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How free dating services can make more money

8/2/2016

 
If you’re one of millions of people who has ever used a “free” online dating site like OkCupid, Tinder, or PlentyofFish, I’ve got a question for you: Would you voluntarily ‘pay it forward’ on a free online dating service?

Online dating is one of the most fascinating trends of the last 25 years.  According to Christian Rudder’s Dataclysm, which I came across while reading Aziz Ansari’s Modern Romance, an average day on OkCupid will generate 200 matches that eventually lead to marriages.  As new dating services have come online, so have new business models.

“Pay to Play”
This is most common in online services founded in the 1990s, like Match.com and JDate.  In general, you have to pay to meet anyone.  While the pitch goes that you can “save” by buying multiple months in advance, what eligible single feels good about committing to using a dating service for the next 9 months?!?
​

“Pay for Premium”
A more modern generation of online dating services provides free access not just to searching for other users and filling out your own profile, but also to basic features that let you actually meet people, like sending and receiving messages.  OkCupid and Tinder are popular examples in this category, and the “Pay for Premium” model may have more potential for growing a larger-scale userbase.  Without a payment barrier, more users may sign up, which can create a bigger network of available singles, and encourage more users to sign up, which can create a bigger network of available singles, and force me to repeat myself:
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So, how can “free” dating services make money, if they’re letting people meet but not making them pay?  A few alternative revenue sources include asking users to pay for “premium” features, monetizing user data, or showing ads.  However, each of these avenues brings challenges.  For example, when Tinder asks users to pay to keep on swiping, it risks breaking its virtuous cycle.  In this context, I’m surprised we don’t see more ads on free online dating services.  While premium features can produce user-generated revenue, they may lower potential for ad revenue and data revenue, if enough users defect to “more free” alternatives.

“Pay for Pleasure”
So what are people looking for when they use a “dating” service, anyway?  The definition of “success” obviously varies from person to person, but what stays constant is the use of some Internet service to meet new people for dates, friendships, relationships, or maybe even marriage.  In a world of online dating services, my hypothesis is that users would be willing to pay money and receive nothing in return, as long as the service asks satisfied users at opportune times.  Some example circumstances might include when matches are made, when messages are read, and perhaps most poignantly, when users deactivate their accounts.

​Many users who deactivate their accounts are quite happy.  The service worked exactly how users hoped that it would, and that's why they're leaving.  How backwards is that?!?  When I deactivate an online service, it’s often because I’m unhappy with the service.  However, when I deactivated my OkCupid account, I had never been happier with OkCupid.  I even took a screenshot of my deactivation process and sent it to the lovely lady who had just become my girlfriend:
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Actual screenshot I texted to my girlfriend
What if, as part the deactivation flow of a free online dating service, users who self-identify as being satisfied are given the option to contribute?  This type of payment would be voluntary, and could involve different options.  For example, there could be a choice between a subscription (lasting as long as the new relationship does?), or a one-time payment of the user’s choosing:
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What a hypothetical 'Pay it Forward' request might look like
Could this work?
At this exploratory stage, my monetization idea is just that: an idea.  To understand how actual users might react, please respond to the poll below!  Also, it’d be great if you could share this post with anyone you know who has used a free online dating service.  Beyond that, share your comments and “Disqus” (shameless plug: we’re hiring)!  Do you think this might work?  Why or why not?

Special thanks to Jamie, Nik, Dana, Dave, Danny, Eric, and Brian for reading and revising a draft of this post.

Be an Expert

3/30/2016

 
This is the fourth and final post of my 4-part "How to Become a Product Leader" series.

A true product leader knows their market, inside and out.  How can you be an expert, if you’re not one already?  Pretend you have a magic wand…
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A Product leader's magic (research) wand
To be a strategic product leader, you need to understand customers and prospects, and anticipate what they’ll need not just today, but also going forward.  From there, you’ll be well positioned to build solutions that will delight current customers, and help prospective users understand that they don’t have to be frustrated.  Your product will solve their problems, and it will serve them better than any alternatives on the market.

When I used to work Bullhorn, two of the strongest product team members, Mitesh Ashar and Kelly McKiernan, built their expertise as industry insiders at the types of businesses that Bullhorn serves.  Specifically, they leveraged real-world experience in the staffing industry, and used that as a foundation to build awesome Bullhorn software that serves businesses like the ones they had worked at previously.

If you’re looking to become a Product leader, how can you be an expert? Put yourself on the receiving end of a product research question that a mentor once taught me to use when talking to customers or prospects:
“if you had a magic wand and could change anything, how would you use it and why?”

Imagine you have a magic wand, and that you can use it to solve any problem.  
For B2C
  • What problems do your customers face as they go about their everyday lives?  Do they get frustrated with the way things are?
  • Why did your customers choose to use your software, or not?  How might they make it better, or what might push prospects to sign up?
For B2B
  • What problems do your customers face as they go about their business?  Do owners or employees spend time and energy on manual tasks or making phone calls when they could otherwise be getting things done?
  • Why did your customers pick your software for their workplace? Why might they pick a different provider, or solve their problem some other way?

If you’re an aspiring Product leader, ask your customers and prospects the magic question.  Understand your customers, how to help them, and how to help others like them.  Be an expert, and use your knowledge to solve real problems.

Have anything to add?  Feedback?  Disagree?  Discuss in the comments, or give me a shout!

Be Internal

1/18/2016

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This is the third post of a 4-part "How to Become a Product Leader" series.

