As a consultant I often work with entrepreneurs working on their first startup. Sometimes I am asked to review business plans and financial spreadsheets. Some business plans are 32 pages long and cover every imaginable circumstance, down to the smallest detail.

I also see my fair share of seven-screen Powerpoint presentations. Guess what, the seven-page version can get funded as often as the 32-pager. Length and level of detail are not what gets you funded. A scalable idea with a great management team is often what investors are looking for. More is not always better.

Financial projections are often all over the place. The one thing that is common to most is that the revenue projections are so far out of alignment with reality as to be amusing.

Throwing caution to the wind, and old tried-and-true business adages to the wind, Rework, the new book from 37Signals, is a great read for anyone starting or running business, dating or otherwise.

Unless you’re a fortune- teller, long- term business planning is a fantasy. There are just too many factors that are out of your hands: market conditions, competitors, customers, the economy, etc. Writing a plan makes you feel in control of things you can’t actually control.

Why don’t we just call plans what they really are: guesses. Start referring to your business plans as business guesses, your financial plans as financial guesses, and your strategic plans as strategic guesses. Now you can stop worrying about them as much. They just aren’t worth the stress.

Great food for thought, as usual. As with all books about business, take what you want and leave the rest. Check out these workplace videos and testimonials and then go buy the book Rework
.

Related posts:

1. eHarmony feels the heat
2. Match seeking Director of Strategy & Planning
3. Yahoo! seeks Dir. of product management

During the past year or so I’ve been thinking and writing a lot about the role Facebook could play in online dating.

I’ve received a lot of feedback from the online dating industry about the possibility of Facebook becoming the worlds largest dating site. Typically I hear that:

- Facebook needs to focus on monitization strategies
- Facebook needs to focus on managing it’s tremendous growth
- There is not enough money in dating for Facebook get involved
- Privacy issues (See Dating Profiles Will Get Their Data From Facebook)
- And lots of other fear-driven reasons why Facebook will never becomes a serious dating platform.

I’m the first to agree that Facebook in it’s current form is not positioned to be a dating site. See You Got Your Match in My Facebook for more on this.

Searching for singles on Facebook around your age in your area code is difficult unless you spend some time figuring out how search works across networks (I may be missing something obvious here). Facebook says there are zero single women looking for men in Boston unless I search in the Boston, MA network. I don’t seem to be able to filter on Boston in the search results. I also can’t filter by age using the high school or college graduation date. I blame all of this on the fact that 200,000 join Facebook every day. They have better things to worry about than search functionality (but not for long).

All of this supports the fact that Facebook itself isn’t going to push into the dating space itself. It’s a platform and it’s job is to make it easy for third-party applications to provide features and functionalty the Facebook won’t/can’t take the time to develop.

Today, fbFund REV 2009 Finalist Thread, Formerly Frintro, Raises $1.2 Million (thanks to Inside Facebook). Thread is a Facebook Connect enabled dating site that allows users to meet friends of friends and/or play matchmaker by making introductions between your friends.

My neighbor Leah Busque, founder of RunMyErrand, turned me on to Thread. Leah was at the fbFund incubator this summer, along with Thread and many other amazing startups based on Facebook. Facebook is evolving as a platform, not only as a destination, and the incubator was a great way to support and fund the companies building out services based on FacebookConnect and the Facebook API.

Here is a Facebook Blog post from Brian Phillips, co-founder of Thread.

The basis for your company, Thread, is to introduce friends-of-friends on Facebook. How did you come up with the idea?
Personal experience. One of our co-founders, Skye Lee, is a consummate matchmaker. She loves nothing more than to set me up. A typical day: I’ll get a phone call from her before we even start thinking about business. “I just found this really cute girl on the street, and she’s single. You should take her to coffee next week. I told her all about you.” When we started to think about business ideas, it hit us — we should just make it easier to introduce people by applying cool technology like Facebook Connect.

Sound familiar? It’s Engage, built on top of Facebook. What Engage spent over $6 million dollars to develop, Thread can do for a million, actually a lot less.

Real online dating is coming to Facebook and it looks like Engage/Kismeet with Facebook Connect added to ease the signup process.

Back in December 2007 even Match got interested in friends matching friends. See Best Friends and Lovers for the latest serious Facebook dating application. Cablight is another “friends matching friends” application on Facebook.

For more on Thread see TechCrunch.

