Has online dating reached its peak?
There are signs that, yes, it has reached its peak and we are en route towards a re-balance back towards the physical space driven by a few creative Dating Cos. and a restlessness among the younger generations.
A deeper dive into the Business Model Trends is required to understand the future potential beyond online dating.
Dating Business Model
- Match, Tinder, Bumble, and Hinge are the kings of the online dating world, a world that has seen a similar growth profile to social networks in the last decade
- The Dating Networks business model includes Paid Subscriptions, Memberships, Ads and more, depending on the model of each specific network and is driven by the constant desire to find love in one form or another. Dating Apps made $5.6B in revenue in 2021
- But there are some signs that the online Dating Networks have staled. Much like Facebook as a social media site, people are still reliant on them; but there is pent-up demand for new models that bring people back to physical space in a novel way (ie. not speed dating)
- Meetup’s business model provides a good reference model to work with given the main Key Activity of driving would-be daters into a physical space
- Future Trends are linked to the re-emergence of human matchmakers moving back into the core of the dating experience, requiring some ongoing experiments with new models
Dating Business Model
- Value Proposition is a hybridization between physical dating networks supported by a digital app, with the core experience being an in-person meetup with other daters
- Revenue can be driven by a mix between membership (to digital network), ticket sales (to physical events), and corresponding sponsorship with brands who support the ‘movement’
- Revenue Streams may vary depending on the strategy at certain moments in time. ie. free membership, low-cost events, etc. to build network effects in early days
- Customer Relationships have a physical dimension, and the companies who build these apps have to build teams who are good at in-person events/service
- Key Activities is driving people to physical space. Users can self-match and meetup like other dating networks, but this isn’t the key activity of the brand
- Cost Structure can be pretty lean depending on the strategy of the specific network, but the major costs are app development, and marketing (with an emphasis on event partnerships)
- Partnership opportunities with local restaurants/bars in each city, experiential brands, and even Fintechs!
Hyrbrid Dating Networks – Business Model Canvas (Mockup)
- Thursday: “the offline dating app” > GetThursday.com
Reference Business Model: Meetup
Most people are familiar with Meetup. The company started in the early 2000s and was one of the very popular tech names until its sale to WeWork in 2017 for $156M.
The company was then subsequently acquired in 2020 for “less than” what WeWork paid at a time when the pandemic was ravaging the networking scene worldwide.
One of Meetups problems was always its business model, where event organizers are charged a monthly subscription fee similar to Saas (sofware-as-a-service):
- Meetup Standard is $15 – $24 per month
- Meetup Pro is $35 per month
The upside to Meetup is that they built a sustainable business model and took in very little Venture Capital financing ($18.3M). The downside is that their business model doesn’t scale outside of what many consider a ‘niche’ because they don’t take any % of ticket sales for example (one of many opportunities).
A Saas Model That Didn’t Scale
At the time that WeWork acquired Meetup, Meetup had 35K subscribers against a base of ~50M users and 300K organizers. If we scale these #s out, we would see a ~$875,000 monthly revenue, which would translate to $10,500,000 annual revenue. On this logic, WeWork would have paid something like 15X Revenue to buy the business.
For this type of price tag, we would assume that WeWork had a specific strategy for Meetup that they never executed on (probably because their core business model collapsed!).
Nevertheless, the Meetup business model is good if the goal is to operate in a niche. Niche Meetups worldwide for all sorts of topics remain popular, and the Saas-type subscription model to basically use the Meetup software for ~$25 per month is reasonable. But it is not a scalable model to benchmark off of.
Future Trend: CoLoving
You have probably heard of CoLiving. People come together and live in cool spaces where they have their own rooms/bathrooms, but share common space.
Like any ‘trend,’ there is a good and bad side to it – there are good and bad CoLiving operators – but the CoLiving market is driven by the need for connection in living arrangements.
If there is as much pent-up demand for new dating solutions as it appears, then we will likely see this trend scale-up quickly in the years ahead. ‘CoLoving’ is a tongue-and-cheek play on words to represent the scale-up phase where we see “meetups” and “retreats” around singles move towards more permanence.
The single life is expensive. Everything that could be split as a cost becomes a higher cost. And singles look for ways to enter the dating market via proxy – roommates, gyms, anywhere with a social component that could become romantic.
Human Matchmakers – Combining Coaching + Platforms Across Verticals
Historically, dating was pretty easy. There were local dances. Families had a vested interest in finding dates for their sons/daughters (ie. Matchmakers).
Nobody had apps on their phone to find a date 24/7, so people would be naturally in-tune with who might be gazing their way. With most of those levels of dating gone, the market will need to respond with innovations to bring people back together.
Things like ‘singles retreats’ and ‘single and mingle’ won’t work in the long-term because they strip out the parts of society who can play matchmaker in a natural way.
If the places where people meet know can help make it happen in a way that helps their business, then they might. Right now, people sit on dating apps in their apartments, gyms, and coffee shops. In the future, they might ditch the app and use those very same spaces to find what they are looking for IRL. But they will need some help.
Is this Future Trend tied to Membership? Successful Matches? Syncing with Online Dating? who knows … but the experimentation in the market has already begun and you can’t put that genie back in the bottle.
Overall, we all know online dating isn’t going anywhere. But it needs a better social sync with the physical world and all the magic that comes with the “experience” of meeting a special someone.