive. Early history (2004–2007) Work commenced on the project in 2004, and the team settled on a name in the summer of 2005. The developers used the previous project Penguin Chat 2 – which was still online – as a jumping-off point in the design process, while incorporating concepts and ideas from Experimental Penguins. Penguin Chat's third version was released in April 2005, and was used to test the client and servers of Penguin Chat 4 (renamed Club Penguin). Variants of Penguin Chat 3 included Crab Chat, Chibi Friends Chat, Goat Chat, Ultra-Chat, and TV Chat. Users from Penguin Chat were invited to beta test Club Penguin. The original plan was to release Club Penguin in 2010, but since the team had decided to fast-track the project, the first version of Club Penguin went live on October 24, 2005, just after Penguin Chat servers were shut down in August 2005. While Penguin Chat used ElectroServer, Club Penguin would use SmartFoxServer. The developers financed their start-up entirely with their own credit cards and personal lines of credit, and maintained 100 percent ownership. Club Penguin started with 15,000 users, and by March that number had reached 1.4 million—a figure which almost doubled by September, when it hit 2.6 million. By the time Club Penguin was two years old, it had reached 3.9 million users, despite lacking a marketing budget. The first mention of the game in The New York Times was in October 2006. The following year, Club Penguin spokesperson Karen Mason explained: "We offer children the training wheels for the kinds of activities they might pursue as they get older." Acquisition by Disney (2007) Although the three Club Penguin co-creators had turned down lucrative advertising offers and venture capital investments in the past, in August 2007, they agreed to sell both Club Penguin and its parent company to Disney for the sum of $350.93 million. In addition, the owners were promised bonuses of up to $350 million if they were able to meet growth targets by 2009. Disney ultimately didn't pay the extra $350 million, as Club Penguin missed both profit goals. At the point when it was purchased by Disney, Club Penguin had 11–12 million accounts, of which 700,000 were paid subscribers, and was generating $40