When Should #Startups Avoid An Industry Like Online Dating?

About 2 weeks ago I attended iDate 2016 in Miami Beach as a speaker. This is the most important global online dating industry event. I have been in and out of the dating industry for almost 15 years, and I am still a partner in the largest speed dating company in the US, Pre-Dating.com.

I am not saying you can’t be the next match.com. I am just saying you have to do something so completely different and unique and often on a new platform that you are not actually competing directly with them and other industry leaders.

About 12 years ago I was listening to a speaker talk about how every technology boom goes through a “gold rush”. They all end up the same. He was referring to the growth of the Internet. There is a common history of every tech industry growth from oil to cars to computers to the actual gold rush near San Francisco. Several hundred or thousands of competitors start out. Among them a few, maybe 20 compete for early leadership and success until there is 3 to 5 leaders through failure and consolidation. Many lose their shirts. Finally these few industry leaders consolidate to 1 or 2 companies. We have seen it happen in the online dating business for instance. It is always the same, high-growth, drop-outs and then consolidation!

So, when I say the dating industry has consolidated to 1 or 2 leaders it is a real thing. Match.com owns not just Plenty of Fish but also Tinder and OkCupid as well as SpeedDates.com. There is one company with the power to control the industry and they use that power effectively to buy you out or compete to eliminate.

The same is true of 50 Internet industry icons. Let’s use Google as an example when it comes to Search Engines. And WordPress when it comes to website making CMS software. And Microsoft of course when it comes to productivity tools. And Apple/Samsung when it comes to Smart Devices. Facebook when it comes to social networks.

So the real question is how do you know to stay out of a consolidated industry? And more importantly how to do compete in a monopoly or oligopoly business environment?

Niche
The point is that you have to either avoid these consolidated industries or enter a niche if you are going to succeed as a startup. You can can still succeed as a startup, but you can’t just enter the fray today as a copy of match.com and call yourself BetterMatches.com without a specific niche or guerrilla marketing strategy that make sense. And you have to set you sights a lot lower in certain industries. You are not going to be the next Match.com most likely. However, there are a few exceptions, but they are rare. Entering the market as Farmer’s Only Dating is a brilliant. It is not Match.com, and it serves a niche market! Just avoid the obvious mistake of mimicking successful companies in industries that are already consolidated. That is a dead end over and over again!

A New Platform

A classic way to do this has been market entry via a new platform. The big question always is, what exactly can be defined as a new platform. Every once in a while a new platform comes along to enable an entry point into an industry. It a small window of opportunity. Sometimes you luck out and are at the beginning of a new platform at the right time and place. That is what Match.com did. They simply entered the market at the beginning of the Internet (The New Platform). Prior to that time, there were 1–900 number telephone dating systems, match-makers, magazines and the local bar to meet somebody.

A new platform was Mobile and Smart Phones. I say “was”, because it is no longer new! And when mobile started it started a whole new mobile dating gold rush. The end result for the dating industry was the growth and success of Tinder. Tinder is one of the major platforms in the mobile dating industry. But think about this. There are still about 200 well-built mobile dating platforms out there that either have failed or will fail. And trust me some were ,and are still, great apps that will never be seen by customers because they never will acquire critical mass.

But then there are new tech platforms that really turn out to not be a new platform, but rather a feature for the current industry leaders. For instance at the online dating industry event, there was some acknowledgement that instant video dating in the form of speeddates.com and a few other competitors did not actually get user acceptance by the market. In these cases you were meeting people so quickly by geography and not by interest and not the right people (lots of scammers) that the video experience was bad and the new platform entrance died a sudden death. Another example would be virtual reality dating where you date through an avatar. There were a few attempts at this but they failed to get user acceptance as well. I think there will be new platforms, possibly virtual dating that is much more sophisticated in the future possibly through Oculus and other new platforms. I am also predicting the return of video dating, but done much better.

Choose Your Market Wisely

I had an finance teacher when going for my MBA at Farleigh Dickinson University who used to tell us to “Choose Our Industry Wisely!” He was referring to getting into Pharmaceuticals vs. Telecom and Banking. He was right. He told us even the secretaries at pharma companies retire with a million dollars in stock! So, the same is true of markets. I always tell people the online dating industry is a $2.5 billion a year market, but online eCommerce is more like $4 trillion a year. Think about that next time you choose what business to enter as a startup. You are going to have a greater chance of succeeding financially making custom t-shirts than selling love!

Critical Mass

Getting critical mass defines your success in the online dating industry. Without it you are Kaput. And with such giants like Match.com and eHarmony dominating the industry, it is far less likely that any similar services will get critical mass any time soon within the US. As a startup you have to think this through. You can enter the online dating business only if you don’t mind it being a lifestyle business or a second job. You are less likely to succeed in this business than one which is wide open! Choose your industry wisely. Now, you could still get critical mass and create the next WhatsApp.com. I am just saying you can’t be a copy of existing successful apps out there. You should try to solve a real problem that nobody else has solved.

Solving Problems Nobody Cares About

I have joined up with, consulted to, met with and listened to pitches from about 50 tech startups where it is not really clear if the problem they are solving really needs solving. It is a very blurred line what is a nuisance vs. a problem. Even if you solve the problem, it does not mean that it is worth anything to anybody. So, you have to really consider this as you develop an app that tracks dog’s bowel movements or the location of a toilets in eastern Ukraine. Not really a winner financially. Trust me. I guess though you can take most any idea and keep working it like a piece of clay pivoting until you find a real problem to solve. Seems like AirBNB and Uber had this happen. So I am not saying that I know something and you need to stay out of online dating. I am saying you have to keep changing your startup’s direction till you find something solid that people will seriously value. Just be bold and be different if you go into dating!

White Label Strategies

Another off-shoot to succeed within consolidated tech industries in the old standby, the white label strategy. It has also been called branded strategies. I had to explain what white label means to somebody I am friends with this morning, so apparently not everybody understands this. This means you get in the business of offering the picks and shovels as opposed to being the gold miner. You provide a platform for others to try to succeed. This platform can have anybody’s brand placed on it and they are in business. It is the Internet’s franchise method! Trust me, very view companies have gained any serious national critical mass this way, but some have made a great living! So can you make thousands or millions, but you can’t make billions. And it is a way to quickly enter a market. By being the white label itself you are getting into a lucrative business. But think about it. When white label strategies are all the rage within an industry, it really means that the industry is mature and all barriers to entry have fallen. We are seeing this more and more in the web industry as website generators are very much in vogue.

If you like this article and you would like to get information about my upcoming book about coming up with a name for your tech startup, please join my email list at http://startuppop.com if you have not done.

We also occasionally build websites for sophisticated clients who need great brochure-like websites. We only build in WordPress and Shopify and we specialize in providing boutique sites that cost a little bit more, but it is worth it. Here are a few example sites we have completed for clients recently:

http://brandsecurities.com

Have a great day.

Dan

dan@startuppop.com

Dan

Written by

Founder SEO Turbo Booster, http://seoturbobooster.com, Writer, Speaker, Consultant. Email me at dan@seoturbobooster.com to contact me.

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