{audio:0:04:00} How did user behavior surprise you when you moved to Tinder from Match?

{audio:0:04:07} When you look at traditional dating sites, legacy dating sites, if you will, it was more of a pay to communicate, paywall type product, where you couldn’t even message someone or send an email without paying. It was also very heavy up front. You have to answer a lot of questions. You have to fill out all of these bio sections and it takes a while to get to actually interacting with someone. The user behavior of Tinder was so different because it was easy. It was literally one click, digest your information from Facebook, and you’re swiping on people immediately. One of the things that Sean Rad, the founder of Tinder always used to say is, we want to imitate real life as much as possible. When you go to somewhere, a restaurant, a bar, wherever it is, the gym, the grocery store, you don’t walk up to someone you see and say, “Hey, how are you? How tall are you? What’s your religion? Where are you from? Do you like dogs? What’s your favorite color?” You nod your head, or you give a wink. That was what Tinder was. You actually saw that come through in the user behaviors. The initial conversations were more whimsical, were more fun, were more, what do you like this versus that. If you’re on Match, they’re very serious questions; they’re very serious-minded people.

{audio:0:05:37}  I’m not saying that one is better or worse, just the behaviors are very different. That was within the app. Outside of the app, if you put it into a real-world context, I called Tinder, back in the early days, the under-the-table app. What I mean by that is, a lot of times you would be out with friends socializing and people would be using Tinder under the table or secretly, if you will. They were enjoying it and having fun, but they didn’t necessarily want everyone to know about it. There was a stigma. That was for Match too, that was for most dating sites. People saw it as a negative thing if they were using a dating site. Tinder really broke through that. It said, look, online dating is becoming very popular, younger users are enjoying it; they’re using it like crazy. Let’s normalize this thing. That’s ultimately what happened.

{audio:0:06:33} How would you measure user engagement?

{audio:0:06:38} There’s a lot of different metrics to look at. The most important ones are just active users. You can break down active users into monthly, weekly and daily. Within those three, if you look at daily active users versus monthly active users, that is a metric that we call stickiness. How often are people coming back?

{audio:0:07:05} Active is just logging in once; there’s no messaging involved.

{audio:0:07:10} Absolutely. We look at daily and if people are logging in once a month, not a great thing. If they’re logging in 30 to 31 days a month, that’s a positive thing. We try to keep that number around 50%. That was a really positive number for us. If someone is on the app, you also want them interacting with people. The goal of this is to meet people and, potentially, find your lifelong partner, or whatever you’re looking for. We looked at swipes, matches, messages. You can read different things in all of those. Are they swiping enough, are they having a good time just in general? Are they making matches? Are we giving the right recommendations? Are we showing you the right profiles to get you a match? If you’re swiping over and over and you’re not getting a match, that’s effectively a useless product. Once you have a match, are you sending messages? Are you actually talking? Are you actually meeting people? Or are you just matching just for the match? You can look at all of these different things. You can look at all of the ratios. Basically, to sum it down, it’s do we have people that we’re engaging on the app? Are they engaging with other users and how often are they doing it?

{audio:0:08:25} How did you see the different ways in which women and men engage with the product?

{audio:0:08:32}  They do engage very differently. I’ll start with this stat and it was fairly consistent for a long time; it might be different today. If a woman swiped right on a man, there was about a 40% chance that she was going to get a match. If a man swiped right on a woman, there was about a 5% chance, or less in certain situations, that they were going to get a match. That in itself, you can understand the difference. Really, what happens is women generally tend to take a little more time. They want to look through a profile. They want to look at all of your pictures. They want to read your bio. They want to try to get as much information on your as a person and personality as they can before they take that action. These are overgeneralizations, probably, but law of averages.

{audio:0:09:27} If you look at men, they’re generally going to right-swipe more than left, if not 100% of the time. A lot of men just want to see who likes me and then I’ll try to make a decision after that. What we see, in general, is that men message first. An app like Bumble has started to change the way people think about messaging first but, on average, men message first.

{audio:0:10:00} It makes complete sense that women effectively drive the whole platform and women engagement, probably, should be one of the most important KPIs for Tinder.

{audio:0:10:20} That’s right. We were very successful and good at creating products that were geared not toward just men, that would make women feel comfortable, would make women feel safe. You’re absolutely right. If you can drive women to your product, the men are going to come to your product also, with a dating app. That’s just what we’ve seen.

{audio:0:10:47} What was the split in payment? Firstly, what is the split in the actual users and then roughly the revenue split between the two genders?

{audio:0:11:02} Again, I don’t want to give anything too specific, and you could break this down 100 times whether it’s regional, age difference, all of that good stuff, but let’s say that, in terms of the distribution of men and women, you’re actually looking at closer to 50/50 than you would imagine. In certain places, it could be 60/40, 55/45. In some of your heavier areas where it’s men, it could be 70/30. It is much closer to half and half than you would expect. Now, when you look at paying, it’s what you would expect there in that men pay much more often. You can tie that back to the match ratios. Women don’t necessarily need all of these fancy enhanced products when they can get a match one out of every two swipes. Guys are going to get a match about one to every 10 to 20 swipes, so they feel a need to have these enhanced products. The distribution from payers is definitely weighted more toward men.

