2011 was a good year & investing.

I managed to visit  25 countries in 2011,  highlights would be seeing the last of the mountain gorilla’s in rwanda’s cloud forests,  safari’s around africa,   Easter Island, Machu Picchu, Bhoutan, Anchor Wat and of course Egypt, hard to beat being fed wine while touring the 3400 year old temple of luxor by moonlight followed by dinner in the temple complex.

While all this was going on,  POF nearly doubled in size last year we hit a record of 50,000 signups on sunday!   We also got a tech team and some administrators,  We launched in a bunch of non English speaking countries, created mobile apps,  created our own chat system and redesigned the site a few times!  Just goes to show you can run an internet company from anywhere.

On the business side we’ve invested millions into other sites last year some with millions of users.  We  acquired a couple of companies and formed a few some new ones outside of the dating space.  We’ve set aside about 10M to acquire other companies this year  or to invest in things.    What i’m looking for are dating companies in the mobile space,  non english speaking countries  or something that can help us lift our average revenue per user..  IE a paid site we can send a lot of traffic to and it converts.

We are also looking for companies that have at least 100k users,   if you don’t have 100k users it means you don’t have a product anyone wants.  We are looking to help other companies grow very fast,  we aren’t looking to help companies design/build a product and then figure out how to get users for them.   What we look for is companies that have already have traction and can turn into large companies.

32 Billion images a month.

In November plentyoffish  got nearly 6 billion pageviews and served out  nearly 32 billion images  in addition to that our IM servers handle about 30 billion pageviews a month.    All of this traffic is handled by our 11 webservers of which we could probably get rid of 5 and everything would still work fine.   All of this may sound like it costs massive amounts of money,  but all hosting/cdn costs  combined are under $70k/month.

What are typical hosting costs for other dating sites?

 

White Label Dating Sites, how to make money / Rev Share.

A lot of people have been setting up white label dating sites the last few years. The most important factor in making money doing this is something most new people don’t even realize they can change.

1. Never ever agree to the default terms a white label dating service offers you. By default the rates are as low as 50-50% rev share. We won’t even talk to a company unless the rates are closer to 80%-20. The majority of the major sites on these platforms are closer to that rate. 30% may not seem like much but if your site was earning 100,000 a year you now get paid $80,000 a year instead of $50,000 a year. If you had $45,000 in expensives that left you with $5,000 in profit. If you where at 80% revshare your profit is now $35,000 because you earned a extra $30,000

2. Constantly negotiate. Best example i can give is we were making $20/paid signup via adnetworks. We went direct and because of volume we were able to get paid $80/signup for the exact same users. When it comes to white label dating site the same rules apply, you can always increase revenue sharing in your favor. If you don’t you wont’ be in the space for very long as competitors are going to dramatically increase their revenue share over time.

3. Users are rebilled on average of 2 or 3 times. Some sites have different rates for new users verse rebills,  for example you get a real high percentage for the first charge but a real low rate for the rebill. Lets say a user is billed 3 times for $100. If you make 80% on first sale and 50% for rebills that means you make $80 + $50 +$50 +$50. Always make sure both your initial and rebill percent rates are really high.

Okcupid Revenue Released.

http://www.inc.com/inc5000/profile/okcupidcom

2010 Revenue:$4.7 million
2007 Revenue:$380,912
Employees:18

Acquisition price was 50 Million cash and 40 Million earn out.  I’m surprised okcupid was able to make so much money given their 400M pageviews/month.  They have 3 ad units per page and auto rebilling, compared to our 1 ad unit and no outrebilling on memberships.. Currently POF has around 5 Billion pageviews a month, if i monetize as much as okcupid that would be around 55-65M in revenues.

Hiring my first dba.

I was reading this article today about match  talk about how they sent 1.2 billion emails in the last 6 years.    It reminded me how far Plentyoffish has come,  and how I’ve been doing all the database work except billing since the beginning.    In a few weeks i’m going to give up much of that responsible and hand it off.

