
IAC Said to Buy More Tinder Shares at $5B Valuation - masonhensley
http://www.bloomberg.com/news/2014-04-11/iac-said-to-buy-back-10-of-dating-app-tinder-for-500-million.html
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chimeracoder
Compare this to OkCupid.

When IAC acquired OkCupid in 2011 for $50MM, OkCupid had almost as many users
as Tinder does now, but Tinder's valuation (according to IAC) is literally
100x more.

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ahelwer
I'm not sure OkCupid and Tinder should even be compared (despite OkCupid
containing a clone of the Tinder app). This is purely from experience, but
most people on Tinder use it solely as an ego prop - finding a date isn't the
focus so much as the validation that comes with a match. You can even do some
shoddy A/B testing with Tinder (if I lead with photo x, do I get a higher
match rate than with photo y?), and I do think more advanced image
testing/refinement tools could and should be a large part of their feature set
going forward. OkCupid has something similar with the My Best Face feature,
but they don't seem to have expanded further on that idea.

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chimeracoder
This is exactly why it's interesting to compare.

You could say that, feature-wise, Instagram was literally a subset of
Foursquare, or Twitter was literally a subset of Tumblr (blogging) or Facebook
(status updates). But how people actually interact with and use those
platforms (and the value derived from those interactions) are very different.

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ahelwer
That's true. Other thoughts: Tinder has flipped the traditional dating website
model on its head. On OkCupid and others, people filter by black-box
quantified "compatibility" first and then attractiveness. Tinder just puts
attractiveness first and leaves compatibility scoring to the people
themselves.

OkCupid recently introduced a feature where you can pay a small fee (about $1)
to temporarily boost your personal search ranking. This is clever, and also
fits very well in Tinder's matching model. Adding features like that or the
ability to pay for additional profiles for A/B testing would put Tinder in the
black pretty quickly, I think.

edit: I should throw in some negatives. There are quite a few duplicate/spam
profiles on Tinder created by escort agencies. Finding a way to seamlessly
detect & block these will be important to avoid a reputation of seediness.
It's already on the line due to the common practice of mentioning Tinder
alongside location-based hookup apps.

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jonbishop
Not saying a 5B valuation makes sense, but I think Tinder is employing the
thin edge of the wedge strategy [1] (like Instagram did with photos) and is
using their huge success with dating to become a more generic social network.

They've already been public with vague plans to move beyond dating. Also,
their new verified accounts for celebrities make a lot more sense with a
generic social network than with a dating app.

[1] [http://cdixon.org/2010/12/27/the-thin-edge-of-the-wedge-
stra...](http://cdixon.org/2010/12/27/the-thin-edge-of-the-wedge-strategy/)

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aresant
Dating is a giant business.

10m daily users is an amazing stat.

Doubling their users at that scale in <5 months is earth shattering.

I know these things make for rational arguments.

And still my brain has trouble processing that valuation, especially in the
context of "worth almost as much as IAC".

A friend said something that struck me yesterday:

"The fed has literally been dumping billions out of helicopters. Billions
don't matter anymore."

I am not commenting on bubble / no bubble but it will be interesting to see
what happens when $$$ tightens @ the top.

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tobennaa
I was just about to post this. Anyone else find this shocking? I mean I know
it's popular and all but...

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gdilla
Not that shocking... valuation these days depend more on your growth curve,
retention and reuse. Revenue doesn't matter. The number of users matters a
little, but not much, as long as you're on that hockey stick.

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argumentum
The article is very confusing about the numbers, but if they do hold up to
scrutiny, the people cashing out are smart.

Tinder's user engagement can be modeled as a wave. Due to the social graph,
when you first get the app, people in your cohort are likely to be using it as
well.

During this time, there is more value than just the dopamine rush of flipping
through pictures and getting matches. A match is much more likely to be
actionable.

The downside of this is that once the addiction wears off for you, it's likely
starting to wear off for the people in your cohort. So user "unadoption" is
just as viral as user adoption.

How many people here have used the app beyond a couple months? How many have
deleted it once they stopped using it?

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tpeng
Most dating businesses are inherently conflicted because a successful outcome
(relationship) is a lost customer. Tinder, in the "short term" relationship
space, has a unique ability to have happy, repeat customers. 5B still seems
like a lot. I wonder if there is a control premium baked into the price; IAC
was rumored to have a majority stake already, but it's possible that those
rumors were incorrect.

Edit: Sam Yagan says the valuation was not 5B

[http://www.forbes.com/sites/jeffbercovici/2014/04/11/no-
tind...](http://www.forbes.com/sites/jeffbercovici/2014/04/11/no-tinder-is-
not-worth-5-billion/)

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sz4kerto
I hate to be THAT, guy, but Nasdaq did not look good last week. :)

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tobennaa
New reports saying the valuation was actually much closer to $500M. Now that
makes a lot more sense to me

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applecore
Like Snapchat with its ephemeral "snaps", Tinder has practically invented a
new mode of interaction (swipeable cards). They're hugely popular and growing,
so it makes sense that they're going to command a huge valuation.

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applecore
Or not.

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pbreit
This has gotta be a reporting mistake (both parties say value much lower). The
$500m valuation sounds much more reasonable. With a 1x or 2x liquidity
preference, maybe it's higher.