So now we’ve covered two of the most obvious ways to become a Product Leader.  However, they’re two of the toughest, and they might not be for everyone.  Next up, we’ll walk through two ways to become a Product Leader that might be less obvious.  First up: “be internal.”  Before you become Captain, become a key part of the team that you want to play on. Like anything else, the way to get to your leadership position is by starting… somewhere.  Anywhere you can build up trust internally, and prove your ability to
  • understand customer needs
  • work with a diverse group of stakeholders
  • formulate a vision, and 
  • execute
In other words, you can prove your ability from within an organization, from any number of backgrounds.  Here’s a handy chart showing some ideas of where you can started:

Your Background

Target Department(s)

Showcase Project(s)

Undergrad — non technical

Sales / Customer Success

Unbuilt solutions for market-wide needs

Undergrad — technical

Engineering / Quality Assurance

Performance optimization / Feature prioritization

MBA

Product Marketing

Product packaging / pricing / positioning

PhD — Sciences

Data Science

Algorithms with defined customer benefits

Business / other (1)

Operations

Improve internal process

Business / other (2)

Marketing / Analytics

Acquisition trends / retention programs

Use your existing skills to come up with new ideas, become an outspoken member of your team, then carry your ideas to Product Management, and push to see them carried through.  If you have enough passion, and can correctly identify where your firm is uniquely positioned to better serve your customers, you’ll be as able as anyone to end up carrying your ideas through.
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Build Something

12/18/2015

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This is the second post of a 4-part "How to Become a Product Leader" series.

So you've got your eye on Product Management, defined in the first post of this series, but you don't yet have the Product Management title or responsibility.  What else can you do to build up that experience? Build Something!
  1. Be a Product Manager (duh)
  2. Build something
  3. Be internal
  4. Be an expert​
Figure out some problem that you want to solve, then find a way to test if people would be interested in an offering of any kind.  Do this on a small scale before investing too much time or money.  Instead of spending $100,000 on developers or equipment, set up a landing page using Launchrock or a pre-sale page on a site like Kickstarter to see if people are even interested.

Once you're confident that the problem you're solving is one that would pique the interest of other people, begin to formulate a vision of what your potential offering might look like, and bring your offering to life, one small step at a time.

As one example, I'm going to share some early links of Mystery Gift Machine below.  For the first time, I'm publicly documenting the progression of the online present-giving service that I built in 2012.

I built the first versions quickly, and they were hideous and embarrassing.  Like Eric Ries says in his classic entrepreneurship book, "The Lean Startup," the way to build a successful startup is to Learn, Build, and Measure.  I'm building on that here by emphasizing the importance of iteration, recognizing that small tweaks can often provide outsize returns after you bring an initial solution to market.

If you follow these steps and "Build Something" -- whether it's software, a community group, or a non-profit organization -- you'll refine many of the same skills you'll need as a product leader:
  • Defining the problem you are solving
  • Coming up with a list of possible solutions that you could potentially deliver
  • Understanding what would be most effective to the most people
  • Prioritizing your roadmap
  • Working with different technologies/ people / groups to bring your solution to life
  • Iterating!
​
Until next time, follow @AdamStober

Mystery Gift Machine Release History

Version 1, Google Form "launched" as a solo project just for fun. Processed credit card transactions manually using PayPal email invoices: http://bit.ly/trysssy

Version 2, Weebly WYSIWYG design, Wufoo for forms, pre-cut HTML code snippets for Facebook plugin, launchrock for lead generation, processed over $1,000 in gift shipments.  With release of V3, V2 moved off of custom URL to live archive at http://mysterygiftmachine.weebly.com/about.html

Version 3, Heroku/Python/Git as infrastructure for potential scaling, Facebook app to automate birthday marketing, Themeforest CSS template to introduce responsive (mobile-friendly) design, mailchimp for email marketing, promo video to attract press in Boston.com, TechCocktail, and BostInno.  Overwritten by Version 4.

Version 4, Django-powered dynamic gift pages installed to scale order processing, JavaScript timer to automate collection period, Stripe payment processing installed to avoid redirecting to PayPal and lower abandon rate, SSL certificate installed to securely process credit cards on-site, "learn more" pages and Twitter Bootstrap design elements added to help increase visitor-to-customer conversion rate, olark live chat installed to better serve and engage with site visitors, Facebook app removed to simplify user experience.  Currently live at http://www.mysterygiftmachine.com
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Be a Product Manager

12/9/2015

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This is the first post of a 4-part "How to Become a Product Leader" series.

What is Product Management, anyway?  Let's start with the following definition, drafted by Rebbie Hughes, Melissa Appel, and myself ahead of a recent EnerNOC career fair:
As product managers, we shape the future of the company. We are the gate keepers for what products get built, and just as importantly, which don’t.  We prioritize ideas and take a vision to reality, working directly with engineers to figure out not just what features get added or removed, but also how and when.  All the while, we have to keep in mind that with great power comes great responsibility. At the end of the day we have to do what's best for our customers, which means we need to truly understand their daily lives in order to solve the problems that keep them up at night. Working with cross-functional teams, we develop and execute our product vision in order to deliver world-class [energy intelligence] software that our customers love.

For anyone looking to either become a Product Leader or get started in Product Management, it's not unusual to see "Previous experience in Product Management required" in most or all Product Management job posts.  If that's not a classic catch-22, I'm not sure what is.  Given that Product is such a critical role, employers like to hire someone who has been there before. So that's one way to get started in Product Management, though I've seen at least four:

  1. Be a Product Manager (duh)
  2. Build something
  3. Be internal
  4. Be an expert
​
Over the course of this series, we'll go through each approach in sequence.  Meanwhile, if you're interested in learning a bit more, I'd recommend:
  • "Good Product Manager/Bad Product Manager" by Ben Horowitz (blog post)
  • "Inspired" by Marty Cagan (book) 
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    Adam Stober

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