OkCupid Raises $6 Million
OkCupid, a free online dating site, has raised $6 million from a group of angels, CEO Sam Yagan told GigaOM. Each time I talk to Yagan about his new company, he pulls out some variation on the same line: “Our goal is to reduce GDP by half a billion dollars by completely eliminating the subscription online dating market.”
Yagan says he can run a successful dating site without making people pay, something PlentyofFish has also had success with. OkCupid currently has 600,000 active users (measured as those who’ve logged on in the last 90 days). It’s not apples-to-apples, but leader Match.com has 1.3 million subscribers. PlentyofFish reports a quarter million users logging in per day.
“All of the big guys think users want to pay for dating because paying for something equals quality,” says Yagan. “Well, unless Match.com has some way of getting Tom Cruise and all the actors and actresses to stand behind a firewall, our users are their users.”
In brass tacks land, that means the new funding is supposed to go toward broadening marketing efforts beyond viral growth, and expanding to non-English speaking users in Europe and Asia.
Yagan, who’s led two companies before but never taken venture capital, attested he talked to 20 different VC firms last year and received a number of term sheets, but didn’t like the proposed equity distribution. Instead, he went with collecting checks from five angels, whom he says he’s not disclosing because we’ve never heard of them.
Yagan previously led two immensely popular consumer internet products, with varying levels of corporate success: SparkNotes, the online alternative to Cliffs Notes that was bought by Barnes & Noble in 2001, and eDonkey, the peer-to-peer file-sharing application that shut down under pressure from the RIAA.
Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.
Congratulations Sam!
Light the stogies ladies and gents, these are good times… Congrats! I hope we are next.
Yagan didn’t found eDonkey but was brought onboard after a few years to develop the company. Jed McCaleb founded the donkey, and he’s also employed at OKCupid these days, I believe.
Also, eDonkey wasn’t just shut down under pressure from the RIAA. They agreed to pay $30m to settle the case against them (though there are serious doubts as to whether this is a real figure or just something dreamt up by the riaa pr people to make it sound impressive).
So instead of striving to make 1/10th of what Match makes (which is very do-able) this guy would rather make even less and also attempt to destroy that industry.
Sounds REAL smart… or not. Hey smart guy, did ya ever think that was the reason you never got offered the terms (or money) you wanted from people who could afford proper due dillegence?
I wonder how much that is in Canadian Pesos?
Kewl…
Is this the $6 million raise that was done Last year in Feb 2006 or is this a new one?
I think you misquoted Sam.
“Our goal is to reduce GDP by half a million dollars by completely eliminating the subscription online dating market.”
Should be
“Our goal is to reduce GDP by half a billion dollars by completely eliminating the subscription online dating market.”
?
Don’t believe a word of anything that Plentyoffish has to say…anyone can lie about their traffic to seem like their playing with the big boys. Simple fact is – plentyoffish is a second rate site full of spam and prostitutes.
Wait a minute… did you say prostitutes?
Hmm…
…Count me in! LOL
Seriously though, there is a reason why paid dating sites are still around. They do a better job of eliminating undesireable people. Sex workers, broke adults, kids… etc. As long as that remains true, which it will, there will be a place for paid dating.
Why anyone would invest more than $500,000 in a free dating site is beyond me.
I agree…6 million for another dating site is a bit out of whack.
What in the world are they going to spend that money on you ask? Marketing.
True, Match, and Eharmony spend tons of money marketing and the only way to catch them is to spend, spend, and oh yeah, spend.
Even with a free service it will be difficult as dating sites are a dime a dozen…
EXCELLENT point in comment #5, Ted. I assume you would also advance the idea that cost cutting in any established industry is similarly “REAL SMART” (those are sarcasm caps).
Like those morons over at Skype, huh? They didn’t create any value for anyone–they probably should have tried to make 1/10 of what SBC or Verizon makes, huh? Er, wait, that’s the model Vonage tried…and they’re not really doing too hot. Instead Skype went and made it free, and, huh, created a ton of value for users.
Who else…let’s see…oh, Google provides for free what used to be a costly product in the form of a research librarian. Oh, then there’s that free MySpace and free Facebook–those were pretty crappy investments, too huh?
But wait, none of these are actually “free.” They’re AD DRIVEN. It just means that someone else is paying the bill in dollars, and that the users are paying their way with attention, CPMs, and clickthroughs. Eventually they pay in DOLLARS, but not on the “free” site, but rather…wait for it…on the sites of the advertisers. Or at the movie theater, buying tickets for the film ADVERTISED on the “free” site. Or buying Coke at 7-11. Or whatever.
Next you’re going to try to tell us that the CPC and CPM online advertising industry isn’t rational either, huh? I bet all those marketing managers would probably beg to differ with you. The hundreds of thousands of Google AdSense affiliates probably think you’re full of it, too. What else…Google’s $1bn to MySpace (all CPM placement of the same sort you find on..gasp…free dating sites!) over 3 years would probably argue against your theory, too. So would Microsoft’s deal with Facebook. You know, a couple other “free” sites.
But wait a minute? I’m confused. I thought this OKCupid move was going to “destroy the industry”? Comment #9 of yours states rather unequivocally that “there will always be a place for paid dating.” There are ways to quality-discriminate other than just price, but it takes an open mind and some brains.
Wow, sometimes I just marvel at the wisdom of the blogosphere. It consistently confirms my friend’s favorite saying: “At very least, one can always serve as a bad example.”