Milestones

According to Bloomberg News, the popular dating website Zoosk is scheduled to go public. The company filed earlier this year, but the latest stock market volatility might delay their offering until 2015.

Zoosk has long touted itself as a major contender in the online dating game due to its large international user base, alongside brands such as Match.com and OkCupid. The company has more than 27 million members across 80 countries, and the online dating market is reported to be worth $1.4 billion.

The appeal to investors goes beyond the revenues to be had in the online dating market. Zoosk company executives are betting on their extensive user base and tracking technology to help leverage their value. Unlike many online dating websites that rely on lengthy questionnaires and profile descriptions, Zoosk’s technology is purely behavior-based. That is, when users of the site navigate through profiles, send messages, or set filters to view other members, Zoosk is tracking this data and responding by providing matches that have similar behavior or seem most compatible. In other words, they are honing in to what users really want by seeing what they actually do online.

The more a user interacts with other members in the Zoosk community, the more Zoosk learns about that person to give them better matches. To the company’s benefit, it also gives them a wealth of data about their users, which is a valuable asset for investors.

Zoosk is also integrated so users can log in no matter what platform they are viewing on – phone, laptop, iPad or tablet, and is the #1 grossing online dating app in the iTunes store, according to its website. But its marketing expenses might be cutting into its revenue.

Website SeekingAlpha.com has been speculating about the opening price the company will decide upon, based on current statistics. Zoosk’s options granted in April 2014 had an exercise price of $7.72, so SeekingAlpha.com assumes the pricing discussions are in the range of $8-$16, which might not be an incentive for investors looking for a deal (and also looking at how the company can bring in more revenue). Right now, the dating app is free, but members pay to use features like messaging, chatting, and connecting with viewers who have viewed their profiles.

The opening price of the company’s stock is a matter of concern, but what does it mean to go public during such a risky market?

“Nobody wishes they went public today or over the last week,” Max Wolff, the chief economist at Manhattan Venture Partners, an investment firm focusing on late-stage private technology companies, told Bloomberg. “A regular bout of intense selling, like we’re seeing now, makes people feel like it’s smart to stay private longer.”

So the next move is up to Zoosk, but the company anticipates that investors are willing to bet on it.

Please read our Zoosk review for more information on this service.

At the recent Forbes Under 30 Summit in Philadelphia, Tinder cofounder Sean Rad made the surprise announcement that the company is launching a new premium service in early November. The upgrade will allow paying users more options beyond just swiping left and right.

This might make some Tinder fans uneasy. After all, the value of the app is in the sheer number of people using it. Will restricting certain new features to paying customers cause others to drop off and look for other cheaper alternatives for hooking up?

Not according to Rad. He says the premium service will include functions that Tinder users have long been asking for - including the ability to travel and use Tinder in multiple cities. Currently, you can only use the service locally, which means if you live in Los Angeles you can't look for hook-ups in New York.

But will people pay for this type of technology? Several hackers have taken advantage of Tinder's technology already and used it to create the very features users have been requesting and the premium Tinder will be offering - such as fooling the GPS-based technology into thinking you are in another city so you can scroll through profiles in multiple cities. Also, several hackers have come up with technology to "mass-like" profiles in mere seconds without having to manually scroll through, which is a very popular request from current Tinder users to increase their odds of a match.

And what about Tinder's current features - will new users have to start paying for basic services, or will some features be taken away to add to the new premium service? Rad says there will be no changes under the current free app, so users can rest a little easier. Forbes reported that people now swipe through 1.2 billion Tinder profiles a day, and that each day Tinder makes more than 15 million matches. The company needs to hang on to these users because its value is in the numbers. 

But Rad is trying to continue Tinder's growth, and that means it's time to add revenue - especially for investors like Barry Diller.  “We had to get our product and growth right first,” says Rad. “Revenue has always been on the road map.”

Forbes said the Tinder founder hinted at offering other types of services that go beyond dating, including features for travelers, though he didn't cite anything specific. Could we see a Tinder app that includes restaurant, car service, or hotel choices in the near future?

Clearly, Rad has big plans for his popular app. But we'll have to wait and see how the market (and their pocketbooks) respond. For more on this dating app you can read our Tinder review.

eHarmony was on the brink of disaster in 2012, ready to be sold to the highest bidder on the auction block, at least according to a recent article on Online Dating Insider. But the company was determined to turn things around.

