There are two types of companies: those who sell a product to a customer and those where
the customer, by itself, is the product.
TINDER belongs to this second group.
Why would you choose Tinder before any other dating app?
Simple!
Because it is full of users!
This means that the real product here is not a website or a service.
My dear viewer, in Tinder, the product is you.
And here is where the big question comes in: How would you start a Dating app?
I mean, imagine you and your friends decide to start a company like Tinder.
The first thing you need is a lot of boys and girls using it, right?
But those boys and girls will not use it if they don’t see many other boys and girls
using it already…
Do you see where I come from?
This is why, the fact that Tinder has over 200 million users is one of the most surprising
successes in business history.
How did they get started?
What did they do better than their competitors?
Today, we are going to answer this question.
And… in order to do this, we are going to ask to one of the biggest experts on the industry:
MARK BROOKS is the President of IDEA, a group that represents the biggest dating apps on
the planet.
He is been more than 25 years on the online love industry.
And he is the brain behind many of the dating sites you know.
Hello Simon and hello to all the VisualPolitik subscribers.
As you said, the key to be successful on a dating site is, as we call it, an activity
critical mass.
This means, having enough active users so, on average, 3 out of 5 messages have an answer.
How do you get here?
This is where economics, strategy and math comes into play.
And you might wonder…
Why are we talking about this in VisualPolitik?
What does Tinder have to do with all the things we usually talk about on this channel?
Well… a lot.
Listen up: in this momento, 1 our of 5 heterosexual copules in America got to know each other
through a dating site.
In the case of the same sex couples, this is more than 70%.
In other words…
daring online has changed our societies.
And this… is also politics.
Nonetheless, despite what it looks, the online dating industry is still a baby.
In total, we move around 5 billion dollars every year in all around the world.
For example, the underwear industry is 10 times bigger.
And has bigger profit margins.
Yep, you heard this right.
We are talking about an industry where making a profit is seldom easy.
Besides, it is a hyper concentrated industry.
Basically, most of the dating sites, including Tinder, belong to the very same group: MATCH.COM
GROUP.
This is a NASDAQ listed company that has smashed most of the competitors.
But still, the big question is…
How did the Tinder creators managed to create such a succesful app?
What kind of lessons can we learn from Tinder that could be applied to other kind of businesses?
Today, we are going to answer to all of this questions… but before we do, let’s take
a look back at history.
THE LOVE BEHEMOTH
I know, I know, it will not come as a surprise if I tell you that dating sites are as old
as Internet itself.
For a better understanding, in the year 1991, Tim Berners-Lee created the first website
in history.
Well… 3 years later, the first dating site, WEB PERSONALS, was launched.
And, as you can imagine, we are not talking just about finding your significant other…
On the same time, other sites like ADULT FRIEND FINDER were created too…
Nonetheless, most of this websites were pretty rudimentary.
Back then, nobody talked about user’s experience or complex algorithms.
Webpersonals was just an online version of the good old classified ads that you had on
the newspapers.
You couldn’t even send messages to the contacts.
And, over all, the biggest problem was… they almost had no users!
In most of the cases, you would create a profile and find nobody to date.
But all of this changed with the advent of MATCH.COM
MATCH.COM was the real game changer.
But make no mistake…
they didn’t have an specially good algorithm or a better user experience.
In fact, their asset was just one word: MONEY.
Match.com started out as classified ads for newspapers.
But soon hey realized the future was online.
During their launch, they tried different formulas.
But the turning point came in the year 1999.
That was the year when IAC, a multinational, bought Match.com by 50 million USD.
And believe me, that was enough money to do great things.
Out of a sudden, this company could invest heavily in advertising.
And this advertising budget let them get to that critical mass sooner than anybody.
But not only that!
Match.com was the first one in importing the concept of the ‘white brand’ to the dating
world.
What made Match.com so unique?
They had technology to improve online dating.
What did they need?
More users.
Who had more users back then?
Webs la MSN…
Do you remember the old Microsoft Messenger?
Well, back then, this was the most used messaging software on the planet.
They were happy to offer a brand new dating service to their users.
And this is why MSN personals was nothing but the match.com engines… with another
logotype.
With this aggressive strategy, Match.com closed similar deals with other internet juggernauts
like Yahoo! And this is how, in so little time, they smashed the competitors.
In fact, today, this company is so big it is listed in the NASDAQ index.
And they represent one fifth of the whole industry revenue.
And I know what you are thinking now… who could compete with such a love behemoth?
At the end of the day, having so much money for advertising and that much power to close
the best business deals…
Who can shadow them?
Well… believe me, the battle had just started.
Despite Match.com being such a big company, their service was pretty lame.
It is true… they had lots of users but…
Almost nobody found an actual match!
This explained why the retention rates where so low!
In fact, people signed up into match.com and… they left after a short while.
This left a big vacuum for a better competitor with a better strategy.
And the winning strategy was…
UNDER PROMISE AND OVER DELIVER
Imagine we start a business to make money.
The logical thing is to get paid for the service, right?
Well… it doesn’t have to be that way.
The founders of PLENTY OF FISH are the proof of this.
In the year 2003, this website was the first one in offering their services completely
free.
So how did they make money?
The answer is obvious…
Advertising!
Many of you will not be surprised with this.
But back in the time, this was a revolutionary idea.
Being based on ads, Plenty of Fish was heavily incentivised to make sure the users would
spend a lot of time on the site.
The longer they stood, the more ads they would see.
