150. The Business Model Behind Dating Apps & Ben’s Dating Experience

Ben, mate, I seem to remember there was a time where you hired a coach, a certain coach Ben, to help your Tinder profile.

Oh, we brought that up. You got to work on your cold outreach strategy as well. You're to build a sales landing page for yourself. Welcome back to another episode of the Ben and Bergs podcast. I'm Ben, your favorite high school dropout and founder of Collective Shift alongside Ms. Bergs, your favorite MBA and CEO of Collective Shift. Join us as we bring you world class crypto research and strategies to help you dominate this crypto bull market as well as behind the scenes view of us scanning a fully remote subscription research business here in Australia. If you like the podcast, we'd love for you to share it around, give it a little follow or a subscribe if you like it. That's how we grow the podcast each and every week coming to you with zero advertisements. Now Bergs, today we're talking about the opposite. We're talking about advertisements, we're talking about upsells, we're talking about the business models of dating apps. Now you and I are in different stages of life.

Fair to say, fair to say. I am recently back on the single single train as a few months back and I'm back on the apps mate. And my goodness, the business models on these things are great. They've up. I think I've improved since I was last single. This is, I, I like the, I like studying the business first rather than the product.

Sure mate, sure.

I mean you know the benefits of the apps are good too but we'll talk about that. But the business model on these things mate, are built for upsells. These things are like squeezing lifetime value and order value out of the user because the more you want to meet a girl or a guy, whatever you're into, the more chances of success you have are based on the more you pay. So basically these apps are fully built with features, upsells all of it subscriptions to make you pay more which gives you more opportunity to meet other people. It's the dopamine, it's the cycle, it's the loop, it's everything. It's brilliant.

I love it. I love the human psychology behind it and I love how they've actually how they build these products. Now I've not used dating apps, you've used Tinder and maybe a few other ones. Why don't you talk us through what the app is like, what the experience is like, how do you match? How does it all work?

This is fascinating. Right, so yeah, you, you Grew up in an era with no dating apps.

No.

Okay. Wow. I, I, I, I grew up in an era where you don't go and talk to girls.

Mate.

Like, isn't there an app for that? I have to go talk to you.

It's funny though, like, right, like me and my buddy, we went, we went on the weekend and it's like, know when, when you go out to a, a bar or a club, like, you know, you, it, it's, it's, it's a different strategy, right? You, you've actually got to like, there's no profile, there's no, like they don't know who you are. They're not searching your Instagram. It's like, no, like you go up and you start talking and you know, we had a good night. We, you know, you got to work on your cold outreach strategy as well.

Yeah, cold outreach strategy. Oh, this is fascinating because. Okay, so back in the day, so I started uni in like 2001. Let's go from there, it would have been 17. And back then it was like we didn't have smartphones. We had like those dumb phones, like those old Nokias. You could text people, you could call people. That was about it. Not everyone had a phone. And you would just organize stuff. Like, so I used to work at Kohl's, like all my mates here, like Josh Alley. And then like 20 other people used to work there and we'd all just go out. Like we'd plan on the Friday or Saturday, whenever it was, I would meet up, meet up at someone's house, have pre drinks and then someone would live like, you know, near the city. Then we'd walk into the city, go to different clubs and yeah, just meet up with people. It was amazing. You didn't always have a phone on you. You just kind of knew where people were and where they'd hang out, like where they'll go on different days. And then at uni, it was always just everyone met up at the pub or like the main area was called like Bushcore. You just meet up there and if you, if your mates weren't there, they didn't have a phone, you just kind of walk around campus till you found them.

Yeah, that's cool. Yeah. So, so there's still like definitely that, but I guess it's less.

What'S the word? Like that, it's less organized in that sense, you know, like, so for, for on the weekend, for example, my buddy and I, we, we, we went out to a bar and like we, we met some People there and you know, it, it, it's great. I love that, like, it's natural. There's no like, sort of like these artificial social status games that you play of like, you know, needing to meet a certain social criteria to, to even like meet with people. Like all of that is so built these apps and like, I think like the modern day dating life, like, it's about status, it's about, you know, the, I mean, not for everyone, but like, it certainly is built around that, if that makes sense.