{audio:0:12:03} Were you almost looking to acquire women and then let the men upsell on the app with the swipes?

{audio:0:12:20} Not directly. That’s not how we thought about monetization. We knew, inherently, if you brought quality women or just women in general to the site, then men would follow behind. We didn’t necessarily target men with our monetization products. Really, we did try to create products that were as equal as possible for both genders. That was something that was very center of focus for us. No, we didn’t create that. It just so happened that the way that the product ends up proving out is that men will want to pay more because they have a less likely chance to match.

{audio:0:13:08} I’ll say this, when we did try to influence that a little bit, it was always toward women. Let me back up and say this, when we created monetization products, it wasn’t just to make money. We were trying to give value to the user as much as possible. Again, if there was a lean, it was towards giving women value. We felt that the value for women was underrepresented in a lot of these apps. It was geared more toward men and we didn’t want to do that. We want women to feel safe, we want women to feel comfortable, and we want women to feel like they can find a match that’s right for them.

{audio:0:13:47} When you first joined, how did you look at a building the first framework for monetizing the product?

{audio:0:14:22} When I joined Tinder, we were north of 10 million users already back in mid-2014, which was multiples bigger than the biggest dating app at the time. The one thing that concerned us was, are younger people willing to pay for a dating app? They have a lot more freedom. They’re not necessarily looking to settle down in a lot of cases. That was something that we spent a lot of time on talking to users, understanding what they would get value from, what they wouldn’t get value from? We had three main options to start. We could have a subscription product. We could have a one-time transactional product. Or we could have advertising revenue. We started looking at all the pros and cons of those three. Looking at today’s more modernized world where people are paying for Netflix, for HBO, for Spotify, for all of these things that are on a subscription already, we felt like that was probably geared more toward the younger audience.

{audio:0:15:27} To take that on the flipside, when you’re swiping through cards and your entire phone is a profile of a person, we didn’t want to introduce a full-size advertisement and really break the flow of that. It was disruptive, it was “not cool” to show advertisements back then. That’s how we landed on subscription. The conversation quickly turned to, where do you price it? The products that were out there at the time, your Match.coms, your People Medias, your Christian Mingles, those were all $20 to $30 to $40 a month. We thought, with a fast-casual type product like we have and the audience that we have, they’re not going to pay $20 and $30 and $40 a month. We broke it down into $10 and $20 for younger and older users. We even thought going into it that $10 may be a little bit high for younger users. We also did large tests for pricing, looking at elasticity regionally, age based. We ended up settling on the lower end of the pricing. Sneak peak, that has since jumped up closer to the $30 and $40 that Match was seeing back then. Initially, we kept it at a lower price point.  Even in some countries, we had some prices as low as $2.99 to start.

{audio:0:17:00} What were the variables that you tracked that actually drove new signups? Excluding obviously sales and marketing, what were you looking at that really drove the growth?

{audio:0:17:25} In the early days, we actually didn’t have to do much, if at all, in terms of sales and marketing. We can go to that later. What do we look at when we’re trying to understand what drives subscriptions? There’s, of course, lots of variables that you could look at. There are two core consistent things. One of them I already mentioned. Make sure that you’re giving a lot of value for the things that you’re charging for. When we would launch monetization products, we would look at the features and say, “Are the people using them?” We had three products within the first launch of monetization. We would say, are they using product one? Is that what’s driving subscriptions? No. Are they using product two? Yes, that is what’s driving the subscriptions. We would amplify the things that were driving value and that would ultimately lead to a subscription. We would de-amplify or push into the background the things that weren’t. Those still gave some people value. That’s key number one. Key number two, that we noticed very early, is if you don’t get someone to subscribe within their first two months, the chances of getting them to subscribe are very low. The target was to get that user very quickly.

{audio:0:18:47} When you know that, then you start breaking that down to, what would make someone subscribe very early? The way that we tied all of this together was user retention. Are they staying around? Are they getting value? Are they converting? We saw that the number one statistic, the number one thing that would make them stay around was getting a match. It seems very straightforward that that would be the thing that keeps someone around, but we noticed a significant drop off when someone didn’t get a match in their first seven days. That was then on us to say, we have to do the free things right, to get someone a match, to show them that this product has value, then they could subscribe. Keeping in mind that 80% to 90% of your users are free. Most of your users are not going to pay for your product. You have to make the experience just as good, if not better, for those users, the people that don’t want to pay. One thing that our CEO always used to say is that, if there’s a product that gives everyone value and doesn’t take away from any other user, then that will be a free product every single time. You have to amplify, and you have to create a good experience for the free users, or your paying userbase will erode.

{audio:0:20:20} How did you drive matches to drive conversion?

