OkCupid Raises $6 Million

34 Comments

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.

34 Comments

Tom Lee

OKCupid looks nice, still I think plentyoffish.com is a better success story. A one person website that can take on the big sites, I think POF will be the winner in the long run.

Michelle

OkCupid also reserves the right to impersonate users. The Terms and Conditions page explains that if a member is suspected of being online for any thing other than a “bona fide relationship-seeking purposes,” OkCupid will contact that member with fake profiles in order to determine the users reason for being there.

Yet, when joining users are asked what they are looking for at OkCupid, and “I am here for the cool tests!” is an option. So, if a user chooses that option- they are subject to fake profiles.

The site will make money, providing compilations of user made psychological profiles to advertising strategists.

Unless of course users find out. And care.

OKCupid

OKCupid has nice design and easy to follow. I like this design and I am impressed about how smart he is in terms of marketing to run a successful dating web site like this.
Thanks for sharing.

tropic79

I like OKCupid so far. At least they are not trying to deceive me with fake profiles. It’s amazing how the “winks” start on a certain site as soon as I cancel my subscription. I won’t name the site but it rhymes with scratch.

AllSinglesMeet

it’s very heartening to see that people are finally acknowledging that free does NOT necessarily mean compromise on quality.
Congrats OKCupid and best wishes for future!

Yogi Muranjan

How about the new site OurLikes.com? It is getting a lot of traction lately. You can express your interests visually through images, and other people can match it. Click click click and you will start clicking to other users. Not to mention, it has a very sweet interface too.

ron burgandy

david… if you think that match.com make only 10K per day after all expenses you are sadly mis-informed… try a little higher.

david

Pete!..Ted has no idea what he’s talking about! not only do i operate online sites and I make revenue on google adense. I could not have said it better The Web will turn into a FREE web…with someone else paying the bill! just becuase a site is free does not mean someone is not paying for it!

Ted..plentyoffish has the traffic with almost no overhead or marketing expense. So if he makes 10k daily with no staff, rent, or expense like the big boys..I would say he’s more profitable then the big sites.

Anthony

I personally love okcupid. I think that the biger pay sites are garbage. Most of the people there don’t buy a subscription anyway, They shouldn’t count because they can’t get back to you. I’ve met lots of really great girls on okcupid (most of them contacted me), It’s got these really cool quizzes, and you are able to contact everyone, and they can contact you. I actually had a Plentyoffish acount over a year ago, I met this girl which I dated for a year before we broke up.

Okcupid works great for me, but I’m a really good looking guy. (I’m sure that helps a lot.)

Tom

Interesting. Why couldn’t Sam reduce the GDP by a half billion? It’s a number…numbers go up and down everyday. Although that’s a pretty big number to attack with only six million from VC! OKCupid came up with six million from VC…big deal and who cares if he doesn’t release the names of the investors. OKCupid has serious problems and needs serious solutions. They need a different plan but who am I to tell Sam what to do…seems like he’s doing pretty well. OKCupid does have a unique value proposition but a value proposition doesn’t pay the rent all the time. This site is Ad Driven but cupid needs to toss a couple million of that VC dollars into internal problems like the fact that the site reloads every three seconds. Am I the only one that noticed that? Come on. They run live scripts that interfere with other software. This site was a lot of potential but is in dire need of an overhaul. Sure google purchased myspace for one billion but why would anyone purchase a personal web site like OKCupid? Why? Because this is America baby…that’s what we do…lol.

vanchau

I think pay dating will be around, but it will just evolve. There are strong players moving into the free dating space such that the quality of service will rival or surpass that of current pay dating.

Most likely pay dating will become very high end with “high-touch” customer service. The masses will be served by next generation free dating sites in the future.

OKCupid is really a quiz site with dating elements.. kinda like MySpace is a social network but has dating elements. I think focus is important, people don’t want to waste time on a pseudo-dating destination if there are better alternatives

derek

these guys have hit on something interesting.. a completely location based mobile dating service.. you text your address in and it give you hits of people who are close to you.. much more spontaneous than match or eharmony

MeetMoi.com

rebecca

Sorry, but the last thing “love” has to do with is a pop quiz, and ya thats what I’m looking for in a date, NOT!”

