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Hey there freedom fighters, my name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart, and in this interview I want to find out how four friends who didn’t want to charge their users ended up building a business worth tens of millions of dollars. Sam Yagan is the co- founder of OKcupid, the free online dating site that uses math to get you dates. In 2011 he sold it for a reported fifty million dollars plus forty million earn-out to the parent company of Match.com, where he is now the CEO. Sam, welcome, and thanks for doing the interview.
Sam: Hey Andrew, thanks for having me.
Andrew: You were upset by my email system. Do you want to talk about it here in the interview? Because I like how open you are about the things that you think are shitty.
Sam: I was trying to schedule this interview and when I emailed you, you auto-replied and sent me to a 1996 style HTML page that had a Contact Us form, and I thought that was a unique approach to try to get someone to agree to an interview.
Andrew: And you told the same thing, or something similar, to Ethan Austin. He told me that when you first saw his site you thought it was crappy, and you said so, and he thought you were right.
Sam: I think what I actually told him is that it was the ugliest website I had ever seen.
Andrew: And he said you were right and he appreciated it. What I’m wondering is, do you ever feel that way about something you created? Maybe at OKcupid?
Sam: Of course. We’ve had our share of duds at OKcupid, and I think a key to being a good entrepreneur is to be honest and direct, and you know, I have rubbed many people the wrong way, but I think everyone knows where they stand with me, and I’m equally, passionately positive when I’m excited. When things are great I will go out of my way to help entrepreneurs. I mentor dozens of entrepreneurs. I do a lot of a [??] investing, I sit on a lot of boards. When there is a team that I think is great there’s really no limit to the amount of support and help I will give them.
Andrew: I’ve heard that, especially from Ethan, who said that you were a huge part of his success, and a huge part of the way that he was, you helped him rethink his website and his business. But going back to what you said earlier, that yes you have had duds, what’s the one thing that you felt so bad about that you created that you almost cringe thinking back?
Sam: As I think back to the biggest failures we have had at OKcupid, we spent a year trying to internationalize the product. 2007 was really spent trying to take, we had achieved some early viral growth at OKcupid, and we had this belief that it would be possible for us to take that same recipe and extend it into international territories in foreign languages, and by all accounts we did a bad job. We did a bad job on the technology, we did a bad job on the product, we did a bad job on the business, so I think, all of the co-founders who touched the project ended up, I think, not doing a great job, and myself included. I probably did the worst of the three of us.
Sam: Why? Well I think we tried to do it… It was 2007 so I’m trying to remember the details, but we tried to do it on the cheap. We didn’t really do a good job investing in the talents. I thought we needed to do a good job. I was unable to secure distribution partnerships. When you are trying to launch something, even the most viral product needs some kind of starting point, needs some initial base in which to grow. And it was my job among the partners to get the first 10,000 people in each of these languages. And I failed to do that.
Andrew: You know, I want to be open with you and say that I feel a little bit off balance because of the exchange that we had via Skype chat. Which is a good thing. And I’ll tell you why it’s a good thing. I spend years volunteering at Dale Carnegie and Associates where they taught me and tons of other people to be supportive to never say anything directly that could hurt someone’s feelings. And they taught us different ways to say things indirectly. To still get the same result. But what I’ve noticed is…sorry?
Sam: I said, that’s very interesting. Maybe I should go get trained.
Andrew: No. I don’t think you should. What I’m saying is I’ve noticed that in business that the approach that you had with me works but is never taught. And I know that you’re a smart person and that you do things deliberately, it doesn’t just happen willy-nilly. So tell me about what your goal is with this kind of approach and how it’s worked. Teach me what I can’t learn from someone at Dale Carnegie. Honestly.