Yeah. Your digital online presence. Who is this person? Who are they before I actually meet them. Right, yes. And even like back in 2001, 2002, like I was online since 95, you would not know who I was and the things I was doing because completely a non. And even Facebook was real shitty at the start. We had things like msn, which was a chat app that was built into Windows and we're all studying computer science, so we knew a lot of science people. They were kind of like online. You, you know, at night you'd chat on that. You'd be like, oh, you know, what's going on? What are you doing? Kind of thing. Or if you're out drinking, you're at a mate's place, MSM would be open and then all the other mates would chat there and you'd all meet up. And that was about the extent of it. Facebook sucked for ages. No one really used it until they. Until mobile phones really, like where you could have a smartphone. So I got the first iPhone, I think in 2007, and shortly after Facebook came out, it was a 3G phone. You could take photos and then you could tag the location of where you were. And that's when Facebook really took off because people could really flex of, hey, I'm here, I'm with my friends, I'm doing this. And then they start to build their profiles from there and start to suck other people into the platform.

Yeah, makes sense. So, so like the way these apps are built now, like, you know, basically.

I mean, it's kind of crazy because it basically there's just unlimited opportunity. Like there's literally, I would say, I don't know what the percentage is of like, you know, people in their 20s on these dating apps that are single, but I want to say it's pretty high. And you basically, you build a profile. There's like, depending on the apps, there's different prompts and photos and you can use audio to use video. And basically you've just got to build like, it's like, it's. It's like a landing page, right? You gotta build a sales landing page for yourself. And then depending on the app, there's different ways you can connect with people. Right. So there's Tinder, which is like, you know, the main one that everyone knows. It's kind of dirty, kind of like just. I don't know, it's just.

It's just.

I don't really use Tinder. It's kind of gross. It's just like, basically. So hinge is like. I'd say, like the main one. Hinge is like a bit more. I don't know what you. What the word is to use. It's like people be more serious. Like, there's people you have to put in effort, basically. So you can swipe left or right, but once you connect with someone, like, you actually have to, you know, deliver, like, some sort of somewhat meaningful, thoughtful message before. Like, you'll get sort of an interaction. Start a conversation going. Yeah, With Tinder is very transactional. And then the other one, which is an interesting model, it's called Bumble. And Bumble is where the girl has to message first, right? So the guy actually can't message you first, so you swipe left and right. And if you get a match, the girl has to message you first, which is kind of an interesting dynamic because that's not really normal in social settings. Right. It's usually the guy that goes and, like, prompts the message. So that's always interesting because the girls always have just an awful first message. It's just like, hi or hey or like, like, how are you doing? It's just like, oh.

Interesting. Power, dynamic, power shift there. Yeah.

So that's kind of interesting. But basically the, you know, the way it works is that on most of the apps is that you. You swipe left and right, and if you match with someone great, you can message. But.

Depending on. Obviously it's down to looks really at the end of the day because, like, it's. It's really. That's what they're looking at. Unless they scroll deep into your profile, which kind of happens on Hinge. But on, like, Tinder, like, you can't even really see the profile. It's like, bang. It's that first photo left or right. Like, it's instant, less than a second decision. Right? So, yeah, if you go deeper on the message, then it's about.

How you can sort of like, yeah, communicate with these people in an organic way. But what they built is these business models behind it where you can Basically increase your chances of getting matches or getting yourself in front of those people. So one of the ways is through like you can boost your profile. So it's like paid ads, right? So you can put money behind your profile to get more views or potential matches. Now for some of the apps, like I think hinges up to like depends. Now there's, there's different time periods as well. So you can get them for like one hour, which might be, I don't know what it is, maybe like 10 bucks or 15 bucks for one hour. Or there's like a 24 hour super boost which is like $50 and it promotes you for like 24 hours. But then there's like things like normal likes and super likes.

Yeah.

