The location-based dating app Tinder was founded on September 1st, 2012, and launched the following October out of Hatch Labs, IAC’s “innovation sandbox.” IAC is the parent company that owns much of Tinder. Since the launch, the Tinder app has become a phenomenon. By January 2014, the app boasted more than 10 million users. [1] By December of 2014, the app had been downloaded more than 40 million times with users swiping 1 billion times per day. [23] On February 3rd, during the IAC earnings call, the company reported that Tinder saw 100% year over year growth in monthly active users (MAU). [24] Like many things with Tinder, it’s valuation is one that’s part myth and part truth. In the Spring of 2014, several sources reported that IAC dropped $500 million to buy another 10% of Tinder from Chamath Palihapitiya—valuing the company at $5 billion. Not long after the story was picked up, Tinder CEO, Sean Rad cited the report as “meaningfully incorrect,” [15] while estimates from Re/Code put the value of the company at the time at $550 million. [25] Later in 2014, rumors were swirling about additional investment in Tinder at $1 billion or more. [26] However, in December, IAC Chairman and Senior Executive Barry Diller reported that the valuation is irrelevant because the company is not a venture backed startup. [27] Beyond its breakout success in the highly-competitive dating space, Tinder has made waves both as a pioneer for mobile user experience (with it’s swiping paradigm) and via its sordid upper management scandal. In this growth study we’re going to focus on the growth engine that made the company so successful and leave a deep dive into the management scandal and sexual harassment lawsuit—that forced their CMO and co-founder Justin Mateen to resign and early employee Whitney Wolfe to leave—for other sites with much deeper journalistic and investigative chops. If you want to read more on the turmoil on the management team and lawsuits read more here. But in a world of heavily funded and popular services like Match.com, Plenty of Fish, eHarmony and others, how did this upstart breakout and totally reinvent online dating for the mobile-first set? In this growth study we’ll look at:
Early Traction
- Creating an addictive app through a novel and gamified user experience that capitalized on new social norms toward casual dating
- Building a robust marketplace of supply and demand through collegiate greek systems
- Driving network effects through college- by-college launches
Today’s Growth Engine
- Word of mouth and press that continues to drive growth
- Product extensions that make the application accessible to more users outside of just singles looking to connect
- Product features that increase re-engagement and retention
- International expansion
- Monetization
Introduction
Tinder is a mobile dating application that matches prospective partners with one another through a novel interface and interaction design. Users of the app are presented with potential dates made up of suggestions from their friend’s social networks and other people using the service from the surrounding locale. After viewing a profile the user can either swipe left, dismissing the potential partner, or swipe right, suggesting interest in starting a conversation with the person. If the other person also swipes right on that user during their time using the app, the two people are “matched” where they can start a dialog, coordinate a date, etc. When a user opens Tinder, the app uses their last known location along with information regarding shared friends (via Facebook), interests, and networks to generate potential matches. The more a user engages with Tinder, the better the app’s potential matches become.
image via the daily dot Unlike other companies studied here on GrowthHackers.com, Tinder is not a traditional startup. Instead Tinder is backed by IAC, the same company who owns dating mega-company, Match.com. Tinder grew out the company’s mobile “innovation sandbox” Hatch Labs—which was founded in March 2011 and subsequently shut down in February 2013. [2] Most people think of Tinder as a startup, and the confusion works to Tinder’s advantage and may even be somewhat intentional, at least according to Sam Yagan, CEO of IAC’s Match.com and OkCupid. As Yagan explained in June 2013:
“We keep it sort of on the DL because it’s much sexier for it to be a totally fresh startup that has nothing to do with the market leader. But we’re constantly trying to build new startup-y stuff at Match, and this is a product that we started working on late last year with the team in L.A., and it popped.” [3]
Tinder is yet to raise any money outside of IAC, and in June 2014 Yagan told TechCrunch that “IAC has been, is, and always will be the majority owner of Tinder.” [5] But Tinder’s status as a company isn’t the only thing clouded in mystery. Mythology and facts conflict in the story of how the app was actually founded. Sources agree that the founders were originally working on Cardify—another customer loyalty app, also at Hatch Labs—when coder Joe Muñoz created an early version of Tinder during a weekend hackathon. As the team gradually shifted their focus from Cardify to the dating app they were calling Matchbox, they realized the name was too similar to IAC-owned Match.com. There’s disagreement as to who originally came up with the name Tinder. Former marketing executive (and, by some accounts, co-founder) Whitney Wolfe claims she offered “Tinder” up as a spin on Rad’s too-romantic suggestion of “Tender,” [6] while TechCrunch says their anonymous sources were uncertain, but listed Badeen, Muñoz, and Wolfe as possibilities. [7]Though many details regarding Tinder are fuzzy, the numbers are not. As of December 2014, Tinder had been downloaded more than 40 million times with users swiping 1 billion profiles every day. [28] So how is it that Tinder has grown so rapidly in such a short amount of time?
