
Looking to acquire. - peter123
http://plentyoffish.wordpress.com/2009/01/27/looking-to-aquire/
======
run4yourlives
I've always admired Markus. In part, because of his ability to run a very
successful business by himself, but also because I tend to enjoy rooting for
the home team; I live in Vancouver.

That being said, I'm not sure where he's going with this. In many ways this
seems like the beginning of the end for him. Granted, he knows his industry
better than I do, but here's my take:

1\. He runs a free service, at huge profit margins. His competitors all run
paid services.

2\. The likelihood that people would view paid dating as a luxury they can no
longer afford is higher than ever.

3\. He's worried about "hundreds of millions of dollars" that he's missing out
on - that's usually a recipe for disaster.

If anything, I think he should stay as static as possible. The odds that much
of the paid traffic from his competitors comes his way in the next little bit
is extremely high. Moving to a paid site destroys the only competitive
advantage he has. It's suicide.

I've seen this move before with other entrepreneurs, and I've never really
seen success from it. What it usually symbolizes is that the particular niche
has reached its potential, and no real innovation is required at this point.
The founder is basically getting bored, and looking for new challenges. What
needs to happen though is that the entrepreneur him/herself needs to leave/end
the business. You can't evolve into new markets and bring your business with
you without destroying the comfortable fit that your brand already has in the
marketplace.

From my 2 cents, he should be looking for buyers, not trying to become one.

~~~
theklub
I think he's going to keep his current site and create another one separate
from his current. Am I wrong?

Really he just wants to keep users that come to his site and aren't happy with
the free type dating site. Instead of them going to match.com or w/e they'll
go to his pay site.

~~~
run4yourlives
Wouldn't it be a lot easier to call up match/cupid/eharmony and discuss
referral fees for driving traffic to these sites? I think he'd be better off
looking for a partner. Perhaps an exclusive deal?

What value is adding a pay site to an over saturated market bringing here? Why
would you play against companies that are more resourceful and experienced
using their rules? Seems to me that - long term - this is a lose/lose all
around for him.

In order for this to be even remotely successful, he needs to beat the pay
sites at their own game. Otherwise, his "pay site" will still be disregarded,
and he'll still "lose revenue" to the big guys. The odds are stacked against
him. The big guys can bear a price war much better than he can, and that's
what he's jumping into, essentially.

~~~
TooMuchNick
Maybe he's tried referrals and sites like Match.com, which launched a free
version, turned him down or paid too little because they want to take over the
vertical too.

~~~
run4yourlives
That's certainly possible. There are a lot of competitors out there though,
and now that one has a free site too, there should be plenty of interest.

Perhaps the true nature of this post is an effort to bring some of those other
players out of the woodwork.

------
huherto
Ask HN: I have site: somoscompatibles.com it is the same concept as
eharmony.com and chemistry.com. It is geared towards Mexico and Spanish but it
can be converted easily to English. I haven't been able to devote a lot of
time to market it but the site has been working fairly well for over a year
and I feel users are very loyal to it. It requires very little maintenance on
my side. I feel very confident on the code it represents about a year's work.
I will like to approach Marcus, I am not too interested on just selling the
site since I do not really need the money but it does seem like a good match.

So my question is how should I approach Marcus and what type of agreement do
you think would be beneficial for both of us.

~~~
run4yourlives
_I will like to approach Marcus, I am not too interested on just selling the
site since I do not really need the money but it does seem like a good match._

My first suggestion would be - assuming what you say here is true - to be
concrete at what you _would_ want out of this, if not money. Fame? A nice CV
tagline? What?

Once you have that down, you would tailor the approach strategy to enable that
outcome.

~~~
huherto
Yes you are right, that's probably the first question I should ask myself. I
guess I would like to look at two possibilities: one just selling the software
and the second one to be an active contributor to the project. edit: grammar.

~~~
run4yourlives
Again though, you're working through solutions without defining the ultimate
goal.

------
coglethorpe
Why not do the "freemium" model and ask a fee for more selective searches or
better features? He could incorporate a redesign as part of the process.