Sam: This is an approach that I think if you talk to companies I’ve mentored, they will tell you. What I’ve found is when you’re direct and honest in your criticism, that your feedback is that much more valuable. Because they believe it. Too many entrepreneurs, too many people tell you you’re doing a great job. Your product’s great. And they run around and think they think their product is great. And then they realize later, wait, no one’s telling me my product sucks. And no one’s telling me what my problems are. And when I worked with Starbucks, as I do through Accelerate Life which is now Tech Star Chicago as per our announcement this morning. And I think if you talk to any of the 30 companies that have gone through the program, I’m direct with my feedback. I say these are the critical things about your business you have to figure out. And they often (?) things that they’re passionate about or that they believe or that they question the very premise of the business. and some of them, we end up with a rocky relationship and we don’t end up working well together and that’s fine. But for the vast majority of them, they come to respect and appreciate that feedback. And then at the end, when they finally have come over the hurdle that I saw and I say, ‘Good job. this is great’ and give them a pat on the back. That feeling is so rewarding, that it makes up for all the hard times. And they’re like, ‘Wait. You really think that I was good.’ And I was like, ‘Yeah, that is great.’ and that means so much more than the person who just said everything was great.
Andrew: Is it also a test? To see, hey are you about to fall apart here. Can you play at my level?
Sam: Not from a like, can you play at my level perspective. But I think the most serious entrepreneurs, and maybe it’s stylistic. I’m the kind of entrepreneur and person who wants constructive feedback. I want to know what I can do better. And I work well with people who aren’t defensive about what they feel. Who aren’t defensive about where they are with their weaknesses.
Andrew: For example?
Sam: And I want to make them better.
Andrew: For example?
Sam: Oh gosh, there’s so many. Where to begin.
Andrew: The one that you’re dying to fix. The one that you spend the most time on personally.
Sam: This has become a therapy session, I guess. So much for whatever the topic was. I think…
Andrew: I figure, as long as you’re honest, I’ve got an opportunity to go really honest and see how far we can go.
Sam: Okay, Dr. Phil. Let’s see. I would say, I think I can sometimes get frustrated when I don’t feel like an entrepreneur is listening to me. When I don’t feel like, when we’re talking past each other. And something is very clear to me. And I’ve explained it. I’ve explained it two or three different ways. And there’s just a lack of comprehension. I think that frustrates me. I get frustrated. Yeah. I think I can be impatient sometimes with people. Once again, I tend to be a pretty binary person on these kinds of things. People tend to have strong feelings about me. They tend to like me, or really not like me. And I similarly tend to be all in on things or totally disengaged. So I think sometimes I’m too quick to count someone out. I think more often than not I’m right. But I probably miss opportunities to work with some great people because I am too quick to judge that I don’t like what they’re working on or they’re not listening to me.
Andrew: One of the the articles I read about OKCupid talked about how OK trends was a turning point for marketing, that once you started using data as marketing, people paid attention and growth happened. Is that true?
Sam: Sure, I would say that. When you start a company, and then build it to the level of success, obviously, as OKCupid or anything larger. There are almost always going to be multiple moments of turning points or moments in time that transform the business. Certainly OKCupid had a number of those. I think if I had to name the one most… there were a number of them, but certainly in the top three pivotal moments of OKCupid’s history was that it evolved with a blog. There is no question about that. There was a time the timing was such on a number of levels… on the one hand we were going through this tremendous economic recession which had put a lot of pressure on the business from a revenue perspective. Our ad rates were low. We had good but not exclusive growth in the sorta 2008 and 2009 time period. The business was growing, but it wasn’t on a super trajectory, and the brand really was still, niche is not the right word, but it was still sort of an underground brand. Maybe a brand much more resonance with early adopters, techies, and young people in big cities on the coast. The blog changed all that. The blog really put OKCupid in the center of conversations happening around the country by people at work, at home. People young and old, people single and married, in a way that it became almost an household name. The fact that you could talk about an online dating site at work, and the fact that you could talk about an online dating site with your parents, or with your husband or wife all really just had an impact not just on OKCupid but on the whole category of online dating. Online dating can be cool, online dating is not just something that is off to the side or something that is weird.
Andrew: You would show data like the impact of showing cleavage on getting dates and the impact of cleavage as you get older on getting dates. Apparently the older you are, the more cleavage you show, the better your chances are. What I am wondering is how you come up with an idea like that, on the inside, what do you do to come up with something so impactful?
Sam: I think the recipe for a great blog post, and Christian Rutter should get all the credit for the blog along with the rest of the creative and technology teams, I’m just the lucky one who gets to talk about it. But I think there are two components to a successful blog post. One is the research and analysis and one is the execution. I think the way Christian can take complex data, the combination of info graphics and humor, his writing style is really one of a kind. So on the execution side that is Christian Rutter magic. There is not much else to say about that.
