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Zoosk IPO: The Offering Price Is Everything

Seeking Alpha has an article about the planned Zoosk IPO. A couple of datapoints for those tracking this evolving situation.

High Operating Expenses Raise Red Flag: The extremely high operating expenses (72% of revenue in fiscal 2013) raise concerns that this is a company simply buying its users with little network effects and/or organic growth.

Based on options granted in April 2014 at an exercise price of $7.72, we can assume the pricing discussions are in the range of $8-$16. The question arises though: Is any price in that range a good incentive to purchase shares, or could this be a short candidate once it goes public?

IBISWorld estimates only six online dating companies, including Zoosk, with 1% or greater estimated market share, with only 2 companies having greater than 10% market share.

The company is the number one gross dating app and a top 25 grossing app on the iPhone in the United States.

Read more at Seeking Alpha.

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HowAboutWe co-founder: How to Avoid Delusional Thinking in Start-up Growth Strategy

Over the years I have posted many links to Andrew Chen. Andrew has a great guest post written by Aaron Schildkrout, co-counder of HowAboutWe, which Match recently acquired.

While we’re talking about the industry, SFGate has some great stories about the online dating industry.

For IAC, it was just another day at the top of the digital dating food chain. HowAboutWe needed an exit; IAC was the only one buying.

“It was opportunistic,” said Sam Yagan, CEO of IAC’s dating division, Match Group. “It wasn’t like, ‘Oh my God, we need to have HowAboutWe.’ It was an attractive financial transaction.”

Aaron has a few pearls of wisdom for online dating startups.

The online dating industry is a petri dish for delusional startup growth strategies.

Couldn’t agree more. The quick-money times for the online dating industry are over. You better have $5-$10 million to get going, otherwise you’re toast. Case in point, lot’s of niche sites launched, most of the struggling to own their respective markets.

Paid Acquisition / Direct Marketing: For dating, this is by far the most interesting category. It is the ONLY strategy that has ever worked to build a truly mainstream dating brand over time.

I can’t begin to remember how many times I’ve told this to dating site startup entrepreneurs, ignore at your peril. If you raise money, make sure to raise enough to survive at least the first six months, including marketing costs. Otherwise you’re gonna have a bad time.

Lot’s of other fantastic thoughts from Aaron I won’t bother with here. Between the two articles, lots of great information about the dating industry.

Thinking of starting a dating site? Read How to Avoid Delusional Thinking in Start-up Growth Strategy to get an industry veteran’s thoughts on what it takes to be successful in the online dating industry.

Siri, Get Me A Date

viv
The team of engineers that created Siri, Apple’s voice-driven intelligent assistant, are creating a an advanced form of AI which “will be able to teach itself, giving it almost limitless capabilities. The stealth startup, Viv Labs, has been working on the new service, called Viv, for two years. In time, they assert, their creation will be able to use your personal preferences and a near-infinite web of connections to answer almost any query and perform almost any function.”

See Cortana from Microsoft and Sherpa for Google Glass for other voice-driven options.

Reading the article, all of a sudden, this.

“Intelligence becomes a utility,” Kittlaus says. “Boy, wouldn’t it be nice if you could talk to everything, and it knew you, and it knew everything about you, and it could do everything?”

That would also be nice because it just might provide Viv with a business model. Kittlaus thinks Viv could be instrumental in what he calls “the referral economy.” He cites a factoid about Match.com that he learned from its CEO: The company arranges 50,000 dates a day. “What Match.com isn’t able to do is say, ‘Let me get you tickets for something. Would you like me to book a table? Do you want me to send Uber to pick her up? Do you want me to have flowers sent to the table?’” Viv could provide all those services—in exchange for a cut of the transactions that resulted.

Dating sites have tried to sell date offers to members, with varying levels of success. But what about using a voice-driven AI to find a date?