{audio:0:20:26} That was done by people a lot smarter than myself, I’ll tell you that much. There was a lot of machine-learning, AI, all of the buzzwords of today. We actually used a really sophisticated ELO ranking, along with all of the technological things. That was basically a user ranking based on an original chess algorithm, that basically says, their relative value versus all of the other users. If you’re giving someone who has this set of value a much higher card, a profile of someone who has a much higher value, there’s a less likely chance that there’s going to be a match on both sides. You try to give people the similar value. You try to show people others of similar value, which is going to lead to high-quality matches. The further and further you go along from point zero of the day that you sign up, we have more information on you. The more you use it, the longer you use it, the matches will actually get better over time. The experience can get better and better as you use the product, which is a really cool thing.

{audio:0:21:42} Since women don’t convert as much as men, does that mean there’s a focus on men getting a match? How do you look at the difference between how women and men convert?

{audio:0:21:59} When we talked about monetization, we actually didn’t focus that much on male versus female splits. Again, I’m going to go back to what we just talked about. If you were creating an atmosphere and an ecosystem that is great for women – again, these are generalizations –  if it’s great for women and the product is great for them and in a free space, then men are going to come to the site. If women are getting quality matches with men, that drives value and some of those women are going to pay. If you have those women on the site, those men are going to be there, and those men are going to pay.

{audio:0:22:38} We tried to make the free experience as good as we could for all users, but one thing we were thinking about simultaneously is, but does this help women? How does this help women? Does it make them feel safe? Does it make them feel secure? Women have different concerns of online dating. While everyone has the same concern of, am I meeting the person I’m talking to? Women also have to think about, am I safe? Am I going to place where I feel comfortable? Do I want to be with this person by myself? Do I need to let someone know where I am? Men can have those concerns, but much less often. The things that a woman is thinking about when they’re on the app are very different than the things that a man is thinking about, most of the time.

{audio:0:23:28} Obviously, acquisition cost has evolved and in the early days, you had such a viral growth that there was so spend, but how did you look at the acquisition cost of men versus women as the business evolved, years later?

{audio:0:23:46} To touch on that point really quick, in the very early days, we literally did almost zero marketing, on a monthly basis. We did have some international representatives in about 15 to 20 countries, where they would hold local events, they would have PR stories, guerrilla warfare marketing. We did have an international presence in that way, although, small. We also used some celebrity influencers, periodically, as those had some pretty big impacts and increased the virality.

{audio:0:24:20} Again, it’s not the answer you might be expecting. We didn’t really hone in on the male versus female marketing until many years later, when we did start evolving. The way that we did that is, if you’re using a local influencer campaign, or you’re using a push notification, you can have the same message twice, but you have to convey the message differently. It was on our product marketing teams, our brand marketing teams to differentiate the marketing campaigns that are geared toward men and women. With today’s targeted advertising, you can very clearly differentiate between the two. It was really just a copy or wording change. The marketing message was there for both.

{audio:0:25:13} What was the retention of users typically when you converted them to paid users?

{audio:0:25:24} Because of my background, I don’t want to give too specific of an answer there, but I’ll say this, the initial retention numbers are going to be lower than most of your traditional dating sites because of the nature of the product, with the nature of it being faster, more casual. Hey, I want to find something maybe a little bit more short-term. You do have people that leave the app often, but they also come back often. If you look at the total duration of a user, it actually is on par, if not longer, than most traditional dating sites. You may have more ins and outs than you would on the other ones.

{audio:0:26:04} Like you said, as the product improves as times goes by, you’re more likely to get matches. If matches drive conversion, then would retention actually improve over time?

{audio:0:26:34} Yes, it does improve over time, as long as you have a product that is better over time. One thing that we understood – and this is based on the last 20 years that Match had before Tinder came around, the data that Match had – retention is actually the hardest metric to move, out of any, when it comes to dating. Especially with the introduction of Tinder. What that did was, it exploded the competitive marketplace. What you saw is that Tinder not only increased the pie, the amount of available audience, the target market audience, but it also increased the number of competitors. People saw that Tinder was wildly successful and this new business model was working and so a lot of people followed behind. Retention does grow over time naturally, but you also have forces pushing against that because there’s a lot more competition and a lot more nuanced apps out there.

{audio:0:27:32} It does seem that if you can keep driving women engagement on the app, plus the product improves over time, then the actual retention of subscribers should be somewhat stable, if not grow slightly, for the core base of the paying users?

{audio:0:27:55} It definitely does stabilize. Growth, harder to say.

{audio:0:28:00} If you take ARPU, it’s up just over 50% since 2016; what do you think drives that?

{audio:0:28:10} The biggest thing was the launch of Tinder Gold; the second major subscription launch that Tinder had. It basically gave you access to a feature called Who Likes You, which gives you the ability to see who has swiped right on you, before you swipe right or left on them. That product itself was actually 50% higher than the original subscription. We saw a large amount of users convert over to Tinder Gold. Just by introducing a price that is 50% higher drove the ARPU up significantly. That’s number one. Point number two is the á la carte products have gotten much better and they have introduced more á la carte products. Those can also drive ARPU because they’re one-time transactions. There is a little bit of advertising driving ARPU, although it’s much smaller than the other two.

