OPW — June 26 — Here's a little graph of Plentyoffish vs OKCupid vs Matchdoctor vs American Singles fyi. Plentyoffish is powering away. Here's Myspace vs Friendster vs Hi5 vs Facebook.
Mark Brooks: Crazy outta control! Myspace is taking over the internet.
Mark,
Kudos to Marcus for his growing site. But, comparing his growth with small sites like OKCupid & Matchdoctor, and a declining AmericanSingles.com (Spark has been cutting back on this site for a while now, as they switch to pushing their niche sites more) is not a valid comparison. Of course he is gaining against those sites.
A better comparison would be POF with Match.com: http://www.google.com/trends?q=plentyoffish%2C+match.com&ctab=0&geo=all&date=all
POF is gaining ground, but Match is still way up there. But, hey, POF is still doing pretty good:)
If you limit it to just canada, Plentyoffish is right behind myspace and ahead of all other social networks and dating sites.
http://www.google.com/trends?q=plentyoffish.com%2C+friendster.com%2C+hi5.com%2C+facebook.com%2C+myspace.com&ctab=0&geo=CA&date=all
Marcus,
I would think your site has to be worth in the tens of millions. If a company offered you that (say, $25M), would you take it?:)
Hey guys,
Even the very fact that Sam suggested to compare PoF with Match.com rather anything else says a lot.
Markus, you defy gravity. And I mean it on a positive way. You proved that free dating has a community on its own. And while paying sites are grabbing users from each other, you build up the traffic.
I’d call it a free-site revolution. It’s totally counterintuitive. Providers were trying to make it better and then bigger. You and Craig kept it simplistic to primitivity and stick to SEO perfection.
What shocked me most is that I heard a reference to PoF from one of my friends who is into dating but wealthy enough to pay for a subscription on any site.
That what I congratulate you on. That’s a brand reconginition. Big guys spend millions on this. You did it equiped with patience and dedication. That’s sooooo cool!
In terms of the price you can get, take your last monthly cheque from google (say $450,000). Then add a growth rate (say your traffic grew 3 folds within 12 month). Then apply a profit margin to get the Enterprise Value. Barry Diller with his IAC/InterActiveCorp (IACI) has 13.8%. Investors would probably want to see something like 30 to 50%. The last thing you’ll have to do is to figure out a discount prospective investors will be willing to get.
I’d say you can start bargaining from $20 to $32 M. Wow!
The one thing I noticed that was as impressive as Markus’s success is the traffic downtrend for the last 12 months for all paying sites with no exception. All sites are going down! That also WOW!
Alexander Shetinin
Alexander.Shetinin@duetnetwork.com
Hey Alexander, how can all sites be going down when we are up over 20% (profiles, rev & profit) this year (not that you would know that unless I told you, us being small and privately owned)? Or, did you mean big generic sites and not smaller, but really successful niche sites like ours?;-)
As for Marcus’ business model, kudos to him, however, I would argue that he and Craigslist are anomalies. How many other free sites have made it? What were the odds that these 2 sites would make it? They must be astronomical.
I am not trying to knock either one; I am just saying that this is not some “revolution”. Yes, most dating sites are not making money, but some are, e.g. larger sites like Match.com, eHarmony.com, & Yahoo, and smaller niche sites like us.
And, while the above are no longer growing at crazy percentages any more, they are all money-makers. Of course, Marcus is making tons with a lot less resources and personnel, but that doesn’t mean others aren’t making tons of cash.
Hey Sam,
My comments regarding the paying site downtrends refered to the traffic volume only. It was based on data provided by Alexa. You right moneywise, the picture may be different given to a higher user’s lifespan and a higher conversion ratios. But still… The comperison of traffic of Pof with Lava and JDate is very impressive.
Lava has lost 2/3 of the traffic since it was bought in March 2004 (Great deal by the way hahaha) while our friend Markus’s traffic grew some 7 folds and passed both Lava and JDate.