Early Traction
Building Supply and Word of Mouth
As with any marketplace, liquidity is the key to success. Liquidity is the availability of buyers and sellers to participate in transactions. In a monetary marketplace there has to be enough supply for buyers and enough demand for sellers to participate. Without both sides of the market, there is no marketplace. This is often described as the chicken and egg problem–how do you get one side without the other? As we’ve seen in talks from Nilan Peiris at the GrowthHackers Conference in London [29], and in talks and articles from Sprig Founder Gagan Biyani and Platformed.info’s Sangeet Choudary, the easiest way to jumpstart a marketplace is to grow the supply side first. [30] Building up the “seller” part of the market is easier to do and can be “hacked” by either paying for the supply or offering other incentives to participate. In the world of Tinder, there are no true buyers and sellers, but in many dating and similar ecosystems the “supply” of women on a platform is what triggers the participation of men. It’s the same principle behind “Ladies’ Night” promotions at your local bars. Seed the marketplace with supply and buyers come to participate. This works in reverse of course, but is typically done in this fashion. Tinder knew this and supply-hacked the dating app with women first, focusing on sorority girls as the early adopters. As more women joined the platform, men were eager to download it and see who was available nearby for dates. The move was brilliant: millennials are digitally savvy and mobile first, sororities offer large ecosystems where word of mouth can spread one-to-many, and the connections between friends and across the greek system in general make word of mouth more contagious. The combination of supply seeding and word of mouth was like a spark on dry kindling. As Muñoz told Businessweek’s Nick Summers:
“We sent [Wolfe] all over the country. … Her pitch was pretty genius. She would go to chapters of her sorority, do her presentation, and have all the girls at the meetings install the app. Then she’d go to the corresponding brother fraternity—they’d open the app and see all these cute girls they knew.” [9]
When Wolfe returned from her trip, Muñoz says Tinder had grown from fewer than 5,000 to almost 15,000. “At that point,” he says, “I thought the avalanche had started.” [9] The importance of this early supply-side seeding and word of mouth growth through collegiate greek networks cannot be understated, as it helped the unknown app reach the critical mass necessary for the network effect to take hold. Word of mouth continues to be an important growth factor for Tinder. Reality TV producer and aspiring comic Jamie Parks—who met her boyfriend of a year using the app—says she started using Tinder because all her friends were doing it. It wasn’t long before she “became addicted,” on occasion leaving the bar to “go home, lay in bed, eat and Tinder, like it was an activity.” [10] Tomas Chamorro-Premuzic, University College London business psychology professor and VP of research and innovation at Hogan Assessment Systems, affirms, “whereas it is still somewhat embarrassing to confess to using EHarmony or Match.com, Tinderers are proud to demo the app at a dinner party.” [8] Unlike other traditional online dating, Tinder is more socially acceptable to talk about, show off and use in the presence of friends. Whereas EHarmony is used by yourself and in private, Tinder users are more likely to share their activity on the service with their friends.
The Network Effect
With networks like Tinder (along with Facebook, LinkedIn, Instagram, and others), the size of the user base is always critical to success. Yet with Tinder it was perhaps even more important—since the app is location-based, it’s of very little use without a sufficient quantity of potential matches. In a town with only 100 or so users, the fun would last one or two sessions at most before potential matches had been exhausted. After all, no matter how fun or engaging the UX, a dating site without potential matches isn’t very useful. This is where the collegiate greek system played a pivotal, dual role in growth. Not only was it a rich group of target users to effectively seed supply from, it also had existing dense networks to increase the number of people on the platform in one area quickly. After a couple of sororities started using the app, the word of mouth between the sorority and fraternity houses of that campus would take over, instantaneously increasing the availability of potential matches for users in that area. We’ve talked before about how constraints to the size of the network helped companies like Facebook, Uber and Belly create liquidity in their network. Tinder used the same strategy, but rather than setting their sites on geographic areas (such as cities in Uber’s case) they used the Greek system to both fuel supply and drive network density. Once Tinder had gained a sufficient user base thanks to word of mouth, adoption began to snowball thanks to the network effect—the more users Tinder got, the more valuable it became, and so even more people joined.
