4 ways the sharing economy has transformed our lives

I am a big supporter of the sharing economy. I use Lyft and Uber instead of taking a taxi, I’ve booked houses and rooms on AirBNB, and I’m about to use GetAround for the first time next week. All of these services add value to my life because of their ease of use,  availability, and “pay as you go” nature. Selfishly, the sharing economy takes pains out of my life, adds value that fulfills my needs, and enables me to to pay for what I use instead of having to invest in specific goods (i.e. a car)

But despite my ulterior motives, I’m a supporter because I believe the sharing economy movement is in the process of changing and transforming some really foundational aspects of our society. As a result of the sharing economy, we’re starting to rethink core elements such as employment, commerce, politics, and law. So far, pretty much every industry, ranging from hospitality to dog walking has felt an impact because of the sharing economy, and while it hasn’t gone without issues or concerns I do believe that in the long-game these incidents will actually help us get closer to solutions of better ways to do things.

Employment – As an Uber or Lyft driver you can drive when and where you want. As an AirBNB host, you can choose when to put your place up for rental to earn income. Same goes for being a courier at Postmates, Shyp, TaskRabbit, or any other on-demand service. When it works right, these platforms provide people the flexibility to work around their schedule and other things going on in their life. As an employer, these companies are providing autonomy and flexibility to their workforce, something that is valuable to many employees. Now, there’s very well documented evidence that these employers are not altruistic companies, and are in fact benefitting by not calling their workers employees (as of late, some have changed their stance and made positions for PT or FT employees) and there’s plenty of issues that need to be work through. But for some people, especially those who are looking for supplemental income, working for one of these companies provides  extra income that can be earned when and where they need it.

New BusinessGuesty is a company that acts as a virtual assistant for AirBNB hosts. Pillow manages property for AirBNB hosts. JFloat is a new model of insurance specifically aimed at the sharing economy. None of these companies (and the jobs they created) existed before the sharing economy was a thing. Not only did the sharing economy create new companies (and thus new revenue and new jobs) but they have also forced consumers as well as companies to rethink the way they do their business both at a strategic (what kind of company are we) and operational (pricing, customer service, delivery, business model) level. Obviously, for some, this is dificult and complex, and in many cases, these established companies who were doing well would rather keep things the way they were, but as we know from economics and our own personal lives competition tends to raise the bar for all those involved. In the end, the consumer wins.

Sustainability – Surely, Ford, BMW, and any other car maker would benefit from having as many cars on the road as possible. But that’s not necessarily sustainable or healthy for our infrastructure as well as our environment. The sharing economy encourages people to lease, rent, or pay as you go, instead of asking you to purchase another widget. As someone who believes that cutting down on our consumption can help us preserve the planet, I’m all for renting certain things (i.e. car) as opposed to buying one.

UberPop protest in France

Politics – Due to the complex nature of these businesses, politicians have been dragged (or have dragged themselves, depending on how you look at it) into the foray of the sharing economy. Uber and Lyft have been banned, unbanned, and attempted to be banned an ungodly amount of times. San Francisco worked with AirBNB to get them to pay taxes in the city, and UberPop (aka UberX) recently shut down in France because their taxi drivers went on strike/got violent with Uber drivers while the government sat back and watched. None of these things are pretty, the politiciking and grandstanding is awful, but outside of the incident in France, these sharing economy companies are forcing politicians to take action and truly consider if the way we do business and the laws we have to do business are still serving the best interests of the people. In an ideal world, the politicians would step up and figure out the best course of action to go forward. Because politics are politics, that doesn’t always happen, but because of the rise and popularity of these services it’s forcing the dialogue to happen.

It’s still early days for the sharing economy. The popularity of these companies and apps will continue to grow over time which will provide both opportunities and challenges for consumers, companies, politicians and the like. There’s no denying that the sharing economy has had an impact on us as of today, the bigger question will be how big of an impact it will have in the future.
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An in-depth review of popular dating apps

In a previous post, I talked about the business dynamics of the dating app market. In this post, I’d like to take some time to explain how some of these apps work provide some commentary on the future of these apps.

As a note, there are many dating apps that are out there, but for the sake of the length of this post I’m going to focus on a handful of ones that seem to be making the most noise lately.

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 Tinder

Arguably the most popular dating it app, tinder gives you a bunch of matches that you can swipe left or right on to match with. If you both swipe right, you get connected to chat. Initially, you could have unlimited matches but in a move to monetize Tinder limited the amount of matches per day for free users (still a pretty high number) For an additional $9.99 per month, you can have unlimited matches and select different cities to “scout” in.

The majority of Tinder users are between the ages of 18-24, and although there are plenty outside that age group it tends to skew towards the younger crowd. In the past, it’s had trouble with spam and bots, but has been working hard to clean that up.

