Inside It's all about the algorithm.

Stories from the Financial Times. 
July 30 2011 7:12 AM


It's all about the algorithm.

(Continued from Page 2)

As often happens in love, the woman Cambry fell for is not exactly the woman he thought he wanted. "I wasn't expecting that the person I was going to marry would be a white woman from Inver Grove Heights, Minnesota," he says. Nor did Cambry fit neatly into O'Daniel's idea of who she would marry. According to her Match profile, she was looking for a man between the ages of 21 and 26. Cambry, by O'Daniel's own standards, was too old for her. In fact, Cambry and O'Daniel never really searched for one another at all. They were introduced by the algorithm.

Cambry was included in O'Daniel's Daily5 because he was similar to 11 other men that she had already indicated she was interested in with a "Yes" rating, Thombre told me. So even though he was older than O'Daniel wanted, and described himself as "stocky", while O'Daniel wanted a man with a body type that was "about average" or "athletic and toned", Match correctly assumed she might be interested in him. "We didn't match, but you can't really sum up a person in a check box," says O'Daniel. "Women change their hair colour every month."

Online dating has come of age. Once a seedy corner of the internet, digital romance is today nearly as commonplace as e-commerce. Of the 87 million singles in the US, nearly half of them, or 40 million, have tried online dating, according to the US Census. Some surveys estimate that one in five new relationships, and one in six new ­marriages, begins online. "This is one of those businesses where scale really ­matters," says Ginsberg, noting that Match has facilitated 1.2 billion e-mails since 2005, and 110 million virtual winks [a way for members to "break the ice" before e-mailing] in the past six months. She also says there is no reason to expect growth to stall any time soon, as online dating becomes more mainstream and new singles of all ages come online. "With the divorce rate in this country being 50 per cent, we're a ­reflection of that society," she says.

Internet dating has also matured into a robust business. Match is owned by IAC, the digital media conglomerate. Last year it and IAC's other online dating sites generated $401m, or nearly a quarter of all revenues for the group. Paying users were up by 30 per cent last year, to 1.78 million. Most revenues come from subscriptions, with some extra cash coming from advertising. Diet ads, such as WeightWatchers for Men, are popular on the site.


Online dating is also an international phenomenon. Native language sites flourish in countries around the globe. Match UK is successful, though operated independently. And while Match is the best-known and largest online dating site on the web, it has plenty of competition., another IAC property, is growing. eHarmony, a rival, has proved popular with an older crowd looking for serious relationships. Niche sites cater to specific nationalities and religions, such as Shaadi for Indians and JDate for the Jewish crowd. OkCupid, launched in 2004, is free to use and has caught on with the young, ­hipster subset. Its success led IAC to purchase it for $50m earlier this year.

Pressure from new competitors has made Ginsberg and Thombre's work all the more critical for their company's success. "Match's fundamental offering is more vulnerable today than at any previous point," says Frances Haugen, a software engineer at Google who studied Match while at Harvard Business School. "With the advent of improved recommendation algorithms and the implicit compatibility information encoded in social networks, Match must act now or put itself at risk for disruption in the next five years."

So far, Match has not been knocked askance by the advent of social networking. In fact, advertising on Facebook has become a great recruiting tool for Match. "Facebook is about people you know, and Match is about connecting to people you don't know," says Ginsberg. And while there is indeed more competition than ever before, 16 years after was founded as one of the original online dating sites, it is still positioned as the industry's frontrunner.

. . . was founded in 1995 by Gary Kremen, an entrepreneur who saw the potential of the web early on. Single at the time, Kremen was using 1-900 number dating hotlines he found in the classified sections of newspapers to meet women. "I noticed I was paying a lot of money for those numbers, and those big bills got me thinking that maybe people would pay the same online," he says.

Kremen was right. He founded a company called Electric Classifieds in 1993, and two years later unveiled Match. It was one of the first sites to use the internet to facilitate dates, and among the first to charge money for a service. "That was the original idea, to do classified ads but make it electric," said Kremen. "I always knew a lot of women; I've done a lot of dating in my life."

Kremen says he designed the site with women in mind. "You have to design the whole system for women, not men," he said. "Who cares what men think? So things like security and anonymity were important. And little things, like talking about body types, not pounds. Never ask a woman her weight."

Yet Kremen was faced with an early problem. In 1995 most people weren't online, and those that were weren't finding dates there. So Kremen got everyone he knew to sign up for Match. He had all Match employees create profiles, and even though he was in a relationship, he signed up and had his girlfriend sign up, too. There was early success. A critical mass started using the site and online dating in the internet era was born. But it backfired in one important respect. Kremen's own girlfriend met another man through Match and left him. It was a painful lesson, but at least he knew the site worked.

Kremen and his board had a falling out soon after Match got going, and the company was sold in 1998 for $7m to Cendant. A year later, Cendant sold it to IAC for $50m. Since then, IAC has grown Match to be the most dominant dating site on the web.



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