On the research and analysis side, ideas tend to come in one of two ways. It either starts with the question, or the answer, I guess is the way, [?]. It starts with the research or the data. So there are times where either Christian or Chris or Max or I would have an idea like “Let’s explore race on OKCupid” or “Lets explore how heterosexuals and homosexuals date differently.” That is one where we start with a question. Then there are other times when the research team and analysts find gems and they’re like “Oh, well I was doing this research over here and I happened to find this other data over here”, and that starts an almost bottom up approach in terms of “let’s poke around in this data some more and see where this data takes me” and before you know it you are at some interesting information. That is the kind of two big pieces, there’s the research and the execution, and then within the research there is kind of the question first, and then the data first.
Andrew: I see. I looked around to see what other ideas you guys tried and I saw one interesting one on Wikipedia. That you allowed users for a while to create their own blogs, right?
Sam: Yeah. They were more journals. And I think we had, you know this is sort of another. The OK Cupid approach to growth was always, it’s less so now as we’ve gotten bigger. But the OK Cupid approach to growth was largely one of, the strategy was one of taking a lot of high risk, high return bets. So, launch every month or two launch something kind of big. Try something kind of big, knowing that it’s probably going to fail. But if you have a couple of winners a year the blog being a great example, it will be sort of step function growth. And so I think the journals were kind of paired with forums and message boards. And really that was something that we got looking at some of our competition that had a lot of message boards. And it had appeared to us that they were generating a lot of traffic and there were some (?) benefits and we said Okay well, why don’t we launch that ourselves. And it turned out that the journals were used by such a small portion of the population. The message boards ended up being really just a place for trolls and flame wars. So those have been deprecated and pretty much retired now. So, I wouldn’t say they were so much blogs as they were journals. I think it was actually called OK journals and OK forums at the time. So it wasn’t really blogs. But we did sort of experiment with more self-expression. But it just didn’t work.
Andrew: One of the reasons why a lot of companies don’t take those kind of risks is that if an idea fails and you have to close it down, there’s a sense that you’re a failure in front of your audience. Is that a real issue, and if it is how do you avoid that?
Sam: I think it depends how you fail. There are things that, kind of like if you’re failing because you’re on the cutting edge of things, I think people tend to be more okay with that. I’m trying to think of a good example. Oh, we launched crazy blind date in 2008. The first version of crazy blind date. We’ve since relaunched it last month. And the first version of crazy blind date, the goal of this product was to set you up on real time blind dates. But this was pre-smart phone. This was pre. No one had an iPhone, no one had an android. And so not only did we not have your GPS information, but you didn’t have a nice app to use. So you had to actually send an SMS to Cupid. We had the short code Cupid. And then we would anonymously relay your message to someone else. And we had a hell of a time keeping the (?) animations up to date. We didn’t have the API or anything like that. I remember someone emailing, an OK Cupid user emailing us saying, you just sent me on a blind date to a (?) that has been shut down six months ago. And I’m standing here in the rain with my dates. And like on the one hand he was angry, and on the other hand, we had a product that was setting people up on blind date. That’s kind of cool. And so, yes, he was unhappy but we were failing in the pursuit of something great. And I think there’s much more tolerance for that than trying to do something and (?). Trying to roll out a new (?). If we were to try to roll out a new mailbox, a new sort of messaging infrastructure and the thing just wouldn’t work. People would say well the old messaging structure was fine. Why did you touch around with it, why did you make it worse? So I think it depends kind of what the error is. That has a big impact.
Andrew: You told (?) magazine that you were in the power decade of your life. In your early 30’s to early 40’s are your power years. Why do you smile at that?
Sam: Whenever people quote back to me I’m always fearful of what quote you’re going to find. That one seems like a reasonable thing to say, unlike other things I’m sure I’ve said.
Andrew: Well, you were thinking at the time, what do I do with these power years. Go build a billion dollar company, continue here. Why did you decide to stay with match.com instead of. After having two huge hits go on to do another brand-new company.