 

Outlook

Tinder is one of the only dating app platforms to monetize and to do so at scale. Between selling premium memberships and offering profiles to brands it has found some sources of income. Tinder belongs to Barry Diller’s IAC Conglomerate, which has launched other successful online dating companies such as Match.com. It is widely believed that they will IPO at some point.

For the positives – Tinder is easy to use, really viral, has a large install base and has found ways to monetize. These are all things that could enable it to gain success in the dating app market. On the flipside, while it is easy to use the ease of use and frequency of use actually may hinder the user experience for people, especially females. There have been plenty of reports of people (mainly females, but certainly males) getting awful messages, or, getting so many matches/messages to the point where it gets overwhelming/unusable. Given its size and scale, I don’t think Tinder is going anywhere, but if you’re trying to find your soulmate, I’d consider checking other alternative options.

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Hinge

Hinge bills itself as the relationship app. You get a bunch of matches, can swipe left or right to note your interest, and if both people say they are interested you get the chance to chat. Hinge focuses on relationships as opposed to hookups (while Tinder would probably not come out and say they are focused on hookups, its kind of implied)

 

To do this, it leverages your Facebook account data to try to match you with people who are friends of your Facebook friends. They are banking on the theory of the screening and vetting process – if you meet someone who happens to share a mutual connection or two, perhaps you’ll be more comfortable with them. Furthermore, Hinge has an internal proprietary algorithm that matches you based on your past experience with the app. Using predicative technology the app learns as you swipe, and tries to match you with people you’d be more likely to swipe right to.

 

Your profile is built by pulling in the social/profile data from your Facebook account. You can make some updates/changes to pictures you want but its mostly pre-populated. Initially, you got about 10-15 matches per day around noon, but a few months ago they switched to an “unlimited model” (probably more like 20-30 per day)

 

Hinge is quite popular, especially within bigger cities, which tend to have a critical mass of young/working professionals. According to this Vox article, it reported about 35,500 dates per week as of March 2015. 90% of its userbase is between 23 and 36, which skews a bit older than Tinder’s (18-24)

 

Outlook

There’s a lot to like about Hinge. The app is easy to use, there’s definitely less noise and riff raff compared to Tinder, and the idea of getting matched with people who have mutual connections with you has significant merit, provided that you trust your friends. Furthermore, the app has seen significant uptick and penetration, especially in cities where there are high amounts of young professionals. In many ways, if Tinder is for high school/college students, Hinge is for working/young professionals. Furthermore, the fact they’ve made over 10M matches demonstrates the size and scale of the app.

 

On the flipside, I’m wondering if they were better off without unlimited matches. I think the challenge with online dating or dating apps is how easy it is to get overwhelmed. Opening your app up so you can have unlimited matches increases the chances for a user getting overwhelmed. The difference between the number of matches you got in a batch versus unlimited might not be a huge concern but it will be interesting to see how Hinge makes money when they decide they need to monetize.

 

 

Coffee Meets Bagel

Coffee Meets Bagel matches people on a once a day basis. Each day, at Noon or so you get a match that you can like or pass on. If you both like each other, you get a week to chat with one another before the chat expires. If you want, you can also buy “beans” which can be used to get additional matches per day, or, even rematch with someone you passed on (according to CMB, if you rematch with someone there is 8x chance they will “like” you the second time around.) Finally, to add a little gamification to the mix, you can “earn” beans by either recommending a potential match to someone else, or referring your friends to the app, or posting about the app on social media.

 

Outlook

CMB has been around for awhile. They also appeared on Shark Tank, and turned down 30M from Mark Cuban because they thought they could end up making more than that in the big picture. It ended up being a great PR move for them (Intentional? Possibly….) as they landed a series A round of funding for $7.5M in February shortly after the show aired. There are three things that I like about CMB

 

Engagement – There is the right amount of engagement for this app. You get 1 bagel a day (at least) and if you want a few more you have the option to get more, but not anywhere near the amount you would get on Tinder or Hinge for that matter. As such, I think it makes people think more seriously about whether or not they want to match with the person of the day. While the amount of matches on Tinder or Hinge might be higher, I would not be surprised if the match percentage on CMB was higher than Hinge and Tinder

 

Limitation – There isn’t an unlimited feature, and while you can pay for more, there are limits. I think they key to dating apps is finding the appropriate level of engagement. You want people to spend time on your site or app, but if they spend too much time they might get bored, or overwhelmed. I think they’ve found the right medium.

Monetization – They’ve found a good way to monetize the app.

Bumble

Bumble is a dating app that puts women in the drivers seat, was started by Whitney Wolfe, one of the former Co-Founders of Tinder. While it acts and behaves very similar to Tinder, there are a few differences that make it unique.