{audio:0:29:12} How did you think about optimizing between subscription and á la carte?

{audio:0:29:21} In the early days, frankly, we didn’t. We noticed that if you’re a subscriber, you were going to buy á la carte products at a substantially higher rate. While we did focus on á la carte users and the people who were buying those without having subscriptions, candidly, we spent most of our time focused on conversion to subscriptions because we knew that that would also lead to higher á la carte products. As we got a little more advanced, as we dove into the data a little more, we noticed that regionally, these things are different. In your developed markets, North America, Western Europe, Australia, New Zealand, people are comfortable with subscriptions. It’s become a part of our everyday lives with the products that we use. In some certain areas, that’s not the case. In some certain areas, people don’t want to have their credit card on file. They don’t want it to be automatically charged every month. They don’t want it stored somewhere.

{audio:0:30:21} What you can do is, you can actually start shifting your monetization offerings to market the á la carte products a little more because they’re comfortable with those products. Maybe even take some of the features that are in the subscription and offer those as a one-time purchase. For example, one of our biggest products on Tinder Plus was limiting the number of times somebody could right-swipe in a day. What you could do is, you could actually just offer that on a daily basis. It’s not going to be economical; you’re going to end up paying more. If someone has an adverse reaction to subscriptions, they’re just not going to pay for a subscription no matter what you do, so you have to rethink your monetization strategy.

{audio:0:31:05} Did you have lots of users that were paying á la carte that weren’t actually subscribers then?

{audio:0:31:15} More relative to your developed markets. You’re still going to have more subscribers than not paying. Even in those less developed markets that are a little more skeptical of subscriptions, you still weight your paying users much more toward subscriptions than á la carte.

{audio:0:31:33} Was á la carte originally just an addon for the subscribers or was it actually helping drive conversion from the free users?

{audio:0:31:44} Yes, that’s right. The first product that we launched on an á la carte basis was Super Like. If you were a paid user, if you had a subscription already, you got five free per day. If you were a free user, you got one per day. We wanted everyone to have access to that product, regardless of whether you’re paying for it or not. An unintended positive consequence from that was that we noticed that the people that were using their super Likes daily were much more likely to convert to Tinder Plus. They saw the value in that single Super Like and they said, “Do you know what? I want five free a day and not one. The easiest way is for me to subscribe.”

{audio:0:32:29} How do you look at the opportunities for Tinder to increase ARPU via á la carte?

{audio:0:32:40} I look at that as an uphill climb, frankly. What Tinder is really good at is optimizing its products, is continuously testing pricing, is continuously testing products and how does that drive pricing, how does that drive conversation? Like we just talked about, that big ARPU jump came from a transformative product launch. The most requested product in Tinder’s history from the day that I joined was, I want to know who likes me. When you launch a product like that, you’re using a lot of your firepower. You’re not going to have something else like that that comes along in another month or two. It’s going to be much harder to have those big growths in ARPU year over year. Where it can come from is increased optimizations, increased product marketing, increased á la carte products.

{audio:0:33:44} Let’s not overlook advertising at the same time. Advertising is almost a four-letter word in some situations. People just don’t want to see them because, a lot of times, they’re not relevant to them. You could be looking at an advertisement for Candy Crush while you’re on Tinder; it just doesn’t seem relevant. Let’s take this example. Say you’re talking to someone on Tinder, you’re having a good conversation, you’re talking about Star Wars. Let’s say that an advertisement pops up from a local movie theatre that says, “Hey, we noticed you’re talking about Star Wars, do you want to go see this movie tomorrow? Click here to buy a ticket.” That is an advertisement that doesn’t feel disruptive; it actually enhances the experience. Now, whether a user is comfortable with that type of product is yet to be seen. I can tell you that there are a lot of very smart people working on really cool innovations, when it comes to advertising products. That may be a road to a higher ARPU in the future.

{audio:0:34:52} Just looking at ARPU then, what were the core drivers that you focused on? Clearly, you can increase the lifetime, but it does seem like there was a somewhat limited lifetime on these things, given that, arguably, people don’t want to be on them for so long, like any dating app. Is it more about increasing the frequency of a la carter payments or actually increasing the pricing of the subscription? Which is why you said it’s an uphill climb, because it’s very difficult to change either of those without a step change in the offer or the product.

{audio:0:35:25} Yes, all the above, frankly. Like I said, we were constantly testing pricing, to make sure that we were getting the most value that we could, given the products we had. We were constantly optimizing. Even just trying out trials, one week free, give a discount for a month. Those are the things that can entice people. Once we had used up a lot of those big ARPU products, our focus really shifted towards volume growth. The bigger statement, the umbrella statement was, we didn’t care, frankly. We didn’t care whether it was volume or whether it was ARPU. We were trying to maximize lifetime value, every time. We saw opportunities, through volume, in ARPU that we could take advantage of. Like I said, once you’ve used up a lot of those ARPU things that you had in your back pocket, you have to shift toward volume. In a competitive marketplace, what does that ultimately lead to? It leads to increased marketing? You have to use marketing to then drive growth and conversion.

