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Online Dating – Q3 2021 Update – Match Group, Tinder & Bumble – 12 July 2021

  • Public Equity
  • TMT
  • Global
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Specialist

Former Director, Product Management at Tinder

Agenda

  • Online dating industry overview – growth, engagement and monetisation
  • Competitive landscape, highlighting Match Group (NASDAQ: MTCH), including Tinder, and Bumble (NASDAQ: BMBL)
  • Opportunities and risks, addressing impact of economies reopening
  • 1-3-year outlook

Questions

Transcript

1.
Could you outline the state of the online dating industry and how it might evolve? People still call it online dating, but it seems so much has moved to mobile over the last couple of years. There are a handful of larger companies that people seem to know and many different properties.

SP (Specialist): I’ve recently described the online dating industry as stratified into generally three tiers. You have tier 1, top tier. Basically, you have Match Group and Badoo Bumble, two large, very focused conglomerates really of dating properties, as you mentioned, that are taking 90% of the money and the market share. Within Match Group and Badoo Bumble, obviously the two biggest players are Tinder on one side, Bumble on the other, Tinder slowing down in growth, but also buoyed by properties like Hinge and Plenty of Fish, and OKCupid, which while maybe not as successful, large, adopted, etc, are certainly helping this mega portfolio of dating properties. Again, that’s the clear top tier. The middle tier you may find a little bit surprising, but it’s what I think of in terms of Instagram, Facebook, even TikTok. These are platforms where people aren’t meeting exclusively for dating, the context is not dating, but I’ve often called Instagram the biggest dating app in the world, for example, because people go on this media-sharing service to meet other people, whether it’s casually, where it’s with intent, and they’re really sliding into DMs and trying to meet other people. There’s a flirtatious nature to posting stories and commenting and starting conversations on Instagram that has always been a threat, and I’d say more so than the third tier, because they have massive scale. At any moment, Instagram could turn on dating features, or features aimed at meeting people, and Tinder should be more worried about that than they ever were worried about Facebook Dating, for a lot of reasons, and I can go into that later. That is tier 2, the largely adopted social media networks and sites that don’t necessarily have a dating explicit focus, but people use for meeting other people. Unfortunately, even LinkedIn is, to some extent, a dating service for some people.

The third tier, this is actually what you might have expected for tier 2, which is all of the smaller properties that are trying to launch, get product market fit, get some sort of scale where they can offer local meet-up services, “Come on the app, swipe, do whatever interaction, find people in your area who are interested in you.” The problem with every start-up in this space is that they have a cold-start problem, of course, and a scale problem. You’re promising that you’re going to find and meet people, but without people in your area, that’s really impossible and it frustrates users and without the proper scale they never get off the ground, or they’re so niche that they serve one segment of the larger user base. For example, if it were a specifically gay dating app, the scale and volume is just so much lower, or like, for example, Chispa, a Latin dating app, scale and volume is not to a point where people can stay and use the product sustainably. That’s the state of the online dating industry in my perspective right now, very tiered, and Tinder and those top tier properties, like Tinder and Bumble, have a huge moat, Tinder even more so a moat around its success compared to Bumble.

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2.
Facebook Dating was launched in December 2019. I’ve heard that it has had mixed success at best and that it hasn’t gained much traction. Around the time of the launch a lot of people interested in the online dating category were squarely focused on it and the potential risks that it posed to companies such as Match Group. Why do you think there have been notable challenges to Facebook becoming successful in this category?

SP: That’s an interesting question, because I was at Tinder, of course, when Facebook Dating announced, and it was the biggest slap in the face, in part because we were partners with Facebook. They helped to make Tinder successful for one-tap sign-in, one of, what I would call, three defining features that made Tinder successful in 2012. Basically, instead of answering a questionnaire like eHarmony, where we pretend to know everything about chemistry and putting people together, we just said, “Log in with Facebook, click one button and then start seeing attractive people nearby.” Facebook had all of the login data, effectively, for the first generation of Tinder users, and they had a lot of information because we were feeding in, “Who are your mutual friends? Who are all these details?” so they could pretty much reverse engineer Tinder’s discovery platform, and then they said they were going to be a competitor, so that kicked off a rush to re-evaluate everything with Facebook.