But this is not the end of the story!
The strategy of Pleny of Fish could not be more counter intuitive.
So here is a question.
Let’s say that you are starting your own dating site….
What kind of Pictures would you put on the front page?
Would you pick ugly or beautiful people?
Would you use an attractive, elegant webdesign… or a very simple and sketchy one?
I guess you would go for beautiful people and smart design, right?
Well…
Plenty of Fish did exactly the opposite.
Their motto was ‘happy those with no expectations because they will never be dissapointed’.
In other words…
‘under promise and over deliver’.
In order to avoid the website to take long times of downloading, Plenty of Fish wanted
to use low res Pictures.
This meant a very unattractive design.
They made sure to their users that they wouldn’t find top models but normal people.
REAL people.
Even their ads made clear that they didn’t want to lie to anybody.
This model was so disruptive that they soon found imitators.
Other websites like Badoo followed their footsteps.
And… guess what happened when Plenty of Fish became that successful!
Well…
Match.com, the love behemoth, does not like competitors.
So they made them an offer they couldn’t refuse.
Basically, they didn’t buy them for what the company worth but by the amount of money
Match.com was losing by having them as competitors.
And… that was a lot of money.
Then again, many of you might believe that, with such a solid business model, and being
part of Match.com, nobody could be a match for Plenty of Fish, right?
Well… my dear friends here at VisualPolitik, again, you are wrong.
TINDERING OUTSIDE OF THE BOX
Yes, it is true…
Plenty of Fish seemed like the perfect website: millions of users, simple design and happy
customers.
But, there was a problem!
It didn’t work on mobile phones!
And, if this was not enough…
nobody was proud of using Plenty of Fish.
Oh yes, you, the millenials watching this video: I know this will surprise you.
But, until recently, this online dating thing was a pretty shameful hobby… and the last
thing you would confess your friends.
And this is when the Tinder founders came in, ready to change the rules of the game
fore ver.
Tinder was the first dating app design for mobile first.
No computers or laptops: just cell phones.
And how do you think they got that critical mass of users?
Well… you might think that, being an internet app, they used online ads to promote themselves,
right?
So… the opposite was true.
The strategy of Tinder was 100% offline.
Instead of ads or big marketing campaigns, the Tinder founders organized parties at the
American Universities: more exactly, on the coolest Fraternities and Sororities.
If you wanted to attend to the most glamorous parties, you had to download the app to your
phone.
And this was not sold as a dating app.
In fact…
it was a game!
In fact, the goal of the Tinder founders was not to sell true love or significant others.
The motto was ‘we are playing Tinder’.
Let’s play and see who is the most popular in the party!
Or to put it on their own terms…
let’s see who gets the biggest share of likes.
The idea of competing for popularity was nothing new.
Other websites like HOT OR NOT offered people to upload their pictures so the other users
could rank them from 0 to 10.
But Tinder made everything simpler.
It was not about ranking but instead, it was a matter or YES or NOT.
Or, to put it on their own terms: SWIPE RIGHT or SWIPE LEFT.
Part of Tinder success can be explained with the theories of the so-called, behavioural
economist.
Authors like Daniel Kahneman, talk about two kinds of behaviour.
“Some of the basic innate operations, functions that we have, such as perceiving things, having
emotional reactions to things…
all of this is System 1: we don’t choose to do it, it just happens to us”
The so-called SYSTEM 1, or rational thinking, and the so-called, SYSTEM 2 or intuitive decision
making.
By limiting the range or choices, we can easily approach people’s emotions easier.
In other words, mobile first design, gamification and a perfect expansion strategy made Tinder
the most loved app in all the American Universities.
Instead of hiding it, people told everybody they were using it.
At the end of the day…
it was not dating!
It was just a game!
We are playing Tinder… aren’t we?
And… guess what happened after Tinder achieved so much success…
Exactly!
Again, Match.com, the love behemoth, bought them.
In other words…
most of the dating apps today are part of the very same Group.
And this is why… we can still say the story doesn’t end here.
After 25 years, the dating app industry is still on their baby steps.
And part of this is because is one of the few business where success is punished instead
of rewarded.
Think about it…
What would be the best app for dating?
Of course!
The one that lets you find your significant other, right?
Nonetheless…
if we can find a couple on Tinder… the first thing we will do is to leave the site.
This way, the company stops making money with us.
In other words, the incentive for a dating app is that we never get to find the true
love!
In economic terms, this means the dating app market is far from being a mature market.
And this means there is still a lot of space for new proposals.
For example, one of the Tinder creators left the company after a sexual harassment lawsuit.
She created her own app, called BUMBLE.
This app is completely innovative because here, women are the one who must send the
first message.
And, of course, there is also Facebook.
Yes, you heard me right.
Facebook has already announced they will launch their own dating site.
They have the information about the users and the money to make a 180 degree shift to
an industry that, despite having millions of users, it makes less than 5 billions a
year.
So now this is your turn…
Do you think Facebook will be a rival for Tinder or Match.com?
Do you think online dating will become the preferred way of finding your significant
other?
Please, leave your answer on the comment section below.
And if you wanna hear more about this industry, you can follow me at my blog, ONLINEPERSONALSWATCH.COM.
There you will find interviews to the industry leaders, news and many many more.
Also don’t forget that we publish brand new videos every week, so subscribe to VisualPolitik
and you will not miss any post.
If you liked this video, please, give us a thumbs up and, as always, I see you next time!