(My experience with Tryst.com)

Dollar Bills Ya’ll

Markus Frind’s free online dating website, Plenty Of Fish, earns around five million dollars a year in advertising revenue.  Andrew Conru’s FriendFinder Inc was recently bought by Penthouse for $500,000,000. SparkNetworks, of JDate and American Singles fame, is on the market in the $100,000,000 area. Obviously, I was attracted to the online dating industry because of the proven profit potential. People are willing to pay for online dating.

Metcalf’s Law

Unfortunately, I learned through failure that this profit is hard earned. Let’s pretend that you have created an algorithm that is 100% efficient at matching people. In other words, if the algorithm matches you, it has mathematically found your soul mate. This is all well and good but you are still bound by geography. Clearly, if the algorithm matches a person in Guam to a person in Brooklyn it is of no value. Even the person who is completely dedicated to finding their supposed soul mate is not likely to travel more than 50 miles.

On the other hand, let’s say you don’t claim to match users but only offer the ability to search by whatever criteria you find important. This is roughly what Markus Frind does. His website might not be flashy or use unnecessarily complicated math, but it has claim to a tremendous set of users. Additionally, with the exception of age, gender, sexuality, education, and appearance, most factors are going to be garbage in, garbage out.

The important thing to note is that in both cases, match making and browsable profiles, the websites value is derived from the size of its user base. Metcalfe’s Law is a bitch. While I, like many people, was attracted to online dating because of its proven profit potential, I misread the costs of entry. Programming, hosting, and bandwidth are all so negligible that they are not really relevant. The advertising dollars needed to reach a minimum level of geographical saturation are extremely high and often overlooked. In the beginning, given the low conversion rate resulting from a low saturation, you are not going to feed AdWords and earn a profit. In other words, my mistake was the oft repeated one of under-capitalization. Unless you have a brilliant idea combined with a bit of luck or say, a couple hundred thousand dollars in burnable cash, an online dating venture is unlikely to succeed.

A History of My Projects (learn from my mistakes)

Version 1

The first version of Tryst was targeted to American users with no part of the site externally visible – as in viewable without login – except for the tour and signup page. The concept was to have a Craigslist style dating network where users posted “Trysts” (dates they want to go on). There was no free tour. The website converted terribly (read: no users). Clearly, if the user is going to pay for an online dating website, they expect a free tour because nearly every website offers one. No matter how good an offer may appear, there should be a free tour.

Version 2

Realizing that the advertising costs needed to reach a decent saturation of users was going to be well beyond my budget, I set out on creating a free, advertising supported network that could be fed by search engine hits. Again, I was interested in creating an “I want to go on this date” oriented network, as it was at least, an underdeveloped area in the online dating industry. The search results did slowly advance but after two months I was only earning around $10.00 a day in advertising.

Version 3

Discouraged by the slow growth of Tryst Version 2 and apprehensive about the possibility of a bubble in PPC advertising, I set out to create Tryst
version 3. This version was also tried to create real world dates, but in a different way. Users would login and be presented with only online users that matched the gender, sexuality, and age group they were interested in. They could then send messages back and forth in an instant message / conversational way. This version was not free but did have a form of baiting. You could see the profiles of other members, but you could not message them unless you had a paying account. Free members could respond to messages sent by paying members, but they
could not initiate the conversation.

This version actually had a high visitor to free member rate (between 20 – 35%). Unfortunately, my estimates of the CPC costs for Google’s geographically targeted visitors were erroneous. I was assuming (using Google’s estimator tool) a PPC rate of between 40 cents and 1 dollar. At this rate, I also assumed I could expect several hundred visitors per day, per city (also from the traffic estimator tool). In reality, targeting NYC costs a minimum of around $1 CPC and, more alarmingly, generated only a couple clicks a day. Tryst version 3, like versions 1 and two, could not work.

Advice borne of failure

• The barriers to entry in the only dating industry are, in fact, very high. You are in a race to acquire new users before your old users are discouraged. Until you reach a certain point of saturation, you are going to be burning advertising bucks.

• Do not base your costs on one set of estimations. I used only AdWords’s Traffic Estimator tool which severely underestimated the CPC and available traffic leaving no chance of success with my chosen business model.

• Do you really want to make an online dating website? I really had no interest but was attracted by the low entry cost and proven profitability. I found both assumptions to be false and more importantly, because I wasn’t interested in solving any problems in online dating, had little continuing motivation.

• If you do decide to start Yet Another Online Dating Website, be original! PlentyOfFish created a free network for online dating when the industry had none. EHarmony was one of the first networks to offer comprehensive matching (aka voodoo but still). I believe the future in online dating is going to be more real world date centric. Find ways (and funding) to get people out and dating with people they could potentially enjoy.