That’s just a little bit of the back story, but the question really is what went wrong with Facebook? This is actually something I expected from Facebook’s dating platform. They’re kind of an “us-too” product builder in a lot of cases. If you’ve noticed, Facebook’s drawer of us-too features is a phone-book directory, it’s massive. Where do features go in a platform with such little focus? It tends to be in that drawer with the others, and I expected a couple of issues. Number one, on Facebook, you’ve been using that platform, assuming, just hypothetically, for X number of years not in a dating context. You’ve been adding photos with friends, you’ve been tagging your location, all these other details, and the context in your mind for Facebook has been friends and family and sharing. I think to try to pivot and make this also dating or to take a subset of that experience in terms of meeting new people for romantic interest and to try to make that a big focus is really difficult because the triggers in your head, internal, that get you to open Facebook are very different.

Also, I’d say the beauty of Tinder, why Tinder is awesome, and other specific dating apps of scale, is that when you open up the app, you know that everyone you’re looking at is there and interested in meeting. They’re single, or so they say, and they’re, again, there for one purpose. I’d say that Facebook, to have that singles bar as part of the larger experience, it feels tacked on and it feels a little uncomfortable for most probably mixing the friends and family with dating. Also, there are so many other features within Facebook competing for your attention, it’s really difficult, again, to balance all of that. That’s a real estate challenge that they have, where does dating literally fit in on the navigation bar? It’s a cultural and a CRM problem that they have, how do they mix in those CTAs with the others that are all competing for your attention? At the end of the day, that’s part of the challenge of building “us-too” features on top of Facebook.

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3.
You suggested that the primary impediment to Facebook Dating gaining traction is that Facebook has historically been used for a different purpose – connecting with friends and family – and it is difficult for people to recalibrate to use it for online dating. You also indicated that you thought Instagram and the way people use it could be considered the biggest threat to a company such as Tinder if it were to focus on and invest in dating as a feature of the platform. Why do you think Instagram could gain traction here where Facebook Dating has struggled? Do you think it’s something the company should or will do?

SP: I will say a couple of things. At Tinder, I think a lot of our team had Instagram envy. We loved all the content people were creating on Instagram, and we knew Tinder and our dating platforms were not going to be a place where people devoted a lot of time to creating content. All of these platforms need to rely on third- party apps, like Instagram, like TikTok, or even Snapchat, to populate profiles with meaningful, high-quality media to help you and your users tell their story to get matches. We rely on that otherwise people won’t look interesting or attractive or committed to this platform, and they won’t get matches in our case, that’s the UX, that’s the angle. I’d say Instagram, that envy also bled over into the idea of sliding into DMs. This has become a cultural saying, much like Tindering was its own verb, to Tinder, so the idea that Instagram had this cheeky, flirtatious nature was a little bit threatening. They’re part of tier 2, in my overview, because they have scale. Facebook Dating, when it flipped on the switch in, I believe, Colombia as a test, and then the United States and other markets, they immediately had scale. You could see people nearby because people were curious and they figured they’d try it out. I certainly did out of curiosity. That’s the bigger threat than any start-up basically saying, “Please come try our product. We need scale in order for it to be interesting. We have this awesome brand, this awesome pitch, we have this unique edge on the dating market,” but, again, nobody is going to try that at the same scale compared to Instagram’s features, for example, Facebook’s launch. That’s the other thing that makes them a bigger threat.

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4.
You mentioned that part of the challenge of developing online dating features for platforms such as Facebook and Instagram is that people have historically used those apps for other purposes and don’t think of them as facilitators for dating. There are companies, however, who were once solely focused on online dating but now seem to be expanding into a whole host of areas, some related to the apps and others more branding efforts. Bumble is basically opening up a restaurant and has been thinking about not just dating, but relationships, whether it’s friendships or professional networking. How might this play out as some of these online dating companies broaden the notion of what they do and how might it impact their TAM? I have come across estimates of a TAM of about USD 5bn, which seems relatively small.

SP: Is that USD 5bn TAM something that you’re considering in terms of just online dating, or is that related to the restaurants and other initiatives Bumble was pursuing?

TB (Third Bridge): I would guess that it was probably more the former and it doesn’t incorporate some of those new initiatives. Those are obviously very nascent and I don’t know how much traction they’ve gotten or how much people have been thinking about that as a major component to considering TAM down the road.