The User Experience and Dating 3.0
We’ve talked a lot about the critical role word of mouth played in Tinder’s early growth, but what was it about Tinder that sparked the surge? Beyond being a mobile, location-based dating app, Tinder innovated on and leveraged some core truths about user experience and psychology to make the app addictive and one worth talking about. After all, a mobile dating app on its own doesn’t create this much excitement–the way Tinder is built has everything to do with how it caught fire. Here we take a look at some of those key differences and innovations that make Tinder memorable, addictive and worth sharing.
The User Experience
On the surface, the big difference between Tinder and other mobile apps is how you navigate through potential matches. Matches are presented like a virtual deck of cards that the user “swipes” through. This UX pattern has important implications for the user behavior. First, the experience of reviewing matches by swiping left to dismiss a match and right to confirm a match is satisfying and feels intuitive on a mobile device. It’s easy to do with one hand, making it perfect for moving quickly through a large “deck” of potential matches. Second, by presenting match information on a card, there is more screen real estate available for larger pictures and more information. This type of visual real estate isn’t feasible in a list format or on a small screen with lots of navigation options.
Gamification of Dating and Variable Rewards
Perhaps more importantly, however, is the variable rewards component of the platform. Because it is impossible to see who is next, the urge to swipe is powerful. What if that next card is your perfect match? Variable rewards is a powerful psychological concept used in gambling, and it works perfectly in Tinder as well. People keep swiping to see if they’ll hit the match “jackpot” on the next swipe. To heighten this potential reward even further, there’s the notion that some of the people you’ll be presented with have actually swiped right on you. You don’t know who exactly, but there is a high probability that someone you’re swiping through at that very moment thinks you’re attractive or interesting and has requested a match with you. Tomasz Chamorro-Premuzic argues in an article about the app for The Guardian that “Tinder is just the latest example for the sexualisation of urban gadgets: it is nomophobia, Facebook-porn and Candy Crush Saga all in one.” [8] He goes on to claim that the hookup is merely pretext for many users, while the act of Tindering is as significant as the (potential) date itself. Jamie Parks’ experience, as discussed above, seems to support that notion. After all, people used HotorNot.com for years to merely rate others without the payoff of potential hookups—that is, before it eventually pivoted toward a dating service. Affirming both the social and the gamified nature of Tinder, Wired’s Issie Lapowsky explains, “It’s not uncool to scroll through Tinder with friends, and your non-single friends are all dying to “play” for you. It may be the first dating technology that people in relationships actually wish they needed.” [11]BetaBeat’s Molly Mulshine describes the experience of “Bethany,” who downloaded Tinder for curiosity’s sake after hearing about it from a friend. For Bethany, Tinder was just another addition to her social media routine. Mulshine explains, “After dutifully checking Facebook, Twitter and Instagram, she’d start swiping. Soon, she was even Tindering at work.” [10] Bethany claims to have loved the ego boost that came from being matched with an attractive guy and having him message her, explaining, “When I was on it, I felt a little voyeuristic, a little excited and different. You test the boundaries of what you can and cannot say. I didn’t feel like myself.” [10] In fact, Tinder might have designed a system too powerful. Whereas most dating platforms promise true love and an ultimate exit from the service, Tinder’s value prop is driven off of seeing who’s in the area right now that might be interested in you. Even after a successful match and subsequent dates, the app’s gamified experience creates a strong urge to return and see what else is out there. It’s the fear of missing out combined with variable rewards that makes it highly addictive.