{audio:0:36:45} How do you look at the difference in lifetime value for a woman versus a man user?

{audio:0:36:52} Mechanically, you don’t. Mechanically, the calculations are the same, but we would notice differences. These aren’t specific examples, but male retention is longer in this area, for this age of user. Why is that? Why is that demographic so different from retention right there. We would dive in. We would figure out why. We would look at, are women getting matches? Are they having messages? Are they swiping enough? Is there a reason why these things aren’t happening? Are there people leaving? Is our retention dropping for just users? The way that we calculated it was not different in any way, but we did look at the two metrics and dive in and see if there was a difference. Frankly, a lot of times, there wasn’t. The difference was the ratio of men to women that were paying. The metrics inside of them were fairly straightforward.

{audio:0:37:48} It makes it pretty tricky, though, because if more men paid than women but the men follow the women, it’s like the women are the lead generator and therefore, the average woman user, although she doesn’t pay, is actually worth two or three lifetime value of the man, arguably, to some extent.

{audio:0:38:17} Yes. One concept that I had always had in my head, that we never actually got to, was a conversion score is what I called it. Is this person going to lead to a conversation for anyone? Not just for themselves. It’s getting at your point of what is the lifetime value effect on others from you joining. A single woman that joined was more valuable than a man that joined. Now, she may not be more valuable for herself versus one other man, but she’s going to drive all of the activity that happens on the site, which leads to more conversion. That goes back to something we talked about earlier; we focused on the free experience a lot more than people would imagine. If you have that good free experience and you make people feel safe and comfortable, the women are going to come and then you can follow the breadcrumbs?

{audio:0:39:24} Just reading the recent Match Q1 report, they claim that engagement for young women is increasing. How can Tinder use different ways to drive engagement for women, going forward?

{audio:0:39:42} There are two things in the last few years that I’ve seen change and they’re at the opposite ends of the spectrum, but they both drive a lot of value. The first one is, Tinder has leaned into the fast-casual nature of the product over the last few years, much more than it did when we were there. Frankly, a lot of the time when I was there in the early days, we spent trying to transform the image of Tinder or change the way that people thought about the fast-casual nature. Once you lean into that and say, we’re a platform that leads you connect with others, whatever that connection may be. We’re not here to say whether things are right or wrong; we’re here to just say be a good person about it. Don’t do the inappropriate things. Don’t say the inappropriate things. Releasing things like Festival Mode, where younger users are together in isolated spaces; or Spring Break Mode. Things that are more toward that younger demographic that’s trying to enhance the experience of where they’re already at. They’re already at Spring Break together, they’re already at Coachella together. Let’s just show those people to each other.

{audio:0:40:59} That has driven a lot of increased volume and retention. On the exact flipside of that, but in conjunction, is safety. They introduced things like Noonlight, which is  a third-party integration, where you let someone know where you’re going. You let someone know when you’re going to be there; you have someone you can call. They’ve put in some more emergency response situations. There’s a button now that can say, “Help, I need someone. I need 911, I need the police.” They’ve put in a lot more safety features that really has helped women feel comfortable using Tinder. I contributed to those two things. Outside of that, the world is getting more progressive day by day, so I think people are just becoming more comfortable with online dating.

{audio:0:41:50} Did you see any material differences in behavior towards the app? I’m just looking at numbers now. Throughout Covid, for women under 30, engagement or total swipes are up 40% to 50%. How would you explain that? Is there anything you learned, during your time, about how women or men engage with the product?

{audio:0:42:20} Covid has changed a lot of things, for a lot of people. The one thing that we know that it has done is, it’s isolated almost everyone. For a product like Tinder, that isolation is going to hit women harder than it would men. You would see a higher uptick of activity, of swipes, of matches, of messages in women versus men. Now, that’s not to say men’s engagement isn’t up too, but when you look at who it’s going to affect more, in terms of isolation, I think it’s going to be women in this scenario. That’s what’s leading to the higher engagement.

{audio:0:43:22} How do you see Bumble catering to women’s needs or just competing with Tinder head on?

{audio:0:43:30} Bumble had an interesting message when they first came out. They were the first company that was, not purely devoted to women, but was very much geared toward, women, where the women message first; the ephemeral nature of a match, where it goes away after 24 hours, so you have to make speedy decisions on who you want to talk to and who you don’t. They’ve also launched other initiatives, such as Bumble BFF, Bumble Bizz; they’re now making investments in women-led companies. Their message, as a company, is women first.

{audio:0:44:10} While Tinder focuses on women, its message is not women first. It’s connections first. Whoever wants to make a connection. I think that Bumble could take Tinder head-on because they focus purely on women. That was a message that resonated and still resonates with a lot of women today. Keep in mind, just because someone is using Bumble doesn’t mean that they’re also not going to use Tinder. We saw that if someone uses one dating app on average, they’re going to use between three or four. People may use them for a number of different reasons.