SP: I’d be interested to see the article or source of that to dig in deeper because I’m interested to see the angle they’re taking on that assessment. I will say that to your question about Bumble, their launches, their diversification, is that when I was at Tinder and when I was very focused on Bumble, paying attention out of the corner of my eye, I was surprised to see that most of their announcements didn’t feel like product announcements, things that would change the actual experience that would potentially generate revenue, etc, I was surprised to see that they were largely marketing efforts, things like the restaurant, things like the space to meet in New York on dates. I say that they’re marketing efforts because I do believe that most of those were about brand and they were short-lived, they were about getting the name out there. Also, in understanding Bumble’s structure then, very different now, I assume that it’s been acquired, or that ownership from Andrey Andreev has changed, but I’d say that basically their structure of Badoo, based in London, and Bumble, based in Austin, Badoo being the product arm with all the engineering, all the product, all the design, and Austin being the marketing wing of the venture at the time, was part of this equation of like, “How do we build a big brand?” vs “How do we build an app that continues to attract more users, make more money and create more matches and success?”

I took it all with a grain of salt in terms of the expansion. Even Bumble Bizz, Bumble BFF, when I talked with colleagues of mine at Badoo at the time, basically they were voicing a little bit of frustration in terms of the butting heads, the differing objectives, the challenge of meeting this marketing demand vs what they actually needed to do with the product to boost their internal metrics. I know the challenge of splitting a network, in terms of taking, for this example, Bumble and splitting it into Bumble Bizz, Bumble BFF, Bumble Dating, is that each is now smaller and the pool of people that you can view, potentially match with, interact with is therefore even smaller. It wasn’t one large network where they’re putting them altogether, they, very importantly, put walls between those and said, “You need to create a new profile for each of these different ventures, these different properties.” While it does similarly say, “We have dating scale and we can pivot into these new industries,” which I’ve said Instagram and Facebook could do, those are lower threat and those aren’t, to me, very successful ventures. I didn’t make the same connection in terms of imagine LinkedIn announced a dating feature, that’s how Bumble going into work felt to me.

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5.
What are your thoughts on the USD 5bn that had been suggested to me as a TAM estimate for the online dating industry? How might that grow? I have read estimates indicating mid-single-digit to low-double-digit growth, driven perhaps by increasing monetisation efforts in more established markets and pursuing newer markets, especially overseas. To what extent could the category grow over the next 1-3 years?

SP: I don’t know if USD 5bn is the right number now, but it feels low in the industry to me. Basically, the growth verticals or angles that you just highlighted are exactly how I thought of growth and how we all were focused on growth at Tinder, and that’s how do you make more money from your existing users and subscribers, and also, “How do we sign up more people?” One big factor in the dating industry that is different from others in social is that there’s a new generation or a new base of users every single year that turns 18 and comes online to online dating, and the growth comes from attracting and continually attracting those users every year. I wanted to point this out because I believe it showed up in some of your later questions, and we can go into more depth later, but that, to me, is where Match Group, Bumble are likely focused the most because that is fresh growth that you need to capture every single year, and if you don’t, you become someone’s mum’s dating platform, someone’s dad’s, uncle’s dating platform, and not their dating platform. In terms of growth internationally, I think that is absolutely Tinder’s number one focus right now, because it feels very saturated in domestic markets here in the United States, here in, I’d say, even the west. It’s tough to expand on the foundation they’ve already built. That’s a big challenge for them.

I think you’ve seen in their latest product releases, centred around revenue, this idea that they can just keep stacking on monetisation features, keep adding new tiers of subscription that potentially they’re hoping will revolutionise and excite their user base to start paying more money. I think it’s even more a question of how much can you get existing payers to continue spending, rather than how can you convert new people to spend, because I’d say that, pretty clearly, there’s a small amount of people that are doing all the spending if you look at the number of subscribers vs the revenue.

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6.
I think people are interested in where growth will come from over the next 1-3 years, with a focus on more users, more engagement and greater ARPU in established markets. What international markets seem to be most appealing, which are either reaching inflection points or just scale where suddenly they contribute to key metrics?