So like if I like you burgs, you're gonna, I'm gonna be amongst everyone else. But like, if you want to super like someone, then you gotta pay for that as well. But that's an interesting dynamic as well because then you start going to like social games. It's like the idea of someone super liking you kind of like that, I don't know, like that's kind of like, that's kind of creepy.

So I, I listened to a podcast with Brian Norgaard and he's the ex chief product officer of Tinder and he created the super like, ah, yeah. And he was talking about it and he was, they were doing a whole bunch of different mechanics and all he really talked about it wasn't the tech, it was the human psychology behind it. Like, you know, yeah, you get a revenue stream. Yeah, you get money. But can you imagine like in this field of noise and everyone liking everyone, you having 50 likes and all these different people, you got to look through their profiles. But then that one person pays that whatever it is a dollar to super like you and the feeling that they get sending it, but then the feeling that the recipient gets when it pops up on their screen and that person is immediately in a different league to everyone else was just so fascinating to me.

Okay, so the way it works, right, because I've received a rose. Basically the girl sends you, oh, this is not hinge. Right. So hinges, they're called roses. So you get sent a rose and she sits at the top of your profile. So when you load up the app, she's not like a small two by two square, she's one of one, she's at the top. You see her every time you load up the app, unless you decline or approve her. And then you go into a message. So the rose elevates you in their profile now, it's such an interesting dynamic because I've seen girls hinges and then compared to guys hinges completely different, right? Because girls are just swamped with dudes. Like hundreds of dudes I've got like matches with. Right? Because all it's like against the dynamic of like, you know, guys are in this sort of chasing mindset. I feel as though the girls just kind of have endless choices where you look at a guy's hint and you know he's got nowhere near as many options as. As a girl. So yeah, then. Then they've built in these like subscription models, right? So where you've got the upsell of the. The super likes the. You've got the upsells of the boosts and then you've got these subscription services where they tie in like it all together and there's different levels of subscriptions and then they really, they really. You should see the discounts they offer for like yearly memberships. Like we're talking 80% off for like a year or if you get like a week, it's just like absorbently expensive. So they're trying to lock people in for a long period of time.

Well, this is interesting because if you think about a dating app. Well, let's. Let's do dating and not hook up app. A dating app is like the goal, I guess is to find someone to stay with that person. Right? Like find the one. Whatever that means to you. But as soon as you do that, you're no longer a customer of that dating app. Yes. So they have to try and lock you in for a longer period of time and get you to pay upfront.

And you know what's so interesting? Right? And I think the hint, I'm not sure if the hinge is like mission statement or tagline or whatever. It's like when you download the app, it's like the dating app we want you to. To we want you to delete is like their. Something like that is like they caption.

That's what they say. But they don't. Not at all.

Not at all.

And think about it. So to attract users, they've got a freemium model, right? Like I'm assuming all these are just free to sign up to.

Free to sign up. Oh, the interesting one though. But this is what happens Berks, because girls will swipe, swipe right on you, but you may not have swiped right on them just yet. So what it comes up with, it says, oh, Berg says 14 girls that have swiped right on you. Do you want to See who they are. Upgrade.

This is LinkedIn trying to sell me LinkedIn Premium, mate. I'm like, I don't care who's viewing my profile. I could not give a. Like, I don't care. I'm not paying the money. Go away.

That's the same model, though, right?

Yeah. So they got the freemium, they got in app purchases, longer subscriptions. They integrate ads as well. There's so many different revenue streams. It's just completely fascinating. And Ben, mate, I seem to remember there was a time where you hired a coach, a certain coach, Ben, to help your Tinder profile.

Oh, you brought that up. Where. What episode was that? Burgs. I think for some of the new listeners, they may not have. May not have heard that episode.

It was a while ago, Matt. It was at least a year ago.

Yeah, I think we'll have to search that up.

I think it was one where you spent $50,000 on coaches or something like that. One of them was a Tinder coach.

I'm guessing, like, because of the way you look. And you're just a generally boring guy. 49,000 of that, 50,000 would have been on your Tinder profile, mate.

All 50. 50 was on my profile. Nothing else.