{audio:0:44:53} How do you view Facebook as a competitor to Tinder?

{audio:0:45:00} Facebook is the great unknown when it comes to dating. When we first heard that Facebook was going to get into dating, it was not alarming, but we were concerned, based on Facebook’s reach, their audience base, their resources, the amount that they could spend on this, that they could very quickly, if they wanted to, become the biggest dating app in the world. That comes down to execution. People don’t necessarily trust Facebook right now. There’s a lot of privacy concerns. I see Facebook as probably one of the bigger threats potentially to Match Group and Tinder. I’m not sure that they can actually capitalize on that potential.

{audio:0:46:02} They launched in mid-2019 and I still don’t know anything about it other than I’ve seen the product once or twice. I haven’t heard about any success from it. They were supposed to launch in Western Europe a number of months ago and the week before they were supposed to launch, they were major privacy data concerns. It’s one of those things where you would keep an eye on them, but you’re not too concerned at the present moment.

{audio:0:46:32} What do you think is the biggest risk for Tinder?

{audio:0:46:39} This is a question I struggle with because there’s not a lot. There are a few things that we could talk about, one of those being social media, as things like Instagram, Snapchat, Tik Tok become more of a platform that people are using for dating. Going into someone’s DMs, you’re actually seeing some of that taking away from Tinder and Match Group’s growth, but fairly small. The biggest risk is the unknown. To use an analogy, what Tinder did to Match was, it came out of nowhere and it revolutionized the dating industry. The unknown product that could come out that nobody is thinking of today, that could disrupt this industry again, is probably the biggest risk. That speaks to the risk level of just a company like Tinder that’s in the dating atmosphere. Our former CEO used to say, dating is recession-proof and, in some cases, it may actually get better. People are always going to want to meet and connect with other people. The dating industry, as a whole, is not at a big risk. With Tinder being the leader of that industry, I don’t see major risks outside of something coming along that we’re not thinking of.

{audio:0:48:14} That’s the question, how durable really is Tinder? You can say that about any company, but what do you think are the biggest risks to customer engagement or using engagement for Tinder?

{audio:0:48:30} We just talked about the unknown. Increased competition possibly. Tinder has the biggest reach; it has the biggest audience; it’s the most ubiquitous. In practice, most people are trying to replicate Tinder and try to replicate the product and the growth. It’s very difficult to do that in today’s world.

{audio:0:48:56} Does the customer acquisition cost decrease, in time, as you get scale, as your brand becomes more powerful with younger people, the CAC should decline for new users?

{audio:0:49:05} If you were to isolate it, yes. There are headwinds against that, as you have more and more competition.

{audio:0:49:15} Marginal users are very hard to recruit because most of the users were probably already using Tinder.

{audio:0:49:20} The way that I break this down is an awareness versus a perception problem. If you look at a lot of areas in the world, if you walk up to any person on the street and you say, “Do you know what Tinder is?” They’re going to say, “Absolutely.” “Why haven’t you joined it?” “Well, I don’t like it. I don’t like the perception of it. I don’t like the nature of it.” In a lot of cases, you actually have to convince someone that you should come to our site, that this is a safe space. Where on other apps, you may not have to. They may feel more comfortable. In certain markets, in certain areas of the world, it’s just an awareness problem. Have you heard of Tinder? “No, what is it?” “It’s online dating.” “Cool, I need to check it out.” That message has to be received by audiences differently.

{audio:0:50:08} Someone who’s in South Korea is not going to receive the message the same way that someone is in India, versus the way that someone is in Germany. You have to tailor all of these messages to your specific audiences, which can be expensive. You’ll see that customer acquisition ramp up for a period of time. As you learn the market, you figure out what works, what doesn’t work? To your point, that number will come down. The economies of scale is not as relevant in this world as you might think because you’re dealing with people. People’s emotions are different. People’s perceptions of online dating are different. Marketing messages, a lot of times, aren’t wash and repeat. You have to spend a lot of time understanding the user and what drives them in a dating world.

{audio:0:50:57} How did you look at that evolution of CAC for Tinder?

{audio:0:51:04} It almost went exactly as I just talked about. In the first probably two and a half years, frankly, we didn’t. We didn’t look at it at all because we didn’t have to spend very much. The product was so viral that we were just growing at amazing rates, month over month. Once we started to see the growth slow down, we did start focusing on CAC. What’s driving our users? Is it brand messaging? Is it targeted advertisements? Is it Facebook, Instagram, Google? Is it guerrilla marketing? Is it getting someone like Hilary Duff to go out and talk about her experience on Tinder and record live dates of herself on Tinder dates?

{audio:0:51:56} Different things work in different areas, so you have to do a lot of testing. Run the same marketing campaign, but just change the wording. It can be very expensive and resource heavy in the beginning, like we said. But then you figure it out and you can really drive down those costs pretty significantly. That’s what happened with Tinder.