SP: APAC is really, I think, the biggest opportunity. Middle East and Africa is always mentioned as a region, but in my opinion, culturally, there’s a long way to go before online dating is anywhere near acceptable outside of people visiting and small populations in some of those countries that are more western. APAC is really where it’s at. I’d say Japan is really an opportunity for growth, especially among Tinder and Bumble and the established players, because it has this new cultural wave of people meeting online vs in the real world. I think there are a lot of social challenges that make dating there difficult in general, but there are also governmental and policy challenges that make operating a dating platform there difficult. Japan requires people and apps to verify people’s real identity with IDs if they’re going to be on an 18-and-older dating app. I think dating culturally there online is associated with sex work, and I’m not just saying this loosely, they literally, I think, categorise it in the same vertical, and so you need to verify your identity. That’s a major hurdle to getting people on the platform, and whether or not that stays the case, it still means that there are a large number of people who still have yet to come online to date on Tinder, and there’s this stigma not just with meeting online, but with a sex work app.

That’s a huge opportunity as well as India. I do believe there’s a changing tide of culture in India when it comes to dating and meeting people. In a culture where, basically, marriages can be arranged, marriages are potentially not even in the hands of the two people getting married, but their families, there’s a wave that I noticed of people being interested in online dating, being interested in owning their own relationships, and it was an amazing area of growth, as you may have seen from Match Group’s investor relations reports, that India especially is a growing target and opportunity zone.

TB: I think the fact that not only was India highlighted when it last reported quarterly results, but also Brazil, Japan and certain European markets. I think it highlighted those being mixed and coronavirus trends in those areas worsening having a notable effect on performance. I imagine the order there reflects some of the coronavirus developments or states of affairs.

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7.
You highlighted three tiers of providers or potential providers in the category. Match Group and Bumble are likely the established leaders as large publicly traded companies. How do you think those companies are positioned? I say companies because it can be confusing when there’s Match Group and Match.com and then Bumble the company and Bumble the property.

SP: They’ve got to be in a mixed state of emotions right now. I’ll speak mostly to Match Group, because Bumble has a lot of catching up to do, but that is to say that Match Group probably feels pretty great about the fact that they have the largest dating properties that are going to continue to succeed in spite of themselves, in Tinder and Hinge, and that they’re sitting pretty on top of this large market. At the same time, I think that there’s a huge threat to some form of disruption, because the next generation of social, gen Z, I think has different expectations in how to interact with apps and with people and with content. I see this in Tinder’s, especially, roadmap of trying to redefine itself. It really wants to be gen Z’s dating app. It really wants to make sure it captures this next generation in a way that TikTok has, for example. The challenge is that they’re never going to beat TikTok. TikTok is 13 and older, and that’s exactly five years later that they can potentially think about using Tinder, or Hinge for that matter. This fear is that basically a video content-based dating app is going to come along and completely unseat them, or that gen Z is going to find their own way to meet online, whether it’s with one of these big social companies or in the next big product. I think that Match Group’s strategy is basically to acquire anything that threatens it, or helps it grow internationally, and just hope that they can revolutionise and change Tinder both in brand and experience to excite gen Z. That would be weighing heavy on me if I was still at Tinder.

When it comes to Bumble, it’s just about really catching up, frankly. There is, like I said, a large moat around Tinder in terms of how much money they make, how many users they have, their growth internationally, that just as a second product with almost identical experience, and the only main difference, in my opinion, being a brand, the women move first, that’s challenging, they’d have to break their own rules, in my opinion, to make it more popular, especially internationally. I think safety for females, for women on the platform, on the dating app is very important, both to users and obviously the company itself. I’m not sure that Bumble has the tools or is really focused on that enough to break into places like India, which I think, from my experience focusing on that segment at Tinder and our discovery features, is very challenging. People in India, especially women, don’t necessarily feel safe online, safe from harassment, safe from men in the real world, and showing their own face is still not comfortable. Again, it’s how do you grow internationally and break your own rules for Bumble to do that and to match the cultural expectations of the regions where you’re trying to get established? That’s certainly something that Tinder, I think, is way ahead of them on, but Bumble needs to equally focus on if they’re going to get a foothold in those regions before Match Group just ends up acquiring and taking over with existing properties.

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8.
It seems you think Match Group and Bumble are focusing on or should be focused on increasing ARPU as well as the level of engagement or minutes that people are spending with their properties. How do you think they are doing this and how should they be?