There are thousands of dating applications on Facebook. I’ve written about two of the most successful, Zoosk ($6 million raised) and Are You Interested (partnered with Match) many times. I like the companies, their management team and their shared passion for helping online dating evolve past the current static profile model of dating.

The problem is, the majority of serious daters are not using these applications, and the number of casual daters, while impressive when looking at Powerpoint slides in terms of adoption rates are tiny compared to Match or eHarmony and Yahoo Personals. Zoosk and Are You Interested talk about millions of installs and monthly users, but what of effectiveness? I don’t have numbers in front of me about how many successful relationships have occurred on either application, which I would presume would bolster my argument further. The reality is that when it comes to results, singles have fared better on traditional dating sites than social networks.

The argument quite often centers around Facebook dating applications copying the old Matchmaker model- many geogpaphic, political, religious and sexual-orientation niches within a large dating site. Don’t forget layering in features to make members anonymous during the matching process, because nobody wants to mix their personal peanut butter with their business chocolate.

There is little doubt in my mind that companies like Thread are going to figure this out, paving the way for more robust dating services built on Facebook that serious singles will warm to over time. How can you argue for the status quo big box dating sites and scores of unprofitable niche dating sites when Facebook has over 250 million users to choose from?

Related posts:

1. SecondLove Launches On Facebook
2. Thread Slowly Rolling out New Features
3. Thread Offers Matchmaker Rewards

AllFacebook says that there is a growing market for purchasing Facebook Profiles. This reminds me of people who contact me looking for dating profiles. Pre-populating a dating site with fake profiles is a really bad idea. Short of acquiring a dating site and merging it’s population with a new site, companies like White Label Dating are the only way to go if you want to launch a dating site with a populated community on day one.

Related posts:

1. Ugly Facebook Dating Project
2. Launching a dating site
3. Online Daters Could Learn From Facebook Fiasco

I was interviewed extensively for last summer’s HBS Case Study of eHarmony. All my interview output was nixed by eHarmony. I was told to take that as a badge of honor. You can order your copy of the Harvard Business School eHarmony Case Study for $6.95.

Related posts:

1. Eharmony Case Study
2. Found, Match.com Case Study
3. 100 Terabytes of eHarmony

Niche dating sites can be incredibly effective if you’re Jewish, Black, Gay, Athletic or belong to any number of groups where it makes sense to self-identify as part of a particular group of people. Matchmaker was the first site to have many different demographic areas broken out inside a single dating site, but Date.com merged everything into one database when they acquired the site.

These days I’m increasingly interested in how large dating sites are taking advantage of the staggering amount of information the collect about their users. Large dating sites are spending tens of millions of dollars logging, storing, analyzing and refining compatibility algorithms on multi-terabyte data sets based on what users is doing on their sites. Data such as the number of emails being sent and responded to daily and hundreds of other metrics and measurements are being captured, at least I hope they are.

Smaller sub-500,000 member niche dating sites are simply not able to compete when it comes to designing compatibility algorithms and dynamic content display. They have to think smarter about which data to collect and how to feed back what they learn about how people use their site in an ongoing incremental update process. Dating sites are not set-it-and-forget-it enterprises, although this is how much of the industry views itself.

Building a quick site turning on the marketing dollars and watching the money pour in works for a few sites, but is not the golden rule by any means when it comes to competing in today’s crowded marketplace.

The widening gap between niche sites and mainstream dating sites reminds me of when Google was starting to get traction. There was Alta Vista, HotBot, Dogpile and 25 other search engines. In the past 5-7 years the majority of them having fallen by the wayside as Google has risen to prominence. This has not been the case in the online dating industry, yet.

Downloading a dating platform and rolling the dice with a few thousand dollars is almost certainly a recipe for disaster in today’s market. This is not to denigrate dating platform providers. On the contrary, I think there is a lot of room for groundbreaking sites to rise up and take market share from slack dating site operators. but what I’m hearing from people day in and day out is a lack of innovative though in regards to what singles are looking for in a dating site these days and the platform providers are simply providing just that, a platform. That’s where I come in as a consultant.

Dating sites are simply starting up all over the place these days as they try and cash in on the recession-based surge the media has done such a good job mis-reporting.

Lately I’ve noticed that most dating software vendors are reticent about discussing their businesses and that more and more people are building sites themselves, either through software platforms or White Label Dating. I still get 10-20 emails a week from startups, but now they are looking for free feedback on their concept, not the multi-month engagements of the past where I work with them to refine their business models and deal with the 87 issues any dating site startup needs to address in order to be successful.