{audio:0:52:22} How do you look at segmenting the brands in the Match portfolio?

{audio:0:52:25} There are a few ways to segment it, the best one is to think about them in terms of free to communicate and pay to communicate. Free to communicate being your sites like Tinder, OkCupid, Hinge, Plenty of Fish. Easy, fast, less serious-minded people, although, you have plenty of serious-minded people on them. On average, you’re going to have less serious-minded people on those. It’s a balance between your free users and paid users, in terms of products and features and how you monetize, how you retain those users.

{audio:0:53:09} Pay to communicate is an entirely different world because half, if not three quarters of your users, should be paying you. You have a very captive audience. You have a very retention-heavy audience, until they find that person that they want to spend the rest of their life with, then you have a user that’s lost forever, in a positive way. That was really the way that we thought about them. Even separated some of our teams to work with each other on specific products more. When it came down to segmenting within the business and within best practices, we didn’t. Every best practice was shared with every company within Match Group. There was a lot of cross-promotional type things; a lot of education sharing. In the beginning, that was Tinder really gaining and learning from other companies. One of the really cool aspects was actually seeing that shift over time to where people then started coming to us for our learnings and our best practices. I thought that was a really cool experience of going from the young startups to the early mature company that everybody leaned on.

{audio:0:54:29} Does the company look at Tinder as the focal of the portfolio and then just try to fill in the gaps with different apps on the edge cases?

{audio:0:54:42} Yes and no. The leadership team is full of smart people. They understand that Tinder is the biggest component of the company and frankly, drives most of the value of the stock price. the other companies were very much not just a secondary option. Most of them had their own internal independent teams that they were working on full-time. One of the things that’s different is, Tinder is made for everyone. It’s supposed to be a product for everyone and anyone. A lot of the other products are a little more in vertical niche products, whether they’re geared towards a certain demographic or certain age group, or a certain interest; you see a lot of value in those types of more dedicated products. They have very loyal customers, they have high retention, they have high conversion, but they just can never reach the scale that Tinder can. To have a portfolio that, no matter who you are, not matter where you are, you have an option, that’s what Match Group is trying to do with its portfolio. They don’t want anyone to have to go anywhere besides one of our companies to find the person they love.

{audio:0:56:02} Does Hinge cannibalize Tinder?

{audio:0:56:10} Yes and no. It goes back to the stat that I was talking about. If a person uses one app, they’re generally going to use between three and four. They don’t cannibalize it in the more general sense of, I’m going to use this and not that. What they do cannibalize is time spent. Rather than spending one day a week or three days a week on Tinder, I’m going to spend one day every two weeks, because I also find value in Hinge. Your users are going to use both of them for the most part, but they will just decide, over time, which of them they want to spend more time on. Yes, it is cannibalistic, but not in the pure sense.

{audio:0:57:00} I’m thinking of how Match could look at the portfolio and all the brands working together. Is there an argument of maybe consolidating some of the brands? What’s the advantage of having so many different brand names in one portfolio?

{audio:0:57:14} I can go back to my time on the Match corporate side. It was something we were constantly evaluating. We did shut down a number of smaller sites over time. For the most part, those are going to be sites that, based on the fact that we are shuttering them, most people don’t use, don’t know about, aren’t very popular, our old legacy sites. What we didn’t see were a lot of mergers. We didn’t see a lot of value in putting together OkCupid and Hinge or Match and People Media. Having a number of options in the marketplace is good for the overall user experience. Were those conversations had? Sure. They were mostly on the dissolution versus the merger side of it.

{audio:0:58:08} Looking at Tinder going forward, they have up to 60 million users. The big question is, can Tinder get to 70, 80, 90, even 100 million users globally? What does it take to get there? We’re seeing in the US now that subscription growth has started to slow, which could put pressure on Tinder to become more aggressive in driving ARPU or monetization broadly. How do you look at that balance, in terms of letting Tinder grow into a mature company now?

{audio:0:58:56} I do think that there is room to grow for Tinder. I think that growth is going to start coming, primarily, from international regions. Like you said, the growth has started to slow in your more domestic, developed areas. Whether that is a crowded marketplace, there are more options, whether it’s social media, whether people are just spending less time on dating apps overall –  which is something that we had seen a little bit when I was there; it may be happening more and more – there’s room to grow to 70, 80, 90, 100, there absolutely is. Part of that also is stigma breakdown over time. We saw that when the stigma broke down in North America, user growth exploded. There are a lot of countries that are way behind in that area. That’s not a negative comment. It’s just speaking to the dating landscape in those areas. Some people just don’t feel comfortable using dating apps. No matter where you live, that will change over time. You will see natural growth.

{audio:1:00:14} To get to those big growth numbers, it’s going to come from two areas. One of them is good and one of them is not. If you were to spend a lot on marketing, you could gain a lot of users, very quickly overnight. Match has the resources. It’s got great cashflow. It could do that, but that would ultimately hurt the company. What I think is going to happen, and being a part of the team for so long, I know that it’s always being worked on, is innovation. What’s the next thing to come? Like we talked about with the biggest risk; the biggest risk is the unknown. Tinder is also working on the unknown too. They’re not just waiting for someone to come out with it. They want to be the first ones.

