{"id":6644,"date":"2018-02-26T23:39:30","date_gmt":"2018-02-27T04:39:30","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/grindr-unique-positioning-in-the-world-of-geosocial-networking\/"},"modified":"2018-02-26T23:39:30","modified_gmt":"2018-02-27T04:39:30","slug":"grindr-unique-positioning-in-the-world-of-geosocial-networking","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/grindr-unique-positioning-in-the-world-of-geosocial-networking\/","title":{"rendered":"Grindr: Unique Positioning in the World of Geosocial Networking"},"content":{"rendered":"<p><strong>Market of Dating Apps<\/strong><\/p>\n<p>Dating\/geosocial networking apps have become big business.\u00a0 15% of Americans use or have used dating apps (as of early 2016) and the trend has caught on across the globe.\u00a0 Dating services have been popular for decades \u2013 before apps became ubiquitous, there were websites (match.com and eHarmony) and before that there were matchmaking services.\u00a0 Business models have varied greatly in the industry, with some platforms charging a success fee, some charging membership fees, and others simply relying on advertising to turn a profit.\u00a0 Over time, as apps became more popular, the advertising and freemium models have become the most common monetization methods.<\/p>\n<p>Dating apps face three main issues in attempting to achieve scale that I believe are fairly unique to their subset within platform businesses.<\/p>\n<ul>\n<li>First, while scale is important for all platform businesses, I think that the location-based nature of dating apps makes scale important in whatever you view as your key geographic areas. While a company like Amazon can ship to any location within the U.S., dating apps don\u2019t have it so easy.<\/li>\n<li>Second, it\u2019s incredibly easy (and almost expected) that users will multi-home, and not just over the course of a week, but over the course of a few minutes. Multi-homing has absolutely no barriers in this industry.<\/li>\n<li>Third, and most uniquely to dating apps, is the bizarre conflict of interest where dating apps would actually prefer that its users fail. If a user has success and finds a partner with whom they enter a monogamous relationship, they will no longer continue using the platform and the dating app will lose their business.\u00a0 It would like if someone had a timely successful Uber ride to airport and then deleted their account \u2013 it makes for tricky business for the companies looking to leverage and maintain their user base.<\/li>\n<\/ul>\n<p><strong>Grindr\u2019s Positioning and Strategy<\/strong><\/p>\n<p>Grindr is a geosocial networking app that was founded in 2009 targeting men who have sex with men (\u201cMSM\u201d).\u00a0 The company is the market leader in the MSM segment and has become almost synonymous with gay networking apps. \u00a0Grindr, which is one of the highest grossing apps ever, achieves approximately 75% of its revenue from their premium version which unlocks various upgraded features for users.\u00a0 The other 25% of revenue comes from advertisements.<\/p>\n<p>To combat these three critical issues above, Grindr has been successful due to the following features and choices:<\/p>\n<ul>\n<li>Given that Grindr targets MSM, they don\u2019t have to worry as much about users being too spread out as gay and bisexual men tend to cluster into large metropolitan areas. Simply by the nature of their customer, they can combat the issue other dating apps face when their users become too spread out.\u00a0 This might have been conscious choice by Grindr or an inadvertent positive side effect.<\/li>\n<li>Founder Joel Simkhai notes that while multi-homing is inevitable, his company has combatted this problem by being the first entrant into the MSM-focused market, building a strong user base that became comfortable with their simple platform. The company does virtually no advertisement, but word of mouth has enabled the company to scale quickly.\u00a0 The comfort (or perhaps it should be described as an addiction) with the platform has led Grindr to third place among its peers in average sessions per day (see Exhibit 1).<\/li>\n<li>Regarding the conflict of interest between the users and the company, Grindr circumvents this issue but never portraying themselves as a \u201cdating app\u201d where one can find a serious relationship, but as a \u201cnetworking app\u201d. This distinction has led many users to leverage Grindr simply for sexual encounters \u2013 this is beneficial for Grindr because they are now likely to retain users who have successful experiences using their app.\u00a0 Evidence of this can be seen in the Exhibit 2, which shows that Grindr has the lowest weekly churn of any of its competitors.<\/li>\n<\/ul>\n<p>Grindr\u2019s success has been undeniable and ultimately led to their acquisition by Beijing Kunlun Tech, a Chinese game developer, for $240m (note: this was a two-part acquisition; the second part of the acquisition valued the company at $400m).\u00a0 Grindr\u2019s last reported net income figure before the acquisition was $13.7m in 2014.\u00a0 The company has even forayed into traditional media by launching an online news platform for LGBTQ stories.<\/p>\n<p>See this YouTube clip for a look at the difficulties of gaining scale in this increasingly competitive industry:\u00a0 <a href=\"https:\/\/www.youtube.com\/watch?v=0DGl0WCBP3k\">https:\/\/www.youtube.com\/watch?v=0DGl0WCBP3k<\/a><\/p>\n<p>&nbsp;<\/p>\n<p><em>Exhibit 1<\/em><\/p>\n<p><a href=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2018\/02\/Average-sessions.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone  wp-image-6642\" src=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2018\/02\/Average-sessions-300x178.png\" alt=\"\" width=\"366\" height=\"217\" srcset=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2018\/02\/Average-sessions-300x178.png 300w, https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2018\/02\/Average-sessions-768x455.png 768w, https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2018\/02\/Average-sessions-600x356.png 600w, https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2018\/02\/Average-sessions.png 1017w\" sizes=\"auto, (max-width: 366px) 100vw, 366px\" \/><\/a><\/p>\n<p><em>Exhibit 2<\/em><\/p>\n<p><a href=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2018\/02\/Returning-Statistics.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone  wp-image-6643\" src=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2018\/02\/Returning-Statistics-300x172.png\" alt=\"\" width=\"358\" height=\"205\" srcset=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2018\/02\/Returning-Statistics-300x172.png 300w, https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2018\/02\/Returning-Statistics-768x439.png 768w, https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2018\/02\/Returning-Statistics-1024x586.png 1024w, https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2018\/02\/Returning-Statistics-600x343.png 600w, https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2018\/02\/Returning-Statistics.png 1044w\" sizes=\"auto, (max-width: 358px) 100vw, 358px\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<p><em>Sources:<\/em><\/p>\n<p><a href=\"https:\/\/medium.com\/@sm_app_intel\/conquer-love-with-these-crucial-dating-app-statistics-2870ec5493cd\">https:\/\/medium.com\/@sm_app_intel\/conquer-love-with-these-crucial-dating-app-statistics-2870ec5493cd<\/a><\/p>\n<p><a href=\"http:\/\/www.pewinternet.org\/2016\/02\/11\/15-percent-of-american-adults-have-used-online-dating-sites-or-mobile-dating-apps\/\">http:\/\/www.pewinternet.org\/2016\/02\/11\/15-percent-of-american-adults-have-used-online-dating-sites-or-mobile-dating-apps\/<\/a><\/p>\n<p><a href=\"http:\/\/www.scmp.com\/business\/companies\/article\/2095674\/chinese-tech-firm-fully-buy-gay-dating-app-grindr\">http:\/\/www.scmp.com\/business\/companies\/article\/2095674\/chinese-tech-firm-fully-buy-gay-dating-app-grindr<\/a><\/p>\n<p><a href=\"https:\/\/moneyish.com\/ish\/why-on-earth-would-a-pioneering-technology-company-want-to-be-a-media-publisher\/\">https:\/\/moneyish.com\/ish\/why-on-earth-would-a-pioneering-technology-company-want-to-be-a-media-publisher\/<\/a><\/p>\n<p><a href=\"https:\/\/techcrunch.com\/2013\/10\/02\/gay-gets-better-and-more-targeted-say-hello-to-the-next-generation-of-grindr\/\">https:\/\/techcrunch.com\/2013\/10\/02\/gay-gets-better-and-more-targeted-say-hello-to-the-next-generation-of-grindr\/<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>How Grindr was able to leverage network effects and overcome traditional problems facing dating apps to \u201cgrind\u201d its way to a $240m payout <\/p>\n","protected":false},"author":2010,"featured_media":6645,"comment_status":"open","ping_status":"closed","template":"","categories":[1003,1885,424,1253],"class_list":["post-6644","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-dating-apps","category-digital-platform","category-online-dating","category-scaling","hck-taxonomy-organization-grindr","hck-taxonomy-industry-technology","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/growing-businesses-in-the-age-of-platforms-2018\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Grindr: Unique Positioning in the World of Geosocial Networking - Digital Innovation and Transformation<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link 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