But from memory, it was incredibly cheap. It was like few hundred bucks. And you got, like, pages of feedback of how to improve your profile.

So. So basically, I think about it like a business, right? You're in a very competitive market. Endless, endless other guys, right?

Red ocean, mate.

Red ocean, right? And my looks is not getting me into any blue ocean anytime soon, right? I'm as a red as. I'm as red as it comes. So my unique value propositions are not going to come through my photos, right? So I need to upgrade my landing page to get a high conversion rate. That's how I think about it. How do I do that? I'm going to find someone who knows how to do that, because I don't. So I hired a coach who basically analyzes your profile. You send her a bunch of photos and she helps you pick out the photos. She used to work in one of their big dating apps, and she's like a site psych background. Analyze your photos to build a profile that has the highest likelihood of convincing a girl that you should. That they should swipe, right? And that includes the bio, the questions, the prompts, everything. And it was interesting because last time I did it with her, it was for a relationship I was looking for, like, you know, I wanted to date someone. I wanted to get, you know, get involved with someone. Now I, I'm, I'm not looking for, I'm just, you know, wanted to catch up and have some fun and sort of meet new people.

Yeah.

So it was interesting to go back and get the optimized version of like the less.

I guess, like not professional but you know, less involved version of the profile. Less serious.

You're targeting a different customer segment.

We are targeting a different customer segment. Exactly. It's a different profile. And because you create your profile, you have to select like what you're basically after in a, in a, in what, what are you doing on the app? You know, you're looking for long term, you're looking for short term, you're looking for friends, you're looking for like what are you looking for? And then basically the algorithm matches you up with other people that are looking for similar things. So I mean it's just, it's so fascinating. It's literally the opportunity is endless in a sense of like how easy it actually is to meet other people. It's kind of scary when you think about it and it's. The more money you spend.

Well, it's a huge problem. They're solving two problems I think, loneliness and social awkwardness. I think as we use more and more technology, more connectedness is done from your home rather than in person. It's more difficult to go up and talk to people or have a conversation or people are scared or they're anxious or they're not really sure what to do. That's on both sides. Like men and women. Like it's not just, you know, one sided. Like people are genuinely awkward these days.

Yeah. And I kind of like it because I'm not a big text, I don't like texting people. Like it's more like we'll connect up, we'll see if we have some stuff in common and then like let's just, let's go catch up, let's do like drinks or dinner or whatever and we'll just, you know, vibe it out and see what happens. Like that's, it's, it sort of just takes the hard work out of the first initial phase and then yeah, you know, you still have to meet these people. Like I'm sure some people try and do it without actually meeting somebody for a while but like that's kind of weird. Yeah, it just takes a lot of the hard work away. Automates the, the top of the funnel books.

So good. So good mate. Cracking business model, man. I think it's a market that's just only going to expand.

Well, I must have. I mean, it must be one of the biggest. I mean, how. I think I had a stat here from. From Tinder. How much revenue they were doing? I think they were doing one. Yeah. One point. This is a little while ago in 2021, they did 1.6 billion revenue up to 7 prior year. Insane.

Even just the marketing dynamics, it's interesting where you kind of had a monopoly with Tinder. You know, the first to kind of do everything. You had other dating apps and like online websites as well, but that was the first one to integrate swiping, and that's when the droves came in. But then people start to see that it's easy enough to copy or have a slight point of difference. It's moved from a monopoly to more like an oligopoly where there's like three or four main players.

Yeah.

And the top, like three or four apps, you don't go to app 5, 6, 7, 8, 9, 10. And they just dominate the market. And I'm guessing, like each of them would have their different proposition where it's like dating or hookups or the girl messages first or whatever it may be 100%.

It's very split between that. It's like Tinder's like a sort of transactional, pretty, like, slimy sort of platform. Bumble girl messages first and hinges, sort of a more serious platform. Like, that's kind of the. That's kind of the top three. There is the celebrity version, which is called Raise, I think Raise or something like that. Basically, you have to be invited to go on the platform. It's like, what the celebrities.