  • Both men and women (or for gay/lesbian, both) can swipe left and right, but the female has to initiate the conversation
  • They only have 24 hours to do so.
  • If you match with someone and the female doesn’t initiate the conversation, you can extend the time length (and thus show your interest)

The app itself is very sleek and easy to use. From my own experience, I’ve also noticed that again, there is much less riff raff than what you’d find on Tinder. I don’t have any metrics on their user base, but I would assume its somewhere overlapping between Tinder and Hinge. In general, it does seem that it’s a bit more cleaned up than Tinder, as this article notes.

Outlook

I like the twist on Bumble – Given some of the awful things I’ve seen on Tinder, I definitely understand and see the value of allowing females to control the narrative/conversation. Furthermore, its not like guys are totally left out, as they can initiate their interest by extending the 24-hour rule. I get that it may seem countercultural to society norms, but perhaps that’s not a bad thing. One concern I can spot is in the event females decide to swipe but don’t in fact end up initiating conversations.

The League Premiere Party

The League

The League is one of the newest dating apps on the market. It caters to highly educated and highly successful professionals. (think Ivy League or JD’s and MBA’s)

 

It’s gotten a lot of flak in the press for being elitist, but many of these apps are trying to match people based on some sort of similarity between both people so while I get the outcry it really doesn’t seem incredibly different.

 

The League functions like many of the other apps – ability to swipe left and right, and each day, you’re given a total of five matches. What’s different about The League is that it has a very selective application process. Instead of opening it to everyone, they personally screen every person that they admit to the dating pool to ensure that the experience benefits all involved parties, and gives the app an air of exclusivity.

 

So far, The League is in San Francisco, LA, and NY, and has plans to expand to London later this year. As of now, it has about 100,000+ people on it’s waitlist, which seems to be growing by the day.

 

Outlook

The League is an interesting one because it’s strategy has been deviated from that of their competitors. Instead of scaling quickly, it’s taken a much more targeted and intentional approach. It’s decision to vet each user slows down the process, but on the flip side it ensures that the dating pool is at the standards it desires. Furthermore, their decision to target a market and zero in on a specific demographic as opposed to serving anyone and everyone. It also has targeted a demographic that is not only highly educated, but also has a higher earning income, so when they do decide to make a push for monetization there’s probably a good chance that the willingness to pay is greater and at a higher amount. Lastly, similar to Coffee Meets Bagel, The League has done a nice job balancing engagement with overload. By limiting users to 5 matches a day, monitoring the inflow of members, and hosting one-off live events and parties, The League provides an experience that gives users what they want without overwhelming them.

 

 

Conclusion

The dating app market is starting to get crowded, but it also means that there’s a way for everyone to find that special someone. As the popularity of these apps continues to rise, it will be interesting to see the decisions these apps make in terms of growth, monetization and product features.

 

The business behind dating apps

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As a 20-something millennial I regularly have conversations with my friends about dating and relationships. Naturally, dating apps, such as Tinder, Bumble, Hinge, and The League come up in conversation. Many of my friends (and myself included) have tried, are trying, or are done trying to use these apps to find a special someone to add to their life.

 

While the social, psychological and societal impacts of these dating apps is up for debate (a post for another day) I’ve become interested and fascinated by the business opportunities that this industry presents. Currently, the online dating industry sits at about $2.2B dollars (as of 2014.) With the stigma of online dating lowering, technology increasing and demographics expanding, the industry looks like it will continue to grow for years to come. IBISWorld estimates there are over 3900 dating sites out there today, and 100 new companies will enter the market each year.

 

I find this industry fascinating because it A) is addressing a problem that I believe many people face and are willing to seek help for and B) there are countless market dynamics that should prevent this from working but yet the amount of dating apps continues to rise Here’s a few points to illustrate what I mean

 

If you’re product is successful, people will leave

If you’ve truly succeeded with your dating app, people will find their soulmate and thus have no reason to come back. Sure, it may take some time for that to happen which typically means you’ll be able to generate revenue off of them for a finite period of time, but in theory, if you do your job well they’ll eventually find someone and leave you. In most businesses, companies want to build long-lasting relationships with their customers, but in the world of finding your soulmate that doesn’t quite apply.