~~~
shimon
If you believe his observations about the differences between free and paid
sites, it would seem very difficult to reconcile them into one freemium site.
You'd essentially have two tiers of users, with separate pools of personals
and at least some variation in design.

Another challenge for PoF is reconciling their business models. AFAIK, right
now PoF makes its money from selling leads to premium dating sites. If they're
going to run their own premium site, doesn't that risk cannibalizing that
business?

~~~
smokinn
I don't always believe everything he says but he does sometimes make some good
points. He says he makes his money entirely off google ads but then again he
said everything runs off varying numbers of servers (it varies according to
which article you're reading, sometimes it's "it's only 2!", sometimes more
and on articles like this one: <http://highscalability.com/plentyoffish-
architecture> mail servers and such aren't even mentioned) so I find that very
fishy.

These assumptions he makes about free vs paid are reasonable but it's probably
just a gut feeling guess.

If you actually look at pof it looks like garbage. No one would want to pay to
have their photo resized so terribly and have basically no features. When
you're paying for a service you have an entirely different set of
expectations. pof works because it has a very large user base. That's all you
need for a free site to work. For a paid site you need quality and he's
famously very lazy so that's why he's looking to buy one instead of actually
getting to work to build one on his own.

It's possible for a dating site to work on the freemium model. It's isn't for
pof though, not without a lot of work he isn't willing to put into it.

I think he's going to find that the only ones he'd want to buy are the ones
that aren't selling.

------
DougBTX
Am I the only one who read this as a satire piece? I was amazed to find all
the comments taking it seriously!

------
there
so match.com starts a free site and a month later, plentyoffish wants to start
a paid site. odd.

~~~
amix
match.com does not want to pay so much to bring traffic to their site, so
their idea is to have a free site that can drive traffic to their paid site.

plentyoffish on the other hand does not get enough $ for driving users away to
match.com, so he wants to drive traffic to his own paid site.

Not that odd, IMO.

------
ntoshev
My feeling is we'll see another hotornot kind of development here. Markus will
try to go with a paid model, fail - because his thinking wouldn't work in the
new context, and either sell the site or leave things as they are now.

------
slackerIII
A cynical take: saying you are in the market for a pay dating site is a way to
get inside information about running a pay dating site. He is going to have
all kinds of small sites sending him their numbers on signups/conversions,
etc. It would be nice to see all that and know which models are working best.
Heck, he even says "I’m going to have a lot of work to do to figure out how to
run a paid site properly."

------
amix
I don't think an ad model is that effective in a bad economy. So he is
probably losing lots in revenue and trying to find ways to generate new
revenue. Just like Google are way more aggressive with a freemium model for
Google Apps...

------
Mistone
it sounds like he is listening to other people and the media too much and
maybe questioning his rightful place in the land of internet fame.

undoubtably any paid site that is hooked into plentyoffish.com will get a
flood of referral traffic, and that is a major competitive advantage.
regardless it will be a major time consuming undertaking and he might hate all
the work involved.

I feel like he needs a number 2, biz dev guy/gal to put together a big time
referral deal with one of the major paid sites. then look at the ad space and
hook in some premium ads that pay more then Adsense. google is reaping huge
rewards here and a big time advertisers would add huge money to the bottom
line, without so much work involved. i would love that gig.

~~~
run4yourlives
I'd take that gig even with the work. Alas, it isn't my industry, and if
Markus actually wanted that person he'd probably be able to find much better
resumes than mine in that respect.

~~~
Mistone
me too, and yep likely people out there with loads more experience then me,
but it would be an awesome gig and seemingly a quicker path to those "million
of dollars" he is missing out on.

------
Fuca
Moral of the story: It is much easier to make money on subscriptions than by
ads.