SP: I can tell you what they are doing, but what they should be doing is difficult. Match Group, as a public company, is driven to annually outdo themselves on growth. They have to grow their growth in terms of subscribers, ARPU, everything. It’s tough when you release something like Tinder Gold all at once and it completely changes the game, it completely, I’d say in a good way, messes up their revenue to the point where they’re saying, “I wish we had slowly rolled this out because it’s going to be tough to sell something greater than see everyone who likes you before you swipe, walk into a room digitally where everyone is already attracted to you and you can choose who to talk to and when.” It’s challenging because you need other marquee features to dramatically grow revenue and grow revenue growth and ARPU, but I’m wondering what those limitations are that they could peel back. That’s a product principle I’ve talked about before, which is basically, in order to improve your product, grow your user base, grow your revenue, you need to break the rules. You need to remove limitations that users have grown accustomed to and are accepting of in your product experience.

Tinder, for example, people were limited by how many people they could see in a single session. We wanted to maintain some volume, some length of use so that you wouldn’t just swipe through everyone near by. Hinge did this as well when they were very young. In order to overcome that limitation you could pay to keep seeing people, you could pay to see more. One limitation was that you weren’t in control of the algorithm, how popular you were, who you were shown to. You could spend money on boosts to improve that. The examples go on, but my point being what rules can you break if you’re Tinder that you’ve already created for yourselves and for your users that they’re going to say, “That is an awesome superpower. I would pay to have that”? Those limitations are running a little bit thin, so they’re getting creative, they’re trying to think of premium subscription tiers where you pay for additional services that are maybe off platform. I think they’ve announced some of those recently in the news, I want to be careful of what I say and what words I use, so I’m trying to dance around it, but they’re trying to expand the way you pay for Tinder and grow their subscriber base along the way and grow their revenue significantly, but I’m not really sure how that’s all going to play out. I can’t advise anything different, because, frankly, I was there helping to make those decisions. Let’s see. You can tell I’m trying to dance around what is public and what’s non-public.

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9.
You suggested that companies such as Match Group and Tinder want to be creative around factors such as new features, functionality and engagement. What else do you think could support or drive growth?

SP: It’s hard to say because I actually don’t see a lot of major revenue growth opportunities for Tinder other than growing their base, growing their user base. I don’t see new features that are just going to light the experience and the users on fire and get them really excited about a new tier. I think you can tell that they probably feel the same way in the way that they’re repackaging old features. You may have seen things like Super Boost and experiences like Swipe Night. They’re trying to get more users onto experiences and live concurrency on the product to create big rushes of activity all at once, but that doesn’t mean they’re getting more users, that doesn’t mean they’re getting more people to pay, they’re just extracting more money out of existing subscribers and spenders. For example, that Super Boost feature is only available to subscribers. They know that the average person who sees a pop-up for a USD 100 day-long boost is not going to spend that money because they’re not even willing to spend the X amount on Tinder Plus, the lowest subscription tier, to keep swiping on a daily basis. I think they know that men are the big spenders, and so how do you lean into capturing this audience of men on the platform who don’t know how to be successful and extracting revenue out of them? I think that’s obviously a major focal point for them, how they do that and how they execute on it is the big question right now.

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10.
It seems that you are saying Tinder and perhaps by proxy the Match Group more broadly is being forced to be more creative to support and drive growth. YoY revenue growth for both Match Group and Bumble the company is expected to be around 20-25%. Would you agree that you seem to be highlighting more revenue growth challenges vs opportunities?

SP: Yes, I think so. There’s something in the back of my mind that is just true of Match Group as long as I’ve known them, and that’s that they will continue to succeed in spite of themselves. I’ve said it before. To clarify a little bit, structurally and internally, they’ve obviously had a new CEO almost every single year for the past five years, that’s one factor, but also they have managed to continually, with both Tinder and Hinge, reinvent and acquire and find new ways to make money. It’s actually amazing, but they know very well at Tinder how to hit their numbers. You may have seen there have been almost zero revenue misses over the past maybe like 16 quarters, so effectively, they know exactly how to control the dials on this machine they’ve created to make sure that they can stay on track. I think feel like, while they don’t own any of the things that they make money on, these user profiles and all of that content belongs to the users, and they could take it just as soon to the next dating app and spend their money there, they do a great job of keeping people on the platform and spending money on a recurring basis.

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11.
There seems to have been a revenue miss in Q4 2019 and then the last one prior to that was Q2 2016. Match Group’s record is very impressive and I think it’s one of the reasons why it is a company that people wouldn’t necessarily believe is a USD 40bn-45bn market cap company. There have been substantial changes in Match Group’s management team, including Shar Dubey replacing Mandy Ginsberg as CEO in 2020 and Jim Lanzone coming in as Tinder’s new CEO later in the year. I think there have been three different people in the chief product officer role since the beginning of 2019. What are your thoughts on these changes and their impact?