 

It costs a lot to acquire customers

When you start a business, acquiring customers can be one of your biggest challenges. If you don’t have strong brand awareness or recognition you’ll generally turned to paid acquisition channels to find potential customers. This gets tricky (and expensive) for dating sites because the more you pay to acquire a customer the more you’ll have to generate revenue from them in order to have a positive customer lifetime value (and remember, you’re LTV is going to be lower because they’ll eventually leave you) However, due to technology advancements, user interface design and interaction, and general acceptance of dating apps, many dating apps (i.e. Tinder, Hinge) have experienced strong organic or word of mouth from their customers which has enabled them to grow a critical mass of users without having to spend exhorbitant amounts of money on acquisition dollars. One interesting tactic that The League did was it created a “waiting list” for it’s app that people could see. It did this because it wanted to vet every single candidate that joined its community, but it was also a great marketing/branding move that gave it a sense of exclusivity which encouraged others to sign up to join the waiting list. While it doesn’t look like The League is generating revenue, it at least is not spending a ton on marketing at an early stage of its company.

 

Freemium Business Models don’t always work well

The Freemium model (where there is a free version with x features and a paid version with x features + additional ones) is great in theory and is very popular amongst startups. Having said that, the model has its share of flaws, and tends to favor those that can scale and innovate quickly so they can get the economics of the paid users to not only work, but to continuously deliver innovation that brings in new customers. Almost all dating sites and apps have a freemium model, with Tinder being the most recent one to follow suit with its Tinder Plus. While many of these apps (Hinge) have not yet focused on revenue, it will be interesting to see how they plan on scaling and finding ways to generate income.

 

Most of your customers aren’t brand loyal

If you’re on one dating app, chances are you probably are on others. People only have so much time to dedicate to dating, and there’s only so many apps that fit on your smartphone, as such, the competition for eye balls and user engagement is fierce.

 

Innovation and Revenue continue to rise

Despite these business challenges, the number of dating sites and apps continues to rise. The industry has its fair share of hurdles and challenges but so does every industry. And while these apps have the same end goal and many similarities differentiation exists within the industry. Here’s a quick look at what some of the apps have done to separate and differentiate themselves from the competition

The Tinder app has helped many find dates in Provo without the pressure of online dating.

Tinder

A few months ago Tinder rolled out Tinder Plus, a paid version of Tinder that for $9.99 or $14.99 per month allows people to have unlimited swipes, and the ability to swipe and browse in locations that they are not currently residing in. Due to the size and popularity of Tinder, it became very easy for people just to swipe right without much care or concern. By placing restrictions, it allowed Tinder to segment their customers and generate an additional revenue stream.

 

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Bumble

Bumble was founded by Whitney Wolfe, an ex-Tinder Co-Founder, and on first glance looks and operates very similar. The catch: matches only last for 24 hours and the female has to initiate the conversation. In terms of revenue generation – guys have the option to “extend” a match for an additional 24 hours. This signals to the female that he’s interested all while generating some extra money for Bumble. No word on their revenue figures but certainly a creative way to generate revenue early on for the company.

 

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The League

The League is a dating app that’s a bit exclusive – while anyone can download the app, users have to be admitted through a screening process. The process tends to favor those with advanced degrees and strong work pedigrees (see lawyers, MBA graduates, Founders, I-Bankers, PE Guys/Gals, etc)

 

Founded by Amanda Bradford, an ex-Googler and Stanford GSB Alum, Bradford’s inspiration for the app came from the challenges that she and her classmates/friends had with other wide/broad dating apps such as Tinder. Instead of focusing on a broad/wide customer base, The League has narrowed theirs.

A really smart and savvy business decision/marketing move The League made was to create a thorough vetting process/waitlist for those who downloaded the app. Not only did this give it an air of exclusivity (lets be honest, who doesn’t love being part of something exclusive?) but it also has allowed them to carefully construct their dating pool and make the experience for those in the pool as strong as possible. Currently, they just setup shop in New York and are expanding soon to London, and they even have some tips for you on how to maximize your chances of getting accepted.

 

CMB Founders on Shark Tank

CMB Founders on Shark Tank

Coffee Meets Bagel

Perhaps one of the more notable/successful apps to date – they got their fame for when they appeared on Shark Tank because they turned down $30M from Mark Cuban. Thus far, CMB has not only built up a formidable user base, but it’s found ways to generate revenue. Each day, everyone gets one match that they can either like or pass on. If both people like, then they get connected. However, you can also buy another match for the day through their own currency (known as beans) You can also earn beans that you can use to get more matches, by recommending someone to another person, or by engaging with CMB on various social media channels. Lastly, you can also buy beans which you can then use at your own discretion. These are all unique things CMB has done to try to drive both engagement and revenue.

 

Conclusion: Dating Apps are here to stay

At the end of the day, it looks like dating apps are here to stay. While markets/industries will always have winners and losers, it will be exciting to see how this market evolves over the next 18-24 months. In my next post, I’ll walk through some of the strengths and weaknesses I see in some of these apps, and make some predictions of what’s to come. In the meantime, happy swiping!