I've seen that. Yeah, yeah, yeah. People were hunting for that on Twitter and I'm like, ugh, gross. It's like you're like a. You're just the average Joe pretending to be rich and you're hunting for an invite to, like, get on this, like, super exclusive app.

A couple of my buddies were on it in their 30s. And yeah, it's just. I don't know, it's. They say it's pretty. It's pretty wild. Like, it basically now. Now you're. Now you're a very small fish in a large pond of like, hedge fund.

Family office dudes with, like, no money. And now you've got to compete because that's like, amazing. But yeah, I mean, the, the business model.

Yeah.

Wild and also just like it's, It's. It's so interesting creating a pro. It's like creating a LinkedIn profile, like your resume, but you're for yourself and your dating life. It's such a, interesting thing to actually exercise to do. Like, like how would you, if you were single, how would you sell to someone cold not knowing who you are, why they should swipe right to you, you know what I mean?

Like, that's crazy. Yeah. And then you're going to attract a certain type of person that, that resonates with. So you got to really think about what kind of person do I want to be with and what's important to them and do I have those qualities?

Do you know, do you even know what you know? Like in 90, I'm gonna say 90 of 20 year olds like in their 20s, don't know what or 30s or however old you are in it. You know what I mean? Like they're single, don't actually know that.

So wild, you know, I'm just happy I'm not in that game, man. It sounds too complicated.

Oh dear. Interesting. Leave it there, will we? Anything else on the.

Oh, I did see one other thing where they built in virtual gifting now as well. So I saw that on a couple of the apps. Did a quick Google before the episode, which is really interesting. I'm guessing that's like super likes, but you might be able to send people things as well, which is like now they're moving like, okay, great, we've got subscriptions, upsells, you can promote yourself, you can get boosted, you can send a super like. But what if you want to send something else, right? So it's like, yeah, like virtual gifting. So obviously you know, you don't have their address or anything. You wouldn't send them, I don't know, flowers or chocolates or whatever. But you could send them like additional things. I don't even know what those things are, but it's going to be interesting. It might be like, I don't know, an itunes voucher or something. Like I've got no idea. But that is really fascinating.

What if they'll take a Moonbirds NFT, bro.

It's like 0.88.

Is it 0.8?

0.8, bro.

Wow.

It's disgusting.

I got out of there. Got out of there. As you start selling it. Yes. You use dating apps to offload you, you, you just. Your dirty NFTs.

Do you reckon they'll integrate NFTs into dating apps? Like you could have literally, like I own these NFTs attached to your profile.

What's interesting, right? You start thinking about it. It's like you start, you're starting to go in the realm of like only fans, where you, like, you're sending someone money for their attention. Like, do you think it will get to a point where these apps integrate you sending the money? Or is that, I mean, that's pretty, that's pretty wild.

That's kind of where I was going with the virtual gifting where it's like, you know, you send someone money. I could see that, like as a. I can see that happening. Like, you know, where people do that, where you can pay people to go on dates with you or something, or you want to flex and say, I've got heaps of money, I'll send you some. Like that happens over like Instagram and everything else all the time. Like, why wouldn't you build that into a dating app?

That's. So what do you think that would just like, not like, if we think about the target audience of like Tinder and like Hinge like these. I'm going to say primarily 20s, maybe early 30s. Like, is that something that their target audience even has the money to do? Like, like, are you budgeting money in this economy to pay for girls to go on like a date with you?

Well, this is interesting because it comes into like sugar daddy, sugar mama type thing, right? Like, I'm guessing some people would be looking for that. Maybe that's a whole different app and maybe that already exists. Whereas, like, that's just what they're after. They want to go on really expensive dates, be bought a handbag, you know, all that kind of crap. And the people their age can't afford that. Or that's just what they're looking for for their lifestyle.

That's wild.

Or the guy side of that as well. Just be like, you know, taken care of, bought whatever you want and have some fun along the way.

Because that's kind of like what only fans is. But it's one way. Like, you know, you have these people that create profiles and create content that you have to pay for. And the more you pay for, some people, they'll do like personalized content for you.

Yeah. Exclusive content. Yeah.

