All Interviews – Page 17 – Online Personals Watch

JiaYuan CEO Interview, Rose Gong’s Founding Story of JiaYuan, and the Secret to Her Success

Posted on July 19, 2011

OPW – July 19 – We’re very honored to offer you this interview from the CEO and Founder of JiaYuan. The top dating site in China. Here’s our interview with Rose Gong Haiyan. JiaYuan is the top Internet Dating site in China, and IPO’d in May 2011. See all news on JiaYuan. See latest stock price and trending. – Mark Brooks

What’s your founding story?
I founded Jiayuan in October 2003, when I was in the second year of my Master’s program at Fudan University. Since I was already an “older” single woman at the time, I registered for several dating sites and I was frustrated with the whole process. I was receiving correspondence from both single and married men.

Additionally, I signed up for a dating site that was hosted by a match-making agency. The site featured images and profiles for lots of male members, many of whom were attractive and appealing to me as a girl who was “looking for love.” I paid RMB500 for join this site so I could contact them. I sent out 12 emails to different men but nobody responded to me. One of the men had a mobile phone number on his profile, so I was brave enough to call him to ask whether he had received my emails. The man was shocked, and said he had never registered on the dating site. That is how I discovered that most of the profiles on this site were fake.

I saw there was a real need for a serious, quality marriage/dating site, and this gave me the confidence I needed to create that site, for me, and people like me, to find their life partner.

At the time, there were already several hundred dating sites in China. There were no big funds (private equity or venture capital) paying attention to this field. Many people set up dating sites simply because they had a little extra money, and were interested in the Internet. Most people in this arena didn’t really understand online dating or social networking. Many of these sites were just imitating and copying each other, with little or no creativity or innovation.

Although I had been an Internet user for several years, I didn’t know anything about the technology. So I began to work with some friends who had studied computers. I applied for a domain name, and spent RMB300 to rent a server with 100MG space. Then I used Frontpage to learn to design web pages. After three weeks, on March 8, 2003, the first version of Jiayuan was officially live. Two months later, I ran out of money after spending RMB17600 to purchase a new server. So I borrowed RMB100,000 from an internet friend in Yiwu, Zhejiang, in return for quite a few stocks. Today, my friend has earned over 1000 times return on his investment.

The first 1000+ members were primarily family and friends. It was very difficult. Fortunately, after several months, the site began to draw attention from the mainstream media in China. At the same time, I also met my husband on the site. Soon, we received investment from Qian Yongqiang, the founder of New Oriental Education (NYSE: EDU). And we received VC investment in 2007.

In 2006 we partnered with the MSN China, and in 2007 with SINA. Then, in 2008 we partnered with TV dating programs. We had 1 Million users in the first 3 years and now we just grew ~1 Million users in 20 days. We now have over 40 Million registered users.

Congratulations on your successful IPO. You raised $74 Million in the IPO. How will you invest it?
We will invest the IPO proceeds in new business, such as mobile dating and new markets . New markets such as the second, third and fourth tier cities in China. China has 253 cities with populations over 500,000, and our current coverage is not enough.

Do you have any plan for acquiring or working with other websites?
My attitude is to go with the flow. If we have good acquisition targets, we will consider them.

Do you think other Chinese dating sites may seek IPOs in the next year? How is the financing environment (both public and private) in China for the online dating industry?
I believe the no. 2 and no. 3 dating sites [Zhenai and Baihe (then 51Taonan)] in China also want to go public. Whether they will be successful or not depends on their operating results, their sustainability and the overall market environment. At present, we account for 76% of the market share in terms of time spent, and 44% of the market share in terms of revenue according to iResearch, far ahead of our other competitors.

How do you see the competitive landscape changing in the next 1-2 years? What do you think will be the most important changes for the industry in general in the next 2 years?
I think because Jiayuan successfully went public, there will be more capital entering into this field, and the competition will become more fierce. In the future, many small sites will have to exit the market, while the large ones will become even larger and stronger, and form a benign circle. The current competitive advantages of Jiayuan are: more users, more effective, less expensive (or free). During this time we have also built certain barriers to entry, including brand, reputation, user network, user experience, capital, and many years of experience in studying the psychology and experiences of Internet dating users. All these barriers to entry will take time for newcomers or other competitors to break through.

Your revenue model is focused on microtransactions — charging for messaging or "poking" other profiles — rather than on subscriptions. How do you expect the revenue model to evolve in the next 2-3 years?
Our pricing model is a result-based model. It is fair and reasonable, and very successful. It also has plenty of room for growth. The shortfall of this model is that people who don’t have good (or any) results, will not pay and don’t have to pay. We are designing new models to complement or improve the current model.

