Lauren Kay and Emma Tessler are not stereotypical startup founders. They’re women, for one, and neither has a technology background. In fact, Tessler is a college dropout who taught sex education in Newark, New Jersey, then built a teenage pregnancy prevention program in Harlem, New York. Yet, like most startup founders, Kay and Tessler saw a problem in a market they knew well, one that wasn’t caused by a lack of technology, but by too much. The problem was cost-effective dating, and the market was love.
The two women were both in their early 20s and frequent online daters, mostly using the site OKCupid. Tessler had ventured on about 100 first dates and Kay, about 50.
“We were spending a lot of time doing it and finding pretty inaccurate results,” said Tessler. (Her current boyfriend was her 115th OKCupid date.)
Tessler wanted to switch careers, from sex education to old-fashioned matchmaking.
“I was burned out, getting calls from 13-year-old girls in the middle of the night,” she said. “But I really liked talking to people about relationships and sexuality, and wanted a way I could do that in a happier environment.”
Kay, however, was burned out on dating — the results didn’t justify the time invested — and decided to start a group-dating company, which she thought would be more efficient. She emailed 15 women and 15 men and asked if they would be open to dating in a group.
“I was shocked,” Kay said. “They all responded yes.”
A woman in one of the first test groups introduced Kay to Tessler. The two women and a third female co-founder (who left last November) introduced Dating Ring in 2013, arranging group dates in New York City.
The company was part of the Silicon Valley accelerator Y Combinator’s January 2014 class, and by then it had a few thousand users, and was growing about 10 percent a week, charging $20 per person per date. Sales had started to flatten, however, and scheduling dates was a nightmare, Kay said.
“We had become a group-scheduling company, not a group-dating service.” Their ability to focus on compatibility was being compromised by their need to find enough people to fill dates.
One of Y Combinator’s partners suggested they get feedback from users about switching to a one-on-one dating model. The women posted a private Facebook poll to a few hundred people and got about 50 responses.
“All of them either preferred one-on-one dates or didn’t have an opinion,” Kay said. “That led us to believe there was a whole group of people who hadn’t signed up because they wanted one-on-one dating.”
In the lexicon of tech startups, they “pivoted.” A new sign-up form on the site advertised the shift to one-on-one dating, still using matchmakers.
“We had $7,000 in sales within 24 hours,” Kay said. With their group-dating model, they had been taking in about $3,000 a month.
Dating Ring uses an algorithm to generate potential match, and then a matchmaker combs through those to hand-select dates. The company’s hybrid model represents the tip of a backlash against mobile dating apps like Tinder, where matches are based almost solely on appearance.
Mark Brooks, an Internet dating analyst and consultant, said although there is still plenty of interest in online dating, “People also want relationships that begin based on more than your gut reaction to a photo,” he said. “This model is very new, this merging of Internet dating and matchmakers.”
Several new startups, like SparkStarter, Hinge and Coffee Meets Bagel, don’t use matchmakers per se but do use connections — friends and friends of friends on Facebook — to humanize the process and move beyond algorithmic, systemized matching. Dave Evans, the founder of Digicraft, an online dating consultancy, said, “The whole industry now is built on smoke, mirrors and a lot of marketing. We’re at the point where I don’t care how old you are, what you find interesting, even where you live. I’m just going to swipe left or right based on how you look.”
Melissa Brady, a 37-year-old Dating Ring client in White Plains, New York, loves the idea of a matchmaker being involved.
“It makes me more excited to go on the date, because I have more hope for it,” she said. Brady has used other dating sites, including OKCupid and Coffee Meets Bagel, but found those dates less suited to her.
A key part of Dating Ring’s model is user feedback — given to the matchmaker after every date — which is then used to keep improving a dater’s experience. The matchmakers are all women who work at least 10 hours a week and want a flexible schedule. The company has begun operating in New York, San Francisco, Los Angeles and Boston. Clients in New York and San Francisco have the option to meet their matchmaker in person but they can all use “matchmaker chat,” Dating Ring’s version of instant messaging. Matched couples get connected via a private text message line that expires in seven days and through which they can schedule their own dates. Right now the company has about 5,000 active members.
Tinder may process more than a billion swipes daily, but a growing number of singles are seeking out a more human, personal touch in dating. Life Change Holdings in Frisco, Texas, for example, builds and manages local matchmaking businesses across the country that use a website, like OhioSingles.com or CharlotteMatchmakers.com, for leads. Each of those local offices employs matchmakers to work individually with clients. The services cost $3,500 to $10,000 and Life Change Holdings revenue has grown from $2.5 million in 2012 to $14.5 million in 2014, said Bill Broadbent, the company’s founder and chief executive. He projects more than $20 million in 2015.
Dating Ring charges $240 for three months with one introduction each week; anyone can become a member of the database for free and be eligible for matches with paying clients. The company’s VIP service includes a one-hour, in-person consultation and multiple Skype feedback sessions in a package tailored to the client. The average price for a VIP package is $3,500 and for that, a client gets five dates in five months.
Kay and Tessler have also begun setting up speed-dating events for members in New York and San Francisco. “They sold out within two days,” Kay said.
Revenue now averages about $35,000 a month but growth fluctuates, Kay said. “Some months it’s 50 percent and other months it’s 5 percent,” she says. “Right now, we’re pretty much breaking even.” The company received a $100,000 initial investment from Y Combinator and raised an additional $255,000 from angels.
Although they are growing, Tessler and Kay aren’t consistently able to take salaries, and still have to tackle the challenges inherent in expansion, which includes finding enough qualified matchmakers in new cities. They are also thinking about changing the company’s name, which reflects its group-dating past.
Much of that will happen under a microscope, as the company is the focus of the second season of the podcast StartUp, from Gimlet Media, which has about 400,000 listeners per episode. Kay said the transparency required for the show has forced her and Tessler to face their struggles openly, whether that is dealing with condescending investors, having to borrow money from their parents or how to keep improving a company that depends, in large part, on the vagaries of human emotion.
As Brady, their client, puts it, “Dating in general can be discouraging but the Dating Ring ladies are really encouraging. They believe it’s possible to find the right match,” she said. “They believe in love.”