In terms revolution-or-not, it’s all up to a particular observer. So it was a total blast for me. What if you were asked if a better service and design would help you to gain customers. What would you say? I bet you would say YES. So would I. And I not only “would,” but actually did. My site was 10 times better designed, had a way better technology, 100 times more flexible and sophisticated not mentioning the customer service comparing to PoF (I exaggerate, but not much).
It’s a new vision of what users want.
MySpace is another good example and it popped up just 2 years ago.
Alexander, are you saying you are re-launching, or that your site was better overall when it was running? Regardless, it just goes to show that quality and business success don’t always go hand-in-hand, e.g. consider beta vs. VHS or Apple’s Mac vs. Microsoft’s Windows (in this latter case, obviously Apple has been successful; my point, though, is that while I would consider it to be the better technical product, Windows is 1000x more successful financially).
MySpace came from out of nowhere, but look at Friendster. Will MySpace go the same way?
I wonder if once you get to a certain size (or success level), you are pretty much sure to make it (assuming you don’t get lazy and don’t move with the times)?
And, hey, if you are Marcus and a year from now it starts to decline, you have still made $500K or so/month until then. That’s a pretty nice nest egg:-)
I recall talking with somone in the business a few years ago and he was living it up, driving fast cars, investing in real estate, living in a mansion, and what-not. His attitude was if it ends someday, who cares? He’ll have gotten out a whack of cash (and, presumably, his other investments will have paid off to keep him going).
Meantime, I was scraping by, putting everything back into the business to make it grow. Now, I am able to do both. I am still careful and never live beyond my means (and always save for a rainy day), as well as diversify. But, success can be pretty sweet:-) I like being able to walk into a car dealership and pay cash for a vehicle. Or, go on fancy and/or exotic vacations. Or, but whatever I want, whenever I want.
Of course, you are never not working and never not thinking about your business, but hey – it sure beats working for someone else!
Sam, are you asking for a financial planning advice or we are still discussing the online dating? 🙂
I believe there is no sure thing when it comes to the Net business. And an exit strategy is a conerstone when it comes to any serious business. If Markus only blinks he’ll be gone. If he manages to maintain the first position in the natural search results, he’ll be save for awhile. But okcupid.com is just a step behind.
If I were Markus, I’d sell the sucker. The area is way too competetive. The entry barrier is too low. There is no intellectual property to protect. His first mover advantage is not going to last forever.
Essentially he won a lottery. Would u keep playing? If our Murkus buddy is a brave man, he’d invest heavily into marketing. But first, it’s not his cup of tea. And second, it would undermine his fundamentals should he decide to go out to sell the business.
Let’s see what comes next. I’m intrigued.
There were actually a LOT of free sites before I even started. Matchdoctor already had 700,000 users and jumpdates around 120,000 users there were others to.
As for OKcupid, all ranking systems except alexa say they have 1/10th my traffic so that puts them at around $40-60k/month income. With 10+ employees living in new york I can’t see that company doing much more then breaking even. That is probably why they went and raised a lot of VC money.
http://lists.freebsd.org/pipermail/freebsd-jobs/2006-March/000395.html
Here it says they have 250k active users, raised ton of vc money and want 1 million active users by next year.
The major problem is you can’t just go out mass buy users at $5.00 a signup. First you lose 50% on the first day, after that you lose 30% per month if you are lucky. There is no way you can get back your money and sites like Myspace retain users forever and keep stealing daters from dating sites. I would say the barrier to entry is really high currently.
I agree with Marcus, Alexander. The barriers to entry in the online dating world *are* high, whether a free site like POF or a paid niche one like ours.
If it was that easy, there would be more threats to us both. I am not suggesting this is a sure thing; far from it. As I said last post, “you are never not working and never not thinking about your business”. Of course you have to innovate and stay on top of things, etc.
If Marcus only “has to blink (and) he’ll be gone”, surely the same would apply to a buyer of his site.
I realise that longevity is no guarantee of success, but it has to count for something. All that experience we’ve gained, the mistakes made (and lessons learned), and being wise with all that cash flow (it isn’t all spent on fancy vehicles;-) means that the odds of us continuing to be successful are pretty good. We have been at this since 1998. My bet is that we will be at it 8 years from now. Will the site look the same? Of course not. But, will the essential offering be the same? Of course it will.
