Match

Twelve years after Markus Frind founded PlentyofFish as a side project, the company sold to Match Group for $575 million. That's an impressive price for anyone, but it becomes astonishing when you consider the site's origins.

Frind launched POF from his apartment and, for the first six years, didn't hire any employees or raise a cent of venture capital. That would be bad news for any other company, but Plentyoffish.com was already getting 2.2 billion page views a month and generating millions of dollars in revenue.

The risky move turned out to be a brilliant one. Except for the IRS, Frind didn't have to share the funds with anyone. He had money to continue his business, travel the world, and buy anything he could imagine. Match tried to purchase the company for a decade, and Frind could easily say no.

He continued to grow POF on his own. At the outset there was no advertising budget, no business plan, and only a basic website. Frind's experience was practically non-existent, so he taught himself about marketing, business development and product. It wasn't until 2009 that he hired his first developer – and he was still running the business out of his apartment at the time. It didn't matter. By then, he had 10 million users. To say it happened “against all odds” is almost corny.

Frind's perspective changed last year, when his daughter Ava was born. “Having a 10-month old daughter, you start measuring time in different increments,” he said in an interview. “Every day you see something’s different – she’s trying to take her first step, or she’s crawling around. Whereas before you measured the company in milestones in terms of the revenue or user growth or some kind of company target.”

Now, having sold his miracle online dating company to rival Match Group, Frind is contemplating the future. He says he has already bought everything he could personally want, so many hope he will instead use his wealth invest in the startup scene in his hometown of Vancouver.

“I think he will invest a lot more and help a lot of businesses,” said Arash Fasihi, founder of online furniture retailer Cymax Stores Inc., to The Globe and Mail. Fasihi's company recently received an $18 million investment from Frind and made him a director.

Vancouver venture capitalist Boris Wertz has similarly high hopes: “He’s a smart guy and he knows how to deploy money, and hopefully some of that will flow back into the tech ecosystem.”

For more information on Frind's dating site your can read our Plenty of Fish review.

Musicians are having to find new and more organic ways to promote their new albums, since people are discovering content in different ways outside of traditional radio. To capture new – and especially younger – fans, artists who are serious about promotion are now looking to dating apps, and finding some success.

Millennials are the largest group of consumers of music, and they also tend to be on dating apps like Tinder and Grindr. So it only makes sense that music and dating apps would eventually come together.

Some recent examples: Madonna's latest album was advertised on Grindr, a dating app for gay men, while Jason Derulo debuted a music video on Tinder. PlentyofFish was one of the first dating sites to link itself to an artist, by making an appearance in Derulo’s 2010 video for his song “Ridin Solo.” POF also worked with Lady Gaga during a U.S. tour, offering fans a chance to win tickets and backstage passes.

Other popular dating sites are linking to musicians, too - Mariah Carey premiered her music video for the single, "Infinity" via her new profile on Match.com, and DJ-producer Afrojack answered questions about love and relationships for eight hours on Match’s Twitter account to promote his new single.

The latest musician to take advantage of the wide reach of dating apps is Zedd, the Grammy-winning DJ-producer. He worked with Tinder to promote his album, "True Colors," released last month, by setting up his profile on the dating app. While Tinder users searched for dates, they would come across Zedd's promotional profile. They could swipe left or right, as with any other potential match. But instead of messaging him or setting up a date, if they swiped right, they could purchase his new album at a discounted price of $3.99 (compared to $7.99 on iTunes).

According to a recent story from Associated Press, “True Colors” debuted at No. 4 on the Billboard 200 albums chart its first week with 39,000 copies sold. While no specifics were given about how many sales were the direct result of Tinder users swiping right on Zedd’s profile, chances are the app had something to do with the album’s popular debut.

According to Tinder, eighty-five percent of its users are between the ages 18-34, and the average user spends about 11 minutes on the app each day — one of the main reasons artists are looking to work with Tinder in particular. It makes sense. Since users’ engagement with dating apps is pretty high, artists have their attention, at least for a few seconds, which is long enough to swipe right and learn more.

If only all breakups ended as well as this one.