The best thing about web2.0 to me is the user participation via “tags” and I think that that helps me gage interest way more than any clever response to some silly question. Then a skype call to help filter out the fakes. Just my take on all this, cheers :) becky

chrisco

Just goes to show that there will always be room for new sites to help people get together. Online is a fantastic way, I know from experience (that’s how I met my wife). We will have a dating site called BuzzLove (www.buzzplove.com) to compliment our social networking type website. Cheers!

-Chris
Founder
BuzzPal – The World Is Your Party
http://www.buzzpal.com

Saïd Amin

“All of the big guys think users want to pay for dating because paying for something equals quality,” – until free sites can provide solid customer support, quality screening of profiles beyond just blocking blocks of ip addresses and offer robust search functionality that allow members to find what they are looking for, free dating sites will not be on the same playing field as the paying sites. I believe that hybrid free/paying dating sites that address the aforementioned are the best positioned to shine and compete with the paying sector. By virtue of charging, paying sites are generally attracting more serious minded singles than those found on Plenty of Wish and other free sites; hence more thorough, “quality” profiles. That said, there is room for both free and dating sites to thrive. Levels of serious daters can be summarized by their participation on social networks > free dating sites > paying sites.

Rodolfo

The main problem with online dating is the supply and demand problem. Demand is that your users expect different things (older women want more children and stable relationships and younger men want more sex) Supply is also asymmetrical, you get more men than women, between 3x and up to 10x. Also for the very nature of dating do not see the advantage of a virality component. You are more likely to have friends of the same sex and adding them to the pool reduces your chances of finding a partner.

Until those issues are solved, it’s just another personal website.

High fees are not only for profitability, they are also high fees to discourage stale profiles. It’s to force people to find a partner and avoid having the same fake profiles all the year long (check fastcupid for example, those profiles have been up for years)

In order to succeed in this market you have to have a meatspace component or a plugin in your service whose utility goes beyond dating (one example is hotornot who uses visitors to rate your picture or speeddating which has parties as well). And 6m is nowhere helpful to find this solution, they could have raised 500k and do the same thing.

Liz Gannes

Sorry guys, slow on the comment thread. I’ve been sick. Updated the post to reflect the corrections you left.

Yeah, $6m is a ton of money, but the subscription prices the incumbents extract are way too large, don’t you think?

Ted Avery

Pete, you obviously have a position to defend. That’s your business. So you should.

Dating is unlike any of the other examples you have mentioned. Let me put it simply for you to understand my point and since we are talking about dating I will use a themed analogy…

Let’s say you have just met the town harlot. It has been confirmed she’s easy and everyone knows it. You want boom boom but instead of getting to the nitty gritty of the conversation with this woman you would rather take her out and buy her flowers for years in hopes that she reciprocates later. She would rather do other things, and she does them with plenty of people while you are “dating her”, but you are trying to spend money to schmooze her with only a kiss and hug to show for it.

In other words, instead of being the guy that gets what he wants(credit card subscriptions plus ads), you are advocating being that guy that gets the strange tasting secondhand kisses later(advertising dollars only) when you could have just as easily received everything with the same effort or less if you had just been direct.

The bottom line is that people pull out their credit cards for dating. If you are scared to play that game then so be it.

Skype, Google and the like are different beasts. There’s no denying that. They are pretty different business models also. They both take care of actual needs for people. Online dating is not a need. It’s a want.

The poster boy for free dating, Plenty Of Fish, is still no match in revenue for the paid sites. There’s no shortage of places to date for free now a days but the paid companies still truck along. There’s a reason for that. But hey, go ahead and take the free route. Maybe you will make a bit of money then get bought out for less than half of 1 year of Match.com’s revenue. If that’s really the best use of your effort and your investor’s money in the dating arena then I wish you well.

Grant

OkCupid has very unique value proposition in that they do lot of interesting questionaire and a lot of people signing up with them just to do the personality test. They are definetely the market leader at this niche. However, they are not a real dating site as described by lot of people on the site that they don’t come here for date. They just don’t.

Pete Kazanjy

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.”

Josh

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…

Ted Avery

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.

Anonymouse

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.

Markus

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.”

?

Ted Avery

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?

pat

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).

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