Over the years I’ve worked with a number of dating site search aggregators. None of them really panned out. Dating sites instead are exposing members to trusted partners, like the Match and Are You Interested deal.

It would be really interesting to see dating sites partner with Siri, Cortana or Viv to find you a date sourced from multiple high-quality sites. Not only to find you a date, they can schedule it for you as well.

How long until something like Viv is smarter than the Match or eHarmony matching algorithm?

Google recently paid a reported $500 million for the UK deep-learning company DeepMind and has lured AI legends Geoffrey Hinton and Ray Kurzweil to its headquarters in Mountain View, California. Facebook has its own deep-learning group, led by prize hire Yann LeCun from New York University. Their goal is to build a new generation of AI that can process massive troves of data to predict and fulfill our desires.

That’s far more money and resources than any dating site has ever put into matching systems. How difficult would it be to add people-matching to the mix?

Interesting to learn than Match members go on 50,000 dates a day. I wonder how that stacks up against the competition?

Read Siri’s Inventors Are Building a Radical New AI That Does Anything You Ask.

Can Dating Sites Make Us More Civil?

Anyone who has spent more than a few minutes on YouTube or Tinder quickly understands that thought-impaired people spewing invectives using terrible grammar make up the majority of commenters and right-swipers. Thankfully we now we have apps like Tinderliker to do the swiping for us.

Nudging uses technology to push people gently towards a specific outcome. When you pay your taxes or buy a domain on Godaddy, alert boxes pop up, asking you to donate to health or political causes. Those are nudges.

The Atlantic has two good articles, Nudge, Nudge: Can Software Prod Us Into Being More Civil? and  Why It’s OK to Let Apps Make You a Better Person. There are lots of apps out there to count your steps, measure your fitness levels, measure your posture and scores of other Quantified Self apps. See Internet of Things, Fitbit, etc. These apps measure something that you are doing, and if you are doing it too much (surfing Reddit) or not enough (walking 25 feet a day), there are a plethora of apps out there to tell you to shape up.

While billions of dollars are being poured into technology-assisted behavior analysis and modification (Hello Apple HealthKit), why is it that the dating industry refuses to analyze member communication and nudge people towards better behavior? I’ve been pushing this for many years, and it appears that only a handful of sites offer any type of suggestion functionality during the message creation process.

Today’s question, is the dating industry smarter than a 13-year old girl?

13-year-old Mighty Girl Trisha Prabhu wants to put an end to cyberbullying so she decided to investigate an important question: would teens still post hurtful content online if they had to think about how it would affect others first? To answer this question, the young Chicagoan — who has now made it to the finalist round of the 2014 Google Science Fair — designed a software system that measures the number of mean or hurtful messages that adolescents were willing to post after being encouraged to “rethink” the impact of their messages. Trisha’s study found that such re-thinking resulted in a tremendous 93% reduction in the number of hurtful messages posted.

You see where I’m going with this. The dating industry needs to take some advice from a teenager about how to ensure safer, more positive interactions between members. I know a lot of sites will balk at this, claiming that this would put undue stress on an important part of the online dating process, The First Email. The more messages that flow, the more money they make. So why the ongoing reticence of the dating industry towards making dating a more enjoyable experience for singles?

“Yo baby let me hit that”, is not something that should ever be spoken to another person on a dating site. I don’t care where you live, the color of your skin or your socioeconomic standing.

Dating sites shouldn’t allow that kind of messaging on their services. That’s never going to happen, so let’s entertain the middle ground.

ToneCheck allows you to do a quick once over check of your message to prevent you from accidentally saying something that you might regret. currently works with Outlook, Gmail and Lotus Notes. Embedding this in a dating site would be pure gold.

But there are two sides to the story here. One one hand, forcing people, (let’s face it, men), to alter their communication style, is a difficult task. Most men would bail on a site that forces this on them. To those cretins I say, good day sir, and goodbye. The chief revenue officer of a top dating site is going to shoot this down immediately. Too much friction, lower signups, higher churn rate.