If the industry is at the point where anyone can launch a dating site or become a pseudo-affiliate of White Label Dating, where is the interesting stuff happening? These days the action and interesting stuff tends to be happening at the top ten dating sites. Thats where the real innovation and growth is occurring, along with one heck of a steep learning curve. And that’s where my focus is moving towards as well.

Lately I’ve been reading more stories like these:

Is Big Data at a tipping point?

Online dating: Your profile’s long, scary shelf life

How Google and Facebook are using R:

Itamar Rosenn at Facebook conveyed how Facebook’s Data Team used R in 2007 to answer two questions about new users: (i) which data points predict whether a user will stay? and (ii) if they stay, which data points predict how active they’ll be after three months?

For the first question, Itamar’s team used recursive partitioning (via the rpart package) to infer that just two data points are significantly predictive of whether a user remains on Facebook: (i) having more than one session as a new user, and (ii) entering basic profile information.

For the second question, they fit the data to a logistic model using a least angle regression approach (via the lars package), and found that activity at three months was predicted by variables related to three classes of behavior: (i) how often a user was reached out to by others, (ii) frequency of third party application use, and (iii) what Itamar termed “receptiveness” — related to how forthcoming a user was on the site.

Facebook’s “In-House Sociologist” Shares Stats on Users’ Social Behavior

These stories may seem to have little to do with online dating, but as a whole they can be seen as incredibly inspiring when viewed from the perspective of someone running an established dating site or looking to start one.

One one end of the spectrum we have bare-bones sites like SinglesNet at the top of the charts, both for traffic and consumer complaints. On the other end we have analysis-driven dating sites like Chemistry and eHarmony (both with their share of complaints as well) leading the charge into massively scalable dating sites able to match members heuristically.

In between we have the niche sites making a tidy profit for a handful of companies focused on satisfying customer demand and hopefully having a good time while they do it.

Then we have the startups, which range from naive to incredibly thoughtful when it comes to business models, marketing plans and expectations. See above.

Each sector of the online dating industry has is own set of issues and objectives but all share these common goals: Attracting members, converting them and then retaining them for as long as possible. This in effect is the essence of online dating and of the work I perform, day in and day out, for five years and counting. These goals will not change anytime soon, but the strategy, execution and resources required the achieve them are evolving drastically. That’s what I attempt to discuss here in the hopes that the online dating industry values my effort and insight enough to warrant hiring me.

As compatibility matching and the systems required to support millions of members continue to increase in complexity, the number of dating site able to compete is going to shrink. This will lead to consolidation, with a few Googles MSN Seach and Ask.com’s in play and then a tier of niche sites catering to 500,000-people communities based on age, sexuality and interest. The rest of the market will solider along, strong enough to live on shoestring budgets and clever marketing campaigns. I think this is exactly where the market needs to go, but the timeline in which this will happen is anyone’s guess.

Anyone who disagrees should go read up on Facebook’s growth, the small number of social networks and the consumer revolt against myriad profiles and demand for simplicity. Online dating is different from social networking in many ways, but the writing is on the wall. What do you think?

Related posts:

1. Dating Industry Market Size
2. Thoughts on Niche Dating Sites
3. MySpace Launches “My Ads” Self Serve Ad Platform

eHarmony has been called a Christian dating site, it’s been made fun of on late night television for years. It’s also responsible for 2% of all marriages. What it’s not been is gay-friendly, until now. After several years of litigation and pressure from the gay community, eHarmony has launched a same-sex relationship site, Compatible Partners. You can thank the attorney general of state of New Jersey for forcing the creation of the site.  

In a few short months, eHarmony has put together a clone of it’s flagship dating site. Here’s the problem, the Compatible Partners could be even worse for people seeking same-sex relationships than not offering a site at all.

As noted it the Wall Street Journal today:

The Compatible Partners version reads, “I greatly appreciate physical attractiveness when looking at people.” The company changed so little in the surveys that it put a disclosure on the Compatible Partners home page. The notice says the site was developed “on the basis of research involving married heterosexual couples.” It adds: “The company has not conducted similar research on same-sex relationships.”

I hope they put more effort into the new site than change a few questions in the 200+ question survey.