Your online services accounted for 83% of the net revenue in the first quarter, and events and VIP services accounted for 15% of revenue. Do you expect the breakdown to change in the next year?
I think the ratio will remain the same. Although our VIP services business grows very fast. Dating events are restricted by such factors as time (only holidays or weekends) and weather (fewer people will attend if it is raining). Therefore this ratio won’t change too much in the future.

Any successful experiences to share with aspiring entrepreneurs?
I think that the most important thing to remember when you host a website, is to truly create value for users, rather than focusing on making money at the beginning. When the users really need your products and services, making money becomes easy.

Read the Chinese version of the interview here.

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iDate Interview: Ross Williams, CEO White Label Dating & Max McGuire, CEO RedHotPie

Posted on July 18, 2011

OPW – July 18 – I caught Ross and Max for a few minutes at iDate after we saw a presentation on background checks legislation. Here's what they had to say on the topic of background checks. – Mark Brooks

Listen to the interview

Mark: We have Ross Williams here from White Label Dating and Max who runs Red Hot Pie out of Australia. Gentlemen, we just saw a session on background checks. What is your opinion on how the industry should proceed with background checks?

Ross: The thing that absolutely spooks me is that there is no international body for online dating. The people who make the legislation have no one to talk to. There is no lobbying group. These people will make the legislation regardless.

So if we want to make sure the legislation works with the industry rather than against the industry there needs to be an association that can help lobby in the best interests of the industry and the best long-term interests of consumers.

Max: Even though the background checks are trying to be protective they lead people into a false sense of security. I think that's the real danger. I’m a big believer that people need to take responsibility of their own actions and their own safety and security.

Mark: In April, Match.com said within 90 days they were going to launch sex offender checks. So they are going to check against the National Sex Offender Registry. What do you think will be the effect on the industry when they do that?

Ross: There is no guarantee to the consumer of the safety of their database. It is a positive step, in certain ways. But actually I think [background checks] even give a false sense of security, as Max says, because people lie. If I was in the Sex Offender Registry and I knew that Match checked that, would I use my details? Probably not. Would I use fake details with a prepaid MasterCard? Probably yes.

So all it does is put people into hiding. I think the route we must all take within this industry is the education of consumers and providing a safe environment and good customer care and support. In the UK we offer a free phone support for our customers and so if they have questions they can speak to someone.

Mark: If Match is offering sex offender checks do you think sex offenders are going to drift to other dating sites?

Ross: They will go; anyone will go where there is the greatest opportunity. So it is far better to give people the education and teach them how to date in a safe way.

Mark: Max, you specialize in the sexy side of internet dating. What would your members in Australia feel about this?

Max: We haven’t had a criminal offense or an assault or sexual related charge. It's not an issue on our site.

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Kevin Carmony, CEO Of DatingDNA, Endorsing OculusAi Automated Image Rejection Service

Posted on April 29, 2011

OPW – Apr 29 – OculusAI’s Automated Image Rejection service has been gaining popularity amongst dating sites. OculusAI applies machine vision technology to profile image inspection to speed up the approval process. We have interviewed Kevin Carmony, CEO of DatingDNA. After a successful trial run and later, full integration, Kevin highlighted the benefits of AIR in this interview. (Full Disclosure: OculusAI is a client of Courtland Brooks)

Have you seen an increase in the rate of conversions after AIR was integrated into your system?

Yes, no doubt about it. Having every user in the system with a clear headshot has a big impact on the overall quality of the service. We have always tried to be a "serious" dating service, not just a place to kill time, but to actually meet someone compatible. AIR has helped us in that goal significantly, because he service just feels much more "real."

Do you have any user testimonial that might relate to the use of AIR?
Not specifically, but perhaps more importantly, we haven't received ANY complaints from ANY users, which we're happy about, considering the little bit of extra work we push to the user in making sure they comply with uploading an appropriate photo. So, users don't seem to mind at all how uploading their headshot has changed.

Is there a significant change in the time it takes for a user to start using the site after uploading their image?
Because AIR auto crops around the user's head, about 90% of users don't experience ANY difference in joining the site. Of the 10% who get a rejection message back, 90% of those are able to make adjustments on their end easily, by simply choosing a different photo, or using our cropping and rotating tools to try again. This adds very little time to their joining process. As for that last 1%…we have looked carefully and they are those who are trying to game the system by not uploading an appropriate photo. So, we're fine with that group being turned away.

Has the number of visitors to your site increased?
We're always on the upswing, so it's hard to know how much of that is from AIR. We do believe, however, that there's no question AIR has significantly added to the overall quality of our service.