OTOH, we have message filtering. What dating sites give women the opportunity to block messages containing lame bro-speak? None, zero, bupkis. Women must resort to embedding rules in their profile. Must have photo, must mention my favorite color, etc. Why can’t dating sites pick either option, or a nuanced blend of both? Someone has got to test this so we have some real-world metrics to evaluate.

In the end it comes down to what’s going to work better, helping men become better communicators or giving women the ability to block the jerks? Or the industry can do nothing at all and continue to suffer due to their unwillingness to try new things?

As a counterpoint, Do apps that promote ethical behavior diminish our ability to make just decisions?

Researchers Don’t Think Online Dating Works

The Washington Post writes about the effectiveness of online dating:

And yet, just this week, a new analysis from Michigan State Universityfound that online dating leads to fewer committed relationships than offline dating does — that it doesn’t work, in other words. That, in the words of its own author, contradicts a pile of studies that have come before it. In fact, this latest proclamation on the state of modern love joins a 2010 study that found more couples meet online than at schools, bars or parties. And a 2012 study that found dating site algorithms aren’t effective. And a 2013 paper that suggested Internet access is boosting marriage rates. Plus a whole host of dubious statistics, surveys and case studies from dating giants like eHarmony and Match.com, who claim — insist, even!! — that online dating “works.”

This much should be obvious: We don’t actually know.

Indeed.

Camgirls Are Taking Over the Adult Dating Market

Webcam sex is now a billion-dollar market. The New York Times has a writeup of the industry, what’s driving it, the money involved and much more. The day-in-the-life story of a popular webcam girl is worth the read.

Gaming And Dating

Vegas World Dating

Did you know that recent research shows that 50 percent of spouses who met online did so somewhere other than a traditional dating site?

Social casino Vegas World wrote in to say:

True love knows no bounds, and more and more people are finding it in multiplayer games and virtual worlds. One such couple, newlyweds Kim and Shane Mitchell, found each other in the social casino Vegas World. After initially bonding as single parents, Kim and Shane used the virtual world setting to ease into a friendship, which later turned into a real life love affair. Falling in love online, they celebrated their virtual wedding in the game before ever meeting in person. They used gaming to get to know each other’s children as well, spending time playing together on Xbox Live. The happy couple from Tennessee is now nearing their first real-world wedding anniversary.

Vegas World is just one of the unconventional places where singles of all ages are finding romance. It has enabled more than 30,000 virtual weddings in its chapel, and 85 percent of its users are in virtual monogamous relationships within the game.

That is a LOT of virtual weddings. Hey I know a guy who met his wife on SecondLife, anything is possible these days. I wonder what other non-dating sites and apps people are using to romantically connect?

Matchmakers Figure Rich Millennials Make For Good TV

spindell

Janis Spindel, high-priced matchmaker to Wall Street fat cats and other power-mongers unable to land a suitable yoga instructor, is launching a reality television show.

Let’s just parse the press release, I’m too tired to be serious today.

“It’s overwhelming,” says Janis, the mom of the dynamic duo. “We have been inundated with calls from TV producers who want us to do our own show.”

TRANSLATION: Hollywood forgot about how terrible dating and matchmaking show are. After the interns harassed Hollywood for months the calls are finally coming in.

“But it wasn’t until her little girl Carly grew up and made it a family business that Janis’ matchmaking service began shaping up as a Fortune 500 company in its own right.”

TRANSLATION: Fortune 500 company?

“Carly added a whole other dimension to it,” says Janis. “Business just went crazy. We suddenly had another whole generation – the millennial generation – we could tap into”. “Mom needed a younger mentality to expand, I think,” says Carly. “But she didn’t know it until I got involved. She had been doing it for so long, and so very well, I might add, that she didn’t know there was an even bigger clientele out there until I turned her onto it.”

