Types (Niche)

Is a company that's only 20 months old and has no revenue model really worth $5 billion? Spoiler alert: no.

IAC/InterActiveCorp recently bought back 10% of mobile dating service Tinder. Although it's easily the hottest mobile dating app on the market, it’s hard not to approach Tinder with a healthy dose of skepticism. $5 billion is, to put it bluntly, a completely insane number for such a young company.

According to the market research company IBISWorld, the entire online dating industry is worth just $2 billion. How on earth could a company that gives away its dating app for free be worth more than the entire dating industry? The answer is simple: it can't.

The number, first reported by Bloomberg and quickly picked up elsewhere, was based on the $500 million IAC had allegedly paid to buy a 10% stake in Tinder from venture capitalist Chamath Palihapitiya, but it's far from accurate. Sam Yagan, CEO of IAC’s Match Group (which includes IAC’s online dating companies) recently confirmed that a deal was made, but declined to comment further.

“I can confirm on the record that we did a transaction with Chamath, but this valuation is nowhere near the truth,” he told Forbes. Tinder CEO Sean Rad added that the Bloomberg report was “meaningfully incorrect.” Forbes found that an e-mail to Palihapitiya did not receive an immediate response, but noted that his statement on Twitter read “My Tinder sale for $500M is inaccurate. I sold my stake but value was much less. Thx @samyagan for official IAC pos’n. #wishfulthinking”

That being said, it's far too early to write Tinder off as worthless. Just because it has no revenue model to speak of to date, doesn't mean it has no value to investors. With 10 million active daily users, Tinder is fundamentally changing the way a massive number of people behave and engage with each other. That's bound to be worth something.

“Tinder’s really doing something that has been the Holy Grail for online dating: it becomes fun,” says Mark Brooks, a consultant to the Internet dating industry. Unlike traditional dating sites, surfing profiles on Tinder is fun, low risk, and not time-consuming. Users don't have to fill out tedious surveys and the swiping process practically eliminates the fear of rejection. Thanks to Tinder, mobile dating is exciting and mainstream, a major coup that the rest of the dating industry has never been able to figure out.

“IAC’s not valuing Tinder based on what it’s worth,” Brooks notes. “They’re valuing it based on what they’ll lose if they don’t own it. If Tinder can own mobile and own the younger demographic, then IAC is owning the future with Tinder. It’s an international phenomenon.”

Kids these days. What crazy shenanigans will they come up with next?

The latest word is that online dating may be on its way out – and that even includes explosively popular mobile apps like Tinder – and that social networks may be on their way in.

“But wait a minute,” you say, “weren’t social networks always in?” Of course they were, but it's only now that people are starting to appreciate them for their full romantic potential. And it may surprise you to know that the social network leading the dating charge isn't Facebook or Twitter – it's Instagram.

Elizabeth Wisdom and Dennis Lafargue, a now-engaged and now Internet famous couple, met using the photo sharing service and documented their courtship on the app. They started out trading flirty comments, then moved on to swapping numbers, and even involved their Instagram accounts in their engagement. When Lafargue made their relationship official, he called Wisdom his “instalady” (not entirely sure if that's cringeworthy or cute). Together, they officially declared that “Instagram is the new Match.com.”

It's one thing for a happy couple to document moments of their lives on Instagram, but Wisdom and Lafargue took it to a whole new level. Lafargue prepared a timeline of their relationship via Instagram photos, combining both their moments together as well as their own separate, first moments using the app. It was a fitting tribute to the service that brought them together in the first place.

For those of us who aren't so involved in sharing our every moment with Instagram followers, it sounds a little crazy, but Wisdom and Lafargue are far from the only couple to tell this story. Even celebrities are getting in on the game, like iCarly actress Jennette McCurdy, who connected with NBA star Andre Drummond using social networks.

“I backtracked on his Twitter page a few months and checked out his Instagram,” she wrote in an op-ed. “He appeared personable, youthful, and fun. And judging by the amount of me-related posts he had shared, it seemed he had been expressing his crush on me for quite some time. I found it sweet, gutsy, and flattering. It’s hard not to be impressed by a boy who will express his feelings for you in front of hundreds of thousands of people.” The relationship didn't work out, but while it lasted the two documented their time together on Instagram (of course).

There isn't yet any research to determine whether Insta-dating is just as effective as traditional online dating, but no research is needed to prove it's a real trend. And given that more and more young people are abandoning Facebook and Twitter in favour of Instagram, it sounds like it stands a real chance of becoming the next big thing.

Why are we so attached to our smartphones? And why has mobile dating become the greatest thing since sliced bread (and online dating)?

Psychologists think they have the answer.

Mobile dating apps are not soaring in popularity because they offer an easy way to meet potential love interests, but because they replicate ‘real world’ dating experiences better than traditional online dating sites. Apps like Tinder and Grindr allow users to scroll through pictures of potential dates (or less) in nearby locations, and then chat with members who show interest in their profiles. That focus on the first impression – especially of a user's physical appearance – mimics people's real-life, instinctive impulses much better than traditional online dating sites.

That's not to say that photos aren’t important on traditional dating sites, because of course they are. And of course people make snap judgments based on physical appearance. All the time. But most online dating sites ask members to create detailed profiles outlining their personal attributes and preferences in a partner, in order to match them with potentially compatible dates. The emphasis is on something deeper and more serious, an attitude that's reinforced by the increased time commitment required to use a traditional online dating site.

Some psychologists now argue that mobile dating is a much more social experience that can lead to more "serendipitous" meetings. In the long run, they say, the mobile dating approach may be more romantic than being matched by a scientific dating website algorithm.