Has there been any feedback about the usability of the site (including ease of access, efficiency etc)?
No, which is a good thing. As I said, I was expecting our support team to hear from some users who didn't like the process, but we haven't heard from any, and thousands of users have been using AIR now.

Has AIR improved your moderation process? If so, how?
Definitely! What we do, is any user who never successfully uploads an image, we have a ticket sent to our support team to review. What we've found is that most of these users shouldn't be on the site anyway; they are underage, spammers, scammers, etc. So, in a way, AIR has proven to be a wonderful filter to round up most of our trouble-making users, and we can remove them from the site very early on. This was a very pleasant benefit to AIR that we hadn't really even considered when we set out to implement it. The bottom line is we see a very big upside to using AIR, with essentially no downside. The cost is very reasonable, and the folks at AIR have been great to work with. We are very happy that we have added AIR to our dating service.

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Paul Larsen, Managing Partner At Paul Larsen Consulting

Posted on April 7, 2011

OPW INTERVIEW – Apr 7 – Paul Larsen of Paul Larsen Consulting helps recurring “Card Not Present “ merchants increase revenue.

Anne Holland referred me to Paul and told me he was a wizard with payment processors. So I thought I’d interview him for you. – Mark Brooks

You have quite an unusual focus with your consultancy. Tell us more. What do you do, Paul?
Primarily, we help subscription merchants meet and overcome customer churn caused by credit card problems. We help them hold onto their customers and we do a few other things along the way – reduce fraud, reduce chargebacks, help them become PCI compliant and help them lower fees.

More specifically I understand your sub specialty is working with card not present.
Yes, we work almost exclusively with what we call card not present, recurring or subscription merchants.

What is your background Paul? How did you get to be doing what you’re doing now?
We were on the merchant side ourselves for 13 years. We helped build and develop the system and the policies and procedures for what came to be the world’s largest magazine subscription company from 1994 to 2003).

That company was called Synapse and was purchased by Time Warner and today is a division of Time, Inc. But it was during that time when we incubated and developed many of the best practices that we were able to bring to bear for more effective performance in credit card processing over time.

Now I understand you’ve worked with the Internet dating industry in the past. Who have you worked with?
We’ve worked with Match.com, Spark Networks, ChristianCafe.com, Speeddate, True.com. Those are just a few of the dating companies that we have worked with – and a number of those we continue to work with today.

What have you helped them achieve?
Primarily higher retention rates and that’s really why we exist. We want to be able to help them overcome the challenges of credit card breakage and thereby help improve their retention rate. And again, we also help them reduce fraud and chargebacks. We help them lower their fees through more incisive processing and more integral partnerships with their processors.

What are the most common problems you encounter specific to the Internet dating industry?
The problems are mostly generated by what we call environmental events. 72 million credit and debit cards were reissued last year. That’s 28% of all consumers receiving a replacement card. Banks are flipping portfolios in the United States quite a bit. Last year SunTrust flipped its entire debit portfolio of 6MM cards from Visa to MasterCard and this year Sovereign Bank is doing the same thing. Any time you hear a news headline about cards being re-issued you know that’s not good for a subscription company.

Greater than 1 in 5 Americans are missing a credit card payment each year and with the economy being what it is, credit has been reduced and so credit limits are challenged. All credit cards around the world are reissued every 3 years or so and that’s a significant problem for subscription merchants.

Now, of course, the latest is the invasion of prepaid cards into the subscription industry. That is challenging because most of them are not reloadable and so therefore there is not much lifetime value attributable to a customer who begins a relationship with a dating merchant on a prepaid card.

Are you a fan of prepaid cards?
Personally I am. I like to receive them and use them but I would say most merchants these days are being crushed by it. They have maybe a lower priced intro offer, under $25, under $30 and the demography thereafter has lots of prepaid cards. They use it on the initial sale and then, of course, there won’t be any successful recurring charge because their prepaid card has been spent. The average value on a non-reloadable gift card is $33.

But we help merchants understand what to do in order to minimize the consequences of these events. Our goal is to move our clients, especially our dating clients to a position of strength corporately because of their credit card process and not despite it.

What would you say would be the biggest opportunity that you think the Internet dating industry is missing out on when it comes to payment processing?
So I could go blue sky here and talk about mobile payments and other trendy things. With mobile payments, especially in the United States and the UK, people are still trying to figure out what that means and how to take advantage of it. But really, the biggest opportunity is the optimized utilization of the best practices that have been made available to help subscription merchants overcome the challenges related to fraud, re-issuance, delinquency, credit limits, etc. There’s a lot of blocking and tackling involved but it’s surely worth it.

