OPW INTERVIEW - May 21 -
There are few companies that are capable and have demonstrated a willingness to acquire other internet dating companies in this industry. Match is one, of course. What kind of companies are you interested in buying at this stage?
Globally, I think there's a lot of opportunity for acquisition. In the United States, I believe that our portfolio of businesses, especially OKCupid, Tinder, and Match, on the mass market, and the People Media sites in the niche markets – I don't believe there's any gap in our portfolio that's a must have. There are lots of good properties out there that we look at when they're available, but I don't go to sleep at night thinking, “we have to have THIS business, in the US.” So we're always looking for things that compliment what we're doing. Anything that either has a great brand or has great growth potential. Those are the two big things that I look for, in the US in particular. Globally, we tend to look more at geographic gaps. There are certain countries where we don't have a great presence, where we're not a market leader. So we'll always be looking there. We're also looking at people who have found interesting ways to get scale. Twoo was an acquisition we made last year. They had over 10 million monthly users all across the globe. That was an interesting platform for us. We've made other acquisitions as well. We make small acquisitions, we make big acquisitions, U.S. and globally. I don't believe there's any asset that we need, we're really looking for strategic compliments and huge growth potential.
It seems that there's a fairly sizable opportunity that Match has talked about in the past and done some experimentation around some years ago, and that is matchmaking. It seems we've done a good job, collectively as an industry, reaching people at that $20-$50 mark. The matchmaking industry is charging $5,000 and up. Lori the matchmaker charges a $250,000 price point. I think there's certainly a price point of around $5,000 where a lot of people have less time and more money, and would like to just get out and date with compatible people. Isn't there really an opportunity between the $1,000 and $5,000 a year mark where you could bring a lot of choice, whereas matchmakers don't bring choice? And add in some service?
We have a big announcement coming out this week in that space, so I can't tell you anything too specific about that other than we're big believers in the value of matchmaking. Some of the matchmakers out there use negativity and scare tactics in recruiting their clients. They bring people into their office and it's a really hard sell. “You're going to be hopeless without us. Your eggs are drying up.“ We want our matchmaking service to be positive, empowering, and aspirational. You'll see us make a move later this week, which will do those things. It will be a great compliment to the Match brand.
It seems our industry is a little flawed in that we wave goodbye to our success stories. Is there a real opportunity, do you think, with couples products? Will we see competitors toying in this space? I think there was a product, Delightful, that was an experiment for three months. What's the future?
We look at ourselves broadly as being in the love business. Sort of beyond the dating business, we're in the relationship business. Half of all adults are married and about half of those unmarried are in relationships anyway. The relationship market is in many ways bigger, from a number of people perspective, than the dating business. So, in theory, it's great. It's a great compliment to our business. Our relationship currently ends with our users when they go into a relationship, and it's nice to have an offering that allows us to extend into that relationship. I think the reality is that finding out what that product is, what the product market fit is, is much harder. We've seen some people go an offer a messaging app. We've seen some people offer a calendaring app. We've seen people offer a dating experience app – a concierge app. I think the reality is, unlike dating, which is such a crystal clear need for people - people really, strongly want to find a relationship. It becomes a top three priority in their life. You don't see the same need for a couples product among couples. Would it be great if someone would plan a date for me? Sure. Would it be nice if there was a good way to have a private messaging area? Yes. But those are needs in the same way that dating is a need. So what we've seen, whether it was with our own product that we've tested, Delightful, whether it's How About We's product, other start-ups, Pair, and what not. What you see is these products get a small amount of traction, but they have a hard time getting to the scale the dating businesses have. We know the How About We guys very well. I have a lot of respect for Aaron and Brian. We know the other products out there. The reality is no one has proven the ability to build a big business in the relationships category. We'll continue to dabble in it. I think it's something that will happen eventually, but no one has yet found the right product at the right price point that has mass market scale.
One thing we have seen over the past three years is a mass transition from desktops to mobile. Roughly, what kind of proportion of daily visits are coming to Match on mobile, at this stage?
Mobile is the present, it's the future, it's probably even the past, still. We have a suite of products in our portfolio. You have Tinder, which is 100 percent mobile, zero percent desktop. You can't even access it from a desktop. You have products like OKCupid and Match, which have both strong desktop presences and strong app presences. You have some of our other products, which are still primarily a desktop and mobile web environment, and they currently have a lesser commitment to the app space. Dating is a category that is inherently mobile, unlike some other products in which mobile is just another interface to reach the same content. In a dating app, you ultimately want to meet someone that you're going to date in person. You have to be at the same place at the same time with another human. That is inherently a mobile activity. I think dating is more tuned to mobile than any other category. The majority of our usage across our businesses is mobile, whether it's logins, or messages, or time spent. Whatever number you want to count, we're primarily mobile. You will see more and more of our focus, both in terms of engineering, but also in terms of product and innovation, go in that direction. You pointed out that not all of our products have app, we're going to correct that. You will see best of breed apps, best of category apps, across all of our brands in the not too distant future.