Love at First Sight: The Psychology of Tinder
Bethany’s experience is not uncommon. As Chamorro-Premuzic explains, Tinder enables users to fulfill some very basic evolutionary and social needs:
“Just like Facebook, Twitter or LinkedIn, Tinder enables people to get along, albeit in a somewhat infantile, sexual and superficial way. It also enables us to get ahead, nourishing our competitive instincts by testing and maximising our dating potential. And lastly, Tinder enables users to satisfy their intellectual curiosity: finding out not only about other people’s interests and personality, but what they think of ours.” [8]
Nevertheless, Chamorro-Premuzic goes on to argue that part of the appeal of Tinder is that it emulates the real dating world—in which people make snap judgements based on visual appearance and perception. In many ways, Tinder has an advantage over mainstream dating sites because it is much more realistic. Like making eye contact with someone from across the bar and deciding whether to go talk to them or not, in the real world, most people don’t find out what a potential date’s favorite book or restaurant is until after they’ve assessed physical attraction. This is by design, Rad, the CEO, told Fast Company [22]:
“We want to create experiences that emulate human behavior. What we do on Tinder is no different than what we already do,” Rad says. “You see somebody. You start with their face. If you find a connection, you continue to understand, ‘what are our common interests, our social groups?’ You’re trying to create validation. From there, you open a dialog. Where that goes is up to a person.”
Dr. Helen Fisher, biological anthropologist at Rutgers University, agrees, explaining, “There’s a reason they call it ‘love at first sight,’ not love at first conversation, first smell or first joke.” [10] She goes on to point out that, in many ways, Tinder may be a more efficient place to find a match than a bar:
“In New York, when you walk into a bar, there’s no response. The other people there don’t know you’ve walked in. You don’t know whether they’re looking for a date. They might all be there with wives who happen to be in the other room.” [10]
When potential matches are presented on Tinder, by contrast, it’s generally safe for users to make a handful of assumptions. For starters, that the person is single and open to the idea of meeting someone.
Softening the Blow of Rejection: Double Opt-In
Thanks to the app’s double opt-in feature, the fear of rejection is also significantly lowered. As Lapowsky points out:
“Sites like OKCupid and Match.com have never been able to hack the rejection problem. They haven’t simplified the process much, either, still prompting users to fill out those long and antiquated dating surveys. The process is a drag. Rejection is disappointing. And the fact that you’re doing it anyway only plays into the lonely stereotype that the online dating industry has had such a tough time shrugging off.” [11]
Horror stories from traditional online dating sites abound, many of which stem from the fact that men outnumber women, and women are often inundated with canned pick-up lines from men they would never consider going out with. This says nothing of the nerve required to approach a physical human person, which Tinder also does away with. Though there’s still plenty of terrible pick up lines and solicitations, and a risk of rejection after a match, the bar is lowered tremendously since users know their matches also swiped right for them. Tinder doesn’t pose the same challenge of a site like OKCupid, where women’s inboxes get cluttered with unwanted pick up lines and solicitations. Removing this slog makes Tinder more enjoyable, and the ability to unmatch unwanted matches gives the user control over who talks to them and when.
Maximum Potential Matches with Minimal Effort
Add to all this the fact that people are generally time-deprived and it’s clear why many people perceive a dating tool that exposes them to hundreds of potential matches in a relatively short amount of time as a welcome improvement. Tinder user “Nick” explains:
“You wouldn’t believe how many interesting women are on there. Wildly successful, totally beautiful women just waiting for somebody to ask them out. I’ve been out with Brazilian event planners who are into capoeira, writers, comedians who deal drugs—any combination of people.” [10]
In fact, Nick sees Tinder as “the end of online dating” [10] thanks in large part to its relatively painless signup and onboarding process. Through Facebook platform integration, identity is verified and photos are readily available. Rather than filling out a questionnaire that’s several pages long, new users write a simple tagline. Once they’re in, they can begin looking through potential matches instantly, and the UX couldn’t be simpler—swipe left for no, swipe right for yes. New users are able to go from App store to engagement with the Tinder app in a matter of minutes. Because users don’t have to create profiles, there is simultaneously less work required of new users, as well as more opportunities for extracting value from the service via conversation between matches. This ease of account creation does lead to Tinder’s large bot problem, which we’ll tackle later on.
