The simple reason is that everyone expects quick results, no one can make that happen, and users get very unhappy very quickly. Even the main industry rag, Online Dating Magazine , admits that the success rate is a mere one percent, compared to an estimated fifty percent for startups in general. I certainly understand why everyone wants to take a shot at it - the "need" is huge. Then there are the forty percent of frequent users that are already married.
Some say that's a billion dollar "recession proof" opportunity. But make no mistake about it, this is a tough and oversaturated market to enter at this stage. Here are six key reasons, from a business perspective: Direct competition is huge. There is no opportunity for "first mover" advantage here. The same Online Dating Magazine estimates that there are more than 2, online dating services online in the U. Some estimates say there are 8. No longer a growth market. After years of dramatic growth in the percent range, online dating revenues have leveled off in the U.
Subscriber numbers are actually falling slightly. Lawsuit claims and Nigerian con artists are up, and disillusionment is growing. The honeymoon is over. Advertisement Entry cost is very high. This business suffers from what Paul Graham calls the 'chicken and the egg problem' - no one wants to use a dating site with only a few users. So sites have to invest heavily in viral marketing to achieve critical mass, which competes with current social networks, while users expect to join both for free.
Intellectual property is tough. It's hard to invent and patent more "scientific" methods on how to match people. Most people, especially women, don't even want to feel like they can be 'matched' by a computer. After all, isn't dating all about making new "friends," and finding them in all the right places? If you want a more intimate virtual encounter, try the Facebook SuperPoke application.
I'm already seeing search engine parameters that can match image features, so singles will soon be able to search cyberspace for their ideal partner, without the need to join any dating site. How about the next generation search engine, answering the question, "Who is my ultimate soul mate?
However, because 99 out of fail, and because some have an unsavory reputation, you won't find many Angel or VC investors who are interested. Plan to focus on that other popular tier of investors - founders, family, friends, and fools.
Advertisement Certainly if you expect to get any traction in this market, you need some real innovation. The trend is to more niche markets. So please don't send me any more business plans along these lines, looking for investor funding, with no marketing budget, and promising huge returns. Investors are looking for real innovation, not copycats with more bells and whistles. Let's give it to them.