I can’t believe the scale of what’s been done.  Its weird because day by day the growth isn’t that much but when you look back over the years its huge.   Plentyoffish users  send  5.5 Billion Messages a year..   That is 27 times what match.com users send.    The hard part about scaling is making it cost effective.   Match doesn’t have a problem as they earn 400M a year which works out to $2.00 an email sent on their system per year.   For match buying new hardware is nothing.    For plentyoffish we have 27 times the messages even paying a penny per email is not viable.     But what truly takes computing power is our Behavioral Matching Engine, talked about it a bit in 2007 on the today show  years before any other dating site even knew that kind of stuff was possible.   I feed it with nearly 20 billion pieces of data that are stored in the database,  and all of this is done in real time.   That is what requires hardware and lots of it.

At the end of the day the site is so large,  I need to give up the day to day running of the SQL databases.   Not only do I not have as much time to pay attention to it but I also don’t know every aspect of SQL Server anymore.  Its funny one day you knew everything there was to know about SQL server because you had to work with it daily but than a year goes by,  or 2 a few upgrades and suddenly you only kind of know whats going on.

Us Dating Market Stats.

According to IAC….

54 million singles in US
2.6 million paid at any time.
5.5 free and non paying.
8.8 million singles have used online dating.

http://ir.iac.com/eventDetail.cfm?EventID=97073

Only 5%of the population is using a paid dating site at any given point in time and another 5% a free dating site.  The real focus of most of the top dating sites is how to get the other 90% of the population to start using dating sites.

Plentyoffish Patent Pending Matching system.

We thought this was an excellent way of matching people,  thats why we filed a patent application for this years ago.

Is Facebook done?

Looks like Google + is going to split the social networking space.   Looks like its no longer going to be facebook controlling the entire space.     Its going to change the dating space a lot because so many companies are advertising directly on facebook.   Whats more amazing is that in 7 years no one has come out with a semi decent social networking competitor until google + came along.

Match.com overun by Nigerian scams?

With Plentyoffish I constantly write more lines of code to deal with scammers than all other code combined. As a result there isn’t a single media story of someone being scammed by Nigerians on Plentyoffish. Nigerian scamming is a massive business. There are many Nigerian scammers that make a living trying to scam people on paid Dating sites. It doesn’t matter how many background checks Match.com does they will never catch someone using a stolen credit cards and addresses. In the last 6 months these scammers have stepped up their game in a big way and it takes a lot of time and effort to stay ahead of them.

Match.com has got some major publicity in the last 2 weeks. Sounds like these Nigerians are becoming an epidemic.

Match.com User Scammed out of 1 Million.
http://www.globalregina.com/Okanagan+woman+scammed+million+online+dating+scam/5067500/story.html

Match.com user Scammed
http://abcnews.go.com/Technology/We_Find_Them/online-dating-nightmare-ny-woman-scammed-thousands-soldier/story?id=13898664

match user scammed for Millions.
http://www.chinapost.com.tw/taiwan/national/national-news/2011/07/01/308198/Scammer-cons.htm

Another match scam.

http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=213114

Match.com user scammed
http://www.bayofplentytimes.co.nz/have-your-say/news/grandmother-duped-in-dating-scam/3950969/

Match.com scams on ABC News 20/20
http://www.ghanaweb.com/GhanaHomePage/crime/artikel.php?ID=212375

Vancouver riots.

Its crazy outside all you can hear is the constant buzz of police helicopters, even more bizzare seeing the riots unfold on TV now considering its only a few blocks away. Police are firing tear gas, cars are on fire and fires in the streets and looting of the stores.

Wow its just going nuts now its only 9:40… Heavy black smoke over the city and everyones afraid to go outside. Liquer stores got looted and cop cars are getting set on fire. Its going to be a long night. Grandville is just a wall of tear gas. If plentyoffish goes down tonight you’ll know why!