How's the relationship of revenues from mobile? Do you think in the next year you'll see half of revenues coming from mobile?
It's hard to say what the mix is going to be going forward, just because we have such a big legacy business. So many of our existing subscribers started on desktop, and those billing relationships continue on the desktop, regardless of whether users use them on mobile or desktop. So, that's unclear. I think the majority of our sign-ups are mobile, and so you're likely to see, over time, the majority of our first-time subscribers become mobile. Then, over time, the majority of all our subscribers become mobile. So we'll see how that goes. It goes different across businesses. As we begin to monetize Tinder down the road, that will obviously be all mobile. Our business is going to become more and more mobile over time, and the revenues will become a part of that.
Match Group has taken an interest in start-ups, like Tinder and others. If you were talking to the CEO of a mobile dating start-up at this stage, would you advise them to focus on Android or iOS from the outset? Which is easier to build at this stage?
From my start-up days, a lot of it is just opportunistic. Where is the talent you have on the founding team? I think if you have a passion for one versus the other, I think you should probably follow that passion. You probably have slightly more early adopters still iOS, and so, depending on how you're going to launch the product, you may be better off there. However, the flip side of that is there may be less competition on Android. I don't think there's one way or the other. By the time you're going to be big enough for us to have an interest in investing or acquiring, or anything like that, you're probably going to be on both platforms anyway. Which path you go to get there isn't important.
In the past we've seen that iOS has generated more money and better conversions. Are you seeing some change in the difference in Android and iOS monetization?
I think the data probably still shows that iOS generates more revenue and more conversions. Again, it depends, what is your app trying to show? Are you trying to demonstrate huge growth? Are you trying to demonstrate huge revenue per user? You can go a bunch of different ways. How much you're going to spend to get that customer. The unit economics aren't that different between the two, but you'll probably get slightly higher revenue numbers on iOS.
Wearable computing is on the rise now. We saw a mass change with the introduction of mobile. It took a while. Somehow, I don't think it will take quite as long with this transition to wearable computing. There certainly seems be a mass frenzy among early adopters. Who knows, if and when Apple introduces their iWatch – there's even talk of using an ear-based mobile computer with no screen at all. What's your plans for Google Glass? Do you see that it's worthwhile having an app in the next year for Match on Google Glass?
I don't know that it will be in the next year and I don't know that it will start on Match. One of the nice things about our portfolio is we have brands all across the spectrum. We have some brands that do things more quickly and more opportunistically, and we have some brands that don't. They have other priorities. I don't know that there's a Google Glass app in particular coming out for Match in the next year. The history of our category is that dating is one of the earliest adopters to any new technology when it launches. In part, because we have such great monetization. In part because, any way you use technology to get a better sense for who the person is you're potentially going on a date with, tends to be very popular. So look, I suspect that as soon as wearables have enough market share to be worth making an app for, then, absolutely, we'll be there. But, again, to me, it's not so much about the app or not the app. What is product? What is the user experience that is customized to that device? The big thing with mobile, with smartphones, was the GPS. It's the touchscreen. You see Tinder leverages those two things. What is Tinder? Tinder really leverages the swipe and leverages your GPS. Those are the two components that are really unique to the smartphone that makes Tinder special. You'll see a lot of innovations that we have coming down in Match. We'll continue to leverage those two things because they are native to the device. So the question is, what are the user experiences native to an iWatch, to Google Glass, to whatever the wearable is, that will lend itself to a great dating product? I don't want to be on Google Glass just to be on Google Glass. I want to be on Google Glass because we have found a really cool way to make dating better for using Google Glass. I don't think we've figured that out yet, but, absolutely, we're thinking about it.
You can think of this as almost a level of intimacy. The mobile phone is far more intimate with human beings than a PC. The wearable computer is really going to know us. Who knows? It may be recording all of our behaviors, or at least scoring them.
For better or for worse.
It's horribly controversial but also fascinating in this particular industry. So how do you think wearable computing might change that dynamic by being more intimate with users? What sort of observables could the dating industry pull and use?
To me, what's exciting about wearables is – you used the word intimacy, which I think is great – but, to me, it's more than that. It's about the data collection that we're going to have. I think the future of our category is better and better algorithms. We started OKCupid because we believe dating is a data game. Dating was about the numbers. If you could imagine, down the road you have a Google Glass that knows, okay, there are ten people in the room and you've looked at each one of them, and you've had a chemical hormonal response based on your attractiveness to each one of them. You don't have to tell me. You don't have to swipe right or swipe left anymore. I'll just know, based on your emotional chemical response to a woman that you interact with, whether you like her or not. Whether you're attracted to her or not. That' gets me more excited than saying “Yes, now I have an iWatch. I'm going to be able to swipe differently.” If we can get access to a whole new type of data, that is going to make the algorithms that much better.