How can people work with you and what do you charge?
We work with companies in 2 different ways. There are organizations that have fully engaged staff in-house that is charged with paying attention to this and making sure credit card processing is optimized. Those companies often reach out to us and just simply ask for an audit of best practice usage. Match.com is one of those companies.

The other way is an approach that is more relationship oriented. We begin almost every relationship with an audit so we can see what they’re doing. Right then we understand what they can improve. Most companies will need some ongoing attention to implement best practices and sharpen the ones they have.

Let me pose a scenario for you. Say if I was running an Internet dating company based in the USA that had revenues of $20 million a year. What roughly would you want to charge me as an upfront and then as a retainer if we’re looking at a 2 year agreement?
We usually charge around $5,000 for the audit and then for our active involvement with customers we charge under $2,000 a month.

We’re very active in our relationships with customers. We help them either utilize and interpret reports that their processors make available or build their own reports internally that give them a clearer idea about how they are performing.

Chris Walker, Founder Of Datingstartshere.com

Posted on January 18, 2011

OPW INTERVIEW – Jan 18 – Yale educated Chris Walker was one of the founding members of Operation Match in the 60’s. Now, after 40 years, he’s turned his attention back to the dating industry. He was frustrated with the user experience for people new to internet dating. DatingStartsHere is his answer.

For travel you use Kayak.com. For internet dating… DatingStartsHere.com. Datingstartshere.com’s mission is to be a starting point for singles. An introductory service for introductory services, if you like. Dating websites can work with DSH and get traffic. (FD: Chris Walker is a client of Courtland Brooks) – Mark Brooks

How did you become involved in the online dating industry?
I was involved in the early stages of computer dating in the 1960’s. As a psychology major at Yale I was always interested on what attracted two people to one another. I’ve been following the online dating field since then to see when technology would mature to the point where powerful but easy to use technology would enable better introductions.

Why did you create Datingstartshere.com?
Datingstartshere.com is not a dating site; it is a profile search engine. We aggregate profiles from multiple dating sites. It is designed to put the universe of people looking for new friends, dates and companions in one place.

Current sites do not provide the quantity or quality of contacts within a geographically convenient area. What sense does it make to have a relationship with someone distant? Our search engine allows for both a simple and an advanced set of filters. The simple set is age, geography, and height. The advanced filter deals with interests.

We also provide a guide to existing dating services as a help to those who wish to take advantage of the particular functionality of individual host sites.

Datingstartshere.com is for all ages over 18 who want to broaden their circle of friends and acquaintances with the goal of more successful personal relationships.

If it is not a dating site…then how does Datingstartshere.com work?
It’s very simple; a minimal registration is optional. Just browse the profiles and click thru the ones you find appealing. Actual contact will depend on the procedures of the host dating site where the actual profile is stored.

We envision that users will learn a substantial amount of information about each other prior to any type of electronic interchange. With the advent of front facing cameras on smartphones, many first dates will consist of a smartphone videochat for example. This new technology will reduce time and expense barriers to new introductions. We will enable contact with those who have put profiles on all current dating sites. In addition, we will enable exposure, for example, to those Facebook users who have given permission for access to their data.

Datingstartshere.com also features a dating site guide. The online dating experience can be confusing since end sites have so many different approaches to registration and subscription. With well over 1,000 active dating sites just in the US alone, we want to provide a user’s guide to help place the user with the right specialized host site.

Can you mention a few of the benefits for online Daters?
The key benefit for daters is the centralization of profiles and dating site information. Datingstartshere.com will enable users to access more desirable people that live close to them, quickly and for free. Why go to many different sites when the important information is collected in one place?

How about the benefits for online dating sites or Host sites?
Datingstartshere.com is an indispensable marketing resource for existing host sites (dating sites). We allow host sites to republish the member profile information that has already been collected in their database. Uploading the essence of each profile to Datingstartshere.com is simple and fast. Datingstartshere.com is the ultimate affiliate site, collecting a referral fee for each user that registers on the host site or converts to a paying member.

Accordingly, DSH can be considered a marketing ally which will provide additional revenues that are almost 100% profit. It is the dream of every marketer to have a revenue source that is variably cost based with no fixed overhead component. We have developed that.

Are there any future development plans for Datingstartshere.com?
Anyone who collects information on people who want to broaden their circle of new friends are potential allies. MySpace, Facebook, Friendster, and the many new types of social media are among those who will find our affiliation profitable and helpful to their user base. We want to make meeting your new best friend or date as easy as selecting a travel package. This is similar to the travel aggregators such as Expedia, Travelocity, Sidestep/Kayak, or Orbitz.

