IAC Said to Buy More Tinder Shares at $5B Valuation(bloomberg.com)
bloomberg.com
IAC Said to Buy More Tinder Shares at $5B Valuation
http://www.bloomberg.com/news/2014-04-11/iac-said-to-buy-back-10-of-dating-app-tinder-for-500-million.html
11 comments
I was just about to post this. Anyone else find this shocking? I mean I know it's popular and all but...
I hate to be THAT, guy, but Nasdaq did not look good last week. :)
Not saying a 5B valuation makes sense, but I think Tinder is employing the thin edge of the wedge strategy [1] (like Instagram did with photos) and is using their huge success with dating to become a more generic social network.
They've already been public with vague plans to move beyond dating. Also, their new verified accounts for celebrities make a lot more sense with a generic social network than with a dating app.
[1] http://cdixon.org/2010/12/27/the-thin-edge-of-the-wedge-stra...
They've already been public with vague plans to move beyond dating. Also, their new verified accounts for celebrities make a lot more sense with a generic social network than with a dating app.
[1] http://cdixon.org/2010/12/27/the-thin-edge-of-the-wedge-stra...
Dating is a giant business.
10m daily users is an amazing stat.
Doubling their users at that scale in <5 months is earth shattering.
I know these things make for rational arguments.
And still my brain has trouble processing that valuation, especially in the context of "worth almost as much as IAC".
A friend said something that struck me yesterday:
"The fed has literally been dumping billions out of helicopters. Billions don't matter anymore."
I am not commenting on bubble / no bubble but it will be interesting to see what happens when $$$ tightens @ the top.
10m daily users is an amazing stat.
Doubling their users at that scale in <5 months is earth shattering.
I know these things make for rational arguments.
And still my brain has trouble processing that valuation, especially in the context of "worth almost as much as IAC".
A friend said something that struck me yesterday:
"The fed has literally been dumping billions out of helicopters. Billions don't matter anymore."
I am not commenting on bubble / no bubble but it will be interesting to see what happens when $$$ tightens @ the top.
Compare this to OkCupid.
When IAC acquired OkCupid in 2011 for $50MM, OkCupid had almost as many users as Tinder does now, but Tinder's valuation (according to IAC) is literally 100x more.
When IAC acquired OkCupid in 2011 for $50MM, OkCupid had almost as many users as Tinder does now, but Tinder's valuation (according to IAC) is literally 100x more.
I'm not sure OkCupid and Tinder should even be compared (despite OkCupid containing a clone of the Tinder app). This is purely from experience, but most people on Tinder use it solely as an ego prop - finding a date isn't the focus so much as the validation that comes with a match. You can even do some shoddy A/B testing with Tinder (if I lead with photo x, do I get a higher match rate than with photo y?), and I do think more advanced image testing/refinement tools could and should be a large part of their feature set going forward. OkCupid has something similar with the My Best Face feature, but they don't seem to have expanded further on that idea.
This is exactly why it's interesting to compare.
You could say that, feature-wise, Instagram was literally a subset of Foursquare, or Twitter was literally a subset of Tumblr (blogging) or Facebook (status updates). But how people actually interact with and use those platforms (and the value derived from those interactions) are very different.
You could say that, feature-wise, Instagram was literally a subset of Foursquare, or Twitter was literally a subset of Tumblr (blogging) or Facebook (status updates). But how people actually interact with and use those platforms (and the value derived from those interactions) are very different.
That's true. Other thoughts: Tinder has flipped the traditional dating website model on its head. On OkCupid and others, people filter by black-box quantified "compatibility" first and then attractiveness. Tinder just puts attractiveness first and leaves compatibility scoring to the people themselves.
OkCupid recently introduced a feature where you can pay a small fee (about $1) to temporarily boost your personal search ranking. This is clever, and also fits very well in Tinder's matching model. Adding features like that or the ability to pay for additional profiles for A/B testing would put Tinder in the black pretty quickly, I think.
edit: I should throw in some negatives. There are quite a few duplicate/spam profiles on Tinder created by escort agencies. Finding a way to seamlessly detect & block these will be important to avoid a reputation of seediness. It's already on the line due to the common practice of mentioning Tinder alongside location-based hookup apps.
OkCupid recently introduced a feature where you can pay a small fee (about $1) to temporarily boost your personal search ranking. This is clever, and also fits very well in Tinder's matching model. Adding features like that or the ability to pay for additional profiles for A/B testing would put Tinder in the black pretty quickly, I think.
edit: I should throw in some negatives. There are quite a few duplicate/spam profiles on Tinder created by escort agencies. Finding a way to seamlessly detect & block these will be important to avoid a reputation of seediness. It's already on the line due to the common practice of mentioning Tinder alongside location-based hookup apps.
It was for a bit more than 50M if you include the earn-out, almost 2x.
Most dating businesses are inherently conflicted because a successful outcome (relationship) is a lost customer. Tinder, in the "short term" relationship space, has a unique ability to have happy, repeat customers. 5B still seems like a lot. I wonder if there is a control premium baked into the price; IAC was rumored to have a majority stake already, but it's possible that those rumors were incorrect.
Edit: Sam Yagan says the valuation was not 5B
http://www.forbes.com/sites/jeffbercovici/2014/04/11/no-tind...
Edit: Sam Yagan says the valuation was not 5B
http://www.forbes.com/sites/jeffbercovici/2014/04/11/no-tind...
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New reports saying the valuation was actually much closer to $500M. Now that makes a lot more sense to me
This has gotta be a reporting mistake (both parties say value much lower). The $500m valuation sounds much more reasonable. With a 1x or 2x liquidity preference, maybe it's higher.
The article is very confusing about the numbers, but if they do hold up to scrutiny, the people cashing out are smart.
Tinder's user engagement can be modeled as a wave. Due to the social graph, when you first get the app, people in your cohort are likely to be using it as well.
During this time, there is more value than just the dopamine rush of flipping through pictures and getting matches. A match is much more likely to be actionable.
The downside of this is that once the addiction wears off for you, it's likely starting to wear off for the people in your cohort. So user "unadoption" is just as viral as user adoption.
How many people here have used the app beyond a couple months? How many have deleted it once they stopped using it?
Tinder's user engagement can be modeled as a wave. Due to the social graph, when you first get the app, people in your cohort are likely to be using it as well.
During this time, there is more value than just the dopamine rush of flipping through pictures and getting matches. A match is much more likely to be actionable.
The downside of this is that once the addiction wears off for you, it's likely starting to wear off for the people in your cohort. So user "unadoption" is just as viral as user adoption.
How many people here have used the app beyond a couple months? How many have deleted it once they stopped using it?