Externalizing the App with New Extensions
Matchmaker
In June of 2013, Tinder released a feature called Matchmaker designed to allow users to introduce two friends—whether for romantic or other purposes. Once introduced those friends could then chat within the app. This seemingly simple feature opened up new growth opportunities for Tinder. Prior to Matchmaker, users of Tinder could only find matches for themselves. This restriction limited the number of Tinder users to (presumably) single people looking for dates. With the launch of Matchmaker, however, Tinder made the application accessible to those not in the dating pool: married people or those in committed relationships. By playing matchmaker, the company created a new use case attractive to users who couldn’t justify using the app as it existed previously. Now, committed people who wanted to see what Tinder was all about had a feature set that made the application relevant to them and gave them a way to connect friends to other friends via Tinder.
Lists
Then in November of 2013, Tinder launched Lists, a feature that TechCrunch editor Alexa Tsotsis describes as “the first product iteration towards a ‘for all’ use case.” [13] Lists allow users to sort matches into groups of their choosing—for example, “Paris friends” or “people who like brunch.” The update also included support for 24 new languages. Exemplifying the app’s shift toward a broader use case, Rad explained to Tsotsis that Tinder is working on a feature that automatically creates dynamic lists using the app’s relevancy algorithm, user preferences, location, and interests.
Moments
Debuted in June of 2014, the Snapchat-meets-Instagram feature entitled Moments allows users to share edited, ephemeral photos with all of their matches. The new feature not only changes how people use Tinder, it also acts as a re-engagement and retention mechanism for users. Moments allows users the ability to interact with matches in a new way but also re-engage old matches who may have forgotten about them—reigniting old conversations. Of Moments, Rad asserts, “It’s about sharing these moments, and just because you match, doesn’t mean you need to date that person; you could match with a friend who you want to share a moment with.” [5] Users simply take a photo using the app, and the photo is available for matches to view for the next 24 hours. As is standard on the app, matches can swipe right for “like” and left for “nope” on Moments, and users can begin chatting with matches who liked the photo. Users also have the ability to opt-out of seeing their matches’ moments. Along with Moments, Tinder added the ability for users to turn off discover mode, allowing them to still chat with existing matches while opting-out of being paired with new matches. Furthermore, Rad alluded to a feature that will be part of the app’s next release that will “solidify that Tinder is not just about dating.” [5]
International Growth
After impressive growth in the US, the July 2013 launch of Tinder on Android represented a push for international growth. As Mateen explained at the time:
“We have been experiencing an unbelievable growth trajectory in the U.S., and have managed to reach a significant chunk of iPhone users within our target market. As we shift our focus to international growth, it only makes sense to launch Tinder for Android, which owns nearly 70% of the smartphone market overseas.” [23]
By November of 2013, Tinder’s largest international markets were Brazil and the United Kingdom, each of which was growing at around 2% per day and had added over a million users each in the previous two months alone. According to Rad, once the company sees sustained organic adoption of Tinder in a new market, they proceed to augment that growth with the help of “borderline celebrities” who have large networks of influence. Essentially the company would reach out to power users on social networks to get them on the site and promoting their presence on it. Minor celebrities from Miss America to Olympic athletes have all been quoted as using the app in the press, which drives buzz and additional user growth. <a href=”http://www.huffingtonpost.com/2014/03/12/tinder-celebrities_n_4948249.html” class=”citation” target=”_blank”>[30]</a> This has been the company’s strategy in the US, and they’ve managed to successfully replicate it in international markets as well. In Turkey, Tinder also briefly experimented with Facebook ads, but they found that growth stagnated at around 25,000 users and, as Mateen says, “The quality of users was completely different. The growth there was horrendous compared to anywhere else.” [22] Yet after implementing their established “borderline celebrity” method, growth in Turkey picked up as well. According to App Annie, as of February 2015, Tinder was ranked among the top 100 overall Android apps in 23 countries and among the top 100 iOS apps in 44 countries. Furthermore, among Android Lifestyle apps, Tinder ranked in the top 100 for 62 countries, the top 10 for 41 countries, and the top 5 for 35 countries. Among iOS Lifestyle apps, Tinder ranked among the top 100 for 139 countries, the top 10 for 82 countries, and the top 5 for 56 countries. Tinder was the #1 Android Lifestyle app in Belgium, the UK, Switzerland, France, the United States, Hungary, Chile, and the Philippines, and the #1 iOS Lifestyle app in Latvia, Malta, Belgium, Brazil, Lithuania, Iceland, Estonia, Sweden, and Finland.