Datingstartshere.com will also research new technologies such as face matching. Since we are based in Washington, DC. we are familiar with this technology for face matching that has been developed for the security world. As this technology is brought forward to the private sector, we will adopt it to image searching for our users.

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Sunil Nagaraj, Founder Of DateBuzz, Making Online Dating More Fun?

Posted on January 4, 2011

OPW INTERVIEW – Jan 4 – User feedback, an interesting blog story and social media sharing are the hallmarks of the all new DateBuzz.com. Here’s our interview with founder Sunil Nagaraj. – Mark Brooks

What is your background and what inspired you to start DateBuzz?
About a year ago, I started the parent company Triangulate along with my co-founders David Chen and Matt Weisinger. We wanted to make the dating process more transparent, fun, and effective with DateBuzz.

Tell us more. Why do you think traditional internet dating is not so much fun and how do you make DateBuzz more fun?
The whole experience of online dating today leaves users feeling isolated and insecure. In particular, guys message a lot of girls and usually don’t hear back. On the other side, females are either inundated with too many messages or get no messages at all.

So I think there is little transparency into what is going on and few of us feel that we’re in control of the process. In contrast, the DateBuzz world is powered by these bite-sized votes that we call buzz. It encourages people to interact with everyone, based on romantic interest or the desire to provide helpful feedback, lowering the bar for starting up a conversation.

On DateBuzz, you start browsing profiles and if you like what someone’s movie interests are you can mark that as buzzworthy. In the background, our system is continually learning about your tastes to build a composite picture of who fits it best. When you label something buzzworthy a notification is sent to the user so they know what aspects of their profile the community is buzzing about.

How are you promoting your site?
We’re the first site built around a vibrant community. One of the things I’m most excited about is our DateBuzz Blog. We have 3 women that are single, and we’re following their real dating adventures on DateBuzz. For the next 45 days they’ll be going on dates and video blogging about it on our DateBuzz Blog.

We’ve done some early testing, and there is tremendous interest in being able to watch someone else going through the dating process. It is entertaining, it’s engaging, and it exposes what’s really going on in the dating world.
Tell us more about how you’re getting that into the blogosphere.

We’re promoting this blog across the diverse network of bloggers that cover the dating world. In addition, we have social media sharing links within the site and throughout the blog. We give the content an initial strategic push, but from there, we see where it goes.

What are your goals? How many members would you like to be at in 3 months time?
We launched a beta product in July learned a ton of lessons about what users love doing and what they find difficult. Now, we’ve built up a strong community with thousands of active users buzzing around. We’re poised for rapid, high-quality growth while maintaining great engagement across the site.

Do you offer users any special ability to provide each other feedback after the date?
Throughout the site and at every step in the process you can provide feedback on each other’s profiles, to each other’s messages, and more. Over the next few weeks, you will see us roll out more and more features that will allow more communication and feedback at every stage in the process.

Are there any matching algorithms to take advantage of that feedback and help a person find new matches based on how they match with the prior person?
I’m glad you asked – this is a big part of what we’re doing. We use those bite-sized votes that we call buzz to personalize the experience. As you vote, we learn from that over time and make your search results smarter and more personalized. In the same way that Amazon shows you what people like you have purchased, we’re able to point you to compatible matches that users like you have found interesting.

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Joel Simkhai, Founder & CEO Of Grindr, The Global Sensation

Posted on December 9, 2010

OPW INTERVIEW – Dec 9 – Joel has quite a story to tell. He started Grindr on a shoestring budget and has driven the service to become a rip-roaring success. Next, he’s launching a straight version. Here’s my interview with the founder of Grindr. – Mark Brooks

I heard you got Grindr started for $5,000 just 18 months ago and now you’re at over a million users. Tell us more. What is the founding story?
I’ve been using online dating sites and services since I was a teenager. I would go to gay chat rooms and talk to other guys. Early on I wasn’t meeting anyone in those chat rooms but they helped me come out as a gay man. It was a pivotal experience for me.

One of the problems with online dating was location. There was no real emphasis on the people around me. So I was hoping to solve that problem. And that’s what we did with Grindr. Grindr allows you to see who’s sitting right next to you, who’s in the same room, or who’s just down the block. So people can meet very quickly as opposed to spending a lot of time online or on the phone. The idea is go meet them and see what the chemistry is like in person. If there is no chemistry, it is unlikely that there is going to be any kind of long-term relationship.

The 2nd generation iPhone was a big technological advance that made Grindr possible. We found a developer who did it for us as a hobby and we put it on the iTunes App Store. From there word of mouth fueled us and helped us reach over a million users in 180 countries.