But this is kind of like a two way. Like this is not just like a one to many. This is like a one to one. You're like incentivizing them to meet with you.

So, so interesting. So one of one of the doctors I used to work with, and she wasn't that old, right. I think she was a bit offended by this, but she was just like, only her, like, oh, 30s. And she went to.

I can't remember. Let's just say Brazil. And she was like walking around English, English girl. And she's, she was pretty good looking, man, I'll be honest. Like, she's not, you know. And so this guy comes up to her and he's just like, oh, you looking for a boyfriend? Like the time that you're here? And literally what they would do is like, they would just go around with them and then like the rich travelers would just buy them stuff and then, yeah, they'd be their boyfriend for like the couple of weeks that they were there kind of thing. And I'm wondering if like a digital version of that exists.

I mean, it kind of makes. It has to, right? Like, it kind of makes. I mean, I guess that's maybe what Instagram's. Well, not really built for that, but like, you know what I mean? You can. Again, it comes back to social status. Like if you see.

Well, here's one for you. So like, super, like, right, okay, you shoot to the top of the list. What if you send them 200 bucks? Would you shoot to the top of the list?

This is interesting. What if the app shared or had a revenue share model with those that got the super likes? Oh, because I'm effectively paying the app to give you the other person that digital asset, but the middleman's taking all the money. So what if we could build a decentralized version of this where we actually share the revenue with the people on platform? So if you're receiving those super likes or your profile is coming up, when we boost our profile, that revenue is shared to you.

I think Tinder should do that if they're not already because that incentivizes the supply side of people to get on that will get the most super likes and then people buy them for those people. If you're getting a revenue share, it incentivizes you.

Do you think they just get like canceled online though, for like even doing that? Like, they're basically promoting girls to be paid.

Yeah, see, this is, this is more where it fits in with their long term vision of their business and their mission. Do they want it to become like Instagram girls on Tinder so they get lots of super likes, or do they actually want it to be that people have really good dating or hookup experiences? It depends what the metric is that they're after.

Yeah, because I'd say that's going to knock out so many people in the market and not even be able to afford to do that.

Yeah, fascinating, because then you've got to.

Pay for the date as well, man. Don't forget that.

This is an expensive. It's an expensive wine.

It's just top, top of the funnel sorted. And then as you progress down the funnel, mate, and more and more money, mate. And then, mate, wait till like, it's. It's years on and then you get engaged and then you have a wedding and then you have a house and then you have kids. Oh, mate, it's all downhill. Like, seriously, you get pushed further and further down the funnel. P and L is just like negative, mate. That's all you got in your head. It's like, what are you thinking about? Negative. P and L.

I hate to see your balance sheet, mate, but.

Oh, bro, bro, actually now, balance sheet's healthy. P and L, the cash flow, mate.

Yeah, mate, you got assets with no cash.

Yeah, that's it.

You can't even write any of it off. That's the worst thing.

N. Mate, they should. They should give tax advantage. They do slight tax advantages for being married, but they need better ones, man. Like, or if you have kids, get some tax incentives around it because it's all downhill. You just get smashed. And as you get older, you earn more money. Your top tax bracket.

It's just using post tax dollars to go on a date with a girl that doesn't even like you.

Oh, you're basically getting bloody 30 cents on the dollar, mate.

$60 steak that cost you like, actually like close like 100. It tastes great. I love it. Thank you, Australia.

Can you pay my Uber home?

Thank you, Mr. Tax Man.

This is.

This is my only date I could afford this month.

I'm losing my house tomorrow.

And she's there just to eat the food and leave. She doesn't.

Oh, mate.

Rip.

Oh. Okay, I'm going to. I'm going to start Ben's Dating Pty Ltd company just to amazing expenses.

Okay, rubber there. Bit of a fun one, guys. I hope you enjoyed that. If you've got any experience on dating apps or business ideas, please let us know. You can tweet at us at Baby Backberg on Twitter or at Ben Simpsonau. Or you can follow us on Twitter at Ben and Bergs. And thank you very much for listening and we'll see you on the next episode.

Thanks, Jbinson.