Tomas Chamorro-Premuzic, professor of psychology at University College London, told The Times: "[Using a dating website] is almost like booking a holiday or a job application, as you try to customize your partners. Mobile dating – and Tinder is a good example – is different. It is more linked to impulse and emotions and focuses on attractiveness and looks, which is more realistic, even if it is a bit more lazy. It replicates the traditional version of dating more closely than Match.com or eHarmony as it allows for more serendipity."

Graham Jones, an internet psychologist said: "Mobile dating apps are a more sociable activity that you can use with friends down the pub rather than sitting at home on your laptop on a dating website."

The tendency is to overestimate the impact of technology on human behavior. In reality, it is usually human behavior that drives technological changes and is responsible for their success or failure. Mobile dating apps like Tinder and Grindr are an extension of mainstream, real-world dating habits – even more so than traditional online dating sites.

BroApp

Let’s say you want to keep your girlfriend’s interest but don’t want to invest the time to text her sweet or flirtatious messages. Turns out, there’s an app for that -  BroApp, a new dating app that calls itself “your clever relationship wingman,” can help you out.

With inspiration presumably drawn from guys who didn’t want to deal with the lofty expectations of girlfriends to text every now and then, the BroApp automatically messages your girlfriend sweet things at the times you request. Of course, you can be creative and write your own texts which are stored in the app and doled out at the appropriate times. But the goal isn’t to win her heart over – it’s so you can free yourself up to spend more time with your bros.

The app has a few complications figured out, too. It will not send messages if it detects that you are at your girlfriend's house (by being connected to her WiFi), or if you have recently messaged her on your own. Well, at least there’s that.

Tinder just announced that it's reached a seriously impressive milestone: it’s made 1 billion matches between its users. That number was just 1 million in January 2013, making Tinder one of the most memorable success stories in online and mobile dating history.

In fact, Tinder has been so successful that even celebrities are getting in on the game. Although you might think it wouldn't be hard for good-looking, A-list of famous folks to find a date, it looks like they have a little more trouble on Tinder than we under-the-radar people would expect.

“We’ve had celebrities reach out to us frequently throughout the last year, sort of calling out various frustrations convincing users that they were actually who they are,” Tinder co-founder Sean Rad told TIME. “One impediment is that sometimes their Facebook accounts, which we pull information from, includes different names than their actual likeness… So [celebrities] were asking for the ability to modify their Tinder name and maybe have a verified badge.”

That's right – apparently all kinds of famous people want nothing more than to be able to swipe right, but their potential matches assume that the well-known faces in their profile pictures mean their accounts are fakes. Making it worse is the fact that Tinder requires Facebook account authorization in order to verify identity, and a lot of celebrities use fake names on social networking sites for privacy purposes. It's a combination that's almost guaranteed to make the average mobile dater send a profile straight to the rejection pile.

Rad and his co-founder Justin Mateen know first-hand what that feels like. For a while, they both listed themselves as the app's co-founders in their Tinder profile taglines. Again and again, they found themselves rejected by users who didn't believe they were telling the truth about their identities.

“It was awesome [to know celebrities are on Tinder] because it sort of validated our theories that everyone, even people of influence, need help forming relationships,” Rad said. “It’s important to us that our users know we are committed to authenticity on every level.” So with that in mind, Tinder is adopting verification badges like Twitter in order to confirm celebrity identities and allow the famous and non-famous alike to intermingle without fear of being scammed.

Of course, Rad won't disclose which celebrities are using the app, but he assures TIME that “These are A-listers.” Sochi Olympians admitted to using Tinder during the Games, and Lindsay Lohan told her Instagram followers know that she found her brother on the app, so you at least know that you stand a chance of meeting one of the world’s most talented athletes and one of the world's most famous redheads.

Bad news for Tinder fans: all those creepy people you've been avoiding on the app may now know exactly where you are.

It turns out the dating app suffered from a bug for most of last year that would've allowed hackers to determine the exact location of its users. And Tinder chose to cover it up until just a few weeks ago. The information security firm Include Security exposed the security vulnerability in mid-February, saying that anyone with the right kind of knowledge could "get the exact latitude and longitude coordinates for any Tinder user" provided that the app was running.

Hello, major privacy violation!

The company confirmed that "anyone with rudimentary programming skills could query the Tinder API directly and pull down the coordinates of any user." From that API data, it is then possible to triangulate the exact location of the user with a very high degree of accuracy. We're talking within 100 feet. And remember that part where they said "rudimentary programming skills?" So not only can creeps get incredibly close to you, they don't even have to be smart creeps in order to do it.

So much for the fun of all that mindless swiping.

It’s a bad bug, for sure, but before you go cursing the day Tinder hit the app-mosphere, Include Security also noted in an FAQ on its disclosure blog post that these flaws can be "common place in the mobile app space" and will “continue to remain common if developers don't handle location information more sensitively." Is that more comforting or less comforting? I'm not actually sure…

What I am sure of is that Tinder should not have failed to disclose the vulnerability when it was privately reported. Users deserved to know that the security of their location data was potentially compromised, even though the bug was fixed sometime between December and January.

Your questions now are probably "Has anyone actually exploited this?” and “Can I tell if someone has tracked me using this privacy vulnerability?" According to Include Security’s post, “there is no simple way to determine if this attack was used against a specific Tinder user." In other words, nope – you have no way of knowing if that slightly unbalanced-looking person you just rejected is about to come knocking at your door.

Good luck sleeping (or swiping) with that on your mind.

See a demo of the Tinder vulnerability at work: