In this conversational segment, Mike Michalowicz and a co‑host explore how misaligned financial incentives undermine the effectiveness of services such as dating apps, healthcare, and legal representation. They note that dating apps earn revenue by matching users but lose it once a match is made, mirroring how doctors in the U.S. are paid when patients are sick rather than healthy, and how lawyers profit from prolonged cases. Michalowicz argues that when a provider’s compensation is tied to outcomes the client desires, reputation and profitability improve. He proposes a new business model for dating platforms where users pay only after a successful, lasting match, aligning incentives fully with the client’s goal of finding love.
Chapters
We were talking about the dating app paradox. We've got these dating apps, but the problem for them is their goal and objective is to match you with somebody and make money from it. But once they match you with somebody, they're out the money because you no longer need to be on that dating app anymore.
I was listening on the radio on the way home, uh, one day about doctors, and someone said something like, sick people make you money. And I sat and I was like, oh yeah, that's a good point. Do you know, this is true, in China you pay your doctor when you're healthy. When you're sick, you stop paying them because you're not healthy. Their job is to keep you healthy. It's interesting, in the US, it's the absolute reverse. You don't pay them when you're healthy, you pay them when you're sick. The question is, or the consideration is, is the client and the provider, the vendor, consistent in the rewards for the outcomes that is desired by the client? Yeah. If I'm being rewarded adversely to it, I may have a moral reason to be of service to you, But I have a financial incentive not to be. We went through a situation where we needed lawyers. I was talking to the lawyer and I said, "Listen, the longer this takes, the more money you make." And they said, "That is true." I said, "So what is the motivation to finish up?" He said, "Well, our reputation. We want you to be happy with us." My conclusion is you want me to be moderately satisfied. If I'm ecstatic, you didn't maximize the money you could make. If I'm angry, you're not going to get a future client. So how can you stretch this out far enough where I have just enough contentment? And I think that is where it goes. And I think these apps are the same. When a business owner thoughtfully structures their incentives to be consistent with the client wants, that's where your reputation excels and you're making money. So these apps, can they find a new way? Like, don't pay us until you find the love of your life. What if they did that? Maybe that's where the opportunity is. Now we're totally in alignment.