Sam: Well, I spent two years in the match family. Having sold OK Cupid in January of ’01 and over the time I was there I came to really respect the people that were there, both in terms of the parent company at IAC who I work for and the colleagues at Match and Meetic and all other worlds who run these great dating businesses. I’ve been an entrepreneur since 1999 and I suspect I’ll be an entrepreneur forever. But when I think about what I want to have accomplished in my professional career I want to have learned a lot. I want to have experienced a lot. Entrepreneurship is amazing and I love it. I always want to call myself an entrepreneur. What entrepreneurs lack, especially at the beginning, is scale and the ability to impact people at a global scale. What is amazing about this platform at Match is ten million people every month use one of our products around the world. We make hundreds of millions of dollars in revenue and hundreds of millions of dollars of profit. We have hundreds of coworkers around the world who are fantastically talented. There’s a lot about that business that I don’t have the time to experience whether it’s running a subscription business or running an international business. I went down to Rio just last week to visit the Latin America team. I went into Rio. I’d never professionally been to Latin America. The opportunity to go down there and think about Latin America as a professional rather than a tourist was eye opening. Same thing for China. I’ve never done business in China. Match is active in China so I’m going to be going there next month and spending some time there. I think it was a really unique opportunity to work with terrifically talented people on a massive platform. Online dating is something that over the last 10 years I’ve developed a huge passion for. It was an opportunity to (?).
Andrew: Earlier you were worried about what quote I would pull up. Here’s a quote that I wasn’t sure how to bring up. It’s one that’s come up a lot. Bigthink.com had videos of you talking about what you do and what you stand for and what you believe. Much of what you said there had to do with media companies like OKCupid should just be free. And that’s what you guys believed until you sold to Match.com. What happened? Was it just an economic decision that it works for Match.com so why mess with it?
Sam: Just to clarify your question, OKCupid is still free. The question is, in my new role how do I think about having free and pay properties?
Andrew: Compared to what you felt before.
Sam: I think that dating in particular is a category where product is immensely personal. This is something that I think that I’ve learned the hard way. I thought when we launched OKCupid as a free site that it’s a good site and it’s free so everyone should flock over here. Why would anyone stick around at a pay dating site? In fact, if I think about my first business Spark Notes it’s a good contrast. If you think about Cliffs Notes and Spark Notes they are essentially substitutes for one another. A Cliffs Note on Hamlet and a Spark Note on Hamlet are essentially the same thing. I would argue that we’re better, it doesn’t matter. The Spark Note is better. They are essentially substitutes, they’re commodities is actually a better word. If you’re a Cliffs Notes user and your friend tells you about Spark Notes there is no longer a reason to use Cliffs Notes because it just doesn’t matter. They are interchangeable commodities. It’s like corn. If you can buy a bushel of corn for a dollar or get a bushel for free, you’ll just take that free bushel.
Dating is not like that. Dating is more akin to a house or a car or clothes. Why does everyone shop at Walmart? For their clothes. Well, you could. You can get really cheap clothes at Walmart. That’s a very nice shirt you’re wearing. You probably spent $100 dollars for that shirt. Why didn’t you just go to Walmart and buy a $5 shirt? You chose to do that because you felt that’s an expression of who you are. So when I think about the sort of continuum from a bushel of corn, you’re just buying on price versus something like clothes or cars or housewares. It’s not just about the cost; it’s about much more going on. Dating is much more in that latter category. When I look at the portfolio product that Match has, my goal is to have the right product at the right price point for every person. There are going to be people who want a free experience and all the benefits and challenges that come with that. For example, [??] doesn’t have customer support. Some people like to be able to pick up the phone and talk to a human, some people like to send an email and get a reply. Not you, I don’t think. Hopefully, you’re back on balance now, hopefully we’ve gotten over our earlier stumble. Some people like to get together. Match has events. Match puts on over 400 events per month. There’s probably an event that you could go to within the next few days near your home. That’s something to do. There are different offerings at different price points. There are going to be people who say just give me the free one. There are going to be people who say actually I’d rather pay 100 dollars a month because I know the person I’m going to be talking to has income and has all of these other attributes.
