Frumster, LLC is no longer for sale as of January 2009. The company has decided to reinvest all revenue into increased marketing and improvement of their technological platform. The company does not anticipate putting the company back up for sale in the foreseeable future.
OPW INTERVIEW — Aug 2 — Ben runs Frumster and JWed, and they are for sale. According to Compete they have ~6% of the traffic of JDate, but have a lot more potential to grow. – Mark Brooks
What’s the company’s founding story?
Frumster.com was started in December of 2001 by a gentleman in Israel (actually a Canadian who had moved to Israel) and I was one of the first members to join the service. I had heard about it pretty much on the first day. At the time I had nothing to do with the site in terms of ownership. I was pretty impressed with the service, and after about a year, the owner was going through financial difficulty because he was running it for free and it started taking up all of his time. So he started asking for donations, but he didn’t get enough. Suddenly, he started charging a monthly fee for the service without warning. So it went from a free service to $18 overnight. And within 48 hours he set it back to a free service because of so many complaints.
It was obvious there was an opportunity there. He needed money to operate the service because by that point it was pretty much a full time venture. I was in between jobs, so it was just a good opportunity for me. I contacted him and asked him if the business was for sale and it was. We ended up purchasing it by September 2003. So pretty much 1 ½ years after he had started it, we had taken it over and turned it into a real business.
What does the name Frumster mean?
I think he told me he got the ‘ster’ originally from a Saturday Night Live skit with the copy machine man. Benster making copies! Napster and Friendster, etc. Frum is a Yiddish word which means religiously observant. So when it was started, it really was a niche service. At the time, the only Jewish dating service out there was JDate, and the religious community didn’t feel comfortable in that environment. It wasn’t niche enough for them. So he created Frumster as a breakaway from JDate to attract the religious niche.
Frumster requires you to specify your level of observance. What are the choices?
You can choose between Traditional, Modern Orthodox-Machmir, Modern Orthodox-Liberal, Yeshivish Modern, Yeshivish/Black Hat, Chasidic, Carlebachian, Shomer Mitzvot. We later added the non-observant categories, which are Reform, Conservative, and Traditional, and we have a unique category called Traditional and Growing.
Frumster originally was started as a site targeting religious Jews, but over time, and it happened pretty rapidly as soon as we bought the service, we transformed to a marriage-oriented service. It’s been like this for several years now. We really don’t mention too much about religion anymore as it’s really focused on Jewish dating for marriage. We still retain the religious flavor of the environment and make it comfortable for people, so we’re very strict about, for example, uploaded photos. We make sure they’re modest. No pictures in bathing suits and the like. We still retain our religious type of environment, but our marketing is focused on our target audience, who is anyone who is very serious about getting married.
So the site is for sale. Why are you selling?
The site is for sale, mostly, for personal reasons. When I bought the company, I really bought it as an investment so I just wanted to take the company to the next level. It was really a home based website that had no resemblance to a business at all, so we had to create a company. My goal was to turn it into a real business and sell it and move on to the next thing.
So it’s really a personal choice. I think of myself more as an investor then a manager/operator.
How much are you asking for Frumster?
We’re trying to get the most we can, obviously. But typically, from what we’ve seen in the dating industry, the valuations are about 2 ½ to 5 times annual sales. So we’re looking in that range.
How much revenue is generated from the site?
This year we’ll be close to $800,000 if not over, so somewhere plus or minus $800,000 for 2008. That’s roughly 5,000 subscribers. Our subscription rates are less then half of our competitors, the big ones, J-Date, Match.com and eHarmony. So we’ve been increasing our fees. So we think that as we catch up with our monthly fees, we should be over seven figures in revenue.
Do you have plans to start another site?
Aside from the sale, I should mention that we started a new Jewish dating site called JWed.com, which is also part of the sale. JWed is really an incredible opportunity because it speaks to the much larger JDate niche, the non-observant Jewish niche, because again even though we accept non-observant Jews on Frumster, the name Frum speaks to religious clientele and actually dissuades those who are not religious.
So we started JWed, which we’ve been in the process of launching in the last several weeks and it should be ready now. We’ve already been accepting registrants and things are going pretty well. So that’s what we’ve been focusing on: JWed. Most of the buyers we’re talking to are really interested in JWed. Frumster is a niche, the members are there, it’s solid, it’s not going anywhere and everything is word of mouth. Its one of those niche sites that have low marketing costs because its community based. Whereas JWed is a much, much larger customer base spread around the world more geographically then the observant base. That market is about 15 times the size of Frumster.
I don’t know if you know JDate‘s numbers, but it’s a pretty big market. We’re very excited about JWed, so if we happen not to sell we’re really going to be focusing on JWed in the next year or two, and if we do sell, there is a possibility we’ll still be involved in a strategic role.
WALL STREET JOURNAL — June 10 — Spark Networks is losing subscribers even as Internet dating as a whole is growing. Spark said it's trying to rebalance its portfolio to be less reliant on JDate. However, its segment weighting seems to be shifting more because of the relative speed of subscriber losses. Stock is down about 9% year-to-date and ~47% over the last 52 weeks, reflecting the prolonged poor performance, and has a market capitalization of $47.1 million. "I live in hope for them," said Mark Brooks, editor of the blog OnlinePersonalsWatch.com and an industry consultant. "But quite consistently, they've shown not particularly enthralling results." Spark's Q1 revenue dropped 20%. Meanwhile, revenue at Match slid just 1%. Ad-supported free sites like PlentyOfFish.com, which saw unique visitors nearly double to ~2.9 million in April from a year earlier, are a threat. Spark is focusing ad spending on a handful of its niche sites to bring them to scale and has all but given up on AmericanSingles.com.
