Category: All Acquisitions

OPW INTERVIEW — Oct 20, 2006 — Spark Networks owns American Singles, JDate, and acquired the MingleMatch group of niche dating sites last year. I had the pleasure of speaking with the CEO, David Siminoff, in person in Palo Alto. – Mark Brooks

What's your background David?
I’m a Silicon Valley guy. I grew up here. I went to Stanford, and I majored in English and math/computer science. After graduating, I attended film school at USC but quickly recognized my lack of talent in this area and instead went to work for Drexel Burnham, which is an old investment bank. Then, I ended up going to business school at Stanford. Around the same time, I founded a company called EastNet that became the largest trader of bartered media properties in Eastern Europe. We would go to an American company that had libraries of TV shows which hadn’t been seen in Russia and Eastern Europe. We would trade them for ad time and sell it back to Coca-Cola and others. I cashed out and tried to make it on the pro golf tour, but failed miserably. I went on to spend nine years plus at Capital Group, which is now the largest money manager in the world. I was sitting on a number of boards, and in 2004, I got a call from the founder of JDate, and he said, “Hey we’re going to do a U.S. listing. We need to expand our finance committee and want a bean counter kind of guy to sit on the board.” That was me, so I said, “Sure that’d be great.” 

I got here and the company had a number of problems. After just a few months, the new CEO stepped down, and they said, “Okay Dave, you go fix this.” So I stepped in as CEO. It’s been two years of very, very hard lifting. But I’m a nice Jewish boy, so it has been a great honor to be able to help turn around and grow JDate and the other Spark Networks properties. Now, in my third year, it’s become a very nice story. I love the team we’ve put together and our numbers speak for themselves. You can see the progress in our financial results. 

What’s been your biggest challenge?
The company had been a damn-the-torpedoes, grow-at-any-price, let’s-just-go company. And that was the right strategy in 2000 and then in ’01, ’02 and ’03. Then things changed dramatically in the middle of ’04 when the cost of online marketing started to skyrocket. All of a sudden, we were paying a lot more for a subscriber than we were earning. You don’t have to be an all-star Wall Street guy to know that is bad business. And so, we had to right-size the company. And that’s what happened.

Why focus on niche dating sites now?
The company was founded in 1997 with the launch of JDate for the Jewish single market. Now, I can arrogantly say that JDate is the best niche dating site in the world, by far. There hasn’t been a great niche vertical yet, that I can think of, other then JDate. And I think there’s room for others.

You can’t share little, personal, intimate granules of detail with someone unless you’re in an environment that you trust and you feel relaxed and you feel kind of protected. JDate accomplishes that clean, well-lit feeling by virtue of being “owned” by the community. We change features on JDate and members will track me personally on my cell phone to yell at me for moving a button three inches to the left. It’s a wonderful feeling that way, and what we’ve learned is that the communities “own” these sites, we don’t. 

How’s the MingleMatch acquisition working out for you?
Revenue from our Other Businesses Segment, which largely consists of the properties acquired through MingleMatch, grew by 118% in the second quarter of this year. This segment was the largest contributor to our revenue growth. We’ve rebranded, renamed and redesigned a number of those properties and have increased the marketing efforts, and they are delivering solid growth.

People are more likely to remember niche dating sites. Do you find they’re more efficient?
Yeah! Word-of-mouth travels fast through small communities. Eighty percent of our traffic on JDate comes from people bookmarking it. They didn’t click a banner ad. No one sent them an email. We didn’t have to pay them to come. They just showed up at our front door. They knew the name, like eBay and Yahoo and Google. I wouldn’t put us in those leagues, but in the Jewish dating community, JDate has that kind of brand attribution.

Why did you rename ChristianMingle.com as Relationships.com?
Relationships are about trends and moods and periods of your life. Relationships imply movement. Relationships aren’t static. Everything is relative to everything else. So there’s kind of a natural dynamism there and a voice that speaks to how people really want to connect. We have a very high hurdle to build to in order to fulfill that vision, but that’s what we’re hoping to do.

What will become of AmericanSingles.com?
For a long time, AmericanSingles had been poorly financially managed more than anything else. Now, the vision for AmericanSingles is to manage it in a financially disciplined manner.

Will you be expanding into Europe?
I don’t think so. You know, Europe for us right now would add little value. We add value by understanding and focusing on a number of targeted communities in the United States. So we probably won’t be expanding into Europe.

I love some of the European sites, but I have 184 to-do list items just to get all our current plans launched and properly managed. It falls off the edge of our plate, in the grand scheme of things.

Match is very active in Asia. Any thoughts on Asia?
We add no value there. We do Hebrew well. In Israel, we’re dominant, but beyond that, if you’re going to try and go into Japan, it’s over, too late. Match can go play in that field. They are a huge company with tremendous resources to do all that stuff. We’re tiny. Our whole company could fit in this restaurant [Palo Alto Golf Club restaurant and conference area].

How many people work for Spark Networks now?
At the end of last year, worldwide there were about 190 employees. We have a bunch of call center folks. The executive team is approximately 20 people.

I’m looking forward to reporting a summary of the quarterly and annual financial reports at the Miami internet dating convention in January. What are your revenue and profit goals?
I think you’ll see ad sales become a little more meaningful for us. But we want to be careful with advertising because the actual ad has to be relevant and has to add value to the site. I don’t want to sell things that are annoying to users.

We’ve gone from “oh my God, are we going bankrupt” to “okay, no more water is coming in the boat now” to “hey, we’re growing and generating a lot of free cash.”