Monetization
Rad assured Tsotsis in 2013, “We would never add a paywall to the core value, we want that to always remain free.” [13]However, the company has considered several potential means of monetization, including in-app purchases [12] such as charging people to back swipe in case they accidentally swiped left [13] (which the company launched on March 2, 2015) or offering the option of Facebook-style gifts like a dozen virtual roses.[1] The co-founders did assert in early 2013 that they were “confident monetization won’t come in the form of ads.” [1] Nevertheless, in January 2014, Charlie Dewitte of Advancers.org shared the following ad campaign, in which Tinder users were matched with characters from The Mindy Project:
Image via Advancers.org [14] However, contrary to Rad’s claims in 2013 that Tinder will always be free, the company today, March 2, 2015, announced the launch of TinderPlus [31], a paid plan that ranges in price depending on your age, location and perhaps gender. For most users, the service is $9.99 per month and for those over 30, it’s $19.99 per month. Like everything with Tinder, there is some murkiness in just how this pricing model works. The company told Quartz [32]:
“Lots of products offer differentiated price tiers by age like Spotify does for students, for example. Tinder is no different; during our testing we’ve learned, not surprisingly, that younger users are just as excited about TinderPlus, but are more budget constrained, and need a lower price to pull the trigger.”
However, the product itself is straightforward. The service gives users the ability to:
- Rewind to the previous person you swiped left on. (This is one of the most requested features from Tinder users.)
- Passport which lets users look for matches anywhere in the world, instead of just being constrained to their current geographic location.
- No ads. Which alludes to the fact that more ads will be coming for the free service, likely in the form of native ads like the Mindy Project example above.
Tinder as a Channel
With so much growth and hype, it’s not surprising that companies have tried to take advantage of Tinder as a growth platform for their own products through the creation of Tinder bots and fake profiles.
Fake Tinder Profiles
In July of 2013, security firm Symantec reported adult webcam spam on the Tinder platform. When matched with a spam account, users would be invited to an adult webcam session on an external website. Once on the site, users would be asked to input a credit card in order to verify their age, though the fine print showed that they’d be charged if they didn’t cancel in time. [17]
Image via Symantec [17] Since Symantec’s original report, Tinder has made an effort to reduce spam by adding the ability to report suspicious accounts. Nevertheless, Tinder bots have been able to continue to scam users. [17] In April of 2014, TechCrunch’s Sarah Perez reported spambots using the same kinds of scripted chats and external links to attempt to get users to download mobile apps like Castle Clash. [17]
Image via Symantec [17] In addition to apps and webcam sites, the newest iterations of Tinder spambots are fake prostitution profiles with provocative photos and text overlay incorporating terms used in online prostitution ads as well as a URL where users can supposedly connect with them.
Image via Symantec[17] When users visit the URLs on prostitution profiles, however, they are typically redirected to an explicit personals website for casual dating and hookups. Including prostitution terms, URLs, and prices in text overlay rather than the designated bio section allows bots to evade Tinder’s efforts to seek out spam. Whether adult webcam, app, or personal site, Tinder spambots are all part of affiliate programs, and the spammers receive compensation for converting unsuspecting Tinder users into leads. According to Symantec:
“While we do not have insight into the conversion of leads and premium memberships, we do have some statistics about click rates for some campaigns. For instance, from the end of January 2014 until mid-April 2014, a campaign associated with a site called blamcams resulted in nearly half a million clicks across seven URLs. Depending on the offers given by the affiliate program and the number of successful conversions of leads, this particular spammer likely earned quite a bit of money.” [17]
What’s Next for Tinder?
With a premium version launching today, March 2, 2015, it remains to be seen whether Tinder can keep its torrid growth going. The novel user experience of Tinder has been replicated in every type of application possible, and the ever-fickle millennial audience can tire of the site at any moment. While IAC is confident that a paid version of the app won’t slow growth down, there is little question that “free” always grows faster in the mobile space. Because of the company’s unique situation, as a subsidiary to IAC, it doesn’t face the pressure of venture investment and could easily become just another mature asset in IAC’s portfolio. Only time will tell, but because IAC is a public company, we’ll be able to get at least some read into the health of Tinder at every earnings call. Co-authored by Everette Taylor. Special thanks to Ross Simmonds for his early work on Tinder’s content and PR strategy.
Written by: Morgan Brown