{audio:1:01:03} Video is a good step. Match actually launched video recently. They’ve got a national TV campaign that’s now marketing that. That is a really cool way to innovate, as video becomes a bigger part of our daily lives. To use a clichéd term, people don’t want to be catfished. If I can talk to someone ahead of time, I can see, I can prove that they’re a real person, that a better experience for me. It just so happens that we’re going through a catastrophic global pandemic and so video is even more important for that company now. I think that’s why you’re seeing much more time spent on these apps, is because you’re starting to integrate video components. That’s not the end goal to me.

{audio:1:01:50} One thing that we had always talked about at Tinder was, how do we bring things back to a social context, a social component? A meeting in person type product. You would see some people who had 10,000 matches. There’s no way you could ever talk to or meet that many people in person. How do we facilitate actually meeting someone in person and creating a meaningful relationship? That’s the end goal. Now, you have to take steps to get there, but I do think that is where you could see the explosive growth from Tinder, over time.

{audio:1:02:35} If you just look at the revenue growth, it’s got to come from either converting more of the free users to paid or increasing the service and value that you offer to paid users, to increase retention or ARPU. How do you look at the healthy balance between the free users and the paid users?

{audio:1:03:02} Frankly, that balance would be healthy if it was 30% paid users and 70% free, but that’s just not necessarily realistic. The balance for us was more spent on, are we dedicating time to innovate product-wise and create a good experience? We didn’t necessarily focus on ratio of the two. We were trying to increase conversion by giving as much value as possible through monetization. We were trying to increase retention on the free side, by introducing products that made people want to stay around longer. If that ratio went up or down, based on those products, that didn’t necessarily matter to us, as long as we were driving as much monetization value as we could, we were driving as much retention for free users as we could.

{audio:1:03:51} It’s very feature driven. Like, you said, you introduced Gold and it drove huge growth. It does seem to be like it’s specific features that can really drive step changes in monetization.

{audio:1:04:08} Absolutely. You saw that with Tinder Gold. Like I said, when I joined – and just to give you a little bit of insight into how our company ran – we would have weekly all-hands. We’re talking about 30, 40 people; really cool intimate experience. We would actually sometimes bring a list of the top 10 things that users are requesting. Almost in perpetuity, on that list was, I want to see who likes me. We knew that feature would drive a significant amount of monetization. At that point, it was just when do we do that, timing wise? A lot of the products that have been launched, and will subsequently launch, are being thought of, have been thought of, it’s just when do you launch them strategically? Are we growing fast enough in this area where we don’t need to launch? There are a lot of metrics and a lot of dynamics that go into it. Absolutely, Tinder at its core, is a tech product company. It is not a dating company to me; it is a technology company. The marketing team amplifies that.

{audio:1:05:30} What the interesting point is, as long as Tinder can keep filling the top of the funnel, as long it’s feature-driven, whether it’s video, whether it’s geolocation services and driving matches in physical space, anything that can be done in that sense, as long as Tinder is the brand for dating, it seems like it’s a feature they can roll out and really keep the userbase for dating. The biggest risk is step change stuff, like you said, where you can’t predict it.

{audio:1:06:11} Yes. I’ll give an example on the flipside. We recognized, at one point, that we grew so fast in our early days, that we didn’t have enough time to focus on the technical stack, if you will. Basically, we were growing so fast that we had to just stack on our resources, which leads to something called technical debt. We ended up rewriting most of the app, for about six to nine months, depending on the platform. What we noticed is that when we weren’t launching new products and were focused just on rewriting the existing app, metrics fell. That was a really eye-opening moment. That if we’re not innovating, if we’re not pushing out new things, users have such a choice in dating these days that they’ll go somewhere else. To your point, it is a very product-driven industry. Tinder just happens to have the best product, but it is a product-driven industry. That’s where the risk can come in the unknown product, or Bumble working on some special thing that nobody knows about. That’s the biggest driver of growth, but it’s also the biggest risk for someone else to do it.

{audio:1:07:31} On competition, I know it seems very difficult to look at a competitor to Tinder at this point, but is there any major risk here? As you said, if we do move towards video or dating does move toward more of a physical digital integration or more in the physical space, is Tinder really in the best position to benefit from that?

Tinder: Optimizing Lifetime Value

How Tinder approaches monetization between subscriptions and á la carte options

Differences between women and men engagement, spending habits, and behavior on Tinder

Balancing new user growth, conversion, and monetization of existing users

New feature and product opportunities for Tinder in video and geolocation

How Match thinks about building a portfolio of dating brands

Tinder: Optimizing Lifetime Value

Former Director of Finance at Tinder

inpractise.com/articles/tinder-lifetime-value

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Executive Bio

Drew Williams

Former Director of Finance at Tinder

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Tinder: Optimizing Lifetime Value(July 29, 2020)

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