For years we have heard various eHarmony executives say that they didn’t offer same-sex matching because they have no research on the subject. This is from a company that has a relationship laboratory eHarmony Labs, an extremely complicated matching algorithm and performs in-office follow up research on people that get married after meeting on the site.

They have terabytes of data on users, datacenters full of hardware and servers, 200 employees and a research team. Where are the questions specific to gays? Where is the research they based the questions on? Where is the transparency?

For all the uproar about eHarmony not catering to gays, is a neutered clone of the straight site really what the gay community wants? After all the congratulations are served up, the stigma of Compatible Partners as being based on a straight site may be difficult to overcome. Reminds me of how Adult Friend Finder and Big Church are run by the same company.

Maybe I’m way off base and the new site will be a welcome addition to the online gay dating market.

It remains to be seen how eHarmony will deal with the new community. Are the customer service reps trained to talk to gay people differently than straight? Or is that not not even an issue?

I’ll leave it to the experts to address any differences between gay and straight compatibility, customer service and all of the other nuances that differentiate gay and straight communities. I certainly hope someone steps up to the plate and takes on the challenge.

Patrick Perrine, a past client of mine and amazing person all around, runs MyPartner, a dating site for gay men. As stated in the WSJ article, Patrick is skeptical about Compatible Partners. He, as well as the rest of the industry knows that eHarmony launched the new site as the result of a legal requirement. Compatible Partners is not a labor of love, so to speak.

The Terms and Conditions state: Must not be married. This should not be an issue. Did you know the site can conduct background checks on members whenever it wants? I looked at the eHarmony Terms of Service. Which also states they can perform background checks at will. Did you know the minimum age to use the site is 13?

I await the new standup routing from Kathy Griffin.

Related posts:

1. eHarmony Now Compatible With Gays
2. eHarmony Marries Off 90 Members Daily
3. eHarmony Launches Major Research Initiative

I get a little excited when I think about all the technology required to run dating sites. Here are some new tools I learned about today.

Selenium is a web application testing system.

CRM114 is a system to examine incoming e-mail, system log streams, data files or other data streams, and to sort, filter, or alter the incoming files or data streams according to the user’s wildest desires.

IMVU deploys updates 50 times a day!

Thanks, Guillaume.

Related posts:

1. Twitter Client Tweetdeck Could be Great For Online Dating
2. Enhancements to Yahoo! Personals Profile
3. Who leads European online dating?

Anyone starting or running a dating site should listen to this Venture Hacks podcast How IMVU learned its way to $10M a year. The dating industry growth hype due to the recession is leading many people to start dating sites. 98% of these companies are going to fail if they don’t pay attention to the details in the podcast and understand what they are getting themselves into.

Here’s the accompanying presentation.

Related posts:

1. Finding an Investor For Your Dating Site
2. Layers of Identity Podcast
3. ODI Podcast #1 – ranking & rating dating sites

In a previous post I mentioned that Friend Finder Networks had an amazing advertising solution right under their nose but are distracted with the IPO plans. I went back and re-read some of the commentary about the IPO and thought it would be interesting to share some of it.

For people who think starting a dating site is cheap, read the Friend Finder Networks prospectus.

Net loss of $29.9 million on $48 million in revenue in 2007. For the first nine months of 2008, FriendFinder had operating income of $17.6 million and a net loss of $32.3 million on $244 million in revenue.

…company labors under default and nearly $400 million in debt coming due in the next three years.

In the first three quarters of 2008, FriendFinder spent $46 million on marketing, up from $3 million in the same period a year ago. FriendFinder’s net loss for the period widened to $32.3 million from a loss of $14.8 million. Revenue was $243.9 million for the nine months ending Sept. 30, compared with $26.7 million in the year-ago period.

Numbers seem a bit out of whack since they company a dating network to Penthouse magazine.

Point 1: Observe how much money it takes to be a major player in the online relationship space? Various, Inc. made things incredibly difficult for the new owners by doing things like “forgetting” to pay EU taxes for a few years and running the debt up incredibly high, which was required to get the footprint and mindshare they now enjoy. Irresponsible or not, they are in a very tight position.

Point 2: How long until Friend Finder Networks goes out of business or is forced to sell off assets in order to survive?

International Herald Tribune, WSJ, ZDNet, and TechCrunch for more details.