Andrew: What other founders have told me is that when you’re the outsider you have to find the one thing that differentiates you from the leader and then just use that be the opposite of them and act like that is the only way to be and that they are wrong to do anything different. Not necessarily because they are wrong or that there’s a universal right or wrong but if they’re charging and you’re not charging and it’s wrong to charge. What do you think of that tactic?
Sam: Certainly as an insurgence, when you’re trying to disrupt the incumbents, it only makes sense that you’re going to focus on the things that are different, that are disruptive, that make you the insurgents. It would be weird for any startup to say look at how great our messaging is. OK, but you message on Match. So naturally you’re going to highlight your differences. I would argue that OKCupid has always been more about free. Historically I’ve always said that OKCupid is free fun and effective. I’ve always tried to use that triple when talking about it. Free is easiest to latch on to it, the media gets it, it’s an obvious consumer hook. OKCupid has always said we’re a fun to site to use, we’re free to use and the site works so why wouldn’t we use it.
Andrew: I heard a rumor that you invested in companies in the first round of accelerate labs that is now tech star Chicago said that the way you decided to invest is was whether or not they asked you to invest. If they asked you were in, if they didn’t, no way.
Sam: That’s not always the case. For any nerd who’s listening, I don’t want to get 100 requests for investment. The first year of accelerate, the 10 companies I invested in, five of them, they happened to be the five who asked.
Andrew: So it wasn’t just you saying if they have the guts to ask me at this point, they’re going to be good entrepreneurs.
Sam: The thing about people about knowing where they stand with me – and I love all tech companies, I’m personally close to almost all of the founders. Again, having spent very much time with them over the course of three months, you know where I stand, you know I’m going to go to bat for you and I will help you no matter what whether I invest or not I help all the companies. There are some who could sense my energy and sense my positivism and said you’re a guy who’s come such a long way this summer. They asked me to invest and asked if I wanted to get more involved. Two of them asked me to be on their board. Three of them, I think I was on their board. I think that almost sort of confirms one of the statements I made earlier that one of the benefits of being very direct is you don’t get people who know I’m not going to invest ask me to invest. They’re going to be like Sam probably is not excited about this business so I’m not going to ask him, whereas the ones who are, are going to be like Sam do you want to invest and I’m like yes of course. So I think that’s a benefit of being (?).
Andrew: Why did you decide to partner up with Tech Stars? Why did you decide to be Tech Stars Chicago? And then I’ll ask one final question, but I’m curious about this partnership.
Sam: Sure. When we started Accelerate in 2009 we called up Tech Stars and said, “Do you want to come to Chicago?” Actually, before we started we actually called David Cohen and said, “Do you want to open up a place in Chicago? We’ll help organize.” We were passionate about the Chicago scene. He said that they weren’t ready to franchise yet. Well, they had already franchised in Boston, but they weren’t really ready to roll out. We said okay. We had a very close relationship with David Cohen and Brad Felt. David was an adviser to us in our first fund. He helped me very closely. I was CEO the first year. We were always very close. We respected what they were doing and they respected what we were doing. They approached us a couple of months ago and said, “Are you guys good for teaming up?” I think what was important to me was that we kept the entrepreneurial local resilience and passion that made Accelerate great. As long as you maintain that energy and add on to Tech Star’s (?) being part of the network and giving access to other founders and access to other support. I said if we’re going to kill Accelerate and rebirth Tech Stars that sounded interesting to me. If we’re going to keep Accelerate and add on to it it’s just going to be a creative partnership. So I said, why not?
Andrew: So you still own it, you and Troy?
Sam: There are a bunch of us who are the founders of it that are involved. But yes, we’re still a management team. Troy runs it, Adam Coopersmith from New World, and Nick from Sandbox. Troy and I are the work.
Andrew: Final question is this. I think this is the most honest person who I can get this answer from. What sucks about the 30 or so minutes that we have spent together? What’s the biggest thing that sucks?
Andrew: Don’t hold back on me. Come on.
Sam: I don’t think anything sucks. I think that we had a challenge scheduling everything. I’ve enjoyed getting to chat with you. Hope it met your expectations.
Andrew: Thank you. It’s great to have you on.
Sam: Awesome. Thanks so much, Andrew.