"For small creatures such as we, the vastness is bearable only through love."
The search for romantic connection is a universal human experience.
We dedicate a *tremendous* amount of time, resources, and mental space to the pursuit of romantic connection. Yet, in modern romance, the disdain for swipe culture is only deepening. The relentless swipe, match, chat cycle is exhausting consumers. While the likes of Tinder, Bumble and Hinge continue to grow their user bases, these solutions now feel woefully insufficient. In that gap, we believe, lies an enormous opportunity for innovators to construct the future of dating.
Evolution of Digital Dating
Digital dating is older than expected. Five decades before Tinder’s inaugural launch party, computer science undergraduates at Harvard digitized a dating compatibility survey to pair up their Class of mid-1960s classmates. The group, named Compatibility Research, Inc., ran their program on a five-ton mainframe that could not fit in most dorm rooms. The first platform to reach critical scale emerged in the 1990s when Match.com set out to "reduce the whirlwind of courtship to digital science," according to a 1995 profile in Wired. But while Match.com pioneered modern online dating, it was perhaps the second platform that offered the most important contribution to the contemporary ecosystem. In 2000, Christian theologian-turned-entrepreneur Neil Clark Warren launched eHarmony as a conservative alternative to Match.com. In the competition for market leadership, Warren positioned Match.com’s engagement model as trivial – a platform for the uncommitted, unsure, unserious. This established the framework that still defines the market today: eHarmony challenged Match’s ability to capture higher intent daters; Match challenged eHarmony’s lack of generic appeal – specifically, its ability to capture users beyond religious and conservative demographics.
Twenty-one years later, online dating is ubiquitous. Dating platforms are now the most popular way singles connect, used by more than 50 million Americans with an estimated 40% of recent couples having met online. We estimate the global market for dating apps has grown to more than $30B. Match Group, the dating app conglomerate born from Match.com, has become the largest player in online dating with a $49B market capitalization and close to nearly $3B in annual revenue; however, it is not the Match.com platform itself that comprises most of its aggregate user base.
Launched from an IAC incubator in 2012, Tinder has become one of the largest dating apps in the world with nearly 8 million monthly active users in the US and with 80 million monthly active users globally. With its image-based profile and swipe instead of scroll action, Tinder translated the consumer social experience of Facebook and Instagram, the leading platforms for 2010s Millennials, into a dating app; its defining developments now feel, at best, unremarkable when compared to how other domains of the consumer social ecosystem have evolved.
But ultimately, judging the present is easy. Building the future and navigating its unknowns — that is hard. As innovators face that uncertainty, we offer our hypothesis on the opportunities to capture and the challenges to overcome. Our research is focused on Gen Z users who represent the fastest growing dating population today as they age into both low intent (casual) and high intent (serious) dating.
We’ve identified these opportunities and challenges from conversations with entrepreneurs, industry experts, as well as NEA’s own experience investing in other social platforms like Snapchat and Bytedance. But most useful have been our conversations with the users themselves — the young daters whose experiences, matches, and relationships will ultimately decide the winners in this space. These conversations have been twofold: primary research calls with current college students and a survey of young users across the country. For the survey we leveraged Attest, a no-code customer research platform (and NEA portfolio company) that allowed us to customize our audience and generate market insights within just a few days.
Capitalize on customer dissatisfaction: Tinder is ubiquitous. 70% of our survey respondents have used the platform in the past six months. While Bumble and Hinge trail significantly (29% and 18% of users respectively) in usage, all three have overwhelming customer dissatisfaction in common. Tinder tallied the best NPS with a score of -25 which grossly underperforms even the lowest consumer facing industry benchmarks.
With such abysmal scores, it is not surprising that nearly 80% of our respondents are somewhat or very open to trying a new dating platform, confirming the opportunity for a new entrant.
Mere novelty, however, will not guarantee traction or staying power. The next generation dating platform may succeed by addressing the incumbents’ shortcomings – providing what Tinder, Bumble, Hinge, etc. currently lack:
- Scarcity: Swiping on dating apps is entertaining, but its ease fails to replicate the scarcity of IRL dating. In order to demonstrate interest in a partner pre-Tinder, daters had to exert time and energy – two of our scarcest resources. That exertion not only signaled interest, it confirmed it. Conversely, in swipe culture, daters exert mere seconds to review a profile and swipe accordingly, making it possible for users to garner hundreds – even thousands – of matches.
- Context: While dating app profiles have become more multi-dimensional, integrating responses to prompts and voice notes, it remains difficult for users to get a true impression of people through profiles. As one survey respondent lamented, “I just wish there was a better way to get a sense of someone’s personality.”
Data in dating: The amount of consumer data collected online enables platforms to form deeply complex matching algorithms. That said, there is something dystopian about technology determining who users need to meet. With the iOS 14 data privacy changes and Cookie-pocalpyse on its way, consumers and builders are more focused on data privacy and ownership than ever before. There is a needle to thread here – we envision success for a company that gives consumers true ownership over their data and leverages that data to ease the pursuit of romantic connection.
Expand geographic reach: Given Gen Z users are more comfortable with “digital dating,” the need to meet in-person is pushed further out on the romantic timeline. Therefore, the need for geographic proximity becomes a latter rather than initial concern. 54% of respondents are open to seeing profiles of individuals from another city and more than 75% are open to seeing profiles out of their immediate community or neighborhood. This phenomenon should ease the need to build user density in a given geography.