According to eHarmony executives, “We took our hard won stash of capital and used $153.2M to buy out all the “Class B” shares, and we began the pursuit of our own company.  We asked five of our former and highly-esteemed board members to step aside and give us a chance to do more of what we needed to do to bring this company back.  We made tough decisions…let some people go, terminated vendor contracts. Moreover, we have cleaned up “our house” by appointing an all-new executive management team that is a more aligned team than we have ever had before.”

For those of us who did not know eHarmony was on the brink of financial ruin, this letter came as a surprise. In the time they were desperately struggling to tread water, Neil Clarke Warren, the company’s founder, came back on board as CEO and reminded the company of the reason they were successful in the first place – their focus on matching for long-term relationships.

While most dating sites and apps have gone in the opposite direction – focusing on quantity instead of quality of matches, and casual meetings instead of long-term relationship potential, eHamorny’s serious focus has paid off.

“Instead of losing 100,000 end of period subscribers each year, suffering...losses of 50% every single year, our EBITDA for 2014 will literally be dramatic and the cash in the bank increasing substantially each month. EBITDA is currently running $9.4M ahead of plan as we work with our forecasts. Our end of period paying subscriber count has hit its all-time high...”

eHarmony was not afraid to get rid of what wasn’t working. Trimming staff by over 30%, they went from about 300 employees to only 190 in all of the U.S., U.K. and Australia. They have also dropped vendors who weren’t contributing to the primary focus of the site – relationships. (That is, focusing on the long-term potential.)

eHarmony’s success rate speaks for itself. It claims to have made more than 600,000 marriages, and has only a 3.86% divorce rate (compared to the over 50% divorce rate of Americans in general).

The company plans to take its technology in other directions besides love. They are planning the launch of Elevated Careers by eHarmony, where they hope to make successful coupling between potential employees and employers by using the same psychologically-based matching system to help people find their dream jobs.

While the company didn’t offer exact figures, they did claim to have hundreds of thousands of users as well as 1.2 million matches. It looks like they have turned things around, though most of us didn’t even realize how much they were struggling.

To find out more about this dating service, you can read our eHarmony review.

I could say something about how hard IAC/InterActiveCorp is trouncing the competition, but…um… It hardly has any competition. The media conglomerate, helmed by Barry Diller, has been killing it in the online dating realm for years and shows no signs of stopping.

Thanks to its two massive dating sites, Match.com and OkCupid, IAC was already the biggest player in the game when it decided to shake things up last December by creating a special division for its online dating holdings called the Match Group.

This year, IAC has made more powerful strides in its quest to dominate online dating. It increased its majority stake in Tinder, the mobile app at the top of the mobile dating heap, and acquired most of the Brooklyn-based dating site HowAboutWe.

Slowly but surely, IAC has bought its way into the dating market. By the end of 2013, IAC reportedly hosted 30 million active users throughout its dating properties, 3.4 million of whom are paying subscribers. The Match Group is now responsible for approximately one quarter of IAC's total revenue. And they're not shy about singing their own praises.

“We are not just the acquirer of choice,” said Sam Yagan, chief executive of the Match Group, “we are the only acquirer.”

Investors, on the other hand, are a little more wary. Analysts are convinced that online dating's growth is likely to slow, despite the fact that the market has never been stronger in the US or abroad. The primary bump in the road is free mobile dating services, which are making it increasingly difficult for other dating services to generate a profit.

Mobile dating now accounts for around 27% of dating site services. As mobile audiences grow, dating sites are finding it challenging to turn those users into paying members. They are also challenged by a crowded market, which becomes more congested all the time as various niche sites pop up. Although many don't last for long, they're still successful in drawing audiences away from larger, more general dating sites.

With that in mind, IAC’s future may lie in Tinder. So far the app has put growth above revenue, but it is estimated that Tinder could eventually earn $75 million a year. First, the company has to figure out how to monetize it without losing users or slowing growth. Yagan is feeling positive about the future.

“It is not a winner take all dynamic,” he said. “There is a lot of concurrent usage. Unlike a car, the majority of online daters use multiple products, so you want to have a portfolio — a multibranded approach.”

