I was hanging out with a friend of mine a couple of days and we started chatting about the online dating space. As we were talking, we both started nodding our heads in agreement that as an outsider, the space seems relatively interesting for a couple of reasons:
Obviously, life isn’t all rosy starting or running an online dating site since there’s an obvious “chicken/egg” problem, a significant user churn rate, and of course strong competition. Anyway, since Spark Networks (owns JDate and Christian Mingle among others) is a publicly traded company I decided to skim through their annual report in search of interesting tidbits. Here’s a couple of the most interesting things:
Some interesting stuff there. Looking at their revenue number, a little back of the envelope math would suggest they’re averaging around $20/mon for subscription revenue since 260k users x $20/mon x 12 months is roughly $62 million.
Ok great, but where are the opportunities? Looking at AngelList the majority of startups seem to be focussing on building traditional dating websites with a unique hook like “date friends of friends”, “ivy league dating”, “gamified dating”. Unfortunately, given the intense competition, chicken/egg problem, and capital that companies like Spark and IAC are spending on marketing I don’t think starting a new dating site is currently the best play. I think focussing on “selling the tools to the miners” is the best bet right now, potentially around a couple of themes.
Think a virtual assistant like FancyHands but specifically aimed at online dating. Need a couple of great date ideas? The concierge has you covered. Need some help writing or polishing up your profile? Covered. As a business perspective, you’d generate monthly subscription revenue with the opportunity to generate additional revenue via referrals while costs generally increased linearly. There are a couple of companies doing this already but no one has serious traction.
It’s 2013 and users are still effectively stuck searching one dating website at a time looking for “mr right”. You would fix this by building a “meta search engine” to allow users to search all the sites they’re a member of at the same time from a single interface. There are obviously technological as well as legal constraints to this but I think the potential value add is huge. Running this as a business would be tough since you’d always be at the mercy of the individual sites who would be well within their rights to shut you down like Craigslist and PadMapper. But who knows, maybe you could negotiate favorable terms in exchange for pushing users to register for new sites.
The goal would to build a handful of “power tools” to improve the overall experience of online dating. Example tools might be a Bayesian spam filter to learn what users flag as “spammy” and automatically block similar messages. Or maybe an “expert advisor” that analyzes messages you send and recommends changes in order to improve your response rate. The business model would be simple, sell the extension in the Chrome Webstore and charge a monthly subscription fee.
Anyway, just some off the cuff ideas – would love to hear any feedback or other ideas.
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