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Here’s some data on the few dating cos that have raised.Obviously, anyone starting a new company in dating should try to understand investor biases in this sector.With dating products, the better you are at delivering dates and matches, the more they churn!I’ve been listening to the excellent Season 2 of the podcast Startup, which gives an inside look at YCombinator startup The Dating Ring (NYT coverage here). They talk about many important topics, but I had some specific comments on fundraising for dating products.Here’s a simple fact: It’s super hard to get a dating product funded by mainstream Silicon Valley investors, even though it’s a favorite startup category from 20-something entrepreneurs.
So what do the churn rates look like for a dating product? Let’s calculate that: 20% monthly churn = 1-(1-0.2)^12 = 93% annual churn You read that right.And that means at 20% monthly churn, it gets very hard to retain what you have, much less fill the top-of-funnel with enough new customers to grow the business. With most subscription products, the more you improve your product, the lower your churn.