Reflect generational behavior: Hinge’s iconic “designed to be deleted” marketing slogan reflects legacy platforms’ ambition to digitize matchmaking rather than dating itself. These platforms incentivize users to convert online matches to offline relationships rather than cultivate the match online. The services’ role almost begs a different nomenclature – not a dating app, but a matchmaking tool.
As younger consumers become more comfortable maintaining online interaction and boundaries between digital and IRL experiences continue to blur, the dating app of the future should extend beyond the singular match and into digital dating itself.
The extension of digital dating is just one of many dimensions along which the dating platform of the future can better align the next generation’s digital behavior. Others include:
- Content Type: Existing dating apps like Tinder, Hinge, and Bumble reflect the static, image-based structure of prominent legacy social media platforms. Next generation social platforms most popular with Gen Z users like TikTok and Snapchat enable more dynamic content like videos and filters. Dating platforms of the future will not only need to meet these Gen Z expectations around dynamic content and engagement, but enable those pieces of content to expand the depth of a user’s profile, both complementing and supplementing text and images.
- Authenticity: Incumbent apps enable users to selectively share the very best reflections of themselves. A Hinge profile, for instance, requires six photos – no more, no less. Like a Facebook profile picture or an Instagram post, digital profiles are interpreted to be more manicured and selective rather than accurate – reflective of the best you, not the real you. Among young users, higher social media usage has widened the aperture of self-representation that users share to include informal, low quality, and mundane content. Therefore, only profiling the best representations of a user’s analog self (e.g., the best photo from a tropical vacation) reflects a digital inauthenticity. Dating platforms will need to enable users to represent themselves spontaneously with features like stories.
Leverage new acquisition channels: Across each evolution of dating platforms, leading businesses have leveraged new acquisition channels to meet the next generation of customers. “We’re bringing classified ads to the internet,” Gary Kremen, Match.com Founder said about their marketing strategy in the late 1990s.
A decade and a half later, Tinder organized costly launch parties in inaugural cities across the United States featuring celebrities like Jason Derulo. Bumble developed an expansive network of brand ambassadors (typically college students) to promote the dating app on Instagram on their local campuses. Next generation platforms can leverage the organic virality that can accompany high quality content on new digital and IRL channels. For example, high volume, video-based engagement can enable marketing teams to illustrate their platform’s value proposition in more depth than before.
Overcome incumbent network effects: Dating platforms are network effect driven businesses. Part of the consumer value proposition is access to a larger pool of potential partners and, theoretically, a higher chance that you’ll find a good match on the platform. The incumbents, as unloved as they are, continue to attract new users because they already represent the digital watering hole for daters. This is a big challenge. But it’s surmountable. Users are eager to try a better product, and will be more sticky once the pool size is built to sufficient parity (such that the difference in size is not felt). New winners will need an aggressive go-to-market strategy and smart growth hacks to establish a sizable user base quickly.
Bridge the present and future: Contrary to perceptions of Gen Z consumers as video-first users, most respondents would prefer more written content (rather than photos or videos) of potential matches in evaluating their profile. Similarly less than a quarter of respondents said video best allows them to evaluate a match (vs. photo, written content). The contradiction between the survey results and stereotypes emphasizes the danger of mistaking the cultural vanguard for the norm. The dating platform of the future then cannot just be the destination; for most users, it must also be the bridge -- a platform that balances familiarity with innovation.
Solve the intentionality paradox: When the telegram connected the United States in the 1850s such that word could spread from Maine to Texas in minutes, American naturalist Henry David Thoreau asked – but what if “[people] have nothing important to communicate?” So goes contemporary dating platforms. In the domain of online dating (even more so than telegrams), the enablement of open and constant communication alone is not enough, particularly for the next generation of daters.
For these users, youth combined with a defining aesthetic irony has created a persistent unintentionality — a certain “this is all just for fun” attitude — on dating apps. It then comes as no surprise that nearly 45% of our respondents reported that less than 1 in 10 matches end in offline dates
One respondent lamented, "I feel like I always get more of a ‘game’ vibe rather than focusing on real, genuine interaction." If pursuing a match necessitates either party showing some kind of commitment or intentionality, the dating app of the future will then need to accommodate that Gen Z digital behavior while still incentivizing intentionality. In other words, the dating platform of the future will deepen shallow tendencies — make matches of strangers, people from profiles. In this market, messaging is a commodity; meaning is value.
Solve the gender gap in content sharing: As platforms experiment with new primary forms of profile content (e.g., video rather than image), we already knew there were greater challenges getting male users to upload videos than female users. For example, more than 60% of TikTok’s user base and over 55% of its creators are female. However, our respondents showed that there is more nuance; It was not that male respondents had no videos, but rather that their repository of videos tended to be more informal, more intended for laughs or friendly making-fun-of, and more safeguarded for their inner circle. Accordingly, among our primary research cohort, the frequency that interviewees post public stories is lopsided; the rate interviewees post private stories is even. The challenge then is not inducing male users to take videos; it is inducing them to share existing ones.
Big problems create big opportunities. The quest to find love touches everyone, and is certainly not going away. The role of digital dating platforms in modern romance remains critical, but the incumbents continue to grow despite broad customer dissatisfaction. There must be another way.
NEA makes no assurance that investment results obtained historically can be obtained in the future, or that any investments managed by NEA will be profitable. To the extent the content in this post discusses hypotheticals, projections, or forecasts to illustrate a view, such views may not have been verified or adopted by NEA, nor has NEA tested the validity of the assumptions that underlie such opinions. Readers of the information contained herein should consult their own legal, tax, and financial advisers because the contents are not intended by NEA to be used as part of the investment decision making process related to any investment managed by NEA.