After all, people need romance. So, the demand isn’t going away any time soon.
Yes, I could get hit by a bus tomorrow or we could have nuclear war – but I doubt those things will happen. You can’t live your life like that. You have to *do*, not just be:-)
Sam, either entry barriers are high or low is very relative as Einstein once taught.
I’m sure they are low. And the turnover in the top 15 dating sites over the course of the last 2 years proves it. We see many newcomers while the old guard is being push away. The very Markus’s latest success is the best prove.
There no patents, no proprietary assets and solutions, no protected intellectual property. Therefore, the area is easy to intrude. It’s just a matter of the budget assigned and how much $$$ one can afford to burn. Obviously, more brains being involved require less cash and vs. For instance, True.com is a good example of the IQ=0 & tons of cash while Markus is on the opposite side of the spectrum.
And the more Markus-like stories are in the air, the higher the threat of intrusion.
Consider the following scenario.
Imagine Markus sells his stuff for $20 M. Some VC runs into the story and thinks that he can do better and faster with some $$$ invested. Let’s say he wants to reach $10M in value attacting the same market from various angles at the same time a-la FriendFinder family of sites but all free. It’ll take $20K to $100K to get all the bell and whistles in place including e-mails, chats, video and audio, forums and so on. Now do the math: how much $$$ can be spent to make the enterprise interesting for VC. I bet $5M can be spent easily.
And it’ll earn 100% return for the VC. Not bad considering the risk and 1 to 2-year time horizon.
Do u, Sam, want to say that it’s a big deal to get $5M for the project? No, it’s not.
I think in all of this is frequently lost the essential element: *PROFIT*! Marcus is doing it (in a major way). We are (a little less). A few other sites are doing it. However, 95%+ are not.
And, VC’s aren’t foolish with their client’s money (most of the time). Give me a real-life example of a dating site that doubled the money for the VC (from $5M to $10M). In 2004-2006. Not 1999. I challenge you to name *one*.
Simply put, those not in this business can never get in and make profit. It is simply too expensive to get the critical mass needed.
Sure, they can make *revenue*, but so what? I am sure True.com makes decent revenue. They also likely spend 200% of that to get it. And, they’ll never make it out of the investment hole from since their inception.
It’s always a pleasure to discuss issues with a guy like you. You know your business inside out. But my point is that u and Markus run two different businesses though within the same market.
You business model is visitor > profile > payee. And u control the acquisition cost over the revenue. Conversion ratios are critical for u.
His business traffic > impressions > clicks. Do u see profiles or conversions here?
The advertising business and the “classic” dating business are 2 different creatures. And Markus has shown that the former may work. That why I called it the free-site revolution. It’s his great achievement.
Would u argue that people will follow this route? Just watch them!
Why do u think Markus made this move with a big wave about the money he’s making? Did he want to please his ego and make people turn green? Did he want CCRA to remember him? I doubt all this.
Our friend is out to attract buys’ attention. That’s why he’s making so much noise. Why does he want out? He understands better than any1 else, the luck of that magnitude is not going to last. The smart boy wants to cash out his lottery ticket. Good for him! If he asks me, I can even help him to get VCs to line up.
I forgot to mention that I agree with you in terms of the profitability of the business for the vast majority of the sites. I guess that only handful of sites are making any money. Does it prevent others from entering the market? No, it doesn’t. That’s why it’s called an entry barrier as opposed to breakeven requirement.
It’s a well known fact 8 out of 10 business will shut the doors within 1st 5 years. Does it prevent people from opening new businesses? Take the restaurant business for example.
By the way, speaking of restaurants, I live 10 min away from your office. Why don’t we go for a coffee/lunch some day to continue the discussion?
It’s a date! (Pardon the pun, hehe:)
yeh, it is. The Christian one :-))))
Adult Dating
Dating services for adults!
uk personal ads
vegas personals