Beyond the million users, you have an incredible activity level. Out of those million users, 250,000 of them are active and log in on average 8 times a day and spend an average of 1.3 hours each day using the app. That’s amazing! But what is your ad budget? What kind of ad budget are you working with to generate so much activity?
Our advertising spend is $0. We’ve done some promotional events. But in terms of our acquisition cost for users, we’re fueled by word of mouth and the press we’ve generated which has been organic. Our users are finding Grindr simple, compelling, and fun, and that has resulted in much of our growth. We are live in over 180 out of 196 countries in the world. So we’re global and we haven’t done any translation and that is a testament to the simplicity of the app. You don’t even need to speak English to figure out how to use Grindr.

You mentioned respect of your users. I would like to learn more about how that translates. How does that feel for the users?
We respect our users’ privacy. We don’t ask for their email addresses or their phone numbers because we have the ability to message our users within the app. Also, in terms of the experience, it’s really straightforward. We don’t constantly remind our users to do things.

What is the revenue model? How well is Grindr doing?
The majority of our members use our ad-supported, free version, which is called Grindr. Then we have a paid subscription version with no ads and added features like push notifications and more guys viewable, for $2.99 a month – that’s Grindr Xtra.. We’ve also held over 200 Grindr parties around the world to date. The venues buy Grindr kits and we advertise those parties for them.

How would you say Grindr is different from the likes of Manhunt?
The key differentiator is that Grindr is a location-based, mobile service. You can be anywhere around the world and find guys who are right next to you and meet them immediately. There is no computer required. While you’re out and about living your life normally, you can simply launch Grindr to meet and chat with guys right around you. We are also a non-adult service and we’re firm believers in being able to meet people in a non-sexual environment. We are largely a free service to our users.

I heard you were planning on launching a straight version. When do you think that will go live?
We don’t have a launch date at this point but it is something that we’re hoping to do soon.

Would you launch under the same name or would you launch the straight version as a brand extension?
It will be a brand extension under a different name.

What are your goals for Grindr for 2011?
We’re hoping to continue to grow the community. To do that we will have to be on additional platforms. We have already announced the BlackBerry version of Grindr, which is in the final stages of beta testing and will be available to the public soon. We are also looking at additional mobile platforms, and possibly a desktop version.

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Be More Tax Efficient – Rob Bossart, Tax Advisor

Posted on December 2, 2010

OPW INTERVIEW – Dec 6 – Rob Bossart has advise idating companies how to become more tax efficient. I had a chat with him to see what he could do for you. – Mark Brooks

How did you come to be a tax advisor?
I was an International Tax Partner of Arthur Andersen and left before it collapsed. I then became the co-chair for International Tax of the Greenberg Traurig Law Firm. After two years there, I decided that as both an attorney and a CPA, the best way for me to work with entrepreneurs and startups was to go out on my own, which is exactly what I did in 2003.

You work with Internet companies. Have you worked with internet dating sites yet?
I began with one dating site in 2002 that had owners from four different countries. A more recent dating client has four owners: 2 US and 2 Canadian. So there are tax issues on both sides of the border as well as in other countries.

Are there any special challenges for internet dating sites in that situation?
There are quite a few if you’re going to approach the US marketplace. Most entrepreneurs are so focused on running the business that they don’t consider the tax implications. If they structure it properly, they could address the US marketplace, have US customers, and not pay any US tax on operating income in many cases..

Obviously there are some differences between US citizens and entrepreneurs from other countries. Nevertheless, an offshore operating entity that does things properly can have zero US tax on operating income. That means offshore entrepreneurs can gain access to the US marketplace without necessarily paying US tax. and US individual entrepreneurs can have a business that approaches the US marketplace and not pay U.S. tax until they put the cash in their own hands.

As a result, both types of entrepreneurs can grow the business with pre-tax dollars rather than after tax dollars, which leads to a geometric expansion of the business and its value for purposes of selling it.

When you say offshore…what does that mean? What sort of jurisdictions do you advocate?
If you’re going to pay no tax you need to be tax free jurisdiction. There are a number of those around the world, many of which I already work with and I find new ones every day. Nevertheless, it is not just a question of where is the operating company incorporated, for U.S. entrepreneurs, it’s where the parent is incorporated.

For all entrepreneurs, it’s also where are the services performed. For example, if a company is incorporated in any tax free jurisdiction but it operates its software on servers located inside the United States, the company will not only pay 35% US corporate tax but also an additional 19.5% tax because of the US Branch Profits Tax rules.