SP: I was only there really just before Jim Lanzone came on, and I can’t speak to him personally or anything, and I don’t think that’s really what the question is about, but it’s like this new era of rapid change and moving seats that, if I were an investor, I would find a bit uncomfortable and a bit worrying, like, “Why are so many heads moving? I thought this company was doing well, etc? Why would people leave? Why are people getting fired?” It’s difficult, but I can say, as an employee, it’s got to be very challenging. I know that first hand obviously, it happened three times while I was there, but a roadmap uprooted, a set of objectives, an entire organisational structure changed, this is not a very comfortable working environment, and it’s going to be a challenge as they try to scale up internally. How do you promise someone security in what they’re building, in everything, when you see so many other people at the company leaving, changing seats, coming and going? It’s kind of a revolving door, and I hope that it stops or at least slows down at some point soon and they find the right heads to put in the right seats, because it’s very disruptive to product building. This is an opportunity for other companies, because I think there’s a lack of efficiency when entire organisations are changed. When vision is overhauled this often, it’s tough. That’s one positive if you’re looking in from the outside and wondering where’s your opportunity to find your niche, it’s that Tinder is certainly trying to reinvent themselves and going through those growing pains right now and there is some, I’d say, gap in the armour that potentially is able to be exploited.

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12.
There have been wholesale changes at Match Group and Tinder over the past 12-18 months, but it does seem there has been a greater level of stability over the last 6-12 months. It’s an easy comparison and perhaps the new personal will end up staying for a while and can establish and push forward on their visions and strategies. Was it your expectation that there would be big changes with every new administration?

SP: I’d say absolutely. When you’re in a company and that sort of change happens, as an employee, change is scary. The person you’ve been reporting to for X number of years, or maybe just one year, based on the cadence, is all of a sudden going to be gone. “Who’s this new person?” There’s concern and apprehension. With those new people, with a new CEO comes this idea I’ve learned that they’re coming in because something was fundamentally broken that they need to fix. I think what often happens is that they tend to fix a lot, they tend to change a lot of things, which if you’ve ever built product before, you know that changing multiple variables at once in an experiment makes it very difficult to read what was working and what change is affecting the outcome, and so a lot tends to change every year. I was part of the team that would onboard new CEOs, being a core member of the product organisation, at one point even teaching one CEO how to download Tinder from the app store, and so I’ve seen all ranges of experiences with tech and mobile and I can say that it’s never easy to bring someone entirely up to speed.

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13.
Live streaming seems to be a topic that people are focused on. Match Group spent USD 1.7bn to buy Hyperconnect, a Korea-based company that many in this category might not have been familiar with. Its focus is on streaming, with one app focused on one-to-one streaming and another focused on one-to-many streaming. How important do you think live streaming is? How might Match integrate or leverage Hyperconnect across its properties?

SP: That’s a good question, and I’m glad to speak to this without any sort of involvement in that because it was well after my time and my vision there. Basically, I find it really interesting that they’d buy this platform rather than trying to build. It reminds me of my own acquisition back in the day where they were just trying to bring on experienced members and IT and quickly scale up an idea that they had. I will say that USD 1.7bn is a lot of money, but for a company like Match that prints this off of users that come to the platform rather than content they create, it’s more modest of a price tag I think. I think the point is I find live concurrent streaming very challenging. It’s the next order of difficulty after nearby, because it requires people to be on the app at the same time, the same place, and be interested in talking to each other while revealing their faces. I think Match Group knows that this is a huge leap for people to take, talk with strangers online face-to-face, it’s like a chat roulette challenge. How do you moderate that? How do you make especially women feel safe engaging in that? How do you give people tools to feel comfortable in that context and to be able to potentially obscure, hide or protect their own identities themselves? How do you make sure people even want to do that in the first place in the sense that women in particular, I’m thinking of, may want to look a certain way, have their background and surroundings present well. I think men, while they don’t think about those things, probably should as well. There’s a lot that goes into presenting live remotely. It’s something that is a massive, I think, cultural hurdle for a dating app, an app for meeting strangers, to overcome. They’re going to have to build in tools that haven’t been proven yet for this sort of engagement, and it’s a big risk.