IAC/InterActiveCorp announced recently that Match.com, Tinder, OkCupid, and other dating services would become part of their own spinoff unit. The subsidiary will be called The Match Group and will be a publically traded company. Following the news, shares of IAC rose over 5%.

According to the announcement, The Match Group is likely to issue less than 20% of its common stock. The IPO is expected to be completed in the fourth quarter of this year, after which investors will be able to buy stock in the company. So far, the ticker symbol (the three-or-four letter identifications that represent companies on stock exchanges) is unknown.

The Match Group is starting out on top. IAC/InteractiveCorp is a $6 billion media conglomerate, and revenue of the new Match Group accounted for nearly one third of IAC's total revenue in the most recent quarter.

Last quarter, The Match Group reported revenues of $239.2 million, marking an increase of 13% on a year-over-year basis. Reports say Match Group’s revenues are expected to increase 18% in 2015, bringing the number to $1.24 billion.

The hope with separating the Match Group, and combining more established businesses (like Match and Meetic) with earlier stage businesses (like Tinder), is that the move will lead to significant cash flow generation and meaningful growth potential.

Or, as Chariman and Senior Executive Barry Diller colorfully put it, “I'm not a believer in simply agglomerating assets in perpetuity. I've long felt that as entities grow into size and maturity it's healthy to give them separation and independence from a mother church."

It's an exciting time for the industry, but dating services haven't always done well on Wall Street. AshleyMadison forfeited an IPO in 2011. Zoosk filed for an IPO in April 2014, but withdrew the application in May 2015. Hinge, on the other hand, skipped the IPO entirely, instead relying on raising capital from venture capitalists. In 2014, Hinge had raised $12 million.

The Match Group will also face stiff competition from other key listed players like Spark Networks and Jiayuan.com. Still, IAC believes this IPO can give new life to the Group. Estimated EBITDA for The Match Group in 2015 is $264.9 million – and that's excluding the $75 million EBITDA anticipated from Tinder alone.

A well-received IPO could not only put IAC significantly ahead of its competitors, but also serve as a litmus test for the entire dating industry.

On Tuesday Match Group which is a subsidiary of IAC/InterActiveCorp purchased PlentyofFish Media for $575 million in cash. The deal is expected to close by the end of the year. Markus Frind which is the founder and sole owner of POF started PlentyofFish.com way back in 2003. It was a side project for him to learn a new programming language. It quickly exploded and by 2008 he was earning $10 million a year from the dating site with only a couple of employees. Early this year POF.com reach a milestone and hit 100 million users. The company also predicted it would earn $100 million for the year 2015. On its newly launch responsive mobile site POF currently reports the following statistics:

• 3.5 million singles log into POF.com daily (through the website and dating apps)
• Those same singles generate more than 9 million conversation every day
• From those conversations 1 million relationships are created every year

In the past two years I have heard several rumors about Match being interested in purchasing POF.com. I had heard around $300 million was offered at one point, but it was turned down. For a site earning $100 million in a year with no debt and it’s only real expense is it’s 75 employees that was a pretty low offer (if it is true). Obviously there was some negotiations going on which resulted in Markus walking away with over half a billion dollars. Funny enough, the general rule of thumb in purchasing a website (now these are much smaller sites [smilely: ;]]), is that it is worth about 4 years’ worth of the income it generates. I guess from using this purchase as an example, that the rule is not too far off!

The Match Group has purchased a number of dating services over the past 6 years:

• In 2014 Match purchased How About We
• In 2012 Match buys DateHookup.com
• In 2011 OkCupid was bought by Match.com for $50 Million
• In 2009 People Media was acquired for $72 Million

Combining all of these sites along with Tinder (which Match had funded pretty early on) and adding POF to the mix, this will make the Match Group the undisputed power house in dating online and on our phones for years to come. Acquiring POF will also make the Match Group’s proposed IPO that much more enticing to investors when it happens, which is most likely near the end of the year.

POF is currently a free dating site that offers a paid subscription for an upgraded membership. This upgraded membership offers a number of features like no ads, viewing extended profiles and seeing who has viewed your emails. I am curious to see if the Match Group plans any tweaks to this formula. If they change POF to a completely paid dating site like Match.com (which I highly doubt by the way), then I am sure POF users would be up in arms. I have a feeling they will leave POF.com pretty much the same for now and let it continue as is, in the same way Match Group let OkCupid continue to operate.

IAC is no doubt a leader in the dating market, with such prominent online dating brands as Match.com, Tinder, and OkCupid, which make up a company subsidiary called The Match Group.

The Match Group has announced its plans to launch its first IPO, making the company available for investment dollars from the general public. Match.com has long been a cash cow in the online dating industry with its paid subscription service, and Tinder with its new premium paid service has been reported to be worth about $1 billion by the end of the year. In fact, the combined revenues of all the companies in The Match Group accounted for nearly one third of IAC's overall revenue in the most recent quarter. They're also growing rapidly, surging 13% year-over-year in the most recent quarter to about $239 million.

Greg Blatt, Chairman of The Match Group said in a statement: "The Match Group is poised for substantial growth in the coming years. The dating industry has come a long way since its inception, but the category remains underpenetrated.  We believe the combination of our more established businesses such as Match, Meetic, and OurTime, and earlier stage businesses such as Tinder and OkCupid, creates an attractive combination of significant cash flow generation, strong margins and meaningful growth potential.” 

This comes at a good time, as Zoosk recently pulled its plans to launch an IPO, leaving the dating space wide open for potential investors. Ashley Madison, a dating site for infidelity, was quick to throw its hat in the ring, too. They are planning a second attempt at an IPO for later this year after a forfeited attempt in 2011.

The Match Group joins other prominent and publicly traded online dating services, notably Spark Networks, which owns several niche dating sites such as JDate, Christian Mingle, and BlackSingles.com, as well as Jiayuan.com, the largest online dating site in China.

After the IPO, investors will be able to buy stock in the company, although the ticker symbol is not yet known. Notably, IAC made the decision to split The Match Group from its parent company to do the IPO.

Barry Diller, IAC’s Chairman and Senior Executive said in a statement: "As many know from our actions over the last 20 years, I'm not a believer in simply agglomerating assets in perpetuity.  I've long felt that as entities grow into size and maturity it's healthy to give them separation and independence from a mother church.”

2015 is a momentous year for Match.com. The site debuted in 1995, making this its 20^th birthday. In a world that's hit with a new app – the next big thing! – practically every other day, that kind of longevity is something to celebrate.

The world has changed drastically since Match first hit the scene. The intense stigma around online dating is all but gone. And though Match used to be the only one in its class, it's now one of thousands of dating services competing for attention.

In honor of two decades in the biz, Match CEO Sam Yagan sat down with Here & Now’s Lisa Mullins for View From The Top on NPR. He shared his insights on getting ahead and staying ahead in a competitive industry, and the impact Match has had on the world.

Yagan is a firm believer in the power of numbers. “When the choice was: Do I want my love life determined by a psychologist or a mathematician,” he says, “I pick mathematician every day of the week.” He happily puts his trust in online dating algorithms and data as a means of finding love.

However, he also admits that they have limitations. “I think it’s unrealistic to say that we can look through millions of people and find the one person who is best for you,” he adds, “but what we can do is of these millions of people, here are the top 100 that might be the best for you.” It's up to you to do the rest. A dating service may one day be able to predict chemistry well enough to identify “the one,” but Yagan speculates that it's still a long way off.

As CEO, Yagan goes to great lengths to keep Match on top. His first focus is the customer. He regularly asks friends, family, and other singles what's going on in their dating lives, so he knows what pain points his product can solve. He also keeps an eye on the competition. “I have all of our competitors’ apps on my phone,” he says.

So far, his strategies are working. Yagan isn't shy about discussing the influence of Match. “If you think about products that really impact humanity,” he says, “dating is one of the most influential out there.”

It's not just about helping people find love for Yagan. It's about breaking down barriers and expanding horizons. He adds, “The relationships that come out of online dating cross more boundaries than those that don’t, so I think in that way it’s very influential and it has a huge impact in the trajectory of our society.”

Big words and big promises, but with all Match has achieved so far, the next 20 years of dating are guaranteed to be interesting.