So what general strategy would you recommend for dating sites that do business in the USA?
For those doing business in the USA there are 2 or 3 things to focus on. First is making sure that you have a proper corporate structure so that you’re not subject to immediate tax in the country in where you’re incorporated. Now depending upon where the ultimate parent company is located, you want a jurisdiction that is amiable to either zero or low tax on dividends received. There are a number of those countries.

The next thing is the location of the servers. For example, if the offshore company owns servers in the US or it has its software hosted on a 3rd party server in the US it is still subject to US tax. Alternatively, if the offshore company had its servers located somewhere else outside the US it wouldn’t be subject to US tax. The question is would the income be subject to tax where the servers are located? In some jurisdictions the answer to that question is whether or not the company owns the servers or is simply having its software hosted on servers in that country. So it is something that you have to be very, very careful about and make sure that you’re doing things the right way.

The third thing you have to be careful about is what I call the substance issue. Most dating sites require a significant amount of data generation, massaging, reviewing, support services, etc. Where do you locate the support services and what is the relationship between the operating entity and the support services? Are they all part of the same company or are they part of a different company? And what are the tax consequences of that? If it is organized properly it can be a very profitable venture.

How does it work for a company that is already operating in the USA?
There are 2 different scenarios. Let’s focus first on the startup entrepreneur. The startup entrepreneur is in the best possible position because they are not moving anything outside of the United States. They are simply going to incorporate an entity or entities outside of the US to be the operating company. The offshore company may need a sister U.S. company to provide some support services in the US performed under support contracts. The offshore company could then take advantage of the onshore company’s resources.

Somebody who is already operating in the United States is not in a hopeless position. I’ve taken many internet companies offshore. It is simply a question of the fundamental nature of the business model, and how many entrepreneurs are involved in the ownership of the entity. There are many US tax rules involved in moving certain things offshore as well as operating offshore that will come into play, and we have to be careful about each and every one of them.

How can the companies contact you?
Via email at rtbz3@yahoo.com or simply call my cell at 917-328-3137.

How do you typically structure a consulting engagement?
I can structure almost any kind of fee arrangement agreeable both parties, but I have no hourly billing rates. I can work on a fixed fee with one payment or over a period of time. I can also participate in profits under certain circumstances. It is all a question of what is appropriate for the entrepreneur.

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Dr. Eike Post, co-Founder Of Intelligent Elite

Posted on November 29, 2010

OPW INTERVIEW – Nov 29 – One million users and counting, with a near zero marketing budget. This can happen. Intelligent Elite has made marketing magic happen. Here’s my interview with the co-founder, Dr. Eike Post. – Mark Brooks

You have a rather unusual site. You offer an IQ test, an emotional quotient test and a personality test. So I’m most intrigued with the personality test. Could you tell us a bit more about what kind of scientific basis that it is based on and how it works?
The personality test is based on the personality types proposed by Carl Gustav Jung and the Meyers Briggs typology. We have 4 dimensions that we measure with two extremes resulting in 16 different personality types.

How do you match based on those?
We currently use two dimensions for matching, sensing/intuition and thinking/feeling. The more similar, the better the match. For the other dimensions there are some researchers who say that opposites attract each other, and others who say it is better if you have similar personality types.

Matchmaking is generally regarded as being useful for more serious dating relationships but you disagree. Tell us more.
We think that matchmaking has many advantages over dating. The main advantages are saving time, better matching because we have information that the user doesn’t have or doesn’t focus on, providing the users a hook to contact the potential partner and some balance that everybody gets a chance to be contacted.

And we think all 4 advantages apply not only to the older demographic who are looking for a long term relationship but also to younger demographics who are not necessarily looking for a long term relationship. For example, we have many people on our site who are what we call passive date seekers. They don’t actively go on the site to look for people but if we offer them matches they wouldn’t refuse them. So dating is not attractive but matchmaking is.

People can log in through Facebook Connect. You have over a million users at this stage. How much do you think the Facebook Connect is responsible for that growth? And how much have you spent on marketing so far?
We spend very little on marketing because we got 95% of our users by word of mouth mostly via Facebook. However, it’s not so much Facebook Connect but more the Facebook application, which is responsible for viral growth. We have tried other viral channels such as Bebo, Hi5, and MySpace, however, it has become clear in the last year that Facebook is really the only way to go.

I heard that you spent less than 100 Euro in total on marketing for a million users. That’s quite the landmark achievement. What are your plans moving forward?
Our plan is to improve the matching algorithm further and maintain our leadership in what we call the new space of social matchmaking.

How do you define social matchmaking?
It is the combination of matchmaking like eHarmony on the one hand and social dating like Zoosk on the other.

