Sam Yagan, cofounder of OkCupid, never needed the services of the successful online dating website he and his friends created.
Yagan is married to his high school sweetheart; they were already engaged when he launched OkCupid in 2004. And yet he might as well have been the target user for the site, whose members voluntarily answer, on average, 233 questions about themselves. “I hated meeting people at bars when I was single, because it’s all about the looks and the funny line,” he tells Fortune in typical self-deprecating fashion. “I don’t have the looks to compete at a bar, and I’m not that funny. So the last thing I want is to be in a situation where that’s what I’m competing on. I’d rather be on OkCupid or Match, where I can write a 300-word essay about myself that’s really good.”
Many daters, it seems, agree: The $2 billion online dating industry is growing quickly, even as it is being consolidated — mostly by Match Inc., which Yagan helms. Before they created OkCupid, he and the same friends started SparkNotes, an online alternative to CliffsNotes study guides, in 1999. It sold to iTurf, Inc. for $30 million.
After that initial success, he says, he was still hesitant to consider himself an entrepreneur; Yagan wasn’t sure whether SparkNotes succeeded because of luck or skill. He applied for desk jobs to no avail. “It turns out that if you’re a 24-year-old whose only line on their resume says CEO, you are totally unemployable,” he says.
Thus: back to creating another business. He joined his friend Jed McCaleb to launch eDonkey, a P2P file-sharing service (akin to a Napster for video) that they scaled fast but shut down after pressure from record labels. Despite successfully rolling out two web companies, Yagan says, “I have never written a line of commercial code in my life. Nor should I.” Instead, his roles have always been on the business side.
It makes sense, then, that only a year and a half after buying OkCupid for some $90 million, IAC (IACI) made Yagan CEO of its entire Match Inc. division. That means he now oversees not only Match.com but also PeopleMedia (which comprises a host of smaller, niche dating sites such as OurTime.com, BlackPeopleMeet.com, and LoveandSeek.com), DateHookup.com, and international companies like Meetic and Twoo. That entire segment contributed $713 million of IAC’s 2012 revenue of $2.8 billion.
The legions of online dating websites now comprise a vast and varied web. But IAC owns a formidable chunk of them and has continued the buying bonanza as a direct result of Yagan’s vision: “I like bringing in small companies, great entrepreneurs, wanting them to be incentivized to stay and work at a big company like Match or IAC.”
Yagan says he gets emails, almost on a weekly basis, from people launching a dating site. They want to know whether he would buy it or at least give them advice. Creating a website is easy — it is building one into a legitimate business that is hard, especially in online dating. But the sites that target a focused subset of daters find a rich market. Many of those in the last few years that scaled successfully have since sold. As CEO of Match, Yagan says, he actually roots for new online dating competitors to launch, because he is basically the only buyer. To hear him describe it, the whole thing is easy: “You’re going to launch, you’re going to get some success, [and] I’m going to buy you for cheap because you don’t have another bidder. And then my business has grown.”
Yagan, 36, is warm and quirky in person — and, yes, nerdy. He speaks quickly and also candidly. “It’s going to get me fired some day,” he says with a grin, “and that’s fine.” Listening to him talk about his purchasing power as CEO of Match, it’s hard not to think of Revenge of the Nerds: Here’s a self-professed introvert who is now the de facto guru in a growing industry with, some feel, only barely tapped potential. (A host of new apps, like Down, which was originally called Bang with Friends, and Snapchat, which allows you to send a photo that will quickly vanish, suggest that if there was ever any social stigma with using online dating, it is dramatically waning and may soon die completely.)
Yagan was deliriously happy being a serial entrepreneur. Now he’s in a very different role. Farther down the road, might he get the itch to leave? “I love starting companies. That’s my DNA,” he says. “But this is a pretty great opportunity — being able to buy instead of always being on the sell side.”
Indeed, Match buys so much that the list of significant e-dating competitors is short: Its biggest is eHarmony, which places an emphasis on marriage as the goal. Next: Spark Networks (no relation to SparkNotes), the parent company of religion-centric dating sites like JDate and ChristianMingle. After those, size drops steeply, but there are options like PlentyOfFish (totally free, thus it competes on price), HowAboutWe (focused on activities couples can do together) and Zoosk (rumored to be going public this year). Each one has its own angle, but it’s unlikely any can grow to rival the size of Match or eHarmony, which recently brought back Dr. Neil Clark Warren (you know him from the site’s ads) to run it after he retired in 2007. Warren, asked about Match, tells Fortune, “There are really only two sites, there’s them and us. It’s been a fun chase that we’ve had for 10 years.”
Warren’s company is ramping up its efforts of late but will need to compete with innovative new products like Tinder, a virally popular mobile app that invites you to swipe “yes” or “nope” to a person. Many of Tinder’s users don’t realize that it is owned by Match; the app came from its R&D lab and launched under Yagan’s guidance. Though it is no large site, Tinder is an important signal of the innovation the company is now focused on moving forward.
Sean Rad is Tinder’s CEO (and tells Fortune he met his current girlfriend through his app), but Yagan is deeply involved and speaks to him every day. He sees Tinder as the “most exciting thing that has come from us.” As a hot app like Tinder gains steam, you might wonder if there’s any risk that Match is cannibalizing its own business. Yagan thinks not; he compares IAC’s suite of dating products to a tool belt.
If Match.com allows you to read up on someone, make sure you have shared interests, and be confident you won’t have a bad date, Tinder is at the other end of the spectrum, suited to meeting up for a casual drink with less pressure. “If you’re a single person and you want to use technology to get dates,” Yagan says, “I don’t think it’s crazy to have different tools in your dating tool belt.”
That’s an analogy that shows much about Yagan’s optimism — it may be a stretch to imagine one person actively using two different websites and a trio of apps, all at once, to mine for prospective dates — as well as his faith in acquisitions. Of course, he has to believe that every dater needs multiple sites or apps, since he continues buying them. If he keeps making wise decisions in what he selects, expect Match to get even bigger. But don’t be surprised if Yagan eventually moves on to a new fish in the corporate sea.