TRANSLATION: Mom’s fame ran it’s course. Bring in the kid, she’s crushing it. Seriously, that was a good move, mom is aging out of being able to keep her pulse on the younger set of rich kids, and her daugther gets it and the gravy train continues. Good for her.

Carly now heads Carly Spindel Serious Matchmaking Inc. and specializes in matching eligible young men and women at a reasonable expense.

TRANSLATION: Now both men and women can enjoy a new price point, now with less zeros.

“Now the matchmaking business has turned out to be a match made in heaven for both of them. When not helping hopeful singles find love, Carly and Janis Spindel love to vacation at their home in Bridgehampton, New York, the Love Villa, and are actively involved in the community.”

TRANSLATION: If you are a matchmaker you better have a house with a goofy-sounding name. Bonus points for the cliches.

Final tally:

Janice: 1013 marriages.

Carly: 79 marriages.

I wonder how a possible reality show helmed by the Spindel women will fare in today’s television market. Rember the other one, what’s her name, Patti something?

Final thought: I wonder how eH+ by eHarmony is doing?

LikeBright Pivots to Reveal Chat To Help You Build Real, Social Connections Via Anonymous Chat

reveal chat

Several years ago I connected with Nick Soman, founder of LikeBright. We’ve been in contact ever since, talking about the dating industry, market opportunities, matchmaking based on the social graph, etc.

After raising over $1 million and trying a number of concepts, LikeBright was stuck. They were unable to figure out how to leverage the social graph to facilitate better matches in a way that resonated strongly enough to get enough traction to matter.

To address the problem, LikeBright pivoted into an anonymous mobile chat app called Reveal Chat. Their new motto is curing loneliness by making it safe and worthwhile to talk to someone new instantly. It’s a big jump from being a dating service based on Facebook to a being the opposite of Tinder. Factor in a crowded marketplace and it’s clear they have their work cut out for them. Having spent a lot of time talking with Nick, I can’t wait to see what they do with Reveal.

Reveal Chat launched as a free download on iOS 7 and iOS 8. No iPhone? Go to www.revealchat.com in your mobile or desktop browser.

More at Geekwire and TechCrunch.

Hinge As The Anti-Tinder

hinge-photoThe Hinge dating site story is interesting. Hinge is built on the backs of Tinder and the handful of sites that have previously attempted to leverage the Facebook social graph by enabling friends to discover friends of friends and match each other. Everyone else has failed, but with $8 million in the bank, Hinge is officially the new HowAboutWe. They have some media hype on their side, a big bank account and have the benefit of watching companies like LikeIt, Likebright and many others fail to figure out social discovery and matchmaking.

Many companies want to clone Tinder, which is fine if you don’t want to think to hard about what you’re doing and it your business is basically a customer acquisition game and little else. And it lasts for about a year or two, so hurry up.

Hinge is Tinder for people who actually want a date and not waste time on the subway swiping people they’ll never meet on Tinder. Hinge is supposedly safer but that’s a load of absolute BS that the media has run with. Just because you match me with a friend of yours doesn’t mean he’s not going to be a jackass or worse.

Hinge has made some assumptions about what datapoints it matches people against. We’ll see if they are any good. This is all I really care about to be honest. Either their matching algorithm starts out ok and improves over time, or this is a fad app that will limp along while someone else either makes an online dating site even worse and more popular than Tinder or actually makes a matching algorithm that works better than what the market has delivered to date.

Without big coffers of marketing dollars, launching a new dating site these days is pretty much a waste of time. Pretty soon the market entry fundraising bar will be at $10 million. If you don’t have that as your A round, you’re not going anywhere soon. Sure you can grow at 1,000 members a month, but these days that’s what a site like Match signs up ever 6-8 hours. Of course there will always be breakouts like Tinder, but unicorns like that are rare.

Now you can hire an Uber ride while you’re chatting with your new friend on Hinge.

More at TechCrunch.