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Patricia Weber, VP, Optimal Payments, On Payment Processing

Posted on November 17, 2010

OPW INTERVIEW – Nov 17 – We interviewed Patricia Weber, the VP of Optimal Payments. There are many payment processing options available for online dating sites. We’ve reviewed all the major providers of mainstream, alternative and mobile payment processing in our payment processor spreadsheets, which are available to you by emailing me at mark@courtlandbrooks.com. Optimal Payments (a Courtland Brooks client) provides debit and credit card processing, multi-currency payment processing, ACH and industrial strength fraud controls. – Mark Brooks

Tell us about Optimal Payments
Optimal Payments has been a trusted online payments solutions provider for more than 12 years. We are a provider of secure online payment solutions servicing e-commerce and MOTO businesses around the world. We understand that online payment processing is more than just merchant accounts. We have the latest gateway technology as well as the right tools to help them mitigate the risks of accepting online payments that are associated with their industry. While we work with all types of ecommerce businesses we have developed an expertise in the dating, social applications, and online games markets, providing a one-shop-stop for all their payment processing needs.

What are the ranges of services you offer?
We have very limited engagement with third party vendors. With our worldwide banking partners, we can provide merchants accounts to all businesses regardless of their location. As part of our offering, merchants utilize our proprietary gateway which supports alternative payments, multi-currency and recurring billing, a full suite of built-in proven fraud mitigation tools, chargeback management, dedicated account managers, and we have an a team that helps merchants manage risk exposure. We also provide a unique service in that we can lower a merchant’s processing costs by routing transactions in the processing network to the lowest cost provider. Our platform is packed full of features, and we don’t charge add-on fees to use them.

How can Internet dating companies benefit from your services?
Dating merchants typically look for more of a partner than just a merchant account provider. They want a company who is going to look out for their business on a day to day basis such as; help with risk management, advise them on changes to industry regulations, and a provider who updates their technology to meet the demands of the changing payments environment. We bring all that to the table and more; if our clients do well, so do we.

Optimal runs its own secure proprietary online payment gateway. We are Level 1 PCI-DSS compliant and our data centers are fully redundant. We are continuously evolving our gateway which processes credit and debit cards as well e-cash and e-wallet transaction around the globe.

Integrated directly into our gateway is a sophisticated risk rules engine that has extensive fraud detection and prevention features including things like credit card AVS and CVV validation, negative list verification, Geo-IP address location checking, Issuing Bank BIN number country matching, velocity checking, telephone number verification service.

One of the interesting features we have developed is the ability for the merchant to create complete customer profiles. Merchants can not only capture general consumer information, but they can build a multi-dimensional billing profile where a merchant can have multiple credit and/or debit cards stored, a token assigned and alternative payments such as an e-cash set. These can all be set to run on a recurring billing schedule.

Of course our gateway also includes a user friendly virtual terminal where merchants can process, pre-authorize, authorize only, capture, reverse, and refund individual transactions. Also very useful to merchants is the gateway’s extensive reporting capabilities. Merchants can run Activity Reports, Transaction Reports and Batch Reports. All can either be customized or run on a schedule. Everything is web based and reports can be delivered in many formats.

At Optimal we have a three pronged approach to Risk Management. One, we can offer assistance to merchants in becoming PCI Compliant. As you know it is mandatory for all merchants accepting or processing credit cards. We help our merchants throughout the entire process. Two, as we mentioned before our gateway has extensive consumer fraud detection and protection features to help merchants minimize their losses. And third is our ability to help merchants with their chargeback management.

What about alternative payment methods?
We offer both an e-wallet and e-cash payment solution. Our e-wallet product is called Get2Pay. Get2Pay is a virtual prepaid MasterCard and e-wallet that can be used to make online purchases. Consumers sign up at get2pay.com and funds can be added to the virtual card. It can be used on any site that accepts MasterCard. Our gateway fully supports this product and online dating merchants can accept Get2Pay by adding it to the payment type drop-down menu. We also offer Get2Pay as a solution for affiliate payouts. Funds can be easily loaded to the e-wallet by the merchant and converted to a physical MasterCard.

Are you working with any Internet dating firms now?
We work with many very well established dating firms. We have many more that we are working with to develop and implement complete online payment processing solutions.

From your experience, what are some of the challenges the Internet dating industry has in regards to processing?
The biggest challenge is for merchants to find a single source provider where they can get everything from one trusted supplier, merchant accounts, payment gateway, risk management and alternative payments.

What about new developments, technical or otherwise at Optimal, are there any on the horizon?
We are continuously evolving our gateway to ensure it supports all the current and new online payment methods. We just finished launching ELV direct debit in German and we are actively working implementing more e-cash and e-wallet solutions, mobile payments and micropayments.

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