Bloomberg News

Match Flirts With New Mobile App After Tinder Popularity Surges

May 13, 2014

Tinder Founder Sean Rad

Tinder was started in 2012 by Sean Rad during a hackathon at IAC’s Hatch Lab in Los Angeles. Photographer: Serena Saitto/Bloomberg

Match.com is flirting with a new mobile strategy after the breakout success of sister dating service Tinder Inc.

Borrowing heavily from Tinder’s swipe feature, which lets users flip through pictures on smartphones until landing on someone of interest, Match redesigned its mobile application last month with a similar feature called Mixer. That’s a big change from the old app, which mimicked the website, letting users update their profile and search for dates using location.

As mobile apps like Tinder, Instagram, WhatsApp and Snapchat gain popularity, traditional Web companies are increasingly catering to the always-on smartphone crowd. Match, as the majority owner of Tinder, is getting a lesson in how to make its 19-year-old service appealing to those glued to their devices. Founded in 2012, Tinder says that it matches 10 million people daily.

The “Tinder app experience was inspiring for Match.com,” said Sam Yagan, chief executive officer of Match, a unit of Barry Diller’s IAC/InterActiveCorp. “We were late, but you will see a steady stream of innovations.”

Winning on mobile is critical for Match. IAC said in December that it planned to turn the dating unit into a separate business, setting the stage for a potential spinoff. The Match unit also includes dating site OKCupid as well as fitness app DailyBurn and education tool Tutor.com.

Revenue (IACI:US) at Match climbed 10 percent last year to $788.2 million, accounting for about a quarter of sales at New York-based IAC. Over half of Match’s traffic comes from mobile.

‘All Platforms’

“To keep users happy, the expectation is that you are supporting them across all platforms,” said Jason Helfstein, an analyst at Oppenheimer & Co. in New York who has the equivalent of a buy rating on IAC. “You don’t want to lose a customer to a competitor because their dating app is better.”

Match’s original mobile app, launched in 2009, was an extension of its Web service, where users pay $20 a month on average to find dates based on the profiles of other subscribers. OKCupid uses an algorithm to suggest dates for users and charges an average $10 for premium services such as message filters and the ability to browse profiles invisibly.

Yagan said the new Match.com mobile strategy will help the service catch up to competitors’ mobile applications.

Tinder was started by Sean Rad two years ago during a hackathon at IAC’s Hatch Labs in Los Angeles. Rad subsequently met his girlfriend, Alexa Dell (daughter of billionaire Michael Dell), using the app.

Future Revenue

While Match is learning hipness from Tinder, Rad’s company is looking to take some money-making lessons from its majority stakeholder.

“We always think about monetizing,” Rad, 28, said in an interview at Tinder’s new office in the Beverly Hills area of Los Angeles. “We are working on it but we would only charge for premium services.” Rad declined to say when the company will introduce the paid offering.

Tinder uses members’ Facebook Inc. (FB:US) credentials and makes recommendations based on their profiles. Users are shown a face and can pursue a chat and a date only if there’s mutual interest.

Match is the world’s biggest dating site, with 20 percent of the industry’s global revenue and twice as many paid subscribers as any rival, according to a March 12 report from Topeka Capital Markets. Popular competitors include EHarmony Inc., Zoosk Inc., which has filed for an initial public offering, and Spark Networks Inc. (LOV:US), the parent of JDate.com and ChristianMingle.com.

“I want to own as much of the dating market as I can,” said Yagan, 37, who co-founded OKCupid before selling it to IAC in 2011.

Customers Flee

All dating sites face one similar challenge: success means losing customers. When users find a match, they no longer need the service, at least until they’re single again. That’s a difficult business model for investors who look for companies with loyal subscribers, said Josh Stein, a partner at venture capital firm Draper Fisher Jurvetson in Menlo Park, California.

“We have not invested in online dating because the churn rate is very high,” Stein said in an interview. “You spend time and money to monetize users and they might only pay for a year.”

Still, Diller says there’s been no shortage of interest from investors lusting for a stake in Tinder, even though he has turned down all of those offers.

“I have been developing online businesses for quite a while now -- since the Internet started,” Diller said in a recent interview at Bloomberg’s New York headquarters. “I have never had the number of people banging through our doors to see if we would sell them a little piece of Tinder.”

To contact the reporters on this story: Serena Saitto in New York at ssaitto@bloomberg.net; Alex Barinka in New York at abarinka2@bloomberg.net

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net; Sarah Rabil at srabil@bloomberg.net Ari Levy, Reed Stevenson


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Companies Mentioned

  • IACI
    (IAC/InterActiveCorp)
    • $61.08 USD
    • 1.36
    • 2.23%
  • FB
    (Facebook Inc)
    • $78.38 USD
    • 1.43
    • 1.82%
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