Someone left a comment on a previous post about the marketing costs associated with launching a dating site. They said $10,000 sounded about right as opposed to my $25,000. $10,000 gets you a month or two of late night radio spots in a single metro market and some Adwords. You haven’t tested your AdWords yet and don’t know what creative will perform the best so you throw away at least a few grand during the learning curve. Two months, budget gone, maybe 500 users if you’re lucky. I’m skimming over the details but anyone who runs a moderately successful dating site spends about $30,000/month on marketing. Once you start spending that much you can’t stop or your traffic will crater. It’s even worse if you’re a free site relaying on impressions and clicks.

I know companies who have spent $500 on AdWords and converted many more members than a $5,000 Yahoo ad buy during the same period. Dating sites like SinglesNet keep to themselves about their ad spending habits, we know the ballpark of what they spend but as for those first few critical months, who knows what they did to get the traffic?

Of course there is gorilla marketing, doing live events, partnering with blog networks, buying spot ads and all the other marketing tricks and advertising optimization tricks out there. That stuff takes a while to figure out, there is no hard and fast blueprint these days, only guidelines and best practices based on those who have launched before you.

Related posts:

1. Spark Networks, Making More While Making Less
2. MatchNet 3Q 2004 Results
3. Spark Networks 1Q 05 Financials

I’m tired of hearing people complain about online dating software. What are we going to do about this? For years I’ve made half-hearted attempts at looking into various online dating software packages. From what I’ve learned, most of them I wouldn’t recommend to my enemies.

Let us look at the state of online dating software:

• Lack of strong administration capabilities
• Templates difficult to customize
• Lack of support
• No integration options for third party support
• Upgrading software is a nightmare
• Software isn’t secure
• International developers, language barriers
• Expensive

Overall my experience with online dating software has been uniformly poor, which is unfortunate. I have been recommending SkaDate and Boonex because they are the *only* dating software vendors who have every reached out to me and kept in contact over the years. Both companies are shifting focus to social networks, a telling sign that the dating startup market is changing.

I helped build a site on Dolphin a while back, and I’m familiar with the system and its capabilities. But what about the other 20 companies out there? Which ones deserve thoughtful consideration? Which should be avoided?

I have talked to several vendors over the years,many who dropped off the map. I’m surprised they are not all over this blog. If you’re not actively engaging me and talking about improvements in the software and delivering consistent customer support, it’s hard for me to keep you on my radar. There is just too much ambiguity in the dating software market and a total lack of transparency into which companies are consistently delivering the goods.

Contrast this with social networking software providers. They email, call an keep me up to date on their recent achievements, and most important, clearly show that they are eager to do business an learn from their mistakes.

Part of the problem is the lack of developer support. Lots of people buy a script due to a smooth sales job, then end up paying a developer to learn how to customize the software. Dolphin at least has a fairly strong developer community. This is a huge benefit during the sales and support process.

My work with startups always has a module dedicated to platform selection. In a discussion, I take the time to understand a client’s goals and aspirations. With that knowledge, I am able walk them through the various solutions, starting with free vs. paid, standalone vs. hosted, and all of the pro’s and cons of each. However, when it comes to recommending software besides a few companies, I’m often at a loss. There is simply not enough quality software out there to evaluate.

I always like to have three types of vendors in any area. Cheap and quick, medium-priced and powerful, expensive and the sky’s the limit. This is practically impossible to do in the online dating market.

I was able to meet team Boonex at iDate and spend time talking about their business, the software, and what’s coming next. It’s reassuring to know that that a company flew from Australia to Miami to meet the online dating industry in person. That’s why I’m letting them sponsor this blog. They are committed to new software upgrades and aware that in the past the system was not as robust as it should have been.

Of course people complain about software. People love to complain about anything. Many customers have never run a website before, let along managed developers. These issues, compounded with flaky software and bad customer service, lead to negative comments.

SkaDate’s reputation has been questioned as of late, supposedly this is all from competitors, but I don’t have enough time in the day to chase down all the accusations. I hope they are able to react accordingly and take a presumed negative situation and turn it into a positive.

In this case, the best way to silence competitors is to deliver a superior product. End of story.

I will do what I can to get dating site software developers to work harder, deliver better customer support and work with dating companies to help them grow. It starts with you. It’s *really* important for people to share their experiences with online dating software companies. How else are we going to learn which software is worthwhile?

Image is from DatingSoftwareReviewer (update your site!)

Related posts:

1. Dating Site Developers
2. GPLDate, New Dating Site Software
3. Selecting the Right Dating Site Software