These days, it's almost hard to believe that online dating wasn't always part of our lives. It feels seamlessly integrated into our daily routines - to the point that it's even infiltrated our phones - but in reality the industry didn't get its start until the late 90s and the road to 2014 was far from smooth.

In the early days of online dating, it was quietly laughed at by the polite and openly scorned by the impolite. It was viewed as an impersonal way to find love, and using an online dating site came with a heaping spoonful of stigma. But over time, a new generation of tech savvy singles arose and with them came a revolution.

Now daters of all kinds, young and old alike, have discovered the benefits of using online dating services and the industry has exploded around the world. As always, with success come new challenges. Online dating still faces criticism, and someone is always ready and willing to tell a horror story of a first date gone awry. Complaints are registered about fake profiles and less-than-truthful users who conceal their identities. Scammers have used online dating sites to cheat people out of thousands.

Online dating is now facing the challenge of maintaining the safety and protecting the privacy of its users – a task that becomes increasingly difficult as more and more of them join dating sites. Different countries are approaching the problem in different ways. In the US, laws have been passed that require background checks for new users. In Singapore, the government acted as a matchmaker through the Social Development Network. In the UK, the Online Dating Association was founded by industry members to take collective responsibility for regulations.

All of these have been important steps towards creating a regulatory framework that will address the issues facing online dating as it continues to expand. Primary among those issues is the rise of mobile dating. Many major dating sites now have a mobile component, and there are plenty of services that are only mobile applications.

The key word here is "innovation." As an increasing number of competitors enter the market, online dating services are forced to get more creative. Creativity is a great thing, but it too comes with challenges. As dating services explore uncharted territory, they will encounter new questions about security and privacy. If dating services want to be here for the long haul, they'll have to match technological innovation with regulatory innovation.

The end of August marked a very special milestone for eHarmony: the website’s 14^th birthday.

All those years ago online dating was still a young industry, and founder Dr. Neil Clark Warren (yep, the guy from the commercials) revolutionized it with his research-based approach to matching people for marriage. eHarmony famously created algorithms based on 29 Dimensions of Compatibility scientifically proven to predict successful long-term relationships. Fourteen years later, those algorithms are still going strong.

Since its inception, eHarmony has racked up more than 45 million subscribers – meaning approximately 1 out of every 7 people in America has subscribed to eHarmony at one point or another. The site is responsible for more than 600,000 marriages in its lifetime. On average, 438 people marry every day in the U.S. after being matched by eHarmony (that’s nearly 4% of all new marriages in the country!).

eHarmony has seen many major changes in the last 2 years, when Warren returned as CEO after previously leaving the company. Amongst the milestones are:

• The launch of eH+, a premium matchmaking service
• A cross-platform redesign of the website
• Record numbers of subscribers and mobile users
• New levels of profitability

“We are so proud of what we have achieved at eHarmony,” said Dr. Warren. “Our success in online dating underscores an opportunity to impact areas beyond online dating. We are launching new verticals in the coming months and years that broaden our reach--verticals that will build eHarmony into a relationship site. Soon, eHarmony will influence the way we look at finding a job, finding friends and solving loneliness.”

As it enters the next phase of its teens, eHarmony has big things in the works. Chief among them is Elevated Careers, a service to match employers with prospective employees and help people find their ideal jobs.  After 3 years of research, eHarmony hopes Elevated Careers will help users find fulfilling, meaningful jobs that last longer than the national average of 4.6 years.

When asked how eHarmony plans to make it work, Warren told Business Insider “The first thing we do when getting involved with a company is we want a short inventory filled out by every person in the company. Just asking how they perceive the culture of the company. We want that culture to be matched up with the culture of the person who’s the applicant.”

“The second thing we do,” he continued, “is we want the org chart of the company, so that if an individual wants to work in a particular part of the company, we want to know what skills are required of the applicant.”

And finally, he added, “we want to know whether the personality match of the applicant and the person they’re going to report to is a good fit for the company and individual. If we can get the culture, skillset, and personality right, we’re convinced that the typical 4.6 year average duration at a company in America, we’ll be able to take that way up.”

For more on this dating site and to find out why it has been such a popular online dating service you can read our review of eHarmony.