TECH CRUNCH — May 8 — Until last month, HotorNot was free until that last crucial stage when two people wanted to meet each other. At that point, one of the members (usually the man, Hong tells me) must have been a paid subscriber, which costs $6/month. Founder James Hong says their conversion rate was extremely high – 15% of active users eventually upgraded to premium accounts. The premium revenue, plus advertising and fees for virtual flowers topped $600,000 per month. Nearly all of that was profit for the two founders, who reportedly pocketed $20 million or so between them over the years. The company has never raised outside funding. Competitors have popped up (see yesnomayb) and free dating sites started to eat away at traffic. Hong and Young decided to remove the requirement for members to have premium accounts to talk to each other. A month ago, the requirement was turned off, and about $500k/month in revenue disappeared overnight. HotorNot is running on reserve cash of a few million dollars. Traffic jumped 60% – 10 million people visited the site in the last month, up from 6 million the month before. Advertising and virtual gift revenue spiked, and the site is now break even. FULL ARTICLE @ TECH CRUNCH
Mark Brooks: I think the founders are gunning for PlentyofFish.