I think it shows that they’re willing to reinvent and try new things in order to break open new segments of this market, but when it comes to COVID, I don’t think that this is obviously a long-lasting experience that people are going to want to have, I don’t think people are going to want that virtual club relative to the real thing where they’re face-to-face, where they’re meeting people in person and able to read body language, able to read the people who they’re with and able to hang out their friends as an excuse. There’s no real excuse, or alibi as we’ve called it, for going in and hanging out virtually in this dating room with a bunch of people in real time. There is an alibi on Instagram, for example, or in the bar, is a better example, where you’re just there to hang out and have a drink and hang out and be with friends. Meeting somebody is not the objective necessarily, but it could happen, and more and more we’re seeing, especially in developing markets, that alibis are really important. Why are you on Tinder? Is it because of the need to meet people for karaoke, XYZ, other things. These are the sort of things people in Korea especially wanted, or else they weren’t going to use dating apps. Kind of an international sidebar there, but I think, again, in conclusion, live concurrent video is extremely challenging, and how do you make that feel safe, I’m not sure that this is going to be the feature that revolutionises Tinder that people have been waiting for, but if anyone could do it it’s them because of scale and the intent of the user base.

TB: Is it fair to say that you think the acquisition is noteworthy, given the size of the transaction, but that there are significant technological, cultural and product-related challenges to livestreaming as a function of online dating gaining much traction, if at all? What might indicate the level of commitment to these features and success?

SP: I would expect at least a tripling of moderation teams, if that were even public information. Like if you saw Match Group acquiring or building, announcing some new live moderation service with hundreds, maybe even thousands of new moderators, like big trust and safety developments, that would be a big indicator to me. When it comes to understanding the seriousness of this acquisition and the implementation, this comes down to the features that they build, like are they going to build that live concurrent video? I know exactly who would be running moderation right now, and I bet you he and his team are absolutely not thrilled about the challenge ahead of them, because there are languages to moderate, there’s real-time video to moderate. I know that this is of massive importance to Match Group, and especially Tinder, because they see it has to be part of the brand with online dating. I think they’re opening up a bit of a can of worms, one that I faced when I was figuring out how people could post Snapchat videos and photos to Tinder profiles from Snapchat, and it’s going to be several years in the making if they really commit to this. The challenge is can they keep one set of leadership in place until that launches, and if they don’t, does the new leadership carry through on that? Is that new leadership even put in place to make sure that feature set goes live? This is the challenge of building long-term features and experiences at Tinder is that things change, people change. I’ve worked on projects for years there that were delayed or scrapped because they were the pet projects of the past administration. That is another challenge that they face with something that’s going to take multiple years to execute on.

TB: The Meet Group, now part of ParshipMeet Group, has what they refer to as a vPaaS [video-platform-as-a- service] offering that seems to be key for that business’ growth. It seems to have figured out how to get that off the ground and how to monetise that in conjunction with online dating.

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14.
What is your outlook for the industry over the next 1-3 years? Could you suggest any properties that you think are worth monitoring as potential emerging competitors?

SP: I’d say the property I’d look at the most keenly is Hinge, both because of demographics, brand, growth and opportunity to monetise. I think they’re really just on the ground level with that, and they’re part of a company that just puts on masterclasses of product monetisation in Match Group. Ultimately, 1-3 years, I really see something major disrupting online dating. I know I didn’t get into this before, but the factors to me of this next generation of daters coming online, their experiences with social, like TikTok and Instagram and content creation, and the differing experience between that, those online social experiences, and Tinder’s existing platform, kind of tells me that there’s an opportunity for something to come in with better content creation tools, with a more social flirtatious light-weight experience. Thinking somewhat like Tinder, except for more centred around video, more centred around better content, and easier flirtation, rather than these very extreme matches that have to result in conversations between two strangers in a blank text field. It just doesn’t match the way we’re interacting online socially. If a company were to come with a massive marketing splash, the right regional release, builds a lot of hype, gets a foothold in some areas, I think that Match Group and, to an extent, Bumble, are very entrenched in one experience, very devoted to their existing investors and revenue streams and just don’t have the ability to pivot on a product sense like they used to, I think that there really is a ripe opportunity for disruption here in domestic markets. I can’t speak to internationally, because each culture and region seems to have different tastes, interests and barriers, but I would say that in the United States, gen Z is probably open to if not eager to have a different option than Tinder and Bumble. I’d say that my three-year outlook is that something major does shake this up, it has every decade or so, and we’re a little bit overdue.

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