Online Dating

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.”

Are you online dating? Chances are, you’re spending some time searching through profiles, emailing, and trying to meet new people. This can get overwhelming if your time is tight between work, school, and family obligations. But it doesn’t mean that you should put online dating last on your priority list.

Have you ever come home from a rough day at work, knowing that you’ve set up a coffee or drinks date to meet one of your online matches, and just didn’t feel like going? Did you cancel? After all, you’ve never met this person, and you have nothing invested in whether or not you see each other again. What’s wrong with canceling or rescheduling for another night?

A big problem with online dating is that people can get really flaky. Other parts of your life take priority from time to time, so your personal life gets put on the back burner. Or maybe you're just not that interested in pursuing a relationship. Unfortunately, this means a lot of people are cancelling at the last minute and just don’t care how it might come across to your dates.

Have you ever been frustrated with an online date who kept canceling or rescheduling? Did this make you rethink your own behavior?

Following are some tips to help you avoid being flaky yourself:

Confirm the date in advance. This shows that you are respectful of the other person’s time which makes a good first impression. It also helps you stick to the plan you made without texting a cancellation at the last minute.

Don't schedule to meet someone if you’re not interested in getting to know them. If you aren’t feeling it, then why make plans to meet? There has to be a spark of interest for both of you to be motivated to try and connect.

Cut it short if you need to. If your work schedule is an issue with dating, there are ways to work around it without canceling at the last minute. Book your dates close to your office. Cut them short if necessary instead of canceling altogether. Make it work if you really want to meet someone.

Don't text if you're cancelling. Call. If an emergency has come up, don’t text to say you won’t make it. Call your date. It shows that you are considerate of his time and makes a good first impression.

Follow up after the date. Don’t leave your date hanging if you weren’t all that interested. Be polite and direct instead by saying thank you for a nice time, but he’s not the right fit for you. When you practice doing this, you’ll notice fewer people “disappearing” on you in return.

Traditionally, online dating websites match users based on things like shared preferences, interests, and goals. There's no doubt that all those things are important elements of a successful relationship, but there's one hugely important factor that dating algorithms don't take into account: physical attraction.

Sure, online daters can list vague specifications about things like height and body type preferences, and of course most of us are guilty of spending more time on photos than profile essays, but matchmaking formulas give very little weight to attraction. Until now, that is. A new potential matchmaking formula created by computer scientists at the University of Iowa puts mutual physical attraction front and center by only matching you with partners who are likely to find you attractive.

The formula works by analyzing your message history in order to make date recommendations based on shared tastes and the kinds of people you found attractive in the past. The scientists who designed the algorithm described it using a fictional online dater named Mike: “It is Mike’s taste that affects whom he approaches through initial contacts, and his attractiveness that determines whether he can get responses.”

In other words, Mike – or any of us – can initiate conversations with anyone he wants, but he won't get very far if he continually reaches out to people who don't find him attractive. If the people you contact never reply, all the recommendations in the world will never be of any use. The most effective online dating algorithm would be able to suggest matches based on the likelihood that they will respond to your messages.

“Considering the match of both taste and attractiveness, our model tries to improve dating partner recommendations by boosting a user’s chance of getting responses,” the researchers write.

To test their theory, they used anonymized data on 47,000 users from a real dating website over the course of a period of nearly 200 days. Their program analyzed the replies each user received and used them to evaluate the user's attractiveness or unattractiveness based on the assumption that people who receive more replies are more attractive. When compared with other methods of matchmaking – like pairing people based on shared interests and other variables they had in common – the results showed that the beauty-based method was significantly more effective.

“If a user approaches a partner recommended by [our engine], he/she will have a better chance of getting responses,” the researchers say. So far the attractiveness sorting formula is just a concept, but it's probably only a matter of time before a dating service seeking to be the next best thing turns it into a reality.

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.

We’ve been warned of scandals when it comes to online dating. Some people post fake profiles and create stories of financial hardship to extract money or financial information from other users, hoping to cash in on someone’s vulnerability or desire for love. This can compromise our security, but it’s within our control to not respond or to report the abuse. But what about the information we voluntarily offer without even knowing how it will be used?

Mobile dating and location-based apps operate and match you with others according to where you physically are, which means they need to collect data from you, usually through your phone’s GPS. But then what happens to the information? Is it used only for matching purposes to benefit the users of the site, or are companies using this valuable information in other ways?

New legislation aims to protect users from themselves and the online dating sites who collect location and other personal information. Senator Al Franken is leading the charge, advocating for more privacy for users.

"This stuff is advancing at a faster and faster rate, and we've got to try and catch up," Franken tells USA Today. "This is about Americans' right to privacy and one of the most private things is your location."

Considering how many people have used online dating sites – a recent Pew report indicated 38% of singles – it makes sense that companies offering services for daters operate with security and privacy in mind. Unfortunately, most people don’t realize how much information they are voluntarily sharing when they sign up and post photos on their phone.

Members also might not realize what information a dating website or app is collecting about them and their social media networks, say if a Facebook login is used to sign up. Though most companies will outline what information they can collect about you and your friends, the fine print is often overlooked by users just trying to download and check out a new app.

A few states require online dating sites to disclose whether they conduct criminal background checks on members, including Illinois, New York, New Jersey and Texas. eHarmony, Match, and Sparks Networks signed an agreement with the California District Attorney’s office in 2012 to check subscribers against national sex offender registries and provide a rapid abuse reporting system for members. Security precautions are being taken to protect users, but legislators like Al Franken and privacy advocates don’t think it’s enough.

Rainey Reitman of the San Francisco, Calif.-based Electronic Frontier Foundation, a nonprofit that advocates for user privacy amid technology development, told USA Today: "People don't realize how much information they're exposing even by doing something as slight as uploading a photograph. Many online apps are very cavalier about collecting that information